Note 12 - Financial Guaranty Insurance Contracts Level 3 (Tables)

12 Months Ended

Dec. 31, 2012

Financial Guaranty Insurance Contracts [Abstract]

Schedule of Insured Financial Obligations with Credit Deterioration [Table Text Block]

The following table includes information as of December 31, 2012 regarding our financial guaranty claim liabilities, segregated by the surveillance categories that we use in monitoring the risks related to these contracts:



	Surveillance Categories
($ in thousands)	Performing		Special Mention		Intensified Surveillance			Case Reserve		Total
Number of policies	10		121		73			111		315
Remaining weighted-average contract period (in years)	21		18		20			27		20
Insured contractual payments outstanding:
Principal	$	2,313	$	951,361	$	669,083		$	339,556	$	1,962,313
Interest	232		543,648		365,705			169,268		1,078,853
Total	$	2,545	$	1,495,009	$	1,034,788		$	508,824	$	3,041,166
Gross claim liability	$	—	$	16,884	$	266,977		$	86,032	$	369,893
Less:
Gross potential recoveries	—		678		293,175			66,351		360,204
Discount, net	—		2,586		(71,939		)	1,199		(68,154		)
Net claim liability (prior to reduction for unearned premium)	$	—	$	13,620	$	45,741		$	18,482	$	77,843
Unearned premium revenue	$	31	$	22,675	$	12,142		$	—	$	34,848
Net claim liability reported in the balance sheet	$	—	$	6,541	$	39,268		$	18,482	$	64,291
Reinsurance recoverables	$	—	$	—	$	—		$	—	$	—

Schedule of Premium Receivable and Unearned with Accretion Detail and Weighted Average Risk-Free Rate [Table Text Block]

The present values of premiums receivable and unearned premiums that are received on an installment basis as of December 31, 2012 and 2011 are as follows:



	December 31,
(In thousands)	2012		2011
Premiums receivable	$	28,929	$	34,287
Unearned premiums	33,605		39,773

The accretion of these balances is included either in premiums written and premiums earned (for premiums receivable) or policy acquisition costs (for commissions) on our consolidated statements of operations. The accretion included in premiums written, premiums earned and policy acquisition costs for the years ended December 31, 2012 and 2011 was as follows:



	December 31,
(In thousands)	2012		2011
Premiums written	$	999	$	1,174
Premiums earned	999		1,174
Policy acquisition costs	212		243

The weighted-average risk-free rate used to discount the premiums receivable and premiums to be collected was 2.6% at December 31, 2012.

Future Premiums To Be Collected On Financial Guaranty Contracts [Table Text Block]

The following table shows the nominal (non-discounted) premiums, net of commissions that are expected to be collected on financial guaranty contracts with installment premiums, included in premiums receivable as of December 31, 2012.



(In thousands)	Future Expected Premium Payments
1^st quarter 2013	$	1,391
2^nd quarter 2013	769
3^rd quarter 2013	976
4^th quarter 2013	567
2013	3,703
2014	2,822
2015	2,729
2016	2,339
2017	2,166
2013 - 2017	13,759
2018 - 2022	8,627
2023 - 2027	5,753
2028 - 2032	3,736
After 2032	4,725
Total	$	36,600

Rollforward of Financial Guaranty NPV of Premiums Receivable [Table Text Block]

The following table shows the rollforward of the net present value of premiums receivable as of December 31, 2012 and 2011:



	December 31,
(In thousands)	2012			2011
Balance at January 1	$	34,287		$	43,966
Payments received	(4,033		)	(4,882		)
Accretion	787			931
Adjustments to installment premiums	(1,007		)	(508		)
Foreign exchange revaluation	40			813
Recaptures/commutation	(1,145		)	(6,033		)
Balance at December 31	$	28,929		$	34,287

Adjustments to Premiums Earned Financial Guaranty Contracts [Table Text Block]

Premiums earned were affected by the following for the years ended December 31, 2012 and 2011:



	December 31,
(In thousands)	2012			2011
Refundings	$	33,985		$	27,187
Recaptures/Commutations	(16,269		)	2,829
Adjustments to installment premiums, gross of commissions	(2,277		)	406
Unearned premium acceleration upon establishment of case reserves	1,109			3,155
Foreign exchange revaluation, gross of commissions	46			1,129
Reinsurance agreements	(5,996		)	—
Total adjustment to premiums earned	$	10,598		$	34,706

Financial Guarantee Insurance Contracts Future Premium Revenue to be Recognized [Table Text Block]

The following table shows the expected contractual premium revenue from our existing financial guaranty portfolio, assuming no refundings of any financial guaranty obligations, as of December 31, 2012.



(In thousands)	Ending Net Unearned Premiums		Unearned Premium Amortization		Accretion		Total Premium Revenue
1^st quarter 2013	$	241,736	$	5,489	$	225	$	5,714
2^nd quarter 2013	234,372		7,364		221		7,585
3^rd quarter 2013	227,437		6,935		216		7,151
4^th quarter 2013	218,854		8,583		212		8,795
2013	218,854		28,371		874		29,245
2014	195,816		23,038		807		23,845
2015	177,146		18,670		763		19,433
2016	160,821		16,325		705		17,030
2017	145,589		15,232		652		15,884
2013 - 2017	145,589		101,636		3,801		105,437
2018 - 2022	82,917		62,672		2,571		65,243
2023 - 2027	41,422		41,495		1,657		43,152
2028 - 2032	17,766		23,656		1,022		24,678
After 2032	—		17,766		1,161		18,927
Total	$	—	$	247,225	$	10,212	$	257,437

Schedule of Liability for Unpaid Claims and Claims Adjustment Expense [Table Text Block]

The following table shows the significant components of changes in our financial guaranty claim liability for the years ended December 31, 2012, 2011 and 2010, excluding $2.0 million, $2.5 million and $4.3 million, respectively, related to our trade credit reinsurance and surety business, which is excluded from the accounting standard regarding accounting for financial guaranty insurance contracts by insurance enterprises.



	Year Ended December 31,
(In thousands)	2012			2011			2010
Claim liability at January 1	$	60,550		$	67,447		$	121,833
Incurred losses and LAE:
Increase in gross claim liability	188,222			68,082			86,224
Increase in gross potential recoveries	(235,787		)	(76,105		)	(74,157		)
Decrease/(increase) in discount	84,646			7,506			(1,939		)
Decrease/(increase) in unearned premiums	95			4,668			(1,085		)
Incurred losses and LAE	37,176			4,151			9,044
Paid losses and LAE:
Current year	(4		)	—			(1,636		)
Prior years	(33,431		)	(11,048		)	(61,794		)
Paid losses and LAE	(33,435		)	(11,048		)	(63,430		)
Claim liability at December 31	$	64,291		$	60,550		$	67,447
Components of incurred losses and LAE:
Claim liability established in current period	$	9,063		$	2,254		$	1,714
Changes in existing claim liabilities	28,113			1,897			7,330
Total incurred losses and LAE	$	37,176		$	4,151		$	9,044
Components of decrease/(increase) in discount:
Decrease/(increase) in discount related to claim liabilities established in current period	$	81,061		$	177		$	(6,377	)
Decrease in discount related to existing claim liabilities	3,585			7,329			4,438
Total decrease/(increase) in discount	$	84,646		$	7,506		$	(1,939	)

Schedule or Description of Weighted Average Discount Rate [Table Text Block]

The weighted-average risk-free rates used to discount the gross claim liability and gross potential recoveries were as follows, as of the dates indicated:



December 31, 2012	2.00	%
December 31, 2011	2.80	%
December 31, 2010	3.69	%
December 31, 2009	3.81	%

- Definition

Tabular disclosure of insured financial obligations with credit deterioration related to the claim liability on financial guarantee insurance contracts as of the end of each annual and interim reporting period detailing, at a minimum, the following for each surveillance category or grouping used to track and monitor the entity's insured financial obligations: (1) number of issued and outstanding financial guarantee insurance contracts; (2) remaining weighted average contract period; (3) insured contractual payments outstanding, segregating principal and interest; (4) gross claim liability; (5) gross potential recoveries; (6) net discount of both the claim liability and potential recoveries; (7) net claim liability; (8) reinsurance recoverable; and (9) unearned premium revenue.

+ References+ Details

- Definition

Tabular disclosure of the average discount rate in the country of origin applied to insurance contracts to determine future policy benefits to be paid to or on behalf of policyholders and the methodology and assumptions for calculating the discount rate.

+ References+ Details