Assured Guaranty 8K Reports Results for Second Quarter 2014 | AGO 8 Aug 14

Assured Guaranty Ltd.

June 30, 2014

Financial Supplement



Table of Contents		Page
	Selected Financial Highlights	1
	Net Income (Loss) Reconciliation to Operating Income	2
	Consolidated Balance Sheets (unaudited)	4
	Adjusted Book Value	5
	Claims-Paying Resources	6
	New Business Production	7
	Financial Guaranty Gross Par Written	8
	New Business Production by Quarter	9
	Available-for-Sale Investment Portfolio and Cash	10
	Estimated Net Exposure Amortization and Estimated Future Net Premium and Credit Derivative Revenues	11
	Expected Amortization of Net Par Outstanding	12
	Present Value of Financial Guaranty Insurance Net Expected Loss to be Expensed	13
	Financial Guaranty Profile	14
	Exposure to Puerto Rico	18
	Direct Pooled Corporate Obligations Profile	21
	U.S. RMBS Profile	22
	Direct U.S. Commercial Real Estate Profile	23
	Below Investment Grade Exposures	24
	Largest Exposures by Sector	29
	Rollforward of Net Expected Loss and Loss Adjustment Expenses to be Paid	33
	Financial Guaranty Insurance and Credit Derivative U.S. RMBS Representations and Warranties Benefit Development	34
	Losses Incurred	35
	Summary Financial and Statistical Data	36
	Glossary	37
	Non-GAAP Financial Measures	40

This financial supplement should be read in conjunction with documents filed by Assured Guaranty Ltd. (‘‘AGL’’ and, together with its subsidiaries, ‘‘Assured Guaranty’’ or the ‘‘Company’’) with the Securities and Exchange Commission ("SEC"), including its Annual Report on Form 10-K for the year ended December 31, 2013 and its Quarterly Report on Form 10-Q for the quarterly periods ended March 31, 2014 and June 30, 2014.

Some amounts in this financial supplement may not add due to rounding.

Cautionary Statement Regarding Forward Looking Statements:

Any forward looking statements made in this supplement reflect the current views of Assured Guaranty with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. Assured Guaranty's forward looking statements could be affected by many events. These events include (1) rating agency action, including a ratings downgrade, a change in outlook, the placement of ratings on watch for downgrade, or a change in rating criteria, at any time, of Assured Guaranty or any of its subsidiaries and/or of transactions that Assured Guaranty’s subsidiaries have insured; (2) reduction in the amount of available insurance opportunities and/or in the demand for Assured Guaranty's insurance; (3) developments in the world’s financial and capital markets that adversely affect obligors’ payment rates, Assured Guaranty’s loss experience, or its exposure to refinancing risk in transactions (which could result in substantial liquidity claims on its guarantees); (4) the possibility that budget shortfalls or other factors will result in credit losses or impairments on obligations of state and local governments that the Company insures or reinsures; (5) the failure of Assured Guaranty to realize insurance loss recoveries or damages through loan putbacks, settlement negotiations or litigation; (6) deterioration in the financial condition of Assured Guaranty’s reinsurers, the amount and timing of reinsurance recoverables actually received and the risk that reinsurers may dispute amounts owed to Assured Guaranty under its reinsurance agreements; (7) increased competition, including from new entrants into the financial guaranty industry; (8) rating agency action on obligors, including sovereign debtors, resulting in a reduction in the value of securities in the Company’s investment portfolio and in collateral posted by and to the Company; (9) the inability of Assured Guaranty to access external sources of capital on acceptable terms; (10) changes in the world’s credit markets, segments thereof, interest rates or general economic conditions; (11) the impact of market volatility on the mark-to-market of Assured Guaranty’s contracts written in credit default swap form; (12) changes in applicable accounting policies or practices; (13) changes in applicable laws or regulations, including insurance and tax laws; (14) other governmental actions; (15) difficulties with the execution of Assured Guaranty’s business strategy; (16) contract cancellations; (17) loss of key personnel; (18) adverse technological developments; (19) the effects of mergers, acquisitions and divestitures; (20) natural or man-made catastrophes; (21) other risks and uncertainties that have not been identified at this time; (22) management’s response to these factors; and (23) other risk factors identified in Assured Guaranty’s filings with the SEC. Readers are cautioned not to place undue reliance on these forward looking statements, which speak only as of the dates on which they are made. Assured Guaranty undertakes no obligation to update publicly or review any forward looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Assured Guaranty Ltd.

Selected Financial Highlights

(dollars in millions, except per share amounts)



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Operating income reconciliation:
Operating income	$	101		$	98		$	233		$	358
Plus after-tax adjustments:
Realized gains (losses) on investments	(2		)	2			(3		)	21
Non-credit impairment unrealized fair value gains (losses) on credit derivatives	47			28			(124		)	(406		)
Fair value gains (losses) on committed capital securities	(5		)	(2		)	(10		)	(8		)
Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and loss adjustment expense (LAE) reserves	5			(3		)	5			(14		)
Effect of consolidating financial guaranty variable interest entities (FG VIEs)	13			96			100			124
Net income (loss)	$	159		$	219		$	201		$	75

Earnings per diluted share:
Operating income	$	0.56		$	0.52		$	1.28		1.87
Plus after-tax adjustments:
Realized gains (losses) on investments	(0.01		)	0.01			(0.02		)	0.11
Non-credit impairment unrealized fair value gains (losses) on credit derivatives	0.26			0.15			(0.68		)	(2.12		)
Fair value gains (losses) on committed capital securities	(0.02		)	(0.01		)	(0.05		)	(0.04		)
Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves	0.02			(0.01		)	0.03			(0.07		)
Effect of consolidating FG VIEs	0.08			0.50			0.55			0.64
Net income (loss)	$	0.89		$	1.16		$	1.11		$	0.39

Weighted average shares outstanding
Basic shares outstanding	178.4			187.8			180.3			190.8
Diluted shares outstanding⁽¹⁾	179.5			188.8			181.3			191.7
Shares outstanding at the end of period	174.2			182.9

Effect of refundings and terminations, net
Net earned premiums from refundings and terminations	$	24		$	46		$	53		$	159
Realized gains (losses) and other settlements from CDS terminations	1			14			1			15
Operating income effect	16			41			36			105
Operating income per diluted share effect	0.09			0.22			0.20			0.55

Effective tax rate on operating income	25.6		%	29.4		%	26.2		%	26.8		%
Effective tax rate on net income	27.2		%	33.5		%	26.2		%	36.4		%

Return on equity (ROE) calculations ⁽²⁾:
ROE, excluding unrealized gain (loss) on investment portfolio	12.9		%	20.4		%	8.2		%	3.4		%
Operating ROE	6.5		%	6.5		%	7.6		%	12.2		%

New business:
Gross par written	$	2,658		$	2,276		$	4,527		$	3,870
Present value of new business production (PVP) ⁽³⁾	$	27		$	16		$	58		$	34
							As of
							June 30,			December 31,
Other information:							2014			2013
Net debt service outstanding							$	662,004		$	690,535
Net par outstanding							437,576			459,107
Claims-paying resources ⁽⁴⁾							12,235			12,147


1)	Non-GAAP diluted shares outstanding were the same as GAAP diluted shares.

2) Quarterly ROE calculations represent annualized returns.

3) Please refer to the explanation of Non-GAAP Financial Measures set forth at the end of this Financial Supplement.

4) See page 6 for additional detail on claims-paying resources.

Please refer to the explanation of Non-GAAP Financial Measures set forth at the end of this Financial Supplement.

Please refer to the Glossary for an explanation of changes in the presentation of net debt service and net par outstanding.

Assured Guaranty Ltd.

Net Income (Loss) Reconciliation to Operating Income (1 of 2)

(dollars in millions)



	Three Months Ended										Three Months Ended
	June 30, 2014										June 30, 2013
	GAAP Income As Reported			Less: Operating Income Adjustments				Non-GAAP Operating Income Results			GAAP Income As Reported			Less: Operating Income Adjustments				Non-GAAP Operating Income Results
Revenues:
Net earned premiums	$	136		$	(5	)	(1)	$	141		$	163		$	(15	)	(1)	$	178
Net investment income	96			(1		)	(1)	97			93			(1		)	(1)	94
Net realized investment gains (losses)	(8		)	(8		)	(2)	0			2			3			(2)	(1		)
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements	15			15				—			(86		)	(86		)		—
Net unrealized gains (losses)	88			88				—			160			160				—
Credit derivative revenues	—			(21		)		21			—			(40		)		40
Net change in fair value of credit derivatives	103			82			(3)	21			74			34			(3)	40
Fair value gains (losses) on committed capital securities	(6		)	(6		)	(4)	—			(3		)	(3		)	(4)	—
Fair value gains (losses) on FG VIEs	25			25			(1)	—			143			143			(1)	—
Other income (loss)	7			6			(1)(5)	1			(7		)	(5		)	(5)	(2		)
Total revenues	353			93				260			465			156				309

Expenses:
Loss and loss adjustment expenses:
Financial guaranty insurance	57			(7		)	(1)	64			62			(22		)	(1)	84
Credit derivatives	—			18			(3)	(18		)	—			(12		)	(3)	12
Amortization of deferred acquisition costs	3			—				3			1			—				1
Interest expense	20			—				20			21			—				21
Other operating expenses	55			—				55			52			—				52
Total expenses	135			11				124			136			(34		)		170

Income (loss) before income taxes	218			82				136			329			190				139
Provision (benefit) for income taxes	59			24			(6)	35			110			69			(6)	41
Net income (loss)	$	159		$	58			$	101		$	219		$	121			$	98


1)	Include adjustments related to elimination of the effects of consolidating FG VIEs.


2)	Adjustments to eliminate realized gains (losses) on available-for-sale investments.


3)	Adjustments to eliminate non-economic fair value gains (losses) on credit derivatives and reclassification to revenues and loss expense.


4)	Adjustments to eliminate fair value gain (loss) on committed capital securities.


5)	Include adjustments related to elimination of foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves.


6)	Tax effect of the above adjustments.

Please refer to the explanation of Non-GAAP Financial Measures set forth at the end of this Financial Supplement.

Assured Guaranty Ltd.

Net Income (Loss) Reconciliation to Operating Income (1 of 2)

(dollars in millions)



	Six Months Ended										Six Months Ended
	June 30, 2014										June 30, 2013
	GAAP Income As Reported			Less: Operating Income Adjustments				Non-GAAP Operating Income Results			GAAP Income As Reported			Less: Operating Income Adjustments				Non-GAAP Operating Income Results
Revenues:
Net earned premiums	$	268		$	(22	)	(1)	$	290		$	411		$	(33	)	(1)	$	444
Net investment income	199			3			(1)	196			187			(1		)	(1)	188
Net realized investment gains (losses)	(6		)	(8		)	(2)	2			30			32			(2)	(2		)
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements	34			34				—			(68		)	(68		)		—
Net unrealized gains (losses)	(142		)	(142		)		—			(450		)	(450		)		—
Credit derivative revenues	—			(41		)		41			—			(68		)		68
Net change in fair value of credit derivatives	(108		)	(149		)	(3)	41			(518		)	(586		)	(3)	68
Fair value gains (losses) on committed capital securities	(15		)	(15		)	(4)	—			(13		)	(13		)	(4)	—
Fair value gains (losses) on FG VIEs	182			182			(1)	—			213			213			(1)	—
Other income (loss)	28			—			(1)(5)	28			(21		)	(22		)	(5)	1
Total revenues	548			(9		)		557			289			(410		)		699

Expenses:
Loss and loss adjustment expenses:
Financial guaranty insurance	98			(6		)	(1)	104			14			(15		)	(1)	29
Credit derivatives	—			26			(3)	(26		)	—			(22		)	(3)	22
Amortization of deferred acquisition costs	8			—				8			4			—				4
Interest expense	40			—				40			42			—				42
Other operating expenses	115			—				115			112			—				112
Total expenses	261			20				241			172			(37		)		209

Income (loss) before income taxes	287			(29		)		316			117			(373		)		490
Provision (benefit) for income taxes	86			3			(6)	83			42			(90		)	(6)	132
Net income (loss)	$	201		$	(32	)		$	233		$	75		$	(283	)		$	358


1)	Include adjustments related to elimination of the effects of consolidating FG VIEs.


2)	Adjustments to eliminate realized gains (losses) on available-for-sale investments.


3)	Adjustments to eliminate non-economic fair value gains (losses) on credit derivatives and reclassification to revenues and loss expense.


4)	Adjustments to eliminate fair value gain (loss) on committed capital securities.


5)	Include adjustments related to elimination of foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves.


6)	Tax effect of the above adjustments.

Please refer to the explanation of Non-GAAP Financial Measures set forth at the end of this Financial Supplement.

Assured Guaranty Ltd.

Consolidated Balance Sheets (unaudited)

(dollars in millions)



	As of:
	June 30,		December 31,
	2014		2013
Assets:
Investment portfolio:
Fixed maturity securities, available-for-sale, at fair value	$	10,530	$	9,711
Short-term investments, at fair value	979		904
Other invested assets	126		170
Total investment portfolio	11,635		10,785

Cash	106		184
Premiums receivable, net of commissions payable	849		876
Ceded unearned premium reserve	440		452
Deferred acquisition costs	122		124
Reinsurance recoverable on unpaid losses	59		36
Salvage and subrogation recoverable	273		174
Credit derivative assets	80		94
Deferred tax asset, net	571		688
FG VIE assets, at fair value	1,284		2,565
Other assets	271		309
Total assets	$	15,690	$	16,287

Liabilities and shareholders' equity:
Liabilities:
Unearned premium reserve	$	4,391	$	4,595
Loss and loss adjustment expense reserve	775		592
Reinsurance balances payable, net	178		148
Long-term debt	1,311		816
Credit derivative liabilities	1,917		1,787
Current income tax payable	12		44
FG VIE liabilities with recourse, at fair value	1,366		1,790
FG VIE liabilities without recourse, at fair value	124		1,081
Other liabilities	374		319
Total liabilities	10,448		11,172

Shareholders' equity:
Common stock	2		2
Additional paid-in capital	2,260		2,466
Retained earnings	2,643		2,482
Accumulated other comprehensive income	332		160
Deferred equity compensation	5		5
Total shareholders' equity	5,242		5,115
Total liabilities and shareholders' equity	$	15,690	$	16,287

Assured Guaranty Ltd.

Adjusted Book Value

(dollars in millions, except per share amounts)



	As of:
	June 30, 2014						December 31, 2013
	Total			Per Share			Total			Per Share
Reconciliation of shareholders' equity to adjusted book value:
Shareholders' equity	$	5,242		$	30.10		$	5,115		$	28.07
Less after-tax adjustments:
Effect of consolidating FG VIEs	(82		)	(0.47		)	(172		)	(0.95		)
Non-credit impairment unrealized fair value gains (losses) on credit derivatives	(1,172		)	(6.73		)	(1,052		)	(5.77		)
Fair value gains (losses) on committed capital securities	20			0.12			30			0.16
Unrealized gain (loss) on investment portfolio excluding foreign exchange effect	327			1.87			145			0.80
Operating shareholders' equity	6,149			35.31			6,164			33.83
After-tax adjustments:
Less: Deferred acquisition costs	158			0.91			161			0.88
Plus: Net present value of estimated net future credit derivative revenue	129			0.74			146			0.80
Plus: Net unearned premium reserve on financial guaranty contracts in excess of expected loss to be expensed	2,730			15.68			2,884			15.83
Adjusted book value	$	8,850		$	50.82		$	9,033		$	49.58

Please refer to the explanation of Non-GAAP Financial Measures set forth at the end of this Financial Supplement.

Assured Guaranty Ltd.

Claims-Paying Resources

(dollars in millions)



	As of June 30, 2014
	Assured Guaranty Municipal Corp.		Assured Guaranty Corp.		Municipal Assurance Corp.		Assured Guaranty Re Ltd. ⁽¹⁰⁾		Eliminations⁽⁴⁾			Consolidated
Claims-paying resources
Policyholders' surplus	$	1,740	$	673	$	520	$	1,024	$	(795	)	$	3,162
Contingency reserve⁽¹⁾	1,915		1,230		341		—		(341		)	3,145
Qualified statutory capital	3,655		1,903		861		1,024		(1,136		)	6,307
Unearned premium reserve⁽¹⁾	1,849		688		634		919		(634		)	3,456
Loss and LAE reserves ^{(1) (2)}	365		140		—		302		—			807
Total policyholders' surplus and reserves	5,869		2,731		1,495		2,245		(1,770		)	10,570
Present value of installment premium⁽¹⁾	377		249		5		189		(5		)	815
Committed Capital Securities	200		200		—		—		—			400
Excess of loss reinsurance facility ⁽³⁾	450		450		450		—		(900		)	450
Total claims-paying resources (including proportionate MAC ownership for AGM and AGC)	6,896		3,630		1,950		2,434		(2,675		)	12,235
Adjustment for MAC ⁽⁵⁾	950		550		—		—		(1,500		)	—
Total claims-paying resources (excluding proportionate MAC ownership for AGM and AGC)	$	5,946	$	3,080	$	1,950	$	2,434	$	(1,175	)	$	12,235

Statutory net par outstanding ⁽⁶⁾	$	164,617	$	52,777	$	90,664	$	108,572	$	(1,803	)	$	414,827
Equity method adjustment ⁽⁷⁾	55,033		35,631		—		—		(90,664		)	—
Adjusted statutory net par outstanding ⁽¹⁾	$	219,650	$	88,408	$	90,664	$	108,572	$	(92,467	)	$	414,827

Net debt service outstanding ⁽⁶⁾	$	254,113	$	76,444	$	135,839	$	171,904	$	(3,745	)	$	634,555
Equity method adjustment ⁽⁷⁾	82,454		53,385		—		—		(135,839		)	—
Adjusted net debt service outstanding ⁽¹⁾	$	336,567	$	129,829	$	135,839	$	171,904	$	(139,584	)	$	634,555
Ratios:
Adjusted net par outstanding to qualified statutory capital	60:1		46:1		105:1		106:1					66:1
Capital ratio ⁽⁸⁾	92:1		68:1		158:1		168:1					101:1
Financial resources ratio ⁽⁹⁾	49:1		36:1		70:1		71:1					52:1

The numbers shown for Assured Guaranty Municipal Corp. (AGM) and Assured Guaranty Corp. (AGC) have been adjusted to include (i) their 100% share of their respective U.K. insurance subsidiaries and (ii) their indirect share of Municipal Assurance Corp. (MAC). AGM and AGC own 60.7% and 39.3%, respectively, of the outstanding stock of Municipal Assurance Holdings Inc., which owns 100% of the outstanding common stock of MAC. Amounts include financial guaranty insurance and credit derivatives.


2)	Reserves are reduced by approximately $0.6 billion for benefit related to representation and warranty recoverables.


3)	Represents an aggregate $450 million excess-of-loss reinsurance facility for the benefit of AGC, AGM and MAC, which became effective January 1, 2014, The facility terminates on January 1, 2016, unless AGC, AGM and MAC choose to extend it.

Eliminations are primarily for (i) intercompany surplus notes between AGM and AGC, and between AGM and MAC, and (ii) MAC amounts, whose proportionate share are included in AGM and AGC based on ownership percentages. Net par and net debt service outstanding eliminations relate to second-to-pay policies under which an Assured Guaranty insurance subsidiary guarantees an obligation already insured by another Assured Guaranty insurance subsidiary, and net par related to intercompany cessions from AGM and AGC to MAC.


5)	Represents adjustment for AGM's and AGC's interest and indirect ownership of MAC's total policyholders' surplus, unearned premium reserve, and loss reserves and present value of installment premium.

Net par outstanding and net debt service outstanding are presented on a separate company statutory basis. Under statutory accounting, such amounts would be reduced both when an outstanding issue is legally defeased (i.e., an issuer has legally discharged its obligations with respect to a municipal security by satisfying conditions set forth in defeasance provisions contained in transaction documents and is no longer responsible for the payment of debt service with respect to such obligations) and when such issue is economically defeased (i.e., transaction documents for a municipal security do not contain defeasance provisions but the issuer establishes an escrow account with U.S. government securities in amounts sufficient to pay the refunded bonds when due; the refunded bonds are not considered paid and continue to be outstanding under the transaction documents and the issuer remains responsible to pay debt service when due to the extent monies on deposit in the escrow account are insufficient for such purpose).


7)	Equity method adjustment is an adjustment made to reflect AGM's and AGC's net exposure to MAC, as determined by their indirect equity ownership, and 100% ownership of their U.K. subsidiaries.


8)	The capital ratio is calculated by dividing adjusted net debt service outstanding by qualified statutory capital.


9)	The financial resources ratio is calculated by dividing adjusted net debt service outstanding by total claims-paying resources (including MAC adjustment for AGM and AGC).


10)	Assured Guaranty Re Ltd. (AG Re) numbers represent the Company's estimate of U.S. statutory accounting practices prescribed or permitted by insurance regulatory authorities.

Assured Guaranty Ltd.

New Business Production

(dollars in millions)



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
New business production analysis:
PVP:
Public finance - U.S.	$	16	$	15	$	39	$	31
Public finance - non-U.S.	—		—		7		—
Structured finance - U.S.	6		1		7		3
Structured finance - non-U.S.	5		—		5		—
Total PVP	$	27	$	16	$	58	$	34

Reconciliation of PVP to gross written premiums (GWP):

PVP of financial guaranty insurance	$	27	$	16	$	58	$	34
Less: financial guaranty installment premium PVP	11		—		21		1
Total: financial guaranty upfront gross written premiums	16		16		37		33
Plus: financial guaranty installment GWP and other GAAP adjustments⁽¹⁾	1		6		10		6
Total GWP	$	17	$	22	$	47	$	39


Financial guaranty gross par written:
Public finance - U.S.	$	2,453	$	2,276	$	4,190	$	3,856
Public finance - non-U.S.	—		—		128		—
Structured finance - U.S.	5		—		9		14
Structured finance - non-U.S.	200		—		200		—
Total	$	2,658	$	2,276	$	4,527	$	3,870


1)	Includes present value of new business on installment policies plus GWP adjustment on existing installment policies due to changes in assumptions and any cancellations of assumed reinsurance contracts and other GAAP adjustments.

Please refer to the explanation of Non-GAAP Financial Measures set forth at the end of this Financial Supplement.

Assured Guaranty Ltd.

Financial Guaranty Gross Par Written

(dollars in millions)

Financial Guaranty Gross Par Written by Asset Type



	Three Months Ended			Six Months Ended
	June 30, 2014			June 30, 2014
	Gross Par Written		Avg. Internal Rating	Gross Par Written		Avg. Internal Rating
Sector:
U.S. public finance
General obligation	$	1,445	A-	$	2,344	A-
Tax backed	713		A	892		A-
Municipal utilities	106		A-	352		A-
Transportation	76		A	416		BBB
Healthcare	—		—	70		BBB
Housing	66		BBB-	66		BBB-
Higher education	47		BBB+	47		BBB+
Infrastructure finance	—		—	3		A
Total U.S. public finance	2,453		A-	4,190		A-
Non-U.S. public finance:
Infrastructure finance	—		—	128		BBB-
Total non-U.S. public finance	—		—	128		BBB-
Total public finance	$	2,453	A-	$	4,318	A-

U.S. structured finance:
Other structure finance	$	5	A-	$	9	A-
Total U.S. structured finance	5		A-	9		A-
Non-U.S. structured finance:
Total non-U.S. structured finance	200		BBB+	200		BBB+
Total structured finance	$	205	BBB+	$	209	BBB+

Total gross par written	$	2,658	A-	$	4,527	A-

Please refer to the Glossary for a description of internal ratings and sectors.

Assured Guaranty Ltd.

New Business Production by Quarter

(dollars in millions)



														Six Months
	1Q-13		2Q-13		3Q-13		4Q-13			1Q-14		2Q-14		2013		2014
PVP:
Public finance - U.S.	$	16	$	15	$	24	$	61		$	23	$	16	$	31	$	39
Public finance - non-U.S.	—		—		13		5			7		—		—		7
Structured finance - U.S.	2		1		3		1			1		6		3		7
Structured finance - non-U.S.	—		—		—		—			—		5		—		5
Total PVP	$	18	$	16	$	40	$	67		$	31	$	27	$	34	$	58

Reconciliation of PVP to GWP:

Total PVP of financial guarantee insurance	$	18	$	16	$	40	$	67		$	31	$	27	$	34	$	58
Less: financial guaranty installment premium PVP	1		—		18		7			10		11		1		21
Total: financial guaranty upfront GWP	17		16		22		60			21		16		33		37
Plus: financial guaranty installment GWP and other GAAP adjustments⁽¹⁾	—		6		4		(2		)	9		1		6		10
Total GWP	$	17	$	22	$	26	$	58		$	30	$	17	$	39	$	47

Financial guaranty gross par written:
Public finance - U.S.	$	1,580	$	2,276	$	2,072	$	2,743		$	1,737	$	2,453	$	3,856	$	4,190
Public finance - non-U.S.	—		—		270		122			128		—		—		128
Structured finance - U.S.	14		—		273		—			4		5		14		9
Structured finance - non-U.S.	—		—		—		—			—		200		—		200
Total	$	1,594	$	2,276	$	2,615	$	2,865		$	1,869	$	2,658	$	3,870	$	4,527

Please refer to the explanation of Non-GAAP Financial Measures set forth at the end of this Financial Supplement.

Assured Guaranty Ltd.

Available-for-Sale Investment Portfolio and Cash

As of June 30, 2014

(dollars in millions)



			Amortized Cost		Pre-Tax Book Yield		After-Tax Book Yield		Fair Value		Annualized Investment Income ⁽¹⁾
Investment portfolio, available-for-sale:
Fixed maturity securities:
	Obligations of states and political subdivisions		$	4,083	3.90	%	3.67	%	$	4,326	$	159
	Insured obligations of state and political subdivisions⁽²⁾⁽⁴⁾		1,080		4.92	%	4.56	%	1,174		53
	U.S. Treasury securities and obligations of U.S. government agencies		603		0.98	%	0.69	%	613		6
	Agency obligations		220		3.99	%	3.29	%	240		9
	Corporate securities		1,376		3.79	%	2.93	%	1,413		52
	Mortgage-backed securities (MBS)⁽³⁾:
		Residential MBS (RMBS) ⁽⁴⁾	1,247		5.49	%	4.08	%	1,235		69
		Commercial MBS (CMBS)	691		3.68	%	3.09	%	712		25
	Asset-backed securities		538		3.16	%	2.19	%	548		17
	Foreign government securities		317		2.55	%	1.67	%	333		8
		Total fixed maturity securities	10,155		3.92	%	3.35	%	10,594		398
Short-term investments			974		0.03	%	0.02	%	974		0
Cash ⁽⁵⁾			105		—	%	—	%	105		—
		Total	$	11,234	3.58	%	3.06	%	$	11,673	$	398

Less: FG VIEs			72		12.20	%	7.90	%	59		9

		Total	$	11,162	3.52	%	3.03	%	$	11,614	$	389



Ratings⁽⁶⁾:			Fair Value		% of Portfolio
	U.S. Treasury securities and obligations of U.S. government agencies		$	613	5.8	%
	Agency obligations		240		2.2	%
	AAA/Aaa		1,621		15.3	%
	AA/Aa		5,412		51.1	%
	A/A		1,906		18.0	%
	BBB		62		0.6	%
	Below investment grade (BIG)⁽⁷⁾		740		7.0	%
		Total fixed maturity securities, available-for-sale	10,594		100.0	%

	Less: FG VIEs		64

		Total fixed maturity securities, available-for-sale	$	10,530


Duration of fixed maturity securities and short-term investments (in years):					4.6

Average ratings of fixed maturity securities and short-term investments					AA-


1)	Represents annualized investment income based on amortized cost and pre-tax book yields.


2)	Reflects obligations of state and local political subdivisions that have been insured by other financial guarantors. The underlying ratings of these bonds, after giving effect to the lower of the rating assigned by Standard & Poor's Ratings Services (S&P) or Moody's Investors Service, Inc. (Moody's), average A+. Includes fair value of $287 million insured by AGC and AGM.


3)	Includes fair value of $248 million in subprime RMBS, which has an average rating of BIG.


4)	Includes securities purchased or obtained as part of loss mitigation or other risk management strategies.


5)	Represents operating cash and is not included in yield calculations.


6)	Ratings are represented by the lower of the Moody's and S&P classifications except for bonds purchased for loss mitigation (loss mitigation bonds) or risk management strategies which use internal ratings classifications.


7)	Includes below investment grade securities that were purchased or obtained as part of loss mitigation or other risk management strategies of $1,699 million in par with carrying value of $740 million.

Assured Guaranty Ltd.

Estimated Net Exposure Amortization⁽¹⁾ and Estimated Future Net Premium

and Credit Derivative Revenues

(dollars in millions)



						Financial Guaranty Insurance ⁽²⁾
		Estimated Net Debt Service Amortization ⁽⁵⁾		Estimated Ending Net Debt Service Outstanding ⁽⁵⁾		Expected PV Net Earned Premiums		Accretion of Discount		Future Net Premiums Earned ⁽³⁾		Future Credit Derivative Revenues ⁽⁴⁾		Total

2014 (as of June 30)				$	662,004
2014 Q3		$	17,508	644,496		$	108	$	6	$	114	$	16	$	130
2014 Q4		16,236		628,260		104		6		110		15		125
2015		57,797		570,463		377		21		398		43		441
2016		45,153		525,310		348		20		368		33		401
2017		44,208		481,102		309		18		327		22		349
2018		33,170		447,932		281		17		298		11		309

2014-2018		214,072		447,932		1,527		88		1,615		140		1,755
2019-2023		146,360		301,572		1,086		67		1,153		43		1,196
2024-2028		117,434		184,138		690		43		733		27		760
2029-2033		83,495		100,643		423		24		447		23		470
After 2033		100,643		—		390		18		408		24		432
	Total	$	662,004			$	4,116	$	240	$	4,356	$	257	$	4,613


1)	Represents the future expected amortization of current debt service outstanding (principal and interest), assuming no advance refundings, as of June 30, 2014. Actual amortization differs from expected maturities because borrowers may have the right to call or prepay guaranteed obligations and because of management's assumptions on structured finance amortization.


2)	See page 13 for ‘‘Present Value of Financial Guaranty Insurance Net Expected Loss to be Expensed.’’


3)	Includes $137 million in future net premiums earned related to FG VIEs.


4)	Excludes contracts with credit impairment.


5)	Amount is shown net of loss mitigation bonds.

Please refer to the Glossary for an explanation of changes in the presentation of net debt service outstanding.

Assured Guaranty Ltd.

Expected Amortization of Net Par Outstanding

(dollars in millions)

Structured Finance



		Estimated Net Par Amortization
		U.S. and Non-U.S. Pooled Corporate		U.S. RMBS		Financial Products			Other Structured Finance		Total		Estimated Ending Net Par Outstanding

2014 (as of June 30)													$	63,212
2014 Q3		$	3,228	$	584	$	193		$	222	$	4,227	58,985
2014 Q4		3,577		561		67			535		4,740		54,245
2015		10,904		2,078		340			1,281		14,603		39,642
2016		5,650		1,763		171			1,521		9,105		30,537
2017		7,992		1,597		70			1,656		11,315		19,222
2018		670		1,411		(22		)	901		2,960		16,262

2014-2018		32,021		7,994		819			6,116		46,950		16,262
2019-2023		1,072		3,006		165			3,034		7,277		8,985
2024-2028		477		890		391			1,366		3,124		5,861
2029-2033		442		230		876			779		2,327		3,534
After 2033		1,650		460		334			1,090		3,534		—
	Total structured finance	$	35,662	$	12,580	$	2,585		$	12,385	$	63,212

Public Finance



		Estimated Net Par Amortization		Estimated Ending Net Par Outstanding

2014 (as of June 30)				$	374,364
2014 Q3		$	8,762	365,602
2014 Q4		6,864		358,738
2015		25,858		332,880
2016		19,808		313,072
2017		17,652		295,420
2018		15,798		279,622

2014-2018		94,742		279,622
2019-2023		78,876		200,746
2024-2028		73,250		127,496
2029-2033		56,619		70,877
After 2033		70,877		—
	Total public finance	$	374,364

Net par outstanding (end of period)



		1Q-13		2Q-13		3Q-13		4Q-13		1Q-14		2Q-14
Public finance - U.S.		$	378,418	$	371,020	$	361,203	$	352,181	$	346,428	$	338,956
Public finance - non-U.S.		35,067		33,700		34,912		33,998		34,826		35,408
Structured finance - U.S.		70,129		65,159		62,584		58,907		55,393		51,442
Structured finance - non-U.S.		17,092		15,915		14,671		14,021		12,978		11,770
	Net par outstanding (excluding loss mitigation bonds)	500,706		485,794		473,370		459,107		449,625		437,576
Loss mitigation bonds		1,111		1,195		1,297		1,195		1,236		1,216
	Net par outstanding (including loss mitigation bonds)	$	501,817	$	486,989	$	474,667	$	460,302	$	450,861	$	438,792

Please refer to the Glossary for an explanation of changes in the presentation of net par outstanding and of the various sectors.

Assured Guaranty Ltd.

Present Value (PV) of Financial Guaranty Insurance Net Expected Loss to be Expensed

As of June 30, 2014

(dollars in millions)



		Net Expected Loss to be Expensed ⁽¹⁾
		Operating⁽²⁾		GAAP⁽²⁾

2014 Q3		$	12	$	10
2014 Q4		12		10
2015		48		39
2016		43		36
2017		37		30
2018		32		27

2014-2018		184		152
2019-2023		118		96
2024-2028		68		57
2029-2033		46		37
After 2033		36		28
	Total expected PV of net expected loss to be expensed	452		370
Discount		478		435
	Total future value	$	930	$	805


1)	The present value of net expected loss to be paid is discounted using weighted-average risk free rates ranging from 0.0% to 3.78% for U.S. dollar denominated obligations.


2)	Operating income includes net expected loss to be expensed on consolidated FG VIEs. Losses on consolidated FG VIEs are eliminated for GAAP.

Assured Guaranty Ltd.

Financial Guaranty Profile (1 of 4)

(dollars in millions)

Net Par Outstanding and Average Rating by Asset Type



			June 30, 2014							December 31, 2013
			Net Par Outstanding (including loss mitigation bonds)		Loss Mitigation Bonds		Net Par Outstanding (excluding loss mitigation bonds)		Avg. Internal Rating	Net Par Outstanding (including loss mitigation bonds)		Loss Mitigation Bonds		Net Par Outstanding (excluding loss mitigation bonds)		Avg. Internal Rating
U.S. public finance:
	General obligation		$	149,039	$	—	$	149,039	A	$	155,277	$	—	$	155,277	A+
	Tax backed		64,088		29		64,059		A	66,856		32		66,824		A+
	Municipal utilities		54,595		—		54,595		A	56,324		—		56,324		A
	Transportation		29,896		—		29,896		A	30,830		—		30,830		A
	Healthcare		15,623		—		15,623		A	16,132		—		16,132		A
	Higher education		13,554		—		13,554		A	14,071		—		14,071		A
	Infrastructure finance		4,109		—		4,109		BBB	4,114		—		4,114		BBB
	Housing		3,229		—		3,229		A+	3,386		—		3,386		A+
	Investor-owned utilities		980		—		980		A-	991		—		991		A-
	Other public finance		3,872		—		3,872		A	4,232		—		4,232		A
		Total U.S. public finance	338,985		29		338,956		A	352,213		32		352,181		A
Non-U.S. public finance:
	Infrastructure finance		15,218		—		15,218		BBB	14,703		—		14,703		BBB
	Regulated utilities		12,092		—		12,092		BBB+	11,205		—		11,205		BBB+
	Pooled infrastructure		2,591		—		2,591		A	2,520		—		2,520		A
	Other public finance		5,507		—		5,507		A	5,570		—		5,570		A
		Total non-U.S. public finance	35,408		—		35,408		BBB+	33,998		—		33,998		BBB+
Total public finance			$	374,393	$	29	$	374,364	A	$	386,211	$	32	$	386,179	A

U.S. structured finance:
	Pooled corporate obligations		$	26,596	$	—	$	26,596	AAA	$	31,325	$	—	$	31,325	AAA
	RMBS		13,442		862		12,580		BBB-	14,559		838		13,721		BBB-
	Insurance securitizations		3,359		325		3,034		A-	3,360		325		3,035		A-
	CMBS and other commercial real estate related exposures		2,804		—		2,804		AAA	3,952		—		3,952		AAA
	Financial products		2,585		—		2,585		AA-	2,709		—		2,709		AA-
	Consumer receivables		2,152		—		2,152		BBB+	2,198		—		2,198		BBB+
	Commercial receivables		682		—		682		A-	911		—		911		A-
	Structured credit		69		—		69		BB	69		—		69		BB
	Other structured finance		940		—		940		A-	987		—		987		A-
		Total U.S. structured finance	52,629		1,187		51,442		AA-	60,070		1,163		58,907		AA-

Non-U.S. structured finance:
	Pooled corporate obligations		9,066		—		9,066		AA+	11,058		—		11,058		AAA
	Commercial receivables		1,162		—		1,162		BBB+	1,263		—		1,263		BBB+
	RMBS		927		—		927		A	1,146		—		1,146		AA-
	Structured credit		37		—		37		BBB-	176		—		176		BBB
	Other structured finance		578		—		578		AA+	378		—		378		AAA
		Total non-U.S. structured finance	11,770		—		11,770		AA	14,021		—		14,021		AA+
Total structured finance			$	64,399	$	1,187	$	63,212	AA-	$	74,091	$	1,163	$	72,928	AA

Total			$	438,792	$	1,216	$	437,576	A	$	460,302	$	1,195	$	459,107	A

Please refer to the Glossary for an explanation of changes in the presentation of net par outstanding and in the Company's internal rating approach, and of the various sectors.

Assured Guaranty Ltd.

Financial Guaranty Profile (2 of 4)

As of June 30, 2014

(dollars in millions)

Distribution by Ratings of Financial Guaranty Portfolio



		Public Finance - U.S.				Public Finance - Non-U.S.				Structured Finance - U.S.				Structured Finance - Non-U.S.				Total
Ratings:		Net Par Outstanding		%		Net Par Outstanding		%		Net Par Outstanding		%		Net Par Outstanding		%		Net Par Outstanding		%
AAA		$	4,239	1.3	%	$	1,031	2.9	%	$	26,709	51.9	%	$	7,597	64.5	%	$	39,576	9.0	%
AA		100,089		29.5	%	432		1.2	%	8,963		17.4	%	567		4.8	%	110,051		25.2	%
A		184,593		54.5	%	9,803		27.7	%	2,395		4.7	%	610		5.2	%	197,401		45.1	%
BBB		41,174		12.1	%	22,529		63.6	%	3,331		6.5	%	1,939		16.5	%	68,973		15.8	%
BIG		8,861		2.6	%	1,613		4.6	%	10,044		19.5	%	1,057		9.0	%	21,575		4.9	%
	Net Par Outstanding (excluding loss mitigation bonds)	$	338,956	100.0	%	$	35,408	100.0	%	$	51,442	100.0	%	$	11,770	100.0	%	$	437,576	100.0	%

Loss Mitigation Bonds		29				—				1,187				—				1,216
	Net Par Outstanding (including loss mitigation bonds)	$	338,985			$	35,408			$	52,629			$	11,770			$	438,792

Please refer to the Glossary for an explanation of changes in the presentation of net par outstanding and in the Company's internal rating approach, and of the various sectors.

Assured Guaranty Ltd.

Financial Guaranty Profile (3 of 4)

As of June 30, 2014

(dollars in millions)

Geographic Distribution of Financial Guaranty Portfolio



			Net Par Outstanding (including loss mitigation bonds)		Loss Mitigation Bonds		Net Par Outstanding (excluding loss mitigation bonds)		% of Total
U.S.:
U.S. public finance:
	California		$	52,709	$	29	$	52,680	12.0	%
	Pennsylvania		27,625		—		27,625		6.3
	New York		27,187		—		27,187		6.2
	Texas		25,867		—		25,867		5.9
	Illinois		23,518		—		23,518		5.4
	Florida		20,748		—		20,748		4.7
	New Jersey		13,866		—		13,866		3.2
	Michigan		13,226		—		13,226		3.0
	Georgia		8,993		—		8,993		2.1
	Ohio		8,424		—		8,424		1.9
	Other states and U.S. territories		116,822		—		116,822		26.7
		Total public finance	338,985		29		338,956		77.4
U.S. structured finance:			52,629		1,187		51,442		11.8
		Total U.S.	391,614		1,216		390,398		89.2

Non-U.S.:
	United Kingdom		22,225		—		22,225		5.1
	Australia		5,855		—		5,855		1.3
	Canada		3,620		—		3,620		0.8
	France		3,385		—		3,385		0.8
	Italy		1,741		—		1,741		0.4
	Other		10,352		—		10,352		2.4
		Total non-U.S.	47,178		—		47,178		10.8

Total net par outstanding			$	438,792	$	1,216	$	437,576	100.0	%

Please refer to the Glossary for an explanation of changes in the presentation of net par outstanding and of the various sectors.

Assured Guaranty Ltd.

Financial Guaranty Profile (4 of 4)

As of June 30, 2014

(dollars in millions)

Net Direct Economic Exposure to Selected European Countries



			Hungary		Ireland		Italy		Portugal		Spain		Total
Sovereign and sub-sovereign exposure:
	Non-infrastructure public finance		$	—	$	—	$	1,007	$	95	$	272	$	1,374
	Infrastructure finance		369		—		16		11		155		551
		Total sovereign and sub-sovereign exposure	369		—		1,023		106		427		1,925
Non-sovereign exposure:
	Regulated utilities		—		—		242		—		—		242
	RMBS		214		144		308		—		—		666
		Total non-sovereign exposure	214		144		550		—		—		908
		Total	$	583	$	144	$	1,573	$	106	$	427	$	2,833

		Total BIG	$	583	$	—	$	—	$	106	$	427	$	1,116

Note: While the Company’s exposures are shown in U.S. dollars, the obligations the Company insures are in various currencies, including U.S. dollars, Euros and British pounds sterling. Included in the tables above is $144 million of reinsurance assumed on a 2004 - 2006 pool of Irish residential mortgages that is part of the Company’s remaining legacy mortgage reinsurance business. One of the residential mortgage-backed securities included in the table above includes residential mortgages in both Italy and Germany, and only the portion of the transaction equal to the portion of the original mortgage pool in Italian mortgages is shown in the table.

Please refer to the Glossary for an explanation of the Company's net par outstanding, internal rating approach and of the various sectors.

Assured Guaranty Ltd.

Exposure to Puerto Rico (1 of 3)

As of June 30, 2014

(dollars in millions)

Gross Par and Gross Debt Service Outstanding of Puerto Rico



	Gross Par Outstanding		Gross Debt Service Outstanding
Subject to the terms of the Puerto Rico Public Corporation Debt Enforcement and Recovery Act (the "Recovery Act")	$	3,195	$	5,472
Not subject to the terms of the Recovery Act	3,220		5,000
Total	$	6,415	$	10,472

Net Exposure to Puerto Rico by Risk



	Net Par Outstanding
	AGM Consolidated		AGC Consolidated		AG Re Consolidated		Eliminations(1)			Total		Internal Rating
Exposures subject to the terms of the Recovery Act:
Puerto Rico Highways and Transportation Authority (Transportation revenue)	$	316	$	400	$	236	$	(80	)	$	872	BB-
Puerto Rico Electric Power Authority	481		65		273		—			819		B-
Puerto Rico Aqueduct and Sewer Authority	—		288		96		—			384		BB-
Puerto Rico Highways and Transportation Authority (Highway revenue)	216		28		58		—			302		BB
Puerto Rico Convention Center District Authority	—		93		92		—			185		BB-
Total	1,013		874		755		(80		)	2,562

Exposures not subject to the terms of the Recovery Act:
Commonwealth of Puerto Rico - General Obligation Bonds	758		476		532		—			1,766		BB
Puerto Rico Municipal Finance Authority	252		49		149		—			450		BB-
Puerto Rico Sales Tax Financing Corporation	261		—		7		—			268		BBB
Puerto Rico Public Buildings Authority	32		46		46		—			124		BB
Government Development Bank for Puerto Rico	—		33		—		—			33		BB
Puerto Rico Infrastructure Financing Authority	—		10		8		—			18		BB-
University of Puerto Rico	—		1		—		—			1		BB-
Total	1,303		615		742		—			2,660
Total net exposure to Puerto Rico	$	2,316	$	1,489	$	1,497	$	(80	)	$	5,222


1)	Net par outstanding eliminations relate to second-to-pay policies under which an Assured Guaranty insurance subsidiary guarantees an obligation already insured by another Assured Guaranty insurance subsidiary.

Assured Guaranty Ltd.

Exposure to Puerto Rico (2 of 3)

As of June 30, 2014

(dollars in millions)

Amortization Schedule of Net Par Outstanding of Puerto Rico



	Scheduled Net Par Amortization
	2014 (2H)			2015			2016			2017			2018			2019			2020			2021			2022			2023		2024 -2028			2029 -2033		2034 -2038		2039 -2043		2044 -2047		Total
	(in millions)
Exposures subject to the terms of the Recovery Act:
Puerto Rico Highways and Transportation Authority (Transportation revenue)	$	29		$	22		$	29		$	32		$	39		$	26		$	21		$	16		$	17		$	17	$	86		$	94	$	288	$	156	$	—	$	872
Puerto Rico Electric Power Authority	46			73			19			4			4			24			40			20			20			78		347			136		8		—		—		819
Puerto Rico Aqueduct and Sewer Authority	—			14			15			—			—			—			—			—			—			—		109			—		—		—		246		384
Puerto Rico Highways and Transportation Authority (Highway revenue)	8			6			31			5			5			11			12			15			6			7		20			95		81		—		—		302
Puerto Rico Convention Center District Authority	10			11			11			—			—			—			—			—			—			—		19			50		84		—		—		185
Total	93			126			105			41			48			61			73			51			43			102		581			375		461		156		246		2,562

Exposures not subject to the terms of the Recovery Act:
Commonwealth of Puerto Rico - General Obligation Bonds	94			109			127			95			64			82			137			16			37			14		282			310		399		—		—		1,766
Puerto Rico Municipal Finance Authority	50			51			48			41			43			39			35			30			30			16		60			7		—		—		—		450
Puerto Rico Sales Tax Financing Corporation	(1		)	(1		)	(1		)	(1		)	(1		)	(1		)	(1		)	(2		)	(2		)	1		(7		)	20		10		255		—		268
Puerto Rico Public Buildings Authority	17			12			9			31			2			7			10			12			—			8		9			2		5		—		—		124
Government Development Bank for Puerto Rico	—			33			—			—			—			—			—			—			—			—		—			—		—		—		—		33
Puerto Rico Infrastructure Financing Authority	—			—			—			—			2			—			—			—			—			2		—			—		1		13		—		18
University of Puerto Rico	0			0			0			0			0			0			0			0			0			0		0			1		—		—		—		1
Total	160			204			183			166			110			127			181			56			65			41		344			340		415		268		—		2,660
Total net par for Puerto Rico(1)	$	253		$	330		$	288		$	207		$	158		$	188		$	254		$	107		$	108		$	143	$	925		$	715	$	876	$	424	$	246	$	5,222


1)	In July 2014, various Puerto Rico issuers made payment on $215 million of par scheduled to be paid; of that amount, $46 million of par was paid by Puerto Rico Electric Power Authority.

Assured Guaranty Ltd.

Exposure to Puerto Rico (3 of 3)

As of June 30, 2014

(dollars in millions)

Amortization Schedule of Net Debt Service Outstanding of Puerto Rico



	Scheduled Net Debt Service Amortization
	2014 (2H)		2015		2016		2017		2018		2019		2020		2021		2022		2023		2024 -2028		2029 -2033		2034 -2038		2039 -2043		2044 -2047		Total
	(in millions)
Exposures subject to the terms of the Recovery Act:
Puerto Rico Highways and Transportation Authority (Transportation revenue)	$	51	$	65	$	72	$	72	$	78	$	63	$	57	$	51	$	50	$	50	$	240	$	217	$	355	$	167	$	—	$	1,588
Puerto Rico Electric Power Authority	64		107		51		36		35		55		69		47		47		102		421		152		9		—		—		1,195
Puerto Rico Aqueduct and Sewer Authority	10		33		33		18		18		18		18		18		18		18		189		63		63		63		278		858
Puerto Rico Highways and Transportation Authority (Highway revenue)	16		22		46		19		19		24		24		26		17		18		69		131		87		—		—		518
Puerto Rico Convention Center District Authority	14		19		18		7		7		7		7		7		7		7		52		78		89		—		—		319
Total	155		246		220		152		157		167		175		149		139		195		971		641		603		230		278		4,478

Exposures not subject to the terms of the Recovery Act:
Commonwealth of Puerto Rico - General Obligation Bonds	137		192		205		167		132		147		195		71		91		67		504		467		439		—		—		2,814
Puerto Rico Municipal Finance Authority	61		70		65		56		55		49		43		37		35		20		69		7		—		—		—		567
Puerto Rico Sales Tax Financing Corporation	5		13		13		13		13		13		13		13		13		16		65		95		76		291		—		652
Puerto Rico Public Buildings Authority	19		18		13		35		5		9		13		14		1		9		12		4		6		—		—		158
Government Development Bank for Puerto Rico	0		35		—		—		—		—		—		—		—		—		—		—		—		—		—		35
Puerto Rico Infrastructure Financing Authority	0		1		1		1		3		1		1		1		1		2		4		4		4		15		—		39
University of Puerto Rico	0		0		0		0		0		0		0		0		0		0		0		1		—		—		—		1
Total	222		329		297		272		208		219		265		136		141		114		654		578		525		306		—		4,266
Total net debt service for Puerto Rico (1)	$	377	$	575	$	517	$	424	$	365	$	386	$	440	$	285	$	280	$	309	$	1,625	$	1,219	$	1,128	$	536	$	278	$	8,744


1)	In July 2014, various Puerto Rico issuers made scheduled par payments of $215 million, plus interest. Of that amount $46 million of par related to Puerto Rico Electric Power Authority.

Assured Guaranty Ltd.

Direct Pooled Corporate Obligations Profile

As of June 30, 2014

(dollars in millions)

Distribution of Direct Pooled Corporate Obligations by Ratings



			Net Par Outstanding		% of Total		Avg. Initial Credit Enhancement		Avg. Current Credit Enhancement
Ratings:
	AAA		$	28,277	80.2	%	28.0	%	30.6	%
	AA		2,324		6.6	%	40.7	%	40.5	%
	A		510		1.4	%	50.2	%	52.5	%
	BBB		2,064		5.9	%	40.7	%	36.9	%
	BIG		2,074		5.9	%	44.1	%	21.9	%
		Total exposures	$	35,249	100.0	%	30.6	%	31.5	%

Distribution of Direct Pooled Corporate Obligations by Asset Class



			Net Par Outstanding		% of Total		Avg. Initial Credit Enhancement		Avg. Current Credit Enhancement		Avg. Rating
Asset class:
	CBOs/CLOs		$	17,748	50.4	%	31.3	%	35.3	%	AAA
	Synthetic investment grade pooled corporates		9,487		26.9	%	21.4	%	19.9	%	AAA
	Market value CDOs of corporates		1,619		4.6	%	24.3	%	34.3	%	AAA
	Synthetic high yield pooled corporates		978		2.8	%	47.0	%	40.6	%	AAA
	Trust preferred
		Banks and insurance	2,407		6.8	%	45.4	%	40.4	%	BBB
		U.S. mortgage and real estate investment trusts	1,500		4.2	%	49.8	%	36.9	%	BB
		European mortgage and real estate investment trusts	817		2.3	%	36.7	%	31.5	%	BBB-
	Other pooled corporates		693		2.0	%	—	%	—	%	BBB-
		Total exposures	$	35,249	100.0	%	30.6	%	31.5	%	AAA

Please refer to the Glossary for an explanation of internal ratings, performance indicators and sectors.

Assured Guaranty Ltd.

U.S. RMBS Profile

As of June 30, 2014

(dollars in millions)

Distribution of Consolidated U.S. RMBS by Rating and Type of Exposure



Ratings:			Prime First Lien		Closed-End Second Lien		HELOC		Alt-A First Lien		Option ARMs		Subprime First Lien			Total Net Par Outstanding
	AAA		$	1	$	—	$	14	$	205	$	53	$	2,280		$	2,553
	AA		91		91		83		526		182		1,373			2,346
	A		7		0		8		—		17		121			153
	BBB		30		—		127		17		32		138			344
	BIG		381		140		1,670		2,621		548		1,824		��	7,185
		Total exposures	$	509	$	232	$	1,901	$	3,369	$	833	$	5,736		$	12,580

Distribution of Direct U.S. RMBS Insured January 1, 2005 or Later by Exposure Type, Average Pool Factor, Subordination, Cumulative Losses and 60+ Day Delinquencies



	Net Par Outstanding		Pool Factor		Subordination		Cumulative Losses		60+ Day Delinquencies		Number of Transactions
U.S. Prime First Lien	$	487	29.2	%	3.8	%	4.7	%	15.8	%	8
U.S. Closed-End Second Lien	222		10.6	%	—	%	69.2	%	5.0	%	9
U.S. HELOC	1,681		15.6	%	4.6	%	37.5	%	3.7	%	18
U.S. Alt-A First Lien	3,297		31.5	%	5.5	%	17.5	%	25.5	%	43
U.S. Option ARMs	801		32.8	%	4.5	%	22.1	%	26.4	%	19
U.S. Subprime First Lien	4,567		27.1	%	36.7	%	24.6	%	33.1	%	21

Please refer to the Glossary for an explanation of changes in the Company's presentation of net par outstanding and a description of performance indicators and sectors.

Assured Guaranty Ltd.

Direct U.S. Commercial Real Estate Profile

As of June 30, 2014

(dollars in millions)

Distribution of Direct U.S. CMBS Insured January 1, 2005 or Later by Exposure Type, Internal Rating, Average Pool Factor, Subordination, Cumulative Losses and 60+ Day Delinquencies

U.S. CMBS



Rating:			Net Par Outstanding		Pool Factor		Subordination		Cumulative Losses		60+ Day Delinquencies		Number of Transactions
	AAA		$	2,306	63.5	%	41.2	%	3.6	%	7.2	%	131
	AA		—		—	%	—	%	—	%	—	%	—
	A		15		9.9	%	67.7	%	2.8	%	17.6	%	1
	BBB		—		—	%	—	%	—	%	—	%	—
	BIG		—		—	%	—	%	—	%	—	%	—
		Total exposures	$	2,320	63.2	%	41.4	%	3.6	%	7.2	%	132

CDOs of U.S. Commercial Real Estate⁽¹⁾



	Net Par Outstanding		Avg. Initial Credit Enhancement		Avg. Current Credit Enhancement
CDOs of commercial real estate	$	260	52.5	%	61.6	%


1)	Represents other U.S. Commercial Real Estate not included in the table above.

Please refer to the Glossary for a description of net par outstanding, performance indicators and sectors.

Assured Guaranty Ltd.

Below Investment Grade Exposures (1 of 5)

(dollars in millions)

BIG Exposures by Asset Exposure Type



			BIG Net Par Outstanding⁽¹⁾
			June 30, 2014		December 31, 2013
U.S. public finance:
	General obligation		$	2,959	$	3,126
	Tax backed		2,168		2,209
	Infrastructure finance		1,737		1,724
	Municipal utilities		1,352		1,360
	Transportation		314		320
	Healthcare		66		70
	Higher education		15		15
	Housing		2		17
	Other public finance		248		253
		Total U.S. public finance	8,861		9,094
Non-U.S. public finance:
	Infrastructure finance		1,246		1,236
	Other public finance		367		372
		Total non-U.S. public finance	1,613		1,608
Total public finance			$	10,474	$	10,702

U.S. structured finance:
	RMBS		$	7,185	$	7,717
	Pooled corporate obligations		1,561		1,722
	Insurance securitizations		598		598
	Consumer receivables		370		386
	Commercial receivables		148		157
	Structured credit		69		69
	Other structured finance		113		115
		Total U.S. structured finance	10,044		10,764
Non-U.S. structured finance:
	Pooled corporate obligations		766		767
	RMBS		215		224
	Commercial receivables		76		81
		Total non-U.S. structured finance	1,057		1,072
Total structured finance			$	11,101	$	11,836
Total BIG net par outstanding			$	21,575	$	22,538

In accordance with the terms of certain credit derivative contracts, the referenced obligations in such contracts have been delivered to the Company and therefore are included in the investment portfolio. Such amounts are still included in the financial guaranty insured portfolio (excluding loss mitigation bonds), and totaled $165 million and $195 million in gross par outstanding as of June 30, 2014 and December 31, 2013, respectively.

Please refer to the Glossary for an explanation of changes in the Company's presentation of net par outstanding and a description of various sectors.

Assured Guaranty Ltd.

Below Investment Grade Exposures (2 of 5)

(dollars in millions)

Net Par Outstanding by BIG Category⁽¹⁾



				Financial Guaranty Insurance and Credit Derivatives Surveillance Categories⁽²⁾
				June 30, 2014		December 31, 2013
Category 1
	U.S. public finance			$	7,170	$	8,205
	Non-U.S. public finance			1,611		1,009
	U.S. structured finance			4,034		4,513
	Non-U.S. structured finance			1,009		1,024
		Total Category 1		13,824		14,751
Category 2
	U.S. public finance			1,269		440
	Non-U.S. public finance			2		599
	U.S. structured finance			2,167		2,862
	Non-U.S. structured finance			48		48
		Total Category 2		3,486		3,949
Category 3
	U.S. public finance			422		449
	Non-U.S. public finance			—		—
	U.S. structured finance			3,843		3,389
	Non-U.S. structured finance			—		—
		Total Category 3		4,265		3,838
			BIG Total	$	21,575	$	22,538

Assured Guaranty's surveillance department is responsible for monitoring our portfolio of credits and maintains a list of BIG credits. BIG Category 1: Below-investment-grade transactions showing sufficient deterioration to make future losses possible, but for which none are currently expected. BIG Category 2: Below-investment-grade transactions for which future losses are expected but for which no claims (other than liquidity claims which is a claim that the Company expects to be reimbursed within one year) have yet been paid. BIG Category 3: Below-investment-grade transactions for which future losses are expected and on which claims (other than liquidity claims) have been paid.

Please refer to the Glossary for an explanation of changes in the Company's internal rating approach, presentation of net par outstanding and a description of various sectors.

Assured Guaranty Ltd.

Below Investment Grade Exposures (3 of 5)

As of June 30, 2014

(dollars in millions)

Public Finance BIG Exposures with Revenue Sources Greater Than $50 Million



			Net Par Outstanding		Internal Rating
Name or description
U.S. public finance:
		Puerto Rico General Obligation, Appropriations and Guarantees of the Commonwealth	$	1,941	BB
		Puerto Rico Highway and Transportation Authority	1,174		BB-
		Skyway Concession Company LLC	1,162		BB
		Puerto Rico Electric Power Authority	819		B-
		Puerto Rico Municipal Finance Agency	450		BB-
		Puerto Rico Aqueduct & Sewer Authority	384		BB-
		Louisville Arena Authority Inc.	337		BB
		Detroit (City of) Michigan	303		D
		San Joaquin Hills California Transportation	239		BB-
		GMAC Military Housing Trust XVIII (Hickam Air Force Base)	214		BB
		Puerto Rico Hotel Occupancy Tax Puerto Rico Convention Center District Authority	185		BB-
		Lackawanna County, Pennsylvania	179		BB-
		Woonsocket (City of), Rhode Island	146		BB
		Guaranteed Student Loan Transaction	143		B
		Stockton City, California	119		D
		City of Fresno Revenue Stream	118		BB+
		Orlando Tourist Development Tax - Florida	118		B+
		Wayne County, Michigan	109		BB+
		Xenia Rural Water District, Iowa	78		B
		Pennsylvania Economic Development Financing Authority (Capitol Region Parking System)	54		BB
		Bridgeview Village Illinois General Obligation	50		BB+
	Total		$	8,322

Non-U.S. public finance:
		Reliance Rail Finance Pty. Limited	$	631	BB
		M6 Duna Autopalya Koncesszios Zartkoruen Mukodo Reszvenytarsasag	368		BB-
		Valencia Fair	261		BB-
		Autovia de la Mancha, S.A.	148		BB-
		Alte Liebe I Limited (Wind Farm)	76		BB
		Metropolitano de Porto Lease and Sublease of Railroad Equipment	56		B+
	Total		$	1,540
Total			$	9,862

Please refer to the Glossary for an explanation of changes in the Company's internal rating approach, presentation of net par outstanding and a description of various sectors.

Assured Guaranty Ltd.

Below Investment Grade Exposures (4 of 5)

As of June 30, 2014

(dollars in millions)

Structured Finance BIG Exposures Greater Than $50 Million



	BIG Net Par Outstanding (including loss mitigation bonds)		Loss Mitigation Bonds		BIG Net Par Outstanding (excluding loss mitigation bonds)		Internal Rating	Current Credit Enhancement	60+ Day Delinquencies
Name or description
U.S. structured finance:
U.S. RMBS:
MABS 2007-NCW	$	473	$	57	$	416	CCC	11.8%	50.6%
Option One 2007-FXD2	325		3		322		CCC	0.0%	24.0%
Deutsche Alt-A Securities Mortgage Loan 2007-2	303		—		303		BB	0.0%	23.1%
Private Residential Mortgage Transaction	303		—		303		CCC	0.9%	23.9%
Countrywide HELOC 2006-I	282		—		282		BB	0.0%	2.4%
Deutsche Alt-A Securities Mortgage Loan 2007-3	272		—		272		B	0.0%	20.0%
Private Residential Mortgage Transaction	256		—		256		CCC	—%	27.3%
Private Residential Mortgage Transaction	255		—		255		B	11.8%	24.5%
MortgageIT Securities Corp. Mortgage Loan 2007-2	246		—		246		CCC	1.2%	17.5%
Nomura Asset Accept. Corp. 2007-1	227		1		226		CCC	0.0%	33.9%
Private Residential Mortgage Transaction	179		—		179		CCC	7.8%	24.9%
Countrywide Home Equity Loan Trust 2007-D	174		—		174		B	0.0%	2.8%
Soundview 2007-WMC1	173		—		173		CCC	—%	57.6%
Countrywide HELOC 2005-D	170		—		170		BB	0.0%	4.3%
Countrywide Home Equity Loan Trust 2005-J	166		—		166		BB	0.0%	3.6%
Countrywide HELOC 2006-F	215		64		151		BB	0.0%	5.5%
New Century 2005-A	141		—		141		CCC	11.1%	26.9%
Countrywide HELOC 2007-A	149		14		135		BB	0.0%	3.6%
Countrywide HELOC 2007-B	135		—		135		BB	0.0%	2.9%
GMACM 2004-HE3	132		—		132		BB	0.0%	2.9%
Deutsche Alt-A Securities Mortgage Loan 2007-2	125		—		125		BB	0.0%	23.1%
Private Residential Mortgage Transaction	114		—		114		BB	17.4%	27.3%
CSAB 2006-3	108		—		108		CCC	0.0%	43.7%
IndyMac 2007-H1 HELOC	105		—		105		BB	0.0%	3.1%
Deutsche Alt-A Securities Mortgage Loan 2007-2	89		—		89		BB	0.0%	23.1%
Countrywide HELOC 2005-C	78		—		78		BB	0.0%	5.1%
Soundview Home Loan Trust 2008-1	72		1		71		CCC	12.4%	27.8%
IMPAC CMB Trust Series 2007-A Class M-1	67		—		67		BB	9.4%	19.1%
AAA Trust 2007-2	249		183		66		BB	—%	32.1%
American Home Mortgage Assets Trust 2007-4	64		—		64		CCC	0.1%	31.0%
MASTR Asset-Backed Securities Trust 2005-NC2	61		—		61		CCC	—%	24.5%
CSAB 2006-2	67		10		57		CCC	0.0%	38.0%
Terwin Mortgage Trust 2005-16HE	55		—		55		CCC	—%	27.3%
Taylor Bean & Whitaker 2007-2	75		21		54		CCC	0.0%	20.2%
CSMC 2007-3	58		8		50		CCC	0.0%	32.9%
Terwin Mortgage Trust 2006-10SL	178		136		42		CCC	—%	3.8%
Renaissance (DELTA) 2007-3	142		128		14		CCC	—%	28.8%
Terwin Mortgage Trust 2007-6ALT	52		50		2		CCC	0.0%	29.3%
Total U.S. RMBS	$	6,335	$	676	$	5,659

Please refer to the Glossary for an explanation of changes in the Company's internal rating approach, presentation of net par outstanding and a description of performance indicators and sectors.

Assured Guaranty Ltd.

Below Investment Grade Exposures (5 of 5)

As of June 30, 2014

(dollars in millions)

Structured Finance BIG Exposures Greater Than $50 Million (continued)



			BIG Net Par Outstanding (including loss mitigation bonds)		Loss Mitigation Bonds		BIG Net Par Outstanding (excluding loss mitigation bonds)		Internal Rating	Current Credit Enhancement
Name or description
U.S. structured finance:
	Other:
		Orkney Re II, Plc	$	423	$	—	$	423	CCC	N/A
		Taberna Preferred Funding IV, LTD	278		—		278		BB-	24.7%
		Taberna Preferred Funding III, LTD	257		—		257		CCC	19.6%
		Alesco Preferred Funding XVI, LTD.	224		—		224		B+	15.9%
		Taberna Preferred Funding II, LTD.	207		—		207		CCC	20.8%
		Ballantyne Re Plc	500		325		175		CC	N/A
		Alesco Preferred Funding XVII, LTD.	169		—		169		BB	28.7%
		Trapeza CDO XI	150		—		150		BB-	39.3%
		Taberna Preferred Funding VI, LTD	141		—		141		B	19.1%
		US Capital Funding IV, LTD	136		—		136		CCC	6.6%
		NRG Peaker ⁽¹⁾	102		—		102		BB	N/A
		National Collegiate Trust Series 2007-4	70		—		70		CCC	N/A
		National Collegiate Trust Series 2006-2	67		—		67		CCC	N/A
		CAPCO - Excess SIPC Excess of Loss Reinsurance	63		—		63		BB	N/A
		Conseco Finance Manufactured Housing Series 2001-2	60		—		60		CCC	14.5%
		Subtotal other	$	2,847	$	325	$	2,522
		Subtotal U.S. structured finance	$	9,182	$	1,001	$	8,181

Non-U.S. structured finance:

		Gleneagles Funding LTD (1st Issue)	$	229	$	—	$	229	BB	N/A
		Augusta Funding Limited 07 Perpetual Note Issue	81		—		81		BB	N/A
		Private Pooled Corporate Transaction	80		—		80		BB	N/A
		Augusta Funding Limited 05 Perpetual Note Issue	78		—		78		BB	N/A
		Babcock & Brown Air Funding I Ltd. Series 2007-1	68		—		68		BB	N/A
		Private Pooled Corporate Transaction	64		—		64		BB	N/A
		Private Pooled Corporate Transaction	56		—		56		BB	N/A
		Subtotal Non-U.S. structured finance	$	656	$	—	$	656
	Total		$	9,838	$	1,001	$	8,837


1)	In accordance with the terms of certain credit derivative contracts, the referenced obligations in such contracts have been delivered to the Company and therefore are included in the investment portfolio. Net par shown is net of $63 million of ceded par. The Company holds 100% of the bonds referenced in this transaction and reports them in the investment portfolio.

Please refer to the Glossary for an explanation of changes in the Company's internal rating approach, presentation of net par outstanding and a description of performance indicators and sectors.

Assured Guaranty Ltd.

Largest Exposures by Sector (1 of 4)

As of June 30, 2014

(dollars in millions)

50 Largest U.S. Public Finance Exposures by Revenue Source



Credit names:	Net Par Outstanding		Internal Rating
Credit names:	Net Par Outstanding		Internal Rating
New Jersey (State of)	$	3,937	A
California (State of)	3,224		A-
New York (City of) New York	3,049		AA-
Massachusetts (Commonwealth of)	2,516		AA
Chicago (City of) Illinois	2,392		BBB+
New York (State of)	2,245		A+
Illinois (State of)	2,183		A-
Miami-Dade County Florida Aviation Authority - Miami International Airport	2,176		A
Los Angeles, California Unified School District	1,947		AA-
Puerto Rico General Obligation, Appropriations and Guarantees of the Commonwealth	1,941		BB
Houston, Texas Water and Sewer Authority	1,801		AA-
Port Authority of New York and New Jersey	1,765		AA-
Wisconsin (State of)	1,756		A+
Washington (State of)	1,684		AA
Philadelphia (City of) Pennsylvania	1,674		BBB+
New York Metropolitan Transportation Authority	1,633		A
Pennsylvania (Commonwealth of)	1,621		AA-
Chicago, Illinois Public Schools	1,606		A-
Chicago-O'Hare International Airport	1,487		A
New York City Municipal Water Finance Authority	1,453		AA
Miami-Dade County Florida School Board	1,447		A-
Illinois Toll Highway Authority	1,409		AA
Arizona (State of)	1,398		A+
Atlanta Georgia Water & Sewer System	1,391		A-
Massachusetts (Commonwealth of) Water Resources	1,304		AA
Georgia Board of Regents	1,300		A
Metro Washington Airport Authority	1,252		A+
Michigan (State of)	1,220		A+
Philadelphia School District, Pennsylvania	1,218		A
Pennsylvania Turnpike Commission	1,178		A-
Puerto Rico Highway and Transportation Authority	1,174		BB-
Skyway Concession Company LLC	1,162		BB
Los Angeles, California Department of Water & Power - Electric Revenue Bonds	1,143		AA-
North Texas Tollway Authority	1,119		A
Long Island Power Authority	1,100		A-
District of Columbia	1,049		A+
Detroit Michigan Sewer	1,018		BBB
Kentucky (Commonwealth of)	1,002		A+
Louisiana (State of) Gas and Fuel Tax	971		AA
San Diego County, California Water	963		AA
California State University System Trustee	947		A+
Garden State Preservation Trust, New Jersey Open Space & Farmland	940		AA
San Diego Unified School District, California	912		AA
University of California Board of Regents	890		AA
Hartfield Atlanta International Airport	881		A+
New Jersey Turnpike Authority	872		A-
Orlando-Orange County Expressway Authority, Florida	861		A+
Puerto Rico Electric Power Authority	819		B-
Miami-Dade County, Florida Water & Sewer	847		A+
New York State Thruway Authority	815		A
Total top 50 U.S. public finance exposures	$	74,692

Please refer to the Glossary for an explanation of net par outstanding, internal ratings and sectors.

Assured Guaranty Ltd.

Largest Exposures by Sector (2 of 4)

As of June 30, 2014

(dollars in millions)

50 Largest U.S. Structured Finance Exposures



Credit Name		Net Par Outstanding		Internal Rating	Credit Enhancement
	Fortress Credit Opportunities I, LP.	$	1,328	AA	34.8%
	Synthetic Investment Grade Pooled Corporate CDO	1,175		AAA	13.2%
	Synthetic High Yield Pooled Corporate CDO	978		AAA	40.6%
	Stone Tower Credit Funding	789		AAA	32.7%
	Synthetic Investment Grade Pooled Corporate CDO	767		AAA	15.3%
	Synthetic Investment Grade Pooled Corporate CDO	763		AAA	29.5%
	Synthetic Investment Grade Pooled Corporate CDO	753		AAA	23.4%
	Synthetic Investment Grade Pooled Corporate CDO	745		AAA	29.0%
	Synthetic Investment Grade Pooled Corporate CDO	655		AAA	15.9%
	Eastland CLO, LTD	532		AAA	39.0%
	Synthetic Investment Grade Pooled Corporate CDO	516		AAA	14.7%
	Denali CLO VII, LTD.	506		AAA	19.6%
	Private US Insurance Securitization	500		AA	N/A
	Shenandoah Trust Capital I Term Securities	484		A+	N/A
	Churchill Financial Cayman	467		AAA	36.8%
	SLM Private Credit Student Trust 2007-A	450		BBB+	17.8%
	LIICA Holdings, LLC	428		AA	N/A
	Orkney Re II, Plc	423		CCC	N/A
	MABS 2007-NCW	416		CCC	11.8%
	Private Other Structured Finance Transaction	400		AA	N/A
	Phoenix CLO II	400		AAA	21.8%
	SLM Private Credit Student Loan Trust 2007-6	392		AAA	4.2%
	Synthetic Investment Grade Pooled Corporate CDO	384		AAA	14.7%
	Synthetic Investment Grade Pooled Corporate CDO	380		AAA	30.2%
	KKR Financial CLO 2007-1	377		AAA	51.1%
	Grayson CLO	366		AAA	30.7%
	Symphony Credit Opportunities Fund	364		AAA	23.4%
	SLM Private Credit Student Loan Trust 2006-C	356		BBB	18.4%
	Synthetic Investment Grade Pooled Corporate CDO	343		AAA	16.8%
	Option One 2007-FXD2	323		CCC	0.0%
	Cent CDO 15 Limited	307		AAA	18.2%
	Deutsche Alt-A Securities Mortgage Loan 2007-2	303		BB	0.0%
	Private Residential Mortgage Transaction	303		CCC	0.9%
	Private Other Structured Finance Transaction	300		A+	N/A
	Muir Grove CLO	298		AAA	23.9%
	Cent CDO 12 Limited	287		AAA	24.1%
	Synthetic Investment Grade Pooled Corporate CDO	283		AAA	31.0%
	Countrywide HELOC 2006-I	282		BB	0.0%
	Taberna Preferred Funding IV, LTD	278		BB-	24.7%
	Kingsland IV	274		AAA	22.7%
	Centurion CDO 9	273		AAA	26.0%
	Deutsche Alt-A Securities Mortgage Loan 2007-3	272		B	0.0%
	Synthetic Investment Grade Pooled Corporate CDO	270		AAA	29.1%
	CIFC Funding 2007-II	268		AAA	43.2%
	Kingsland V	263		AAA	26.7%
	Stone Tower CLO V	261		AAA	35.1%
	Taberna Preferred Funding III, LTD	257		CCC	19.6%
	Private Residential Mortgage Transaction	256		CCC	—%
	Private Residential Mortgage Transaction	255		B	11.8%
	Alesco Preferred Funding XIV	253		BBB-	37.5%
	Total top 50 U.S. structured finance exposures	$	22,303

Please refer to the Glossary for an explanation of changes in the Company's internal rating approach, presentation of net par outstanding and a description of various sectors.

Assured Guaranty Ltd.

Largest Exposures by Sector (3 of 4)

As of June 30, 2014

(dollars in millions)

25 Largest Non-U.S. Exposures by Revenue Source



Credit Name		Net Par Outstanding		Internal Rating
	Quebec Province	$	2,378	A+
	Thames Water Utility Finance PLC	1,562		A-
	Sydney Airport Finance Company	1,383		BBB
	Channel Link Enterprises Finance PLC	1,001		BBB
	Southern Gas Networks PLC	987		BBB
	Societe des Autoroutes du Nord et de l'Est de France S.A.	870		BBB+
	Capital Hospitals (Issuer) PLC	849		BBB-
	Southern Water Services Limited	753		A-
	Campania Region - Healthcare receivable	740		BBB-
	International Infrastructure Pool	721		A-
	International Infrastructure Pool	721		A-
	International Infrastructure Pool	721		A-
	Reliance Rail Finance Pty. Limited	631		BB
	Central Nottinghamshire Hospitals PLC	594		BBB
	Synthetic Investment Grade Pooled Corporate CDO	562		AAA
	Scotland Gas Networks Plc (A2)	545		BBB
	NewHospitals (St Helens & Knowsley) Finance PLC	543		BBB
	Verbund - Lease and Sublease of Hydro-Electric equipment	532		AAA
	The Hospital Company (QAH Portsmouth) Limited	522		BBB
	Integrated Accomodation Services PLC	517		BBB+
	Envestra Limited	511		BBB
	A28 Motorway	505		BBB
	Octagon Healthcare Funding PLC	452		BBB
	Dali Capital PLC-Northumbrian Water (Swap)	450		BBB+
	Taberna Europe CDO II PLC	432		BBB-
	Total top 25 non-U.S. exposures	$	19,482

Please refer to the Glossary for an explanation of net par outstanding, internal ratings and sectors.

Assured Guaranty Ltd.

Largest Exposures by Sector (4 of 4)

As of June 30, 2014

(dollars in millions)

10 Largest U.S. Residential Mortgage Servicer Exposures



Servicer:		Net Par Outstanding
	Ocwen Loan Servicing, LLC⁽¹⁾	$	3,725
	Bank Of America, N.A.⁽²⁾	2,682
	Wells Fargo Bank N.A.	2,257
	Specialized Loan Servicing, LLC	2,114
	JPMorgan Chase Bank	551
	Select Portfolio Servicing, Inc.	517
	Carrington Mortgage Services, LLC	303
	Doral Bank	86
	Nationstar Mortgage LLC	85
	Capital One Financial Corporation	68
	Total top 10 U.S. residential mortgage servicer exposures	$	12,388

10 Largest U.S. Healthcare Exposures



Credit Name:		Net Par Outstanding		Internal Rating	State
	MultiCare Health System	$	462	AA-	WA
	Methodist Healthcare	424		A	TN
	CHRISTUS Health	421		A+	TX
	Children's National Medical Center	341		A-	DC
	Catholic Health Initiatives	323		A+	CO
	Carolina HealthCare System	319		AA-	NC
	Bon Secours Health System Obligated Group	312		A-	MD
	UnityPoint Health System (fka Iowa Health System)	307		A+	IA & WI
	Catholic Health Partners	301		A+	OH
	Palmetto Health Alliance	287		A-	SC
	Total top 10 U.S. healthcare exposures	$	3,497


1)	Includes Homeward Residential Inc.


2)	Includes Countrywide Home Loans Servicing LP.

Please refer to the Glossary for an explanation of changes in the Company's internal rating approach and presentation of net par outstanding.

Assured Guaranty Ltd.

Rollforward of Net Expected Loss and LAE to be Paid

(dollars in millions)

Rollforward of Net Expected Loss and LAE to be Paid for the Three Months Ended June 30, 2014



Financial Guaranty Insurance Contracts and Credit Derivatives				Net Expected Loss to be Paid as of March 31, 2014			Economic Loss Development During 2Q-14⁽¹⁾			(Paid) Recovered Losses During 2Q-14			Net Expected Loss to be Paid at June 30, 2014
U.S. RMBS
	First lien:
		Prime first lien		$	18		$	(7	)	$	—		$	11
		Alt-A first lien		308			4			(11		)	301
		Option ARMs		(28		)	(24		)	1			(51		)
		Subprime first lien		295			6			40			341
			Total first lien	593			(21		)	30			602
	Second lien:
		Closed-end second lien		(4		)	(5		)	—			(9		)
		HELOC		(109		)	(33		)	25			(117		)
			Total second lien	(113		)	(38		)	25			(126		)
Total U.S. RMBS				480			(59		)	55			476
TruPS				32			—			—			32
Other structured finance				138			5			(3		)	140
U.S. public finance				281			82			(24		)	339
Non-U.S. public finance				57			(5		)	—			52
			Subtotal	988			23			28			1,039
Other				(4		)	—			—			(4		)
Total				$	984		$	23		$	28		$	1,035

Rollforward of Net Expected Loss and LAE to be Paid for the Six Months Ended June 30, 2014



Financial Guaranty Insurance Contracts and Credit Derivatives				Net Expected Loss to be Paid as of December 31, 2013			Economic Loss Development During 2014⁽¹⁾			(Paid) Recovered Losses During 2014			Net Expected Loss to be Paid at June 30, 2014
U.S. RMBS
	First lien:
		Prime first lien		$	21		$	(10	)	$	—		$	11
		Alt-A first lien		304			12			(15		)	301
		Option ARMs		(9		)	(39		)	(3		)	(51		)
		Subprime first lien		304			(1		)	38			341
			Total first lien	620			(38		)	20			602
	Second lien:
		Closed-end second lien		(11		)	—			2			(9		)
		HELOC		(116		)	(31		)	30			(117		)
			Total second lien	(127		)	(31		)	32			(126		)
Total U.S. RMBS				493			(69		)	52			476
TruPS				51			(19		)	—			32
Other structured finance				120			24			(4		)	140
U.S. public finance				264			105			(30		)	339
Non-U.S. public finance				57			(5		)	—			52
			Subtotal	985			36			18			1,039
Other				(3		)	(1		)	—			(4		)
Total				$	982		$	35		$	18		$	1,035


1)	Includes the effect of changes in the Company's estimate of future recovery on representations and warranties (R&W).

Assured Guaranty Ltd.

Financial Guaranty Insurance and Credit Derivative U.S. RMBS R&W Benefit Development

(dollars in millions)

Financial Guaranty Insurance and Credit Derivatives U.S. RMBS Benefit Development for the Three Months Ended June 30, 2014



			Future Net R&W Benefit at March 31, 2014		R&W Economic Loss Development During 2Q-14			R&W Recovered During 2Q-14			Future Net R&W Benefit at June 30, 2014
Financial guaranty insurance:
	Prime first lien		$	3	$	—		$	—		$	3
	Alt-A first lien		101		5			(2		)	104
	Option ARMs		145		10			(19		)	136
	Subprime first lien		146		1			(48		)	99
	Closed-end second lien		95		—			(2		)	93
	HELOC		56		9			(16		)	49
		Subtotal	546		25			(87		)	484

Credit derivatives:
	Alt-A first lien		168		(7		)	(2		)	159
	Option ARMs		7		1			—			8
		Subtotal	175		(6		)	(2		)	167

Total			$	721	$	19		$	(89	)	$	651

Financial Guaranty Insurance and Credit Derivatives U.S. RMBS Benefit Development for the Six Months Ended June 30, 2014



			Future Net R&W Benefit at December 31, 2013		R&W Economic Loss Development During 2014			R&W Recovered During 2014			Future Net R&W Benefit at June 30, 2014
Financial guaranty insurance:
	Prime first lien		$	4	$	(1	)	$	—		$	3
	Alt-A first lien		100		7			(3		)	104
	Option ARMs		167		18			(49		)	136
	Subprime first lien		118		29			(48		)	99
	Closed-end second lien		98		(3		)	(2		)	93
	HELOC		45		21			(17		)	49
		Subtotal	532		71			(119		)	484

Credit derivatives:
	Alt-A first lien		174		(6		)	(9		)	159
	Option ARMs		6		2			—			8
		Subtotal	180		(4		)	(9		)	167

Total			$	712	$	67		$	(128	)	$	651

Financial Guaranty Insurance and Credit Derivatives U.S. RMBS Policies with R&W Benefit



			Number of Risks as of		Debt Service as of
			June 30, 2014	December 31, 2013	June 30, 2014		December 31, 2013
Financial guaranty insurance:
	Prime first lien		1	1	$	35	$	38
	Alt-A first lien		15	13	843		838
	Option ARMs		9	8	271		346
	Subprime first lien		4	5	668		998
	Closed-end second lien		4	4	149		158
	HELOC		2	4	70		320
		Subtotal	35	35	2,036		2,698

Credit derivatives:
	Alt-A first lien		8	6	1,896		2,018
	Option ARMs		1	1	282		295
		Subtotal	9	7	2,178		2,313

Total			44	42	$	4,214	$	5,011

Please refer to the Glossary for an explanation of changes in the presentation of net debt service outstanding and of the various sectors.

Assured Guaranty Ltd.

Losses Incurred

As of June 30, 2014

(dollars in millions)



Financial Guaranty Insurance Contracts and Credit Derivatives				Total Net Par Outstanding for BIG Transactions (1)		2Q-14 Losses Incurred			2014 Losses Incurred			Net Expected Loss to be Expensed
U.S. RMBS
	First lien:
		Prime first lien		$	381	$	(6	)	$	(10	)	$	0
		Alt-A first lien		2,621		6			16			72
		Option ARMs		548		(24		)	(32		)	29
		Subprime first lien		1,824		10			5			88
			Total first lien	5,374		(14		)	(21		)	189
	Second lien:
		Closed-end second lien		140		(7		)	(3		)	37
		HELOC		1,671		(18		)	(10		)	102
			Total second lien	1,811		(25		)	(13		)	139
Total U.S. RMBS				7,185		(39		)	(34		)	328
TruPS				1,561		1			(14		)	1
Other structured finance				2,355		3			20			25
U.S. public finance				8,861		83			109			81
Non-U.S. public finance				1,613		(2		)	(2		)	17
			Subtotal	21,575		46			79			452
Other				—		0			(1		)	—
			Subtotal	21,575		46			78			452
Effect of consolidating FG VIEs				—		(7		)	(6		)	(82		)
Total				$	21,575	$	39		$	72		$	370

Please refer to the Glossary for an explanation of changes in the presentation of net par outstanding and of the various sectors.

Assured Guaranty Ltd.

Summary Financial and Statistical Data

(dollars in millions, except per share amounts)



			As of and for Six Months Ended June 30, 2014			Year Ended December 31,
						2013			2012			2011		2010
GAAP Summary Income Statement Data
	Net earned premiums		$	268		$	752		$	853		$	920	$	1,187
	Net investment income		199			393			404			396		361
	Realized gains and other settlements on credit derivatives		34			(42		)	(108		)	6		153
	Total expenses		261			466			822			776		776
	Income (loss) before income taxes		287			1,142			132			1,029		534
	Net income (loss) attributable to Assured Guaranty Ltd.		201			808			110			773		484
	Net income (loss) attributable to Assured Guaranty Ltd. per diluted share		1.11			4.30			0.57			4.16		2.56

GAAP Summary Balance Sheet Data
	Total investments and cash		$	11,741		$	10,969		$	11,223		$	11,314	$	10,849
	Total assets		15,690			16,287			17,242			17,709		19,370
	Unearned premium reserve		4,391			4,595			5,207			5,963		6,973
	Loss and LAE reserve		775			592			601			679		574
	Long-term debt		1,311			816			836			1,038		1,053
	Shareholders’ equity attributable to Assured Guaranty Ltd.		5,242			5,115			4,994			4,652		3,670
	Book value attributable to Assured Guaranty Ltd. per share		30.10			28.07			25.74			25.52		19.97

Non-GAAP Financial Measures
	Operating income		$	233		$	609		$	535		$	601	$	655
	Operating income per diluted share		1.28			3.25			2.81			3.24		3.46
	Operating shareholder's equity		6,149			6,164			5,830			5,201		4,691
	Operating shareholder's equity per share		35.31			33.83			30.05			28.54		25.53
	Adjusted book value		8,850			9,033			9,151			8,987		8,989
	PVP		58			141			210			243		363

Other Financial Information (GAAP Basis)
	Net debt service outstanding (end of period)		$	662,004		$	690,535		$	780,356		$	844,447	$	926,698
	Gross debt service outstanding (end of period)		705,266			737,380			833,098			934,914		1,029,540
	Net par outstanding (end of period)		437,576			459,107			518,772			556,830		616,686
	Gross par outstanding (end of period)		464,455			487,895			550,908			613,124		680,803

Other Financial Information (Statutory Basis)⁽¹⁾
	Net debt service outstanding (end of period)		$	634,555		$	663,797		$	756,044		$	828,327	$	904,686
	Gross debt service outstanding (end of period)		676,306			709,000			807,420			916,501		1,003,651
	Net par outstanding (end of period)		414,827			434,597			496,237			541,882		598,398
	Gross par outstanding (end of period)		440,277			461,845			527,126			593,072		659,320

	Consolidated qualified statutory capital		6,307			6,136			5,943			5,688		4,915
	Consolidated policyholders' surplus and reserves		10,570			10,454			10,288			10,626		10,247

	Ratios:
		Net par outstanding to qualified statutory capital	66		:1	71		:1	83:1			95:1		122:1
		Capital ratio⁽²⁾	101		:1	108		:1	127:1			145:1		184:1
		Financial resources ratio⁽²⁾	52		:1	55		:1	61:1			65:1		72:1

	Gross debt service written:
		Public finance - U.S.	$	6,916		$	15,559		$	25,252		$	26,630	$	48,990
		Public finance - non-U.S.	233			674			40			208		51
		Structured finance - U.S.	11			297			623			1,731		2,962
		Structured finance - non-U.S.	215			—			—			—		—
	Total gross debt service written		$	7,375		$	16,530		$	25,915		$	28,569	$	52,003

	Net debt service written		$	7,375		$	16,497		$	25,915		$	28,569	$	52,003
	Net par written		4,527			9,331			16,816			16,892		30,759
	Gross par written		4,527			9,350			16,816			16,892		30,759

1) Statutory amounts prepared on a consolidated basis. The NAIC Annual Statements for U.S. Domiciled Insurance Subsidiaries are prepared on a stand-alone basis.


2)	See page 6 for additional detail on claims-paying resources.

Please refer to the explanation of Non-GAAP Financial Measures set forth at the end of this Financial Supplement.

Please refer to the Glossary for an explanation of changes in the presentation of net debt service and net par outstanding and of the various sectors.

Glossary

Net Par Outstanding and Internal Ratings

Net par outstanding is insured par exposure, net of reinsurance cessions. Unless otherwise indicated, GAAP net par outstanding amounts exclude amounts related to securities the Company has purchased for loss mitigation purposes.

Internal Rating utilizes the Company’s ratings scale, which is similar to that used by the nationally recognized statistical rating organizations; however, the ratings in the tables may not be the same as ratings assigned by any such rating agency.

Performance Indicators

The performance information described below is obtained from third parties and/or provided by the trustee and may be subject to revision as updated or additional information are obtained:

60+ Day Delinquencies are defined as loans that are greater than 60 days delinquent and all loans that are in foreclosure, bankruptcy or real estate owned divided by current collateral balance.

Average Credit Enhancement is intended to provide a measure of the amount of equity and/or subordinated tranches that are junior in the capital structure to Assured Guaranty’s exposure, expressed as a percentage of the total transaction size, and reflects any reduction of that credit support resulting from defaults or other factors. For transactions where excess spread may be available to absorb certain losses, the amounts shown do not include any benefit from excess spread. The calculation methodologies differ for the various asset classes to reflect differences in transaction structures in order to provide a measure that management believes is comparable across asset classes. Some asset classes may not have subordinated tranches so they are excluded from the weighted averages.

Cumulative Losses are defined as net charge-offs on the underlying loan collateral divided by the original collateral balance.

Pool Factor is the percentage of the current collateral balance divided by the original collateral balance of the transactions at inception.

Subordination represents the sum of subordinate tranches and overcollateralization, expressed as a percentage of total transaction size, and does not include any benefit from excess spread collections that may be used to absorb losses. Many of the closed-end second lien RMBS transactions insured by the Company have unique structures whereby the collateral may be written down for losses without a corresponding write-down of the obligations insured by the Company. Many of these transactions are currently undercollateralized, with the principal amount of collateral being less than the principal amount of the obligation insured by the Company. The Company is not required to pay principal shortfalls until legal maturity (rather than making timely principal payments), and takes the undercollateralization into account when estimating expected losses for these transactions.

Sectors

Below are brief descriptions of selected types of public and structured finance obligations that the Company insures and reinsures. For a more complete description, please refer to Assured Guaranty Ltd.’s Annual Report on Form 10-K for the year ended December 31, 2013.

Public Finance:

General Obligation Bonds are full faith and credit bonds that are issued by states, their political subdivisions and other municipal issuers, and are supported by the general obligation of the issuer to pay from available funds and by a pledge of the issuer to levy ad valorem taxes in an amount sufficient to provide for the full payment of the bonds.

Tax-Backed Bonds are obligations that are supported by the issuer from specific and discrete sources of taxation. They include tax-backed revenue bonds, general fund obligations and lease revenue bonds. Tax-backed obligations may be secured by a lien on specific pledged tax revenues, such as a gasoline or excise tax, or incrementally from growth in property tax revenue associated with growth in property values. These obligations also include obligations secured by special assessments levied against property owners and often benefit from issuer covenants to enforce collections of such assessments and to foreclose on delinquent properties. Lease revenue bonds typically are general fund obligations of a municipality or other governmental authority that are subject to annual appropriation or abatement; projects financed and subject to such lease payments ordinarily include real estate or equipment serving an essential public purpose. Bonds in this category also include moral obligations of municipalities or governmental authorities.

Municipal Utility Bonds are obligations of all forms of municipal utilities, including electric, water and sewer utilities and resource recovery revenue bonds. These utilities may be organized in various forms, including municipal enterprise systems, authorities or joint action agencies.

Transportation Bonds include a wide variety of revenue-supported bonds, such as bonds for airports, ports, tunnels, municipal parking facilities, toll roads and toll bridges.

Healthcare Bonds are obligations of healthcare facilities, including community-based hospitals and systems, as well as of health maintenance organizations and long-term care facilities.

Glossary (continued)

Sectors (continued)

Higher Education Bonds are obligations secured by revenue collected by either public or private secondary schools, colleges and universities. Such revenue can encompass all of an institution’s revenue, including tuition and fees, or in other cases, can be specifically restricted to certain auxiliary sources of revenue.

Infrastructure Bonds include obligations issued by a variety of entities engaged in the financing of infrastructure projects, such as roads, airports, ports, social infrastructure and other physical assets delivering essential services supported by long-term concession arrangements with a public sector entity.

Investor-Owned Utility Bonds are obligations primarily backed by investor-owned utilities, first mortgage bond obligations of for-profit electric or water utilities providing retail, industrial and commercial service, and also include sale-leaseback obligation bonds supported by such entities.

Housing Revenue Bonds are obligations relating to both single and multi-family housing, issued by states and localities, supported by cash flow and, in some cases, insurance from entities such as the Federal Housing Administration.

Regulated Utilities Obligations are issued by government-regulated providers of essential services and commodities, including electric, water and gas utilities. The majority of the Company's international regulated utility business is conducted in the United Kingdom.

Pooled Infrastructure Obligations are synthetic asset-backed obligations that take the form of CDS obligations or credit‑-linked notes that reference either infrastructure finance obligations or a pool of such obligations, with a defined deductible to cover credit risks associated with the referenced obligations.

Other Public Finance primarily includes government insured student loans, government-sponsored project finance and structured municipal transactions, which includes excess of loss reinsurance on portfolios of municipal credits.

Structured Finance:

Pooled Corporate Obligations are securities primarily backed by various types of corporate debt obligations, such as secured or unsecured bonds, bank loans or loan participations and trust preferred securities. These securities are often issued in ‘‘tranches,’’ with subordinated tranches providing credit support to the more senior tranches. The Company’s financial guaranty exposures generally are to the more senior tranches of these issues.

Residential Mortgage-Backed Securities (RMBS) are obligations backed by closed-end and open-end first and second lien mortgage loans on one-to-four family residential properties, including condominiums and cooperative apartments. First lien mortgage loan products in these transactions include fixed rate, adjustable rate (ARM) and option adjustable-rate (Option ARM) mortgages. The credit quality of borrowers covers a broad range, including ‘‘prime’’, ‘‘subprime’’ and ‘‘Alt-A’’. A prime borrower is generally defined as one with strong risk characteristics as measured by factors such as payment history, credit score, and debt-to-income ratio. A subprime borrower is a borrower with higher risk characteristics, usually as determined by credit score and/or credit history. An Alt-A borrower is generally defined as a prime quality borrower that lacks certain ancillary characteristics, such as fully documented income.

Additional insured obligations within RMBS include Home Equity Lines of Credit (HELOCs), which refers to a type of residential mortgage-backed transaction backed by second-lien loan collateral consisting of home equity lines of credit. U.S. Prime First Lien is a type of residential mortgage-backed securities transaction backed primarily by prime first-lien loan collateral plus an insignificant amount of other miscellaneous RMBS transactions.

CBOs/CLOs (collateralized bond obligations and collateralized loan obligations) are asset-backed securities largely backed by non-investment grade/high yield collateral.

Commercial Mortgage-Backed Securities (CMBS) are obligations backed by pools of commercial mortgages. The collateral supporting CMBS include office, multifamily, retail, hotel, industrial and other specialized or mixed-use properties.

Financial Products is the way in which the Company refers to the guaranteed investment contracts (GICs) portion of a line of business previously conducted by AGMH that the Company did not acquire when it purchased AGMH in 2009. That line of business, which the Company refers to as the former "Financial Products Business" of AGMH, was comprised of its guaranteed investment contracts business, its medium term notes business and the equity payment agreements associated with AGMH's leveraged lease business. When AGMH was still conducting Financial Products Business, AGM issued financial guaranty insurance policies on GICs and in respect of the GIC business; those policies cannot be revoked or canceled. Assured Guaranty is indemnified by Dexia against loss from the former Financial Products Business. The Financial Products Business is currently being run off.

Glossary (continued)

Sectors (continued)

Consumer Receivables Securities are obligations backed by non-mortgage consumer receivables, such as student loans, automobile loans and leases, manufactured home loans and other consumer receivables.

Commercial Receivables Securities are obligations backed by equipment loans or leases, aircraft and aircraft engine financings, business loans and trade receivables. Credit support is derived from the cash flows generated by the underlying obligations, as well as property or equipment values as applicable.

Insurance Securitization Securities are obligations secured by the future earnings from pools of various types of insurance/reinsurance policies and income produced by invested assets.

Other Structured Finance Securities are obligations backed by assets not generally described in any of the other described categories. One such type of asset is a tax benefit to be realized by an investor in one of the Federal or state programs that permit such investor to receive a credit against taxes (such as Federal corporate income tax or state insurance premium tax) for making qualified investments in specified enterprises, typically located in designated low-income areas.

Non-GAAP Financial Measures

The Company references financial measures that are not in accordance with accounting principles generally accepted in the United States of America (GAAP).

Management and the board of directors utilize non-GAAP financial measures in evaluating the Company’s financial performance and as a basis for determining senior management incentive compensation. By providing these non-GAAP financial measures, investors, analysts and financial news reporters have access to the same information that management reviews internally. In addition, Assured Guaranty’s presentation of non-GAAP financial measures is consistent with how analysts calculate their estimates of Assured Guaranty’s financial results in their research reports on Assured Guaranty and with how investors, analysts and the financial news media evaluate Assured Guaranty’s financial results.

The following paragraphs define each non-GAAP financial measure and describe why it is useful. A reconciliation of the non-GAAP financial measure and the most directly comparable GAAP financial measure, if available, is presented within this financial supplement. Non-GAAP financial measures should not be viewed as substitutes for their most directly comparable GAAP measures.

Operating Income: Management believes that operating income is a useful measure because it clarifies the understanding of the underwriting results of the Company’s financial guaranty business, and also includes financing costs and net investment income, and enables investors and analysts to evaluate the Company’s financial results as compared with the consensus analyst estimates distributed publicly by financial databases. Operating income is defined as net income (loss) attributable to Assured Guaranty Ltd., as reported under GAAP, adjusted for the following:

1) Elimination of the after-tax realized gains (losses) on the Company’s investments, except for gains and losses on securities classified as trading. The timing of realized gains and losses, which depends largely on market credit cycles, can vary considerably across periods. The timing of sales is largely subject to the Company’s discretion and influenced by market opportunities, as well as the Company’s tax and capital profile. Trends in the underlying profitability of the Company’s business can be more clearly identified without the fluctuating effects of these transactions.

2) Elimination of the after-tax non-credit-impairment unrealized fair value gains (losses) on credit derivatives, which is the amount in excess of the present value of the expected estimated economic credit losses and non-economic payments. Such fair value adjustments are heavily affected by, and in part fluctuate with, changes in market interest rates, credit spreads and other market factors and are not expected to result in an economic gain or loss. Additionally, such adjustments present all financial guaranty contracts on a more consistent basis of accounting, whether or not they are subject to derivative accounting rules.

3) Elimination of the after-tax fair value gains (losses) on the Company’s committed capital securities. Such amounts are heavily affected by, and in part fluctuate with, changes in market interest rates, credit spreads and other market factors and are not expected to result in an economic gain or loss.

4) Elimination of the after-tax foreign exchange gains (losses) on remeasurement of net premium receivables and loss and LAE reserves. Long-dated receivables constitute a significant portion of the net premium receivable balance and represent the present value of future contractual or expected collections. Therefore, the current period’s foreign exchange remeasurement gains (losses) are not necessarily indicative of the total foreign exchange gains (losses) that the Company will ultimately recognize.

5) Elimination of the effects of consolidating FG VIEs in order to present all financial guaranty contracts on a more consistent basis of accounting, whether or not GAAP requires consolidation. GAAP requires the Company to consolidate certain VIEs that have issued debt obligations insured by the Company even though the Company does not own such VIEs.

Operating Shareholders’ Equity: Management believes that operating shareholders’ equity is a useful measure because it presents the equity of Assured Guaranty Ltd. with all financial guaranty contracts accounted for on a more consistent basis and excludes fair value adjustments that are not expected to result in economic loss. Many investors, analysts and financial news reporters use operating shareholders’ equity as the principal financial measure for valuing Assured Guaranty Ltd.’s current share price or projected share price and also as the basis of their decision to recommend buying or selling Assured Guaranty Ltd.’s common shares. Many of the Company’s fixed income investors also use operating shareholders’ equity to evaluate the Company’s capital adequacy. Operating shareholders’ equity is the basis of the calculation of adjusted book value (see below). Operating shareholders’ equity is defined as shareholders’ equity attributable to Assured Guaranty Ltd., as reported under GAAP, adjusted for the following:

1) Elimination of the effects of consolidating FG VIEs in order to present all financial guaranty contracts on a more consistent basis of accounting, whether or not GAAP requires consolidation. GAAP requires the Company to consolidate certain VIEs that have issued debt obligations insured by the Company even though the Company does not own such VIEs.

Non-GAAP Financial Measures (continued)

Operating Shareholders’ Equity (continued):

4) Elimination of the after-tax unrealized gains (losses) on the Company’s investments, that are recorded as a component of accumulated other comprehensive income (AOCI) (excluding foreign exchange remeasurement). The AOCI component of the fair value adjustment on the investment portfolio is not deemed economic because the Company generally holds these investments to maturity and therefore should not recognize an economic gain or loss.

Operating return on equity (Operating ROE): Operating ROE represents operating income for a specified period divided by the average of operating shareholders’ equity at the beginning and the end of that period. Management believes that operating ROE is a useful measure to evaluate the Company’s return on invested capital. Many investors, analysts and members of the financial news media use operating ROE to evaluate Assured Guaranty Ltd.’s share price and as the basis of their decision to recommend, buy or sell the Assured Guaranty Ltd. common shares. Quarterly and year-to-date operating ROE are calculated on an annualized basis.

Adjusted Book Value: Management believes that adjusted book value is a useful measure because it enables an evaluation of the net present value of the Company’s in-force premiums and revenues in addition to operating shareholders’ equity. The premiums and revenues included in adjusted book value will be earned in future periods, but actual earnings may differ materially from the estimated amounts used in determining current adjusted book value due to changes in foreign exchange rates, prepayment speeds, terminations, credit defaults and other factors. Many investors, analysts and financial news reporters use adjusted book value to evaluate Assured Guaranty Ltd.’s share price and as the basis of their decision to recommend, buy or sell the Assured Guaranty Ltd. common shares. Adjusted book value is operating shareholders’ equity, as defined above, further adjusted for the following:

1) Elimination of after-tax deferred acquisition costs, net. These amounts represent net deferred expenses that have already been paid or accrued and will be expensed in future accounting periods.

2) Addition of the after-tax net present value of estimated net future credit derivative revenue. See below.

3) Addition of the after-tax value of the unearned premium reserve on financial guaranty contracts in excess of expected loss to be expensed, net of reinsurance. This amount represents the expected future net earned premiums, net of expected losses to be expensed, which are not reflected in GAAP equity.

Net present value of estimated net future credit derivative revenue: Management believes that this amount is a useful measure because it enables an evaluation of the value of future estimated credit derivative revenue. There is no corresponding GAAP financial measure. This amount represents the present value of estimated future revenue from the Company’s credit derivative in-force book of business, net of reinsurance, ceding commissions and premium taxes for contracts without expected economic losses, and is discounted at 6%. Estimated net future credit derivative revenue may change from period to period due to changes in foreign exchange rates, prepayment speeds, terminations, credit defaults or other factors that affect par outstanding or the ultimate maturity of an obligation.

PVP or present value of new business production: Management believes that PVP is a useful measure because it enables the evaluation of the value of new business production for Assured Guaranty by taking into account the value of estimated future installment premiums on all new contracts underwritten in a reporting period as well as premium supplements and additional installment premium on existing contracts as to which the issuer has the right to call the insured obligation but has not exercised such right, whether in insurance or credit derivative contract form, which GAAP gross premiums written and the net credit derivative premiums received and receivable portion of net realized gains and other settlements on credit derivatives (Credit Derivative Revenues) do not adequately measure. PVP in respect of financial guaranty contracts written in a specified period is defined as gross upfront and installment premiums received and the present value of gross estimated future installment premiums, in each case, discounted at 6%. For purposes of the PVP calculation, management discounts estimated future installment premiums on insurance contracts at 6%, while under GAAP, these amounts are discounted at a risk free rate. Additionally, under GAAP, management records future installment premiums on financial guaranty insurance contracts covering non-homogeneous pools of assets based on the contractual term of the transaction, whereas for PVP purposes, management records an estimate of the future installment premiums the Company expects to receive, which may be based upon a shorter period of time than the contractual term of the transaction. Actual future net earned or written premiums and Credit Derivative Revenues may differ from PVP due to factors including, but not limited to, changes in foreign exchange rates, prepayment speeds, terminations, credit defaults, or other factors that affect par outstanding or the ultimate maturity of an obligation.

Assured Guaranty Ltd.

30 Woodbourne Avenue

Hamilton HM 08

Bermuda

(441) 279-5705

www.assuredguaranty.com

Contacts:

Equity and Fixed Income Investors:

Robert Tucker

Managing Director, Investor Relations and Corporate Communications

(212) 339-0861

rtucker@assuredguaranty.com

Michael Walker

Managing Director, Fixed Income Investor Relations

(212) 261-5575

mwalker@assuredguaranty.com

Ross Aron

Vice President, Equity Investor Relations

(212) 261-5509

raron@assuredguaranty.com

Glenn Alterman

Associate, Investor Relations

(212) 339-0854

galterman@assuredguaranty.com

Media:

Ashweeta Durani

Vice President, Corporate Communications

(212) 408-6042

adurani@assuredguaranty.com

Assured Guaranty (AGO) 8-KAssured Guaranty Ltd. Reports Results for Second Quarter 2014