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 15, Long Term Debt and Credit Facilities) as of September 30, 2014 and December 31, 2013 and for the three and nine months ended September 30, 2014 and 2013. The information for AGUS and AGMH presents its subsidiaries on the equity method of accounting.

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF SEPTEMBER 30, 2014

(in millions)



	Assured Guaranty Ltd. (Parent)		AGUS (Issuer)		AGMH (Issuer)		Other Entities		Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
ASSETS
Total investment portfolio and cash	$	298	$	150	$	28	$	11,355	$	(300	)	$	11,531
Investment in subsidiaries	5,035		4,677		3,929		330		(13,971		)	—
Premiums receivable, net of commissions payable	—		—		—		936		(135		)	801
Ceded unearned premium reserve	—		—		—		1,513		(1,093		)	420
Deferred acquisition costs	—		—		—		189		(69		)	120
Reinsurance recoverable on unpaid losses	—		—		—		228		(172		)	56
Credit derivative assets	—		—		—		436		(350		)	86
Deferred tax asset, net	—		98		—		464		(88		)	474
Intercompany receivable	—		—		—		90		(90		)	—
Financial guaranty variable interest entities’ assets, at fair value	—		—		—		1,296		—			1,296
Other	27		29		43		709		(223		)	585
TOTAL ASSETS	$	5,360	$	4,954	$	4,000	$	17,546	$	(16,491	)	$	15,369
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unearned premium reserves	$	—	$	—	$	—	$	5,336	$	(1,073	)	$	4,263
Loss and LAE reserve	—		—		—		938		(178		)	760
Long-term debt	—		847		436		20		—			1,303
Intercompany payable	—		90		—		300		(390		)	—
Credit derivative liabilities	—		—		—		2,004		(350		)	1,654
Deferred tax liabilities, net	—		—		94		—		(94		)	—
Financial guaranty variable interest entities’ liabilities, at fair value	—		—		—		1,459		—			1,459
Other	6		22		21		879		(352		)	576
TOTAL LIABILITIES	6		959		551		10,936		(2,437		)	10,015
TOTAL SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO ASSURED GUARANTY LTD.	5,354		3,995		3,449		6,280		(13,724		)	5,354
Noncontrolling interest	—		—		—		330		(330		)	—
TOTAL SHAREHOLDERS' EQUITY	5,354		3,995		3,449		6,610		(14,054		)	5,354
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	5,360	$	4,954	$	4,000	$	17,546	$	(16,491	)	$	15,369

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2013

(in millions)



	Assured Guaranty Ltd. (Parent)		AGUS (Issuer)		AGMH (Issuer)		Other Entities		Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
ASSETS
Total investment portfolio and cash	$	33	$	186	$	42	$	11,008	$	(300	)	$	10,969
Investment in subsidiaries	5,066		4,191		3,574		289		(13,120		)	—
Premiums receivable, net of commissions payable	—		—		—		1,025		(149		)	876
Ceded unearned premium reserve	—		—		—		1,598		(1,146		)	452
Deferred acquisition costs	—		—		—		198		(74		)	124
Reinsurance recoverable on unpaid losses	—		—		—		170		(134		)	36
Credit derivative assets	—		—		—		482		(388		)	94
Deferred tax asset, net	—		97		—		681		(90		)	688
Intercompany receivable	—		—		—		90		(90		)	—
Financial guaranty variable interest entities’ assets, at fair value	—		—		—		2,565		—			2,565
Other	23		17		31		638		(226		)	483
TOTAL ASSETS	$	5,122	$	4,491	$	3,647	$	18,744	$	(15,717	)	$	16,287
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unearned premium reserves	$	—	$	—	$	—	$	5,720	$	(1,125	)	$	4,595
Loss and LAE reserve	—		—		—		733		(141		)	592
Long-term debt	—		348		430		38		—			816
Intercompany payable	—		90		—		300		(390		)	—
Credit derivative liabilities	—		—		—		2,175		(388		)	1,787
Deferred tax liabilities, net	—		—		95		—		(95		)	—
Financial guaranty variable interest entities’ liabilities, at fair value	—		—		—		2,871		—			2,871
Other	7		7		16		853		(372		)	511
TOTAL LIABILITIES	7		445		541		12,690		(2,511		)	11,172
TOTAL SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO ASSURED GUARANTY LTD.	5,115		4,046		3,106		5,765		(12,917		)	5,115
Noncontrolling interest	—		—		—		289		(289		)	—
TOTAL SHAREHOLDERS’ EQUITY	5,115		4,046		3,106		6,054		(13,206		)	5,115
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	5,122	$	4,491	$	3,647	$	18,744	$	(15,717	)	$	16,287

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2014

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—		$	—		$	—		$	142		$	2		$	144
Net investment income	0			0			1			104			(3		)	102
Net realized investment gains (losses)	0			0			0			(19		)	0			(19		)
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements	—			—			—			(14		)	0			(14		)
Net unrealized gains (losses)	—			—			—			269			—			269
Net change in fair value of credit derivatives	—			—			—			255			0			255
Other	—			—			—			43			—			43
TOTAL REVENUES	0			0			1			525			(1		)	525
EXPENSES
Loss and LAE	—			—			—			(44		)	—			(44		)
Amortization of deferred acquisition costs	—			—			—			6			(2		)	4
Interest expense	—			13			13			5			(4		)	27
Other operating expenses	8			0			1			43			(2		)	50
TOTAL EXPENSES	8			13			14			10			(8		)	37
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES	(8		)	(13		)	(13		)	515			7			488
Total (provision) benefit for income taxes	—			4			5			(140		)	(2		)	(133		)
Equity in net earnings of subsidiaries	363			290			147			8			(808		)	—
NET INCOME (LOSS)	$	355		$	281		$	139		$	383		$	(803	)	$	355
Less: noncontrolling interest	—			—			—			24			(24		)	—
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD.	$	355		$	281		$	139		$	359		$	(779	)	$	355

COMPREHENSIVE INCOME (LOSS)	$	356		$	294		$	146		$	397		$	(837	)	$	356

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2013

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—		$	—		$	—		$	156		$	3		$	159
Net investment income	—			—			1			101			(3		)	99
Net realized investment gains (losses)	—			—			(1		)	33			(39		)	(7		)
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements	—			—			—			24			—			24
Net unrealized gains (losses)	—			—			—			330			—			330
Net change in fair value of credit derivatives	—			—			—			354			—			354
Other	—			—			—			65			—			65
TOTAL REVENUES	—			—			—			709			(39		)	670
EXPENSES
Loss and LAE	—			—			—			52			3			55
Amortization of deferred acquisition costs	—			—			—			6			(2		)	4
Interest expense	—			6			13			6			(4		)	21
Other operating expenses	5			—			1			49			(1		)	54
TOTAL EXPENSES	5			6			14			113			(4		)	134
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES	(5		)	(6		)	(14		)	596			(35		)	536
Total (provision) benefit for income taxes	—			3			5			(172		)	12			(152		)
Equity in net earnings of subsidiaries	389			316			151			10			(866		)	—
NET INCOME (LOSS)	$	384		$	313		$	142		$	434		$	(889	)	$	384
Less: Noncontrolling interest	—			—			—			10			(10		)	—
NET INCOME (LOSS) Attributable to Assured Guaranty LTD.	$	384		$	313		$	142		$	424		$	(879	)	$	384

COMPREHENSIVE INCOME (LOSS)	$	381		$	317		$	145		$	411		$	(873	)	$	381

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—		$	—		$	—		$	408		$	4		$	412
Net investment income	0			0			1			307			(7		)	301
Net realized investment gains (losses)	0			0			0			(23		)	(2		)	(25		)
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements	—			—			—			20			0			20
Net unrealized gains (losses)	—			—			—			127			—			127
Net change in fair value of credit derivatives	—			—			—			147			0			147
Other	—			—			—			239			(1		)	238
TOTAL REVENUES	0			0			1			1,078			(6		)	1,073
EXPENSES
Loss and LAE	—			—			—			48			6			54
Amortization of deferred acquisition costs	—			—			—			17			(5		)	12
Interest expense	—			27			40			13			(13		)	67
Other operating expenses	24			1			1			142			(3		)	165
TOTAL EXPENSES	24			28			41			220			(15		)	298
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES	(24		)	(28		)	(40		)	858			9			775
Total (provision) benefit for income taxes	—			9			14			(240		)	(2		)	(219		)
Equity in net earnings of subsidiaries	580			529			436			24			(1,569		)	—
NET INCOME (LOSS)	$	556		$	510		$	410		$	642		$	(1,562	)	$	556
Less: noncontrolling interest	—			—			—			24			(24		)	—
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD.	$	556		$	510		$	410		$	618		$	(1,538	)	$	556

COMPREHENSIVE INCOME (LOSS)	$	729		$	650		$	495		$	957		$	(2,102	)	$	729

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
REVENUES
Net earned premiums	$	—		$	—		$	—		$	563		$	7		$	570
Net investment income	0			0			1			298			(13		)	286
Net realized investment gains (losses)	0			—			0			58			(35		)	23
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements	—			—			—			(44		)	—			(44		)
Net unrealized gains (losses)	—			—			—			(120		)	—			(120		)
Net change in fair value of credit derivatives	—			—			—			(164		)	—			(164		)
Other	—			—			—			244			—			244
TOTAL REVENUES	0			0			1			999			(41		)	959
EXPENSES
Loss and LAE	—			—			—			69			—			69
Amortization of deferred acquisition costs	—			—			—			3			5			8
Interest expense	—			21			40			17			(15		)	63
Other operating expenses	17			—			1			151			(3		)	166
TOTAL EXPENSES	17			21			41			240			(13		)	306
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES	(17		)	(21		)	(40		)	759			(28		)	653
Total (provision) benefit for income taxes	—			8			14			(226		)	10			(194		)
Equity in net earnings of subsidiaries	476			486			533			10			(1,505		)	—
NET INCOME (LOSS)	$	459		$	473		$	507		$	543		$	(1,523	)	$	459
Less: noncontrolling interest	—			—			—			10			(10		)	—
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD.	$	459		$	473		$	507		$	533		$	(1,513	)	$	459

COMPREHENSIVE INCOME (LOSS)	$	150		$	272		$	384		$	16		$	(672	)	$	150

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
Net cash flows provided by (used in) operating activities(1)	$	762		$	170		$	84		$	408		$	(1,077	)	$	347
Cash flows from investing activities
Fixed-maturity securities:
Purchases	—			(356		)	(7		)	(1,668		)	—			(2,031		)
Sales	—			399			8			544			—			951
Maturities	—			4			1			552			—			557
Sales (purchases) of short-term investments, net	(265		)	(74		)	14			414			—			89
Net proceeds from financial guaranty variable entities’ assets	—			—			—			346			—			346
Investment in subsidiary	—			—			50			—			(50		)	—
Other	—			—			—			9			—			9
Net cash flows provided by (used in) investing activities	(265		)	(27		)	66			197			(50		)	(79		)
Cash flows from financing activities
Return of capital	—			—			—			(50		)	50			—
Dividends paid	(58		)	(700		)	(150		)	(227		)	1,077			(58		)
Repurchases of common stock	(438		)	—			—			—			—			(438		)
Share activity under option and incentive plans	(1		)	—			—			—			—			(1		)
Net paydowns of financial guaranty variable entities’ liabilities	—			—			—			(348		)	—			(348		)
Net proceeds from issuance of long-term debt	—			495			—			—			—			495
Payment of long-term debt	—			—			—			(18		)	—			(18		)
Net cash flows provided by (used in) financing activities	(497		)	(205		)	(150		)	(643		)	1,127			(368		)
Effect of exchange rate changes	—			—			—			(2		)	—			(2		)
Increase (decrease) in cash	—			(62		)	—			(40		)	—			(102		)
Cash at beginning of period	0			67			0			117			—			184
Cash at end of period	$	0		$	5		$	0		$	77		$	—		$	82

____________________


(1)	Assured Guaranty Ltd., AGUS and AGMH net cash flows provided by (used in) operating activities includes dividends from subsidiaries.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013

(in millions)



	Assured Guaranty Ltd. (Parent)			AGUS (Issuer)			AGMH (Issuer)			Other Entities			Consolidating Adjustments			Assured Guaranty Ltd. (Consolidated)
Net cash flows provided by (used in) operating activities(1)	$	108		$	123		$	68		$	207		$	(360	)	$	146
Cash flows from investing activities
Fixed-maturity securities:
Purchases	—			(35		)	(23		)	(1,570		)	65			(1,563		)
Sales	171			1			25			680			(65		)	812
Maturities	21			—			2			620			—			643
Sales (purchases) of short-term investments, net	16			(94		)	(24		)	146			—			44
Net proceeds from financial guaranty variable entities’ assets	—			—			—			553			—			553
Intercompany debt	—			—			—			7			(7		)	—
Investment in subsidiary	—			—			50			—			(50		)	—
Other	—			—			—			81			—			81
Net cash flows provided by (used in) investing activities	208			(128		)	30			517			(57		)	570
Cash flows from financing activities
Return of capital	—			—			—			(50		)	50			—
Dividends paid	(57		)	—			(98		)	(262		)	360			(57		)
Repurchases of common stock	(259		)	—			—			—			—			(259		)
Share activity under option and incentive plans	—			—			—			—			—			—
Net paydowns of financial guaranty variable entities’ liabilities	—			—			—			(409		)	—			(409		)
Payment of long-term debt	—			—			—			(22		)	—			(22		)
Intercompany debt	—			(7		)	—			—			7			—
Net cash flows provided by (used in) financing activities	(316		)	(7		)	(98		)	(743		)	417			(747		)
Effect of exchange rate changes	—			—			—			(1		)	—			(1		)
Increase (decrease) in cash	—			(12		)	—			(20		)	—			(32		)
Cash at beginning of period	—			13			0			125			—			138
Cash at end of period	$	—		$	1		$	0		$	105		$	—		$	106

____________________


(1)	Assured Guaranty Ltd., AGUS and AGMH net cash flows provided by (used in) operating activities include dividends from subsidiaries.