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Contracts Accounted for as Insurance (Tables)
 3 Months Ended
Mar. 31, 2019
Insurance [Abstract]  
Net Earned Premiums Net Earned Premiums
 
 
First Quarter
 
2019
 
2018
 
(in millions)
Financial guaranty:
 
 
 
Scheduled net earned premiums
$
87

 
$
88

Accelerations from refundings and terminations
26

 
52

Accretion of discount on net premiums receivable
4

 
4

Financial guaranty insurance net earned premiums
117

 
144

Non-financial guaranty net earned premiums
1

 
1

  Net earned premiums (1)
$
118

 
$
145

 ___________________
(1)
Excludes $3 million and $3 million for First Quarter 2019 and 2018, respectively, related to consolidated FG VIEs.
Gross Premium Receivable, Net of Commissions on Assumed Business Roll Forward Gross Premium Receivable,
Net of Commissions on Assumed Business
Roll Forward 

 
First Quarter
 
2019
 
2018
 
(in millions)
Beginning of year
$
904

 
$
915

Less: Non-financial guaranty insurance premium receivable
1

 
1

Financial guaranty insurance premiums receivable
903

 
914

Gross written premiums on new business, net of commissions
41

 
75

Gross premiums received, net of commissions
(54
)
 
(63
)
Adjustments:
 
 
 
Changes in the expected term
(4
)
 
(3
)
Accretion of discount, net of commissions on assumed business
1

 
(4
)
Foreign exchange translation and remeasurement (1)
9

 
24

Financial guaranty insurance premium receivable (2)
896

 
943

Non-financial guaranty insurance premium receivable
1

 
1

March 31,
$
897


$
944

____________________
(1)
Includes foreign exchange gain (loss) on remeasurement recorded in the condensed consolidated statements of operations of $9 million in First Quarter 2019 and $23 million in First Quarter 2018. The remaining foreign exchange translation in First Quarter 2018 was recorded in other comprehensive income (OCI).

(2)
Excludes $8 million and $9 million as of March 31, 2019 and March 31, 2018, respectively, related to consolidated FG VIEs.

Expected Collections of
Financial Guaranty Insurance Gross Premiums Receivable,
Net of Commissions on Assumed Business
(Undiscounted)

 
As of
March 31, 2019
 
(in millions)
2019 (April 1 - June 30)
$
39

2019 (July 1 - September 30)
26

2019 (October 1 - December 31)
19

2020
99

2021
79

2022
80

2023
66

2024-2028
285

2029-2033
190

2034-2038
100

After 2038
102

Total (1)
$
1,085

 ____________________
(1)
Excludes expected cash collections on consolidated FG VIEs of $11 million.
Schedule of Net Earned Premiums Scheduled Financial Guaranty Insurance Net Earned Premiums

 
As of
March 31, 2019
 
(in millions)
2019 (April 1 - June 30)
$
85

2019 (July 1 - September 30)
83

2019 (October 1 - December 31)
80

Subtotal 2019
248

2020
304

2021
276

2022
251

2023
230

2024-2028
903

2029-2033
609

2034-2038
341

After 2038
286

Net deferred premium revenue (1)
3,448

Future accretion
181

Total future net earned premiums
$
3,629

 ____________________
(1)
Excludes net earned premiums on consolidated FG VIEs of $63 million.
Selected Information for Policies Paid in Installments Selected Information for Financial Guaranty Insurance
Policies Paid in Installments

 
As of
March 31, 2019
 
As of
December 31, 2018
 
(dollars in millions)
Premiums receivable, net of commission payable
$
896

 
$
903

Gross deferred premium revenue
1,280

 
1,313

Weighted-average risk-free rate used to discount premiums
2.3
%
 
2.3
%
Weighted-average period of premiums receivable (in years)
9.1

 
9.1
Loss and LAE Reserve and Salvage and Subrogation Recoverable Net of Reinsurance Insurance Contracts Net Reserve (Salvage) 

 
As of
March 31, 2019
 
As of
December 31, 2018
 
(in millions)
Public finance:
 
 
 
U.S. public finance
$
459

 
$
612

Non-U.S. public finance
13

 
14

Public finance
472

 
626

Structured finance:
 
 
 
U.S. RMBS (1)
(13
)
 
21

Other structured finance
35

 
30

Structured finance
22

 
51

Subtotal
494

 
677

Other payable (recoverable)
(2
)
 
(3
)
Total
$
492

 
$
674

____________________
(1)
Excludes net reserves of $41 million and $47 million as of March 31, 2019 and December 31, 2018, respectively, related to consolidated FG VIEs.
 
Components of Net Reserves (Salvage) Insurance Contracts Components of Net Reserves (Salvage)
 
 
As of
March 31, 2019
 
As of
December 31, 2018
 
(in millions)
Loss and LAE reserve
$
1,032

 
$
1,177

Reinsurance recoverable on unpaid losses (1)
(40
)
 
(34
)
Loss and LAE reserve, net
992

 
1,143

Salvage and subrogation recoverable
(522
)
 
(490
)
Salvage and subrogation payable (2)
24

 
24

Other payable (recoverable) (1)
(2
)
 
(3
)
Salvage and subrogation recoverable, net, and other recoverable
(500
)
 
(469
)
Net reserves (salvage)
$
492

 
$
674

____________________
(1)
Recorded as a component of other assets in the condensed consolidated balance sheets.

(2)
Represents ceded reinsurance amounts recorded as a component of other liabilities in the condensed consolidated balance sheets.
Reconciliation of Net Expected Loss to be Paid and Net Expected Loss to be Expensed Financial Guaranty Insurance Contracts Reconciliation of Net Expected Loss to be Paid and
Net Expected Loss to be Expensed
Financial Guaranty Insurance Contracts

 
As of
March 31, 2019
 
(in millions)
Net expected loss to be paid - financial guaranty insurance
$
903

Contra-paid, net
65

Salvage and subrogation recoverable, net, and other recoverable
500

Loss and LAE reserve - financial guaranty insurance contracts, net of reinsurance
(991
)
Net expected loss to be expensed (present value) (1)
$
477

____________________
(1)    Excludes $33 million as of March 31, 2019, related to consolidated FG VIEs.
Net Expected Loss to be Expensed Insurance Contracts Net Expected Loss to be Expensed
Financial Guaranty Insurance Contracts 

 
As of
March 31, 2019
 
(in millions)
2019 (April 1 - June 30)
$
9

2019 (July 1 - September 30)
9

2019 (October 1 - December 31)
8

Subtotal 2019
26

2020
35

2021
35

2022
36

2023
36

2024-2028
150

2029-2033
103

2034-2038
46

After 2038
10

Net expected loss to be expensed
477

Future accretion
15

Total expected future loss and LAE
$
492

 
Loss and LAE Reported on the Consolidated Statements of Operations Loss and LAE
Reported on the
Condensed Consolidated Statements of Operations
  
 
Loss (Benefit)
 
First Quarter
 
2019
 
2018
 
(in millions)
Public finance:
 
 
 
U.S. public finance
$
70

 
$
(28
)
Non-U.S. public finance
—

 
(1
)
Public finance
70

 
(29
)
Structured finance:
 
 
 
U.S. RMBS (1)
(27
)
 
16

Other structured finance
3

 
(5
)
Structured finance
(24
)
 
11

Loss and LAE
$
46

 
$
(18
)

____________________
(1)
Excludes a benefit of $1 million and a loss of $6 million for First Quarter 2019 and 2018, respectively, related to consolidated FG VIEs.
BIG Net Par Outstanding and Number of Risks The following tables provide information on financial guaranty insurance contracts categorized as BIG.
 
Financial Guaranty Insurance
BIG Transaction Loss Summary
As of March 31, 2019
 
 
BIG  Categories
 
BIG 1
 
BIG 2
 
BIG 3
 
Total
BIG, Net
 
Effect of
Consolidating
FG VIEs
 
Total
 
Gross
 
Ceded
 
Gross
 
Ceded
 
Gross
 
Ceded
 
 
 
 
(dollars in millions)
Number of risks (1)
128

 
(8
)
 
31

 
(1
)
 
142

 
(7
)
 
301

 
—

 
301

Remaining weighted-average contract period (in years)
7.5

 
6.2

 
16.4

 
2.1

 
9.7

 
8.8

 
9.4

 
—

 
9.4

Outstanding exposure:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Principal
$
3,262

 
$
(71
)
 
$
579

 
$
(6
)
 
$
5,868

 
$
(159
)
 
$
9,473

 
$
—

 
$
9,473

Interest
1,351

 
(28
)
 
484

 
(1
)
 
2,756

 
(70
)
 
4,492

 
—

 
4,492

Total (2)
$
4,613

 
$
(99
)
 
$
1,063

 
$
(7
)
 
$
8,624

 
$
(229
)
 
$
13,965

 
$
—

 
$
13,965

Expected cash outflows (inflows)
$
133

 
$
(5
)
 
$
151

 
$
(1
)
 
$
3,852

 
$
(120
)
 
$
4,010

 
$
(284
)
 
$
3,726

Potential recoveries (3)
(509
)
 
23

 
(61
)
 
—

 
(2,557
)
 
98

 
(3,006
)
 
198

 
(2,808
)
Subtotal
(376
)
 
18

 
90

 
(1
)
 
1,295

 
(22
)
 
1,004

 
(86
)
 
918

Discount
82

 
(5
)
 
(19
)
 
—

 
(85
)
 
(9
)
 
(36
)
 
21

 
(15
)
Present value of expected cash flows
$
(294
)
 
$
13

 
$
71

 
$
(1
)
 
$
1,210

 
$
(31
)
 
$
968

 
$
(65
)
 
$
903

Deferred premium revenue
$
191

 
$
(4
)
 
$
25

 
$
—

 
$
544

 
$
(2
)
 
$
754

 
$
(62
)
 
$
692

Reserves (salvage)
$
(330
)
 
$
15

 
$
51

 
$
(1
)
 
$
827

 
$
(30
)
 
$
532

 
$
(41
)
 
$
491

 
Financial Guaranty Insurance
BIG Transaction Loss Summary
As of December 31, 2018
 
 
BIG Categories
 
BIG 1
 
BIG 2
 
BIG 3
 
Total
BIG, Net
 
Effect of
Consolidating
FG VIEs
 
Total
 
Gross
 
Ceded
 
Gross
 
Ceded
 
Gross
 
Ceded
 
 
(dollars in millions)
Number of risks (1)
128

 
(8
)
 
39

 
(1
)
 
145

 
(7
)
 
312

 
—

 
312

Remaining weighted-average contract period (in years)
7.9

 
6.5

 
13.2

 
2.1

 
10.1

 
9.1

 
9.8

 
—

 
9.8

Outstanding exposure:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Principal
$
3,052

 
$
(71
)
 
$
938

 
$
(6
)
 
$
6,249

 
$
(159
)
 
$
10,003

 
$
—

 
$
10,003

Interest
1,319

 
(29
)
 
592

 
(1
)
 
3,140

 
(72
)
 
4,949

 
—

 
4,949

Total (2)
$
4,371

 
$
(100
)
 
$
1,530

 
$
(7
)
 
$
9,389

 
$
(231
)
 
$
14,952

 
$
—

 
$
14,952

Expected cash outflows (inflows)
$
98

 
$
(5
)
 
$
264

 
$
(1
)
 
$
4,029

 
$
(80
)
 
$
4,305

 
$
(290
)
 
$
4,015

Potential recoveries (3)
(465
)
 
23

 
(81
)
 
—

 
(2,542
)
 
55

 
(3,010
)
 
192

 
(2,818
)
Subtotal
(367
)
 
18

 
183

 
(1
)
 
1,487

 
(25
)
 
1,295

 
(98
)
 
1,197

Discount
83

 
(5
)
 
(53
)
 
—

 
(134
)
 
(2
)
 
(111
)
 
23

 
(88
)
Present value of expected cash flows
$
(284
)
 
$
13

 
$
130

 
$
(1
)
 
$
1,353

 
$
(27
)
 
$
1,184

 
$
(75
)
 
$
1,109

Deferred premium revenue
$
125

 
$
(4
)
 
$
151

 
$
—

 
$
518

 
$
(2
)
 
$
788

 
$
(64
)
 
$
724

Reserves (salvage)
$
(311
)
 
$
15

 
$
48

 
$
(1
)
 
$
993

 
$
(24
)
 
$
720

 
$
(47
)
 
$
673

____________________
(1)
A risk represents the aggregate of the financial guaranty policies that share the same revenue source for purposes of making debt service payments. The ceded number of risks represents the number of risks for which the Company ceded a portion of its exposure.

(2)
Includes BIG amounts related to FG VIEs.

(3)