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 amounts that relate to CDS.

Net Earned Premiums



	First Quarter
	2014		2013
	(in millions)
Scheduled net earned premiums	$	107	$	128
Acceleration of net earned premiums	19		113
Accretion of discount on net premiums receivable	6		7
Net earned premiums(1)	$	132	$	248

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(1)	Excludes $17 million and $18 million for First Quarter 2014 and 2013, respectively, related to consolidated FG VIEs.

Components of Unearned Premium Reserve



	As of March 31, 2014									As of December 31, 2013
	Gross			Ceded			Net(1)			Gross			Ceded			Net(1)
	(in millions)
Deferred premium revenue:
Financial guaranty insurance	$	4,567		$	472		$	4,095		$	4,647		$	470		$	4,177
Other	5			—			5			5			—			5
Deferred premium revenue	$	4,572		$	472		$	4,100		$	4,652		$	470		$	4,182
Contra-paid	(68		)	(18		)	(50		)	(57		)	(18		)	(39		)
Unearned premium reserve	$	4,504		$	454		$	4,050		$	4,595		$	452		$	4,143

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(1)	Excludes $137 million and $187 million of deferred premium revenue, and $49 million and $55 million of contra-paid related to FG VIEs as of March 31, 2014 and December 31, 2013, respectively.

Gross Premium Receivable,

Net of Commissions on Assumed Business

Roll Forward



	First Quarter
	2014			2013
	(in millions)
Beginning of period, December 31	$	876		$	1,005
Gross premium written, net of commissions on assumed business	33			17
Gross premiums received, net of commissions on assumed business	(53		)	(53		)
Adjustments:
Changes in the expected term	(3		)	1
Accretion of discount, net of commissions on assumed business	7			9
Foreign exchange translation	2			(23		)
Other adjustments	1			0
End of period, March 31 (1)	$	863		$	956

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(1)	Excludes $18 million and $28 million as of March 31, 2014 and March 31, 2013, 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 49% and 48% of installment premiums at March 31, 2014 and December 31, 2013 respectively, are denominated in currencies other than the U.S. dollar, primarily the 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 Commissions on Assumed Business

(Undiscounted)



	As of March 31, 2014
	(in millions)
2014 (April 1 - June 30)	$	46
2014 (July 1 - September 30)	24
2014 (October 1 – December 31)	26
2015	95
2016	86
2017	79
2018	71
2019-2023	282
2024-2028	176
2029-2033	123
After 2033	130
Total(1)	$	1,138

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(1)	Excludes expected cash collections on FG VIEs of $23 million.

Scheduled Net Earned Premiums



	As of March 31, 2014
	(in millions)
2014 (April 1 - June 30)	$	105
2014 (July 1 - September 30)	103
2014 (October 1–December 31)	99
2015	359
2016	335
2017	297
2018	271
2019 - 2023	1,058
2024 - 2028	676
2029 - 2033	412
After 2033	380
Total present value basis(1)	4,095
Discount	239
Total future value	$	4,334

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(1)	Excludes scheduled net earned premiums on consolidated FG VIEs of $137 million.

Selected Information for Policies Paid in Installments



	As of March 31, 2014			As of December 31, 2013
	(dollars in millions)
Premiums receivable, net of commission payable	$	863		$	876
Gross deferred premium revenue	1,560			1,576
Weighted-average risk-free rate used to discount premiums	3.5		%	3.4		%
Weighted-average period of premiums receivable (in years)	9.4			9.4