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Reinsurance and Other Monoline Exposures (Tables)
 6 Months Ended
Jun. 30, 2018
Insurance [Abstract]  
Effects of Reinsurance on Statement of Operations
Effect of SGI Transaction

 
 
Commutation
 
Assumed
 
Total
 
 
(in millions)
Cash
 
$
20

 
$
343

 
$
363

 
 
 
 
 
 
 
Premiums receivable/payable, net of commissions
 
$
16

 
$
45

 
$
61

Unearned premium reserve, net
 
(56
)
 
(319
)
 
(375
)
Credit derivative liability, net
 
—

 
(68
)
 
(68
)
Other
 
2

 
(1
)
 
1

Impact to net assets (liabilities)
 
$
(38
)
 
$
(343
)
 
$
(381
)
 
 
 
 
 
 
 
Commutation loss
 
$
18

 
$
—

 
$
18

Effect of Reinsurance on Statement of Operations

 
Second Quarter
 
Six Months
 
2018
 
2017
 
2018
 
2017
 
(in millions)
Premiums Written:
 
 
 
 
 
 
 
Direct
$
62

 
$
72

 
$
135

 
$
181

Assumed
331

 
7

 
331

 
9

Ceded (1)
24

 
(1
)
 
13

 
10

Net
$
417

 
$
78

 
$
479

 
$
200

Premiums Earned:
 
 
 
 
 
 
 
Direct
$
130

 
$
163

 
$
273

 
$
330

Assumed
9

 
8

 
14

 
14

Ceded
(3
)
 
(9
)
 
(6
)
 
(18
)
Net
$
136

 
$
162

 
$
281

 
$
326

Loss and LAE:
 
 
 
 
 
 
 
Direct
$
49

 
$
79

 
$
35

 
$
146

Assumed
(5
)
 
(3
)
 
(8
)
 
0

Ceded
0

 
(4
)
 
(1
)
 
(15
)
Net
$
44

 
$
72

 
$
26

 
$
131

 ____________________
(1)    Positive ceded premiums written were due to commutations and changes in expected debt service schedules.
Exposure by Reinsurer
Exposure to Reinsurers and Other Monolines (1) 

 
As of
June 30, 2018
 
As of
December 31, 2017
 
(in millions)
Due (To) From:
 
 
 
Assumed premium, net of commissions
$
94

 
$
53

Ceded premium, net of commissions
(28
)
 
(42
)
Assumed expected loss to be paid
(60
)
 
(71
)
Ceded expected loss to be paid
24

 
29

Outstanding Exposure:
 
 
 
Financial guaranty
 
 
 
Ceded par outstanding (2)
2,856

 
4,434

Assumed par outstanding
18,488

 
8,383

Second-to-pay insured par outstanding (3)
8,358

 
6,605

Non-financial guaranty exposure (see Note 4)
 
 
 
Ceded
233

 
159

Assumed
1,050

 
974

____________________
(1)
The total collateral posted by all non-affiliated reinsurers required to post, or that had agreed to post, collateral as of June 30, 2018 and December 31, 2017 was approximately $96 million and $118 million, respectively.

(2)
Of the total par ceded to unrated or BIG rated reinsurers, $260 million and $296 million, is rated BIG as of June 30, 2018 and December 31, 2017, respectively.

(3)
The par on second-to-pay exposure where the primary insurer and underlying transaction rating are both BIG and/or not rated is $183 million and $204 million as of June 30, 2018 and December 31, 2017, respectively. Second-to-pay insured par outstanding represents transactions the Company has insured that are insured directly by another monoline financial guaranty insurer and where the Company’s obligation to pay under its insurance of such transactions arises only if both the underlying insured obligation and the primary financial guarantor insurer default. The Company underwrites such transactions based on the underlying insured obligation without regard to the primary insurer.
Schedule of Commutations and Cancellations of Reinsurance Contracts
Commutations of Ceded Reinsurance Contracts 

 
Second Quarter
 
Six Months
 
2018
 
2017
 
2018
 
2017
 
(in millions)
Increase (decrease) in net unearned premium reserve
$
56

 
$
—

 
$
60

 
$
18

Increase (decrease) in net par outstanding
1,191

 
—

 
1,233

 
1,173

Commutation gains (losses)
(18
)
 
—

 
(17
)
 
73