Earnings Per Share

Accounting Policy

The Company computes EPS using a two-class method, which is an earnings allocation formula that determines EPS for (i) each class of common stock (the Company has a single class of common stock), and (ii) participating securities according to dividends declared (or accumulated) and participation rights in undistributed earnings. Restricted stock awards and share units under the AGC supplemental executive retirement plan (AGC SERP) are considered participating securities as they received non-forfeitable rights to dividends (or dividend equivalents) as common stock.

Basic EPS is then calculated by dividing net (loss) income available to common shareholders of Assured Guaranty by the weighted‑average number of common shares outstanding during the period. Diluted EPS adjusts basic EPS for the effects of restricted stock, restricted stock units, stock options and other potentially dilutive financial instruments (dilutive securities), only in the periods in which such effect is dilutive. The effect of the dilutive securities is reflected in diluted EPS by application of the more dilutive of (1) the treasury stock method or (2) the two-class method assuming nonvested shares are not converted into common shares.

Computation of Earnings Per Share



	Year Ended December 31,
	2017		2016		2015
	(in millions, except per share amounts)
Basic EPS:
Net income (loss) attributable to AGL	$	730	$	881	1,056
Less: Distributed and undistributed income (loss) available to nonvested shareholders	1		1		1
Distributed and undistributed income (loss) available to common shareholders of AGL and subsidiaries, basic	$	729	$	880	1,055
Basic shares	120.6		133.0		148.1
Basic EPS	$	6.05	$	6.61	$	7.12

Diluted EPS:
Distributed and undistributed income (loss) available to common shareholders of AGL and subsidiaries, basic	$	729	$	880	$	1,055
Plus: Re-allocation of undistributed income (loss) available to nonvested shareholders of AGL and subsidiaries	0		0		0
Distributed and undistributed income (loss) available to common shareholders of AGL and subsidiaries, diluted	$	729	$	880	$	1,055

Basic shares	120.6		133.0		148.1
Dilutive securities:
Options and restricted stock awards	1.7		1.1		0.9
Diluted shares	122.3		134.1		149.0
Diluted EPS	$	5.96	$	6.56	$	7.08
Potentially dilutive securities excluded from computation of EPS because of antidilutive effect	0.1		0.3		0.5