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



	Second Quarter				Six Months
	2013		2012		2013		2012
	(in millions)
Scheduled net earned premiums	$	113	$	145	$	241	$	297
Acceleration of premium earnings	46		68		159		105
Accretion of discount on net premiums receivable	3		6		10		11
Total financial guaranty insurance	162		219		410		413
Other	1		0		1		0
Total net earned premiums(1)	$	163	$	219	$	411	$	413

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(1)	Excludes $15 million and $16 million for Second Quarter 2013 and 2012, respectively, and $33 million and $33 million for the Six Months 2013 and 2012, respectively, related to consolidated FG VIEs.

Components of Unearned Premium Reserve



	As of June 30, 2013									As of December 31, 2012
	Gross			Ceded			Net(1)			Gross			Ceded			Net(1)
	(in millions)
Deferred premium revenue:
Financial guaranty	$	4,941		$	533		$	4,408		$	5,349		$	586		$	4,763
Other	6			—			6			7			—			7
Total deferred premium revenue	$	4,947		$	533		$	4,414		$	5,356		$	586		$	4,770
Contra-paid	(135		)	(23		)	(112		)	(149		)	(25		)	(124		)
Total	$	4,812		$	510		$	4,302		$	5,207		$	561		$	4,646

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(1)	Excludes $210 million and $262 million of deferred premium revenue, and $58 million and $98 million of contra-paid related to FG VIEs as of June 30, 2013 and December 31, 2012, respectively.

Gross Premium Receivable, Net of Ceding Commissions Roll Forward



	Six Months
	2013			2012
	(in millions)
Balance beginning of period	$	1,005		$	1,003
Premium written, net of ceding commissions	32			103
Premium payments received, net of ceding commissions	(109		)	(167		)
Adjustments:
Changes in the expected term of financial guaranty insurance contracts	1			19
Accretion of discount, net of ceding commissions	13			13
Foreign exchange translation	(27		)	(1		)
Consolidation of FG VIEs	—			(5		)
Other adjustments	—			(1		)
Balance, end of period (1)	$	915		$	964

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(1)	Excludes $20 million and $32 million as of June 30, 2013 and June 30, 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%, 47% and 49% of installment premiums at June 30, 2013, December 31, 2012 and June 30, 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)



	June 30, 2013
	(in millions)
2013 (July 1 – September 30)	$	39
2013 (October 1 – December 31)	34
2014	104
2015	91
2016	85
2017	78
2018-2022	307
2023-2027	190
2028-2032	129
After 2032	147
Total(1)	$	1,204

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(1)	Excludes expected cash collections on FG VIEs of $25 million.

Scheduled Net Earned Premiums

Financial Guaranty Insurance Contracts



	As of June 30, 2013
	(in millions)
2013 (July 1 - September 30)	$	119
2013 (October 1–December 31)	113
Subtotal 2013	232
2014	427
2015	374
2016	338
2017	302
2018 - 2022	1,161
2023 - 2027	731
2028 - 2032	436
After 2032	407
Total present value basis(1)	4,408
Discount	247
Total future value	$	4,655

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(1)	Excludes scheduled net earned premiums on consolidated FG VIEs of $210 million.

Selected Information for Policies Paid in Installments



	As of June 30, 2013			As of December 31, 2012
	(dollars in millions)
Premiums receivable, net of ceding commission payable	$	915		$	1,005
Gross deferred premium revenue	1,725			1,908
Weighted-average risk-free rate used to discount premiums	3.4		%	3.5		%
Weighted-average period of premiums receivable (in years)	9.4			9.6