Subsidiary Information

The following tables present the condensed consolidating financial information for AGUS and AGMH, wholly-owned subsidiaries of AGL, which have issued publicly traded debt securities (see Note 17, Long-Term Debt and Credit Facilities, for the full description of AGUS and AGMH debt and the related AGL guarantees for such debt) as of December 31, 2012 and December 31, 2011 and for the years ended December 31, 2012, 2011 and 2010. The information for AGUS and AGMH presents its subsidiaries on the equity method of accounting.

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2012

(in millions)



	Assured Guaranty Ltd. (Parent)		AGUS (Issuer)		AGMH (Issuer)			Other Subsidiaries		Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
ASSETS
Total investment portfolio and cash	$	245	$	15	$	30		$	10,933	$	—		$	11,223
Investment in subsidiaries	4,734		3,958		3,225			3,524		(15,441		)	—
Premiums receivable, net of ceding commissions payable	—		—		—			1,147		(142		)	1,005
Ceded unearned premium reserve	—		—		—			1,550		(989		)	561
Deferred acquisition costs	—		—		—			190		(74		)	116
Reinsurance recoverable on unpaid losses	—		—		—			223		(165		)	58
Credit derivative assets	—		—		—			553		(412		)	141
Deferred tax asset, net	—		48		(94		)	789		(22		)	721
Intercompany receivable	—		—		—			473		(473		)	—
Financial guaranty variable interest entities’ assets, at fair value	—		—		—			2,688		—			2,688
Other	23		29		26			816		(165		)	729
TOTAL ASSETS	$	5,002	$	4,050	$	3,187		$	22,886	$	(17,883	)	$	17,242
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unearned premium reserves	$	—	$	—	$	—		$	6,168	$	(961	)	$	5,207
Loss and LAE reserve	—		—		—			778		(177		)	601
Long-term debt	—		347		423			66		—			836
Intercompany payable	—		173		—			300		(473		)	—
Credit derivative liabilities	—		—		—			2,346		(412		)	1,934
Financial guaranty variable interest entities’ liabilities, at fair value	—		—		—			3,141		—			3,141
Other	8		6		15			803		(303		)	529
TOTAL LIABILITIES	8		526		438			13,602		(2,326		)	12,248
TOTAL SHAREHOLDERS’ EQUITY	4,994		3,524		2,749			9,284		(15,557		)	4,994
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	5,002	$	4,050	$	3,187		$	22,886	$	(17,883	)	$	17,242

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2011

(in millions)



	Assured Guaranty Ltd. (Parent)		AGUS (Issuer)			AGMH (Issuer)			Other Subsidiaries		Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
ASSETS
Total investment portfolio and cash	$	33	$	99		$	61		$	11,121	$	—		$	11,314
Investment in subsidiaries	4,607		3,730			2,802			3,258		(14,397		)	—
Premiums receivable, net of ceding commissions payable	—		—			—			1,150		(147		)	1,003
Ceded unearned premium reserve	—		—			—			1,739		(1,030		)	709
Deferred acquisition costs	—		—			—			223		(91		)	132
Reinsurance recoverable on unpaid losses	—		—			—			212		(143		)	69
Credit derivative assets	—		—			—			404		(251		)	153
Deferred tax asset, net	—		22			(77		)	867		(8		)	804
Intercompany receivable	—		—			—			300		(300		)	—
Financial guaranty variable interest entities’ assets, at fair value	—		—			—			2,819		—			2,819
Other	23		(71		)	27			836		(109		)	706
TOTAL ASSETS	$	4,663	$	3,780		$	2,813		$	22,929	$	(16,476	)	$	17,709
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unearned premium reserves	$	—	$	—		$	—		$	6,950	$	(987	)	$	5,963
Loss and LAE reserve	—		—			—			834		(155		)	679
Long-term debt	—		519			415			104		—			1,038
Intercompany payable	—		—			—			300		(300		)	—
Credit derivative liabilities	—		0			—			1,708		(251		)	1,457
Financial guaranty variable interest entities’ liabilities, at fair value	—		—			—			3,458		—			3,458
Other	11		3			16			675		(243		)	462
TOTAL LIABILITIES	11		522			431			14,029		(1,936		)	13,057
TOTAL SHAREHOLDERS’ EQUITY	4,652		3,258			2,382			8,900		(14,540		)	4,652
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	4,663	$	3,780		$	2,813		$	22,929	$	(16,476	)	$	17,709

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE YEAR ENDED DECEMBER 31, 2012

(in millions)



	Assured Guaranty Ltd. (Parent)		AGUS (Issuer)			AGMH (Issuer)			Other Subsidiaries			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—	$	—		$	—		$	833		$	20		$	853
Net investment income	0		—			1			422			(19		)	404
Net realized investment gains (losses)	—		—			—			1			—			1
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements	—		—			—			(108		)	—			(108		)
Net unrealized gains (losses)	—		—			—			(477		)	—			(477		)
Net change in fair value of credit derivatives	—		—			—			(585		)	—			(585		)
Equity in earnings of subsidiaries	131		177			424			153			(885		)	—
Other	—		—			—			303			(3		)	300
TOTAL REVENUES	131		177			425			1,127			(887		)	973
EXPENSES
Loss and LAE	—		—			—			528			(5		)	523
Amortization of deferred acquisition costs	—		—			—			28			(14		)	14
Interest expense	—		35			54			22			(19		)	92
Other operating expenses	21		2			1			194			(6		)	212
TOTAL EXPENSES	21		37			55			772			(44		)	841
INCOME (LOSS) BEFORE INCOME TAXES	110		140			370			355			(843		)	132
Total provision (benefit) for income taxes	—		(13		)	(19		)	38			16			22
NET INCOME (LOSS)	$	110	$	153		$	389		$	317		$	(859	)	$	110

COMPREHENSIVE INCOME (LOSS)	$	257	$	266		$	465		$	577		$	(1,308	)	$	257

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE YEAR ENDED DECEMBER 31, 2011

(in millions)



	Assured Guaranty Ltd. (Parent)		AGUS (Issuer)			AGMH (Issuer)			Other Subsidiaries			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—	$	—		$	—		$	904		$	16		$	920
Net investment income	—		—			1			410			(15		)	396
Net realized investment gains (losses)	—		—			—			(18		)	—			(18		)
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements	—		—			—			6			—			6
Net unrealized gains (losses)	—		—			—			554			—			554
Net change in fair value of credit derivatives	—		—			—			560			—			560
Equity in earnings of subsidiaries	798		640			398			614			(2,450		)	—
Other	—		—			—			(34		)	(5		)	(39		)
TOTAL REVENUES	798		640			399			2,436			(2,454		)	1,819
EXPENSES
Loss and LAE	—		—			—			454			8			462
Amortization of deferred acquisition costs	—		—			—			37			(20		)	17
Interest expense	—		39			54			21			(15		)	99
Other operating expenses	25		1			1			194			(9		)	212
TOTAL EXPENSES	25		40			55			706			(36		)	790
INCOME (LOSS) BEFORE INCOME TAXES	773		600			344			1,730			(2,418		)	1,029
Total provision (benefit) for income taxes	—		(14		)	(19		)	277			12			256
NET INCOME (LOSS)	$	773	$	614		$	363		$	1,453		$	(2,430	)	$	773

COMPREHENSIVE INCOME (LOSS)	$	1,029	$	824		$	507		$	1,918		$	(3,249	)	$	1,029

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE YEAR ENDED DECEMBER 31, 2010

(in millions)



	Assured Guaranty Ltd. (Parent)		AGUS (Issuer)			AGMH (Issuer)			Other Subsidiaries			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—	$	—		$	—		$	1,168		$	19		$	1,187
Net investment income	—		—			0			384			(23		)	361
Net realized investment gains (losses)	—		—			—			(6		)	4			(2		)
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements	—		—			—			153			—			153
Net unrealized gains (losses)	—		—			—			(155		)	—			(155		)
Net change in fair value of credit derivatives	—		—			—			(2		)	—			(2		)
Equity in earnings of subsidiaries	508		443			525			416			(1,892		)	—
Other									(230		)	(1		)	(231		)
TOTAL REVENUES	508		443			525			1,730			(1,893		)	1,313
EXPENSES
Loss and LAE	—		—			—			406			6			412
Amortization of deferred acquisition costs	—		—			—			30			(8		)	22
Interest expense	—		39			54			28			(21		)	100
Other operating expenses	24		3			3			217			(2		)	245
TOTAL EXPENSES	24		42			57			681			(25		)	779
INCOME (LOSS) BEFORE INCOME TAXES	484		401			468			1,049			(1,868		)	534
Total provision (benefit) for income taxes	—		(15		)	(21		)	74			12			50
NET INCOME (LOSS)	$	484	$	416		$	489		$	975		$	(1,880	)	$	484

COMPREHENSIVE INCOME (LOSS)	$	454	$	341		$	428		$	1,036		$	(1,805	)	$	454

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2012

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Subsidiaries			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
Net cash flows provided by (used in) operating activities	$	138		$	6		$	20		$	5		$	(334	)	$	(165	)
Cash flows from investing activities
Fixed maturity securities:
Purchases	(211		)	(1		)	(13		)	(1,424		)	—			(1,649		)
Sales	—			—			13			899			—			912
Maturities	3			—			6			1,096			—			1,105
Sales (purchases) of short-term investments, net	(7		)	27			26			(17		)	—			29
Net proceeds from financial guaranty variable entities’ assets	—			—			—			545			—			545
Acquisition of MAC	—			(91		)	—			—			—			(91		)
Intercompany debt	—			—			—			(173		)	173			—
Investment in subsidiary	—			—			46			—			(46		)	—
Other	—			—			—			92			—			92
Net cash flows provided by (used in) investing activities	(215		)	(65		)	78			1,018			127			943
Cash flows from financing activities
Issuance of common stock	173			—			—			—			—			173
Return of capital	—			—			—			(50		)	50			—
Capital contribution from parent	—			—			—			4			(4		)	—
Dividends paid	(69		)	—			(98		)	(236		)	334			(69		)
Repurchases of common stock	(24		)	—			—			—			—			(24		)
Share activity under option and incentive plans	(3		)	—			—			—			—			(3		)
Net paydowns of financial guaranty variable entities’ liabilities	—			—			—			(724		)	—			(724		)
Payment of long-term debt	—			(173		)	—			(36		)	—			(209		)
Intercompany debt	—			173			—			—			(173		)	—
Net cash flows provided by (used in) financing activities	77			—			(98		)	(1,042		)	207			(856		)
Effect of exchange rate changes	—			—			—			1			—			1
Increase (decrease) in cash	—			(59		)	—			(18		)	—			(77		)
Cash at beginning of period	—			72			0			143			—			215
Cash at end of period	$	—		$	13		$	0		$	125		$	—		$	138

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2011

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Subsidiaries			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
Net cash flows provided by (used in) operating activities	$	68		$	84		$	(36	)	$	676		$	(116	)	$	676
Cash flows from investing activities
Fixed maturity securities:
Purchases	—			—			(14		)	(2,294		)	—			(2,308		)
Sales	—			—			—			1,107			—			1,107
Maturities	—			—			1			662			—			663
Sales (purchases) of short-term investments, net	(11		)	(25		)	(1		)	357			—			320
Net proceeds from financial guaranty variable entities’ assets	—			—			—			760			—			760
Investment in subsidiary	—			—			50			—			(50		)	—
Other	—			—			—			19			—			19
Net cash flows provided by (used in) investing activities	(11		)	(25		)	36			611			(50		)	561
Cash flows from financing activities
Return of capital	—			—			—			(50		)	50			—
Dividends paid	(33		)	—			—			(116		)	116			(33		)
Repurchases of common stock	(23		)	—			—			—			—			(23		)
Share activity under option and incentive plans	(1		)	—			—			—			—			(1		)
Net paydowns of financial guaranty variable entities’ liabilities	—			—			—			(1,053		)	—			(1,053		)
Payment of long-term debt	—			—			—			(22		)	—			(22		)
Net cash flows provided by (used in) financing activities	(57		)	—			—			(1,241		)	166			(1,132		)
Effect of exchange rate changes	—			—			—			2			—			2
Increase (decrease) in cash	—			59			—			48			—			107
Cash at beginning of period	—			13			—			95			—			108
Cash at end of period	$	—		$	72		$	—		$	143		$	—		$	215

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2010

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)		AGMH (Issuer)			Other Subsidiaries			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
Net cash flows provided by (used in) operating activities	$	15		$	12	$	(49	)	$	225		$	(74	)	$	129
Cash flows from investing activities
Fixed maturity securities:
Purchases	—			—		(15		)	(2,447		)	—			(2,462		)
Sales	—			—		5			1,059			—			1,064
Maturities	—			—		6			988			—			994
Sales (purchases) of short-term investments, net	30			1		3			579			—			613
Net proceeds from financial guaranty variable entities’ assets	—			—		—			424			—			424
Investment in subsidiary	—			—		50			—			(50		)	—
Other	—			—		—			20			—			20
Net cash flows provided by (used in) investing activities	30			1		49			623			(50		)	653
Cash flows from financing activities
Return of capital	—			—		—			(50		)	50			—
Dividends paid	(33		)	—		—			(74		)	74			(33		)
Repurchases of common stock	(10		)	—		—			—			—			(10		)
Share activity under option and incentive plans	(2		)	—		—			—			—			(2		)
Net paydowns of financial guaranty variable entities’ liabilities	—			—		—			(651		)	—			(651		)
Payment of long-term debt	—			—		—			(21		)	—			(21		)
Net cash flows provided by (used in) financing activities	(45		)	—		—			(796		)	124			(717		)
Effect of exchange rate changes	—			—		—			(1		)	—			(1		)
Increase (decrease) in cash	—			13		—			51			—			64
Cash at beginning of period	—			0		—			44			—			44
Cash at end of period	$	—		$	13	$	—		$	95		$	—		$	108