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Contracts Accounted for as Insurance (Tables)
 12 Months Ended
Dec. 31, 2019
Insurance [Abstract]  
Net Earned Premiums
Net Earned Premiums
 
 
Year Ended December 31,
 
2019
 
2018
 
2017
 
(in millions)
Financial guaranty:
 
 
 
 
 
Scheduled net earned premiums
$
331

 
$
367

 
$
385

Accelerations from refundings and terminations
122

 
159

 
286

Accretion of discount on net premiums receivable
17

 
18

 
17

Financial guaranty insurance net earned premiums
470

 
544

 
688

Specialty net earned premiums
6

 
4

 
2

  Net earned premiums (1)
$
476

 
$
548

 
$
690

 ___________________
(1)
Excludes $18 million, $12 million and $15 million for the years ended December 31, 2019, 2018 and 2017, respectively, related to consolidated FG VIEs.
Gross Premium Receivable, Net of Commissions on Assumed Business Roll Forward
Expected Collections of
Financial Guaranty Insurance Gross Premiums Receivable,
Net of Commissions on Assumed Business
(Undiscounted)

 
As of December 31, 2019
 
(in millions)
2020 (January 1 - March 31)
$
35

2020 (April 1 - June 30)
47

2020 (July 1 - September 30)
30

2020 (October 1 - December 31)
18

2021
92

2022
94

2023
82

2024
82

2025-2029
343

2030-2034
240

2035-2039
151

After 2039
352

Total (1)
$
1,566

____________________
(1)
Excludes expected cash collections on consolidated FG VIEs of $9 million.
Gross Premium Receivable,
Net of Commissions on Assumed Business
Roll Forward

 
Year Ended December 31,
 
2019
 
2018
 
2017
 
(in millions)
Beginning of year
$
904

 
$
915

 
$
576

Less: Specialty insurance premium receivable
1

 
1

 
—

Financial guaranty insurance premiums receivable
903

 
914

 
576

Premiums receivable from acquisitions (see Note 2)
—

 
—

 
270

Gross written premiums on new business, net of commissions (1)
689

 
610

 
301

Gross premiums received, net of commissions
(318
)
 
(577
)
 
(301
)
Adjustments:
 
 
 
 
 
Changes in the expected term
(21
)
 
(8
)
 
(8
)
Accretion of discount, net of commissions on assumed business
10

 
9

 
12

Foreign exchange translation and remeasurement (2)
21

 
(35
)
 
64

Cancellation of assumed reinsurance
—

 
(10
)
 
—

Financial guaranty insurance premium receivable (3)
1,284

 
903

 
914

Specialty insurance premium receivable
2

 
1

 
1

December 31,
$
1,286

 
$
904

 
$
915

____________________
(1)
For transactions where one of the Company's financial guaranty contracts is replaced by another of the Company's insurance subsidiary's contracts, gross written premium in this table represents only the incremental amount in excess of the original gross written premiums. The year ended December 31, 2018 included $330 million of gross written premiums assumed from SGI on June 1, 2018, when the Company closed an SGI Transaction. See Note 2, Business Combinations and Assumption of Insured Portfolio.

(2)
Includes foreign exchange gain (loss) on remeasurement recorded in the consolidated statements of operations of $21 million in 2019, $(33) million in 2018, $61 million in 2017. The remaining foreign exchange translation in 2018 and 2017 was recorded in OCI prior to the Combination, some of which had functional currencies other than the U.S. dollar

(3)
Excludes $7 million, $9 million and $10 million as of December 31, 2019, 2018 and 2017, respectively, related to consolidated FG VIEs.
Schedule of Net Earned Premiums
Scheduled Financial Guaranty Insurance Net Earned Premiums
 
 
As of December 31, 2019
 
(in millions)
2020 (January 1 - March 31)
$
80

2020 (April 1 - June 30)
79

2020 (July 1 - September 30)
77

2020 (October 1 - December 31)
75

Subtotal 2020
311

2021
284

2022
263

2023
245

2024
227

2025-2029
909

2030-2034
634

2035-2039
368

After 2039
494

Net deferred premium revenue (1)
3,735

Future accretion
281

Total future net earned premiums
$
4,016

 ____________________
(1)
Excludes net earned premiums on consolidated FG VIEs of $47 million.
Selected Information for Policies Paid in Installments
Selected Information for Financial Guaranty Insurance
Policies with Premiums Paid in Installments

 
As of
December 31, 2019
 
As of
December 31, 2018
 
(dollars in millions)
Premiums receivable, net of commission payable
$
1,284

 
$
903

Gross deferred premium revenue
1,637

 
1,313

Weighted-average risk-free rate used to discount premiums
1.7
%
 
2.3
%
Weighted-average period of premiums receivable (in years)
13.3

 
9.1
Rollforward of Deferred Acquisition Costs
Rollforward of
Deferred Acquisition Costs

 
Year Ended December 31,
 
2019
 
2018
 
2017
 
(in millions)
Beginning of year
$
105

 
$
101

 
$
106

DAC adjustments from acquisitions (see Note 2)
—

 
—

 
(2
)
Costs deferred during the period
23

 
19

 
16

Costs amortized during the period
(17
)
 
(15
)
 
(19
)
December 31,
$
111

 
$
105

 
$
101
Loss and LAE Reserve and Salvage and Subrogation Recoverable Net of Reinsurance Insurance Contracts

Net Reserve (Salvage)

 
As of
December 31, 2019
 
As of
December 31, 2018
 
(in millions)
Public finance:
 
 
 
U.S. public finance
$
328

 
$
612

Non-U.S. public finance
5

 
14

Public finance
333

 
626

Structured finance:
 
 
 
U.S. RMBS (1)
(78
)
 
21

Other structured finance
40

 
30

Structured finance
(38
)
 
51

Subtotal
295

 
677

Other payable (recoverable)
—

 
(3
)
Total
$
295

 
$
674


____________________
(1)
Excludes net reserves of $33 million and $47 million as of December 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
December 31, 2019
 
As of
December 31, 2018
 
(in millions)
Loss and LAE reserve
$
1,050

 
$
1,177

Reinsurance recoverable on unpaid losses (1)
(38
)
 
(34
)
Loss and LAE reserve, net
1,012

 
1,143

Salvage and subrogation recoverable
(747
)
 
(490
)
Salvage and subrogation reinsurance payable (2)
30

 
24

Other payable (recoverable) (1)
—

 
(3
)
Salvage and subrogation recoverable, net and other recoverable
(717
)
 
(469
)
Net reserves (salvage)
$
295

 
$
674

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

(2)          Recorded as a component of other liabilities in the 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
December 31, 2019
 
(in millions)
Net expected loss to be paid - financial guaranty insurance
$
683

Contra-paid, net
51

Salvage and subrogation recoverable, net, and other recoverable
717

Loss and LAE reserve - financial guaranty insurance contracts, net of reinsurance
(1,012
)
Net expected loss to be expensed (present value) (1)
$
439

____________________
(1)
Excludes $33 million as of December 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
December 31, 2019
 
(in millions)
2020 (January 1 - March 31)
$
9

2020 (April 1 - June 30)
9

2020 (July 1 - September 30)
9

2020 (October 1 - December 31)
9

Subtotal 2020
36

2021
35

2022
34

2023
32

2024
33

2025-2029
138

2030-2034
91

2035-2039
32

After 2039
8

Net expected loss to be expensed
439

Future accretion
105

Total expected future loss and LAE
$
544

 
Loss and LAE Reported on the Consolidated Statements of Operations
Loss and LAE
Reported on the
Consolidated Statements of Operations
 
 
Loss (Benefit)
 
Year Ended December 31,
 
2019
 
2018
 
2017
 
(in millions)
Public finance:
 
 
 
 
 
U.S. public finance
$
247

 
$
90

 
$
553

Non-U.S. public finance
(7
)
 
(7
)
 
(4
)
Public finance
240

 
83

 
549

Structured finance:
 
 
 
 
 
U.S. RMBS (1)
(154
)
 
(15
)
 
(113
)
Other structured finance
7

 
(4
)
 
(48
)
Structured finance
(147
)
 
(19
)
 
(161
)
Loss and LAE
$
93

 
$
64

 
$
388


____________________
(1)
Excludes a benefit of $20 million, a benefit of $3 million and a loss of $7 million for the years ended December 31, 2019, 2018 and 2017, respectively, related to consolidated FG VIEs.
BIG Net Par Outstanding and Number of Risks
Financial Guaranty Portfolio
BIG Net Par Outstanding
and Number of Risks
As of December 31, 2019

 
 
Net Par Outstanding
 
Number of Risks(2)
Description
 
Financial
Guaranty
Insurance(1)
 
Credit
Derivative
 
Total
 
Financial
Guaranty
Insurance(1)
 
Credit
Derivative
 
Total
 
 
(dollars in millions)
BIG:
 
 

 
 

 
 

 
 

 
 

 
 

Category 1
 
$
2,600

 
$
67

 
$
2,667

 
121

 
6

 
127

Category 2
 
561

 
5

 
566

 
24

 
1

 
25

Category 3
 
5,216

 
57

 
5,273

 
131

 
7

 
138

Total BIG
 
$
8,377

 
$
129

 
$
8,506

 
276

 
14

 
290


Financial Guaranty Portfolio
BIG Net Par Outstanding
and Number of Risks
As of December 31, 2018
 
 
 
Net Par Outstanding
 
Number of Risks(2)
Description
 
Financial
Guaranty
Insurance(1)
 
Credit
Derivative
 
Total
 
Financial
Guaranty
Insurance(1)
 
Credit
Derivative
 
Total
 
 
(dollars in millions)
BIG:
 
 

 
 

 
 

 
 

 
 

 
 

Category 1
 
$
2,981

 
$
77

 
$
3,058

 
128

 
6

 
134

Category 2
 
932

 
5

 
937

 
39

 
1

 
40

Category 3
 
6,090

 
75

 
6,165

 
145

 
8

 
153

Total BIG
 
$
10,003

 
$
157

 
$
10,160

 
312

 
15

 
327

_____________________
(1)    Includes VIEs.
(2)
A risk represents the aggregate of the financial guaranty policies that share the same revenue source for purposes of making debt service payments.
Financial Guaranty Insurance
BIG Transaction Loss Summary
As of December 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)
121

 
(6
)
 
24

 
—

 
131

 
(7
)
 
276

 
—

 
276

Remaining weighted-average contract period (in years)
8.0

 
5.2

 
17.0

 
—

 
9.7

 
8.3

 
9.7

 
—

 
9.7

Outstanding exposure:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Par
$
2,654

 
$
(54
)
 
$
561

 
$
—

 
$
5,386

 
$
(170
)
 
$
8,377

 
$
—

 
$
8,377

Interest
1,149

 
(15
)
 
481

 
—

 
2,507

 
(73
)
 
4,049

 
—

 
4,049

Total (2)
$
3,803

 
$
(69
)
 
$
1,042

 
$
—

 
$
7,893

 
$
(243
)
 
$
12,426

 
$
—

 
$
12,426

Expected cash outflows (inflows)
$
135

 
$
(3
)
 
$
84

 
$
—

 
$
4,185

 
$
(132
)
 
$
4,269

 
$
(264
)
 
$
4,005

Potential recoveries (3)
(598
)
 
21

 
(10
)
 
—

 
(2,926
)
 
107

 
$
(3,406
)
 
189

 
(3,217
)
Subtotal
(463
)
 
18

 
74

 
—

 
1,259

 
(25
)
 
863

 
(75
)
 
788

Discount
54

 
(1
)
 
(21
)
 
—

 
(151
)
 
(3
)
 
(122
)
 
17

 
(105
)
Present value of expected cash flows
$
(409
)
 
$
17

 
$
53

 
$
—

 
$
1,108

 
$
(28
)
 
$
741

 
$
(58
)
 
$
683

Deferred premium revenue
$
142

 
$
(1
)
 
$
34

 
$
—

 
$
480

 
$
(4
)
 
$
651

 
$
(48
)
 
$
603

Reserves (salvage)
$
(441
)
 
$
17

 
$
35

 
$
—

 
$
742

 
$
(25
)
 
$
328

 
$
(33
)
 
$
295

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:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Par
$
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 amounts related to FG VIEs.

(3)
Represents expected inflows for future payments by obligors pursuant to restructuring agreements, settlements or litigation judgments, excess spread on any underlying collateral and other estimated recoveries. Potential recoveries also include recoveries on certain investment grade credits, related mainly to exposures that were previously BIG and for which claims have been paid in the past.