Financial Guaranty Insurance Premiums

The portfolio of outstanding exposures discussed in Note 3, Outstanding Exposure, includes financial guaranty contracts that meet the definition of insurance contracts as well as those that meet the definition of a derivative under GAAP. Amounts presented in this note relate only to financial guaranty insurance contracts. See Note 8, Financial Guaranty Contracts Accounted for as Credit Derivatives, for a discussion of credit derivative revenues.

Net Earned Premiums



	First Quarter
	2013		2012
	(in millions)
Scheduled net earned premiums	$	128	$	152
Acceleration of premium earnings	113		37
Accretion of discount on net premiums receivable	7		5
Total financial guaranty insurance	248		194
Other	0		0
Total net earned premiums(1)	$	248	$	194

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(1)	Excludes $18 million and $17 million for First Quarter 2013 and 2012, respectively, related to consolidated FG VIEs.

Components of Unearned Premium Reserve



	As of March 31, 2013									As of December 31, 2012
	Gross			Ceded			Net(1)			Gross			Ceded			Net(1)
	(in millions)
Deferred premium revenue:
Financial guaranty	$	5,090		$	558		$	4,532		$	5,349		$	586		$	4,763
Other	7			—			7			7			—			7
Total deferred premium revenue	$	5,097		$	558		$	4,539		$	5,356		$	586		$	4,770
Contra-paid	(115		)	(23		)	(92		)	(149		)	(25		)	(124		)
Total	$	4,982		$	535		$	4,447		$	5,207		$	561		$	4,646

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(1)	Excludes $244 million and $262 million of deferred premium revenue, and $72 million and $98 million of contra-paid related to FG VIEs as of March 31, 2013 and December 31, 2012, respectively.

Net Deferred Premium Revenue Roll Forward



	First Quarter
	2013			2012
	(in millions)
Balance beginning of period	$	4,770		$	5,327
Premium written, net	14			13
Net premium earned, excluding accretion	(241		)	(189		)
Commutations and changes in expected premiums	1			130
Foreign exchange translation	(4		)	3
Consolidation of FG VIEs	(1		)	(5		)
Balance, end of period	$	4,539		$	5,279

Gross Premium Receivable, Net of Ceding Commissions Roll Forward



	First Quarter
	2013			2012
	(in millions)
Balance beginning of period	$	1,005		$	1,003
Premium written, net of ceding commissions	17			56
Premium payments received, net of ceding commissions	(53		)	(86		)
Adjustments:
Changes in the expected term of financial guaranty insurance contracts	1			33
Accretion of discount, net of ceding commissions	9			6
Foreign exchange translation	(23		)	12
Consolidation of FG VIEs	0			(5		)
Balance, end of period (1)	$	956		$	1,019

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(1)	Excludes $28 million and $33 million as of March 31, 2013 and March 31, 2012, respectively, related to consolidated FG VIEs.

Gains or losses due to foreign exchange rate changes relate to installment premium receivables denominated in currencies other than the U.S. dollar. Approximately 46%, and 47% of installment premiums at March 31, 2013 and December 31, 2012, respectively, are denominated in currencies other than the U.S. dollar, primarily Euro and British Pound Sterling.

The timing and cumulative amount of actual collections may differ from expected collections in the tables below due to factors such as foreign exchange rate fluctuations, counterparty collectability issues, accelerations, commutations and changes in expected lives.

Expected Collections of Gross Premiums Receivable,

Net of Ceding Commissions (Undiscounted)



	March 31, 2013
	(in millions)
2013 (April 1 – June 30)	$	53
2013 (July 1 – September 30)	26
2013 (October 1 – December 31)	29
2014	105
2015	93
2016	87
2017	80
2018-2022	315
2023-2027	197
2028-2032	135
After 2032	154
Total(1)	$	1,274

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(1)	Excludes expected cash collections on FG VIEs of $35 million.

Scheduled Net Earned Premiums

Financial Guaranty Insurance Contracts



	As of March 31, 2013
	(in millions)
2013 (April 1 - June 30)	$	121
2013 (July 1 - September 30)	118
2013 (October 1–December 31)	112
Subtotal 2013	351
2014	422
2015	371
2016	338
2017	303
2018 - 2022	1,164
2023 - 2027	732
2028 - 2032	437
After 2032	414
Total present value basis(1)	4,532
Discount	250
Total future value	$	4,782

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(1)	Excludes scheduled net earned premiums on consolidated FG VIEs of $244 million.

Selected Information for Policies Paid in Installments



	As of March 31, 2013			As of December 31, 2012
	(dollars in millions)
Premiums receivable, net of ceding commission payable	$	956		$	1,005
Gross deferred premium revenue	1,788			1,908
Weighted-average risk-free rate used to discount premiums	3.6		%	3.5		%
Weighted-average period of premiums receivable (in years)	9.5			9.6