Assured Guaranty (AGO) 8-K Assured Guaranty Ltd. Reports Results for Fourth Quarter 2018 and Full Year 2018

Assured Guaranty Ltd.

December 31, 2018

Financial Supplement

Table of Contents		Page
	Selected Financial Highlights	1
	Consolidated Balance Sheets (unaudited)	3
	Consolidated Statements of Operations (unaudited)	4
	Non-GAAP Operating Income Adjustments and Effect of FG VIE Consolidation	5
	Selected Financial Highlights GAAP to Non-GAAP Reconciliations	6
	Claims-Paying Resources	9
	New Business Production	10
	Gross Par Written	11
	New Business Production by Quarter	12
	Investment Portfolio and Cash	13
	Estimated Net Exposure Amortization and Estimated Future Financial Guaranty Net Premium and Credit Derivative Revenues	14
	Expected Amortization of Net Par Outstanding	15
	Net Expected Loss to be Expensed	16
	Financial Guaranty Profile	17
	Non-Financial Guaranty Exposure	20
	Exposure to Puerto Rico	21
	Direct Pooled Corporate Obligations Profile	24
	Consolidated U.S. RMBS Profile	25
	Below Investment Grade Exposures	26
	Largest Exposures by Sector	30
	Rollforward of Net Expected Loss and Loss Adjustment Expenses to be Paid	33
	Loss Measures	34
	Summary of Financial and Statistical Data	35
	Summary of GAAP to Non-GAAP Reconciliations	36
	Glossary	38
	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, 2018.

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) reduction in the amount of available insurance opportunities and/or in the demand for Assured Guaranty's insurance; (2) 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 AGL or any of its subsidiaries, and/or of any securities AGL or any of its subsidiaries have issued, and/or of transactions that AGL’s subsidiaries have insured; (3) developments in the world’s financial and capital markets that adversely affect obligors’ payment rates or Assured Guaranty’s loss experience; (4) the possibility that budget or pension shortfalls or other factors will result in credit losses or impairments on obligations of state, territorial and local governments and their related authorities and public corporations that Assured Guaranty insures or reinsures; (5) the failure of Assured Guaranty to realize loss recoveries that are assumed in its expected loss estimates; (6) increased competition, including from new entrants into the financial guaranty industry; (7) rating agency action on obligors, including sovereign debtors, resulting in a reduction in the value of securities in Assured Guaranty’s investment portfolio and in collateral posted by and to Assured Guaranty; (8) the inability of Assured Guaranty to access external sources of capital on acceptable terms; (9) changes in the world’s credit markets, segments thereof, interest rates or general economic conditions; (10) the impact of market volatility on the mark-to-market of Assured Guaranty’s contracts written in credit default swap form; (11) changes in applicable accounting policies or practices; (12) changes in applicable laws or regulations, including insurance, bankruptcy and tax laws, or other governmental actions; (13) the impact of changes in the world’s economy and credit and currency markets and in applicable laws or regulations relating to the decision of the United Kingdom to exit the European Union; (14) the possibility that acquisitions or alternative investments made by Assured Guaranty do not result in the benefits anticipated or subject Assured Guaranty to unanticipated consequences; (15) difficulties with the execution of Assured Guaranty’s business strategy; (16) loss of key personnel; (17) the effects of mergers, acquisitions and divestitures; (18) natural or man-made catastrophes; (19) other risk factors identified in AGL's filings with the SEC; (20) other risks and uncertainties that have not been identified at this time and; (21) management’s response to these factors. 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 (1 of 2)

(dollars in millions, except per share amounts)

	Three Months Ended						Year Ended
	December 31,						December 31,
	2018			2017			2018			2017
Net income (loss)	$	88		$	52		$	521		$	730
Non-GAAP operating income(1)	92			91			482			661
Gain (loss) related to the effect of consolidating financial guaranty variable interest entities (FG VIE consolidation) (net of tax provision (benefit) of $(1), $1, $(1) and $6) included in non-GAAP operating income	(3		)	2			(4		)	11
Net income (loss) per diluted share	$	0.83		$	0.44		$	4.68		$	5.96
Non-GAAP operating income per diluted share(1)	0.87			0.77			4.34			5.41
Gain (loss) related to FG VIE consolidation included in non-GAAP operating income per diluted share	(0.02		)	0.02			(0.03		)	0.10
Weighted average shares outstanding
Basic shares outstanding	105.2			117.1			110.0			120.6
Diluted shares outstanding (2)	106.4			118.9			111.3			122.3
Effective tax rate on net income	12.8		%	66.6		%	10.2		%	26.3		%
Effective tax rate on non-GAAP operating income (3)	11.8		%	48.4		%	8.9		%	22.5		%
Effect of FG VIE consolidation included in effective tax rate on non-GAAP operating income	(0.3		)%	(0.5		)%	(0.1		)%	0.2		%
Return on equity (ROE) calculations (4):
GAAP ROE	5.4		%	3.0		%	7.8		%	10.9		%
Non-GAAP operating ROE (1)	5.8		%	5.6		%	7.5		%	10.2		%
Effect of FG VIE consolidation on non-GAAP operating ROE	(0.2		)%	0.2		%	(0.1		)%	0.1		%
New business:
Gross written premiums (GWP)	$	96		$	72		$	612		$	307
Present value of new business production (PVP) (1)	96			77			663			289
Gross par written	4,850			4,776			24,624			18,024
							As of
							December 31,			December 31,
							2018			2017
Shareholders' equity							$	6,555		$	6,839
Non-GAAP operating shareholders' equity (1)							6,342			6,521
Non-GAAP adjusted book value (1)							8,922			9,020
Gain (loss) related to FG VIE consolidation included in non-GAAP operating shareholders' equity							3			5
Gain (loss) related to FG VIE consolidation included in non-GAAP adjusted book value							(15		)	(14		)
Shares outstanding at the end of period							103.7			116.0
Shareholders' equity per share							$	63.23		$	58.95
Non-GAAP operating shareholders' equity per share (1)							61.17			56.20
Non-GAAP adjusted book value per share (1)							86.06			77.74
Gain (loss) related to FG VIE consolidation included in non-GAAP operating shareholders' equity							0.03			0.03
Gain (loss) related to FG VIE consolidation included in non-GAAP adjusted book value							(0.15		)	(0.12		)
Financial guaranty net debt service outstanding							$	371,586		$	401,118
Financial guaranty net par outstanding							241,802			264,952
Claims-paying resources (5)							11,815			12,021

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

2) Non-GAAP diluted shares outstanding were the same as diluted shares calculated in accordance with accounting principles generally accepted in the United States of America (GAAP) since both net income and non-GAAP operating income were positive for all periods.

3) Represents the ratio of non-GAAP operating provision for income taxes to non-GAAP operating income before income taxes.

4) Quarterly ROE calculations represent annualized returns. See page 7 for additional information on calculation.

5) See page 9 for additional detail on claims-paying resources.

1

Assured Guaranty Ltd.

Selected Financial Highlights (2 of 2)

(dollars in millions, except per share amounts)

	Three Months Ended				Year Ended
	December 31,				December 31,
	2018		2017		2018		2017
Effect of refundings and terminations on GAAP measures:
Net earned premiums, pre-tax	$	28	$	82	$	159	$	286
Net change in fair value of credit derivatives, pre-tax	—		—		6		26
Net income effect	21		53		129		208
Net income per diluted share	0.20		0.44		1.16		1.70
Effect of refundings and terminations on non-GAAP measures:
Operating net earned premiums and credit derivative revenues(1), pre-tax	28		82		163		295
Non-GAAP operating income(1) effect	21		53		126		196
Non-GAAP operating income per diluted share (1)	0.20		0.44		1.14		1.60

1) Consolidated statement of operations items mentioned in this Financial Supplement that are described as operating (i.e. operating net earned premiums) are non-GAAP measures and represent components of non-GAAP operating income. Please refer to the explanation of Non-GAAP Financial Measures set forth at the end of this Financial Supplement.

2

Assured Guaranty Ltd.

Consolidated Balance Sheets (unaudited)

(dollars in millions)

	As of
	December 31,		December 31,
	2018		2017
Assets:
Investment portfolio:
Fixed maturity securities, available-for-sale, at fair value	$	10,089	$	10,674
Short-term investments, at fair value	729		627
Other invested assets	55		94
Total investment portfolio	10,873		11,395
Cash	104		144
Premiums receivable, net of commissions payable	904		915
Ceded unearned premium reserve	59		119
Deferred acquisition costs	105		101
Salvage and subrogation recoverable	490		572
Financial guaranty variable interest entities' (FG VIEs') assets, at fair value	569		700
Other assets	499		487
Total assets	$	13,603	$	14,433
Liabilities and shareholders' equity:
Liabilities:
Unearned premium reserve	$	3,512	$	3,475
Loss and loss adjustment expense (LAE) reserve	1,177		1,444
Long-term debt	1,233		1,292
Credit derivative liabilities	209		271
FG VIEs' liabilities with recourse, at fair value	517		627
FG VIEs' liabilities without recourse, at fair value	102		130
Other liabilities	298		355
Total liabilities	7,048		7,594
Shareholders' equity:
Common stock	1		1
Additional paid-in capital	86		573
Retained earnings	6,374		5,892
Accumulated other comprehensive income	93		372
Deferred equity compensation	1		1
Total shareholders' equity	6,555		6,839
Total liabilities and shareholders' equity	$	13,603	$	14,433

3

Assured Guaranty Ltd.

Consolidated Statements of Operations (unaudited)

(dollars in millions, except per share amounts)

			Three Months Ended						Year Ended
			December 31,						December 31,
			2018			2017			2018			2017
Revenues:
	Net earned premiums		$	125		$	178		$	548		$	690
	Net investment income		100			96			398			418
	Net realized investment gains (losses)		(18		)	(14		)	(32		)	40
	Net change in fair value of credit derivatives		9			5			112			111
	Fair value gains (losses) on FG VIEs		3			5			14			30
	Bargain purchase gain and settlement of pre-existing relationships		—			—			—			58
	Commutation gains (losses)		—			—			(16		)	328
	Other income (loss)		(5		)	11			(22		)	64
		Total revenues	214			281			1,002			1,739
Expenses:
	Loss and LAE		21			34			64			388
	Amortization of deferred acquisition costs		4			6			16			19
	Interest expense		23			24			94			97
	Other operating expenses		65			61			248			244
		Total expenses	113			125			422			748
Income (loss) before income taxes			101			156			580			991
	Provision (benefit) for income taxes		13			104			59			261
Net income (loss)			$	88		$	52		$	521		$	730
Earnings per share:
	Basic		$	0.84		$	0.44		$	4.73		$	6.05
	Diluted		$	0.83		$	0.44		$	4.68		$	5.96

4

Assured Guaranty Ltd.

Non-GAAP Operating Income Adjustments and Effect of FG VIE Consolidation

(dollars in millions)

Non-GAAP Operating Income Adjustments and Effect of FG VIE Consolidation for the Three Months Ended December 31, 2018 and December 31, 2017

	Three Months Ended						Three Months Ended
	December 31, 2018						December 31, 2017
	Non-GAAP Operating Income Adjustments (1)			Effect of FG VIE Consolidation (2)			Non-GAAP Operating Income Adjustments (1)				Effect of FG VIE Consolidation (2)
Adjustments to revenues:
Net earned premiums	$	—		$	(3	)	$	—			$	(3	)
Net investment income	—			(1		)	—				(1		)
Net realized investment gains (losses)	(18		)	—			(14		)		—
Net change in fair value of credit derivatives	4			—			1				—
Fair value gains (losses) on FG VIEs	—			3			—				5
Other income (loss)	5			—			10				—
Total revenue adjustments	(9		)	(1		)	(3		)		1
Adjustments to expenses:
Loss expense	(6		)	3			18				(2		)
Total expense adjustments	(6		)	3			18				(2		)
Pre-tax adjustments	(3		)	(4		)	(21		)		3
Tax effect of adjustments	1			(1		)	18			(3)	1
After-tax adjustments	$	(4	)	$	(3	)	$	(39	)		$	2

Non-GAAP Operating Income Adjustments and Effect of FG VIE Consolidation for the Year EndedDecember 31, 2018 and December 31, 2017

	Year Ended						Year Ended
	December 31, 2018						December 31, 2017
	Non-GAAP Operating Income Adjustments (1)			Effect of FG VIE Consolidation (2)			Non-GAAP Operating Income Adjustments (1)			Effect of FG VIE Consolidation (2)
Adjustments to revenues:
Net earned premiums	$	—		$	(12	)	$	—		$	(15	)
Net investment income	—			(4		)	—			(5		)
Net realized investment gains (losses)	(32		)	—			40			—
Net change in fair value of credit derivatives	92			—			86			—
Fair value gains (losses) on FG VIEs	—			14			—			30
Other income (loss)	(18		)	—			55			—
Total revenue adjustments	42			(2		)	181			10
Adjustments to expenses:
Loss expense	(9		)	3			43			(7		)
Total expense adjustments	(9		)	3			43			(7		)
Pre-tax adjustments	51			(5		)	138			17
Tax effect of adjustments	12			(1		)	69		(3)	6
After-tax adjustments	$	39		$	(4	)	$	69		$	11

1) The "Non-GAAP Operating Income Adjustments" column represents the amounts recorded in the consolidated statements of operations that the Company removes to arrive at non-GAAP operating income. Please refer to the explanation of Non-GAAP Financial Measures set forth at the end of this Financial Supplement.

2) The "Effect of FG VIE Consolidation" column represents the amounts included in the consolidated statements of operations and non-GAAP operating income that the Company removes to arrive at the core financial measures that management uses in certain of its compensation calculations and its decision making process. Please refer to the explanation of Non-GAAP Financial Measures set forth at the end of this Financial Supplement.

3) Three months and year ended December 31, 2017 include $26 million adjustment to tax expense related to the estimated effect of tax reform under the 2017 Tax Cuts and Jobs Act.

5

Assured Guaranty Ltd.

Selected Financial Highlights

GAAP to Non-GAAP Reconciliations (1 of 3)

(dollars in millions, except per share amounts)

Non-GAAP Operating Income Reconciliation	Three Months Ended						Year Ended
	December 31,						December 31,
	2018			2017			2018			2017
Net income (loss)	$	88		$	52		$	521		$	730
Less pre-tax adjustments:
Realized gains (losses) on investments	(18		)	(14		)	(32		)	40
Non-credit impairment unrealized fair value gains (losses) on credit derivatives	10			(17		)	101			43
Fair value gains (losses) on committed capital securities (CCS) (1)	17			2			14			(2		)
Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves(1)	(12		)	8			(32		)	57
Total pre-tax adjustments	(3		)	(21		)	51			138
Less tax effect on pre-tax adjustments	(1		)	(18		)	(12		)	(69		)
Non-GAAP operating income	$	92		$	91		$	482		$	661
Gain (loss) related to FG VIE consolidation (net of tax provision (benefit) of $(1), $1, $(1) and $6) included in non-GAAP operating income	$	(3	)	$	2		$	(4	)	$	11
Per diluted share:
Net income (loss)	$	0.83		$	0.44		$	4.68		$	5.96
Less pre-tax adjustments:
Realized gains (losses) on investments	(0.17		)	(0.12		)	(0.29		)	0.33
Non-credit impairment unrealized fair value gains (losses) on credit derivatives	0.09			(0.14		)	0.90			0.35
Fair value gains (losses) on CCS (1)	0.16			0.01			0.13			(0.02		)
Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves (1)	(0.11		)	0.07			(0.29		)	0.46
Total pre-tax adjustments	(0.03		)	(0.18		)	0.45			1.12
Less tax effect on pre-tax adjustments	(0.01		)	(0.15		)	(0.11		)	(0.57		)
Non-GAAP operating income	$	0.87		$	0.77		$	4.34		$	5.41
Gain (loss) related to FG VIE consolidation included in non-GAAP operating income per diluted share	$	(0.02	)	$	0.02		$	(0.03	)	$	0.10

1) Included in other income (loss) in the condensed consolidated statements of operations.

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

6

Assured Guaranty Ltd.

Selected Financial Highlights

GAAP to Non-GAAP Reconciliations (2 of 3)

(dollars in millions)

ROE Reconciliation and Calculation
	December 31,		September 30,			December 31,			September 30,			December 31,
	2018		2018			2017			2017			2016
Shareholders' equity	$	6,555	$	6,583		$	6,839		$	6,878		$	6,504
Non-GAAP operating shareholders' equity	6,342		6,420			6,521			6,590			6,386
Gain (loss) related to FG VIE consolidation included in non-GAAP operating shareholders' equity	3		3			5			3			(7		)
			Three Months Ended						Year Ended
			December 31,						December 31,
			2018			2017			2018			2017
Net income (loss)			$	88		$	52		$	521		$	730
Non-GAAP operating income			92			91			482			661
Gain (loss) related to FG VIE consolidation included in non-GAAP operating income			(3		)	2			(4		)	11
Average shareholders' equity			$	6,569		$	6,859		$	6,697		$	6,672
Average non-GAAP operating shareholders' equity			6,381			6,556			6,432			6,454
Gain (loss) related to FG VIE consolidation included in average non-GAAP operating shareholders' equity			3			4			4			(1		)
GAAP ROE (1)			5.4		%	3.0		%	7.8		%	10.9		%
Non-GAAP operating ROE (1)			5.8		%	5.6		%	7.5		%	10.2		%
Effect of FG VIE consolidation included in non-GAAP operating ROE			(0.2		)%	0.2		%	(0.1		)%	0.1		%

1) Quarterly ROE calculations represent annualized returns.

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

7

Assured Guaranty Ltd.

Selected Financial Highlights

GAAP to Non-GAAP Reconciliations (3 of 3)

(dollars in millions)

	As of
	December 31,			September 30,			December 31,			September 30,			December 31,
	2018			2018			2017			2017			2016
Reconciliation of shareholders' equity to non-GAAP adjusted book value:
Shareholders' equity	$	6,555		$	6,583		$	6,839		$	6,878		$	6,504
Less pre-tax reconciling items:
Non-credit impairment unrealized fair value gains (losses) on credit derivatives	(45		)	(55		)	(146		)	(129		)	(189		)
Fair value gains (losses) on CCS	74			57			60			58			62
Unrealized gain (loss) on investment portfolio excluding foreign exchange effect	247			215			487			506			316
Less taxes	(63		)	(54		)	(83		)	(147		)	(71		)
Non-GAAP operating shareholders' equity	6,342			6,420			6,521			6,590			6,386
Pre-tax reconciling items:
Less: Deferred acquisition costs	105			103			101			106			106
Plus: Net present value of estimated net future revenue	204			211			146			144			136
Plus: Net unearned premium reserve on financial guaranty contracts in excess of expected loss to be expensed	3,005			3,012			2,966			3,091			2,922
Plus taxes	(524		)	(528		)	(512		)	(899		)	(832		)
Non-GAAP adjusted book value	$	8,922		$	9,012		$	9,020		$	8,820		$	8,506
Gain (loss) related to FG VIE consolidation included in non-GAAP operating shareholders' equity (net of tax (provision) benefit of $(1), $(1), $(2), $(1), and $4)	3			3			5			3			(7		)
Gain (loss) related to FG VIE consolidation included in non-GAAP adjusted book value (net of tax benefit of $4, $4, $3, $7, and $12)	(15		)	(14		)	(14		)	(13		)	(24		)

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

8

Assured Guaranty Ltd.

Claims-Paying Resources

(dollars in millions)

	As of December 31, 2018
	Assured Guaranty Municipal Corp.		Assured Guaranty Corp.		Municipal Assurance Corp.			Assured Guaranty Re Ltd. (8)		Eliminations(3)			Consolidated
Claims-paying resources
Policyholders' surplus	$	2,533	$	1,793	$	321		$	986	$	(485	)	$	5,148
Contingency reserve(1)	1,034		629		200			—		(200		)	1,663
Qualified statutory capital	3,567		2,422		521			986		(685		)	6,811
Unearned premium reserve and net deferred ceding commission income(1)	1,873		484		195			706		(308		)	2,950
Loss and LAE reserves (1)	518		236		—			269		—			1,023
Total policyholders' surplus and reserves	5,958		3,142		716			1,961		(993		)	10,784
Present value of installment premium	178		137		(1		)	136		1			451
CCS	200		200		—			—		—			400
Excess of loss reinsurance facility (2)	180		180		180			—		(360		)	180
Total claims-paying resources (including proportionate MAC ownership for AGM and AGC)	6,516		3,659		895			2,097		(1,352		)	11,815
Adjustment for MAC (4)	434		281		—			—		(715		)	—
Total claims-paying resources (excluding proportionate MAC ownership for AGM and AGC)	$	6,082	$	3,378	$	895		$	2,097	$	(637	)	$	11,815
Statutory net par outstanding (5)	$	115,555	$	26,263	$	23,621		$	66,549	$	(343	)	$	231,645
Equity method adjustment (4)	14,338		9,283		—			—		(23,621		)	—
Adjusted statutory net par outstanding (1)	$	129,893	$	35,546	$	23,621		$	66,549	$	(23,964	)	$	231,645
Net debt service outstanding (5)	$	183,075	$	39,473	$	34,962		$	103,446	$	(476	)	$	360,480
Equity method adjustment (4)	21,222		13,740		—			—		(34,962		)	—
Adjusted net debt service outstanding (1)	$	204,297	$	53,213	$	34,962		$	103,446	$	(35,438	)	$	360,480
Ratios:
Adjusted net par outstanding to qualified statutory capital	36:1		15:1		45:1			67:1					34:1
Capital ratio (6)	57:1		22:1		67:1			105:1					53:1
Financial resources ratio (7)	31:1		15:1		39:1			49:1					31:1

1) The numbers shown for Assured Guaranty Municipal Corp. (AGM) and Assured Guaranty Corp. (AGC) have been adjusted to include 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. AGM has been adjusted to include 100% share of its European insurance subsidiary. Amounts include financial guaranty insurance and credit derivatives. Beginning in the second quarter of 2018, the Company incorporates deferred ceding commission income in claims-paying resources.

2) Represents the $180 million portion placed with an unaffiliated reinsurer of a $400 million aggregate excess-of-loss reinsurance facility for the benefit of AGC, AGM and MAC, which became effective January 1, 2018. The facility terminates on January 1, 2020, unless AGC, AGM and MAC choose to extend it.

3) Eliminations are primarily for (i) intercompany surplus notes between AGM and AGC, and (ii) MAC amounts, whose proportionate share are included in AGM and AGC based on ownership percentages, and (iii) eliminations of intercompany deferred ceding commissions. 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.

4) Represents adjustments for AGM's and AGC's interest and indirect ownership of MAC.

5) Net par outstanding and net debt service outstanding are presented on a statutory basis.

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

7) 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).

8) Assured Guaranty Re Ltd. (AG Re) numbers represent the Company's estimate of United States (U.S.) statutory accounting practices prescribed or permitted by insurance regulatory authorities, except for contingency reserves.

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

9

Assured Guaranty Ltd.

New Business Production

(dollars in millions)

Reconciliation of GWP to PVP for the Three Months Ended December 31, 2018 and December 31, 2017

	Three Months Ended											Three Months Ended
	December 31, 2018											December 31, 2017
	Public Finance				Structured Finance							Public Finance					Structured Finance
	U.S.		Non - U.S.		U.S.			Non - U.S.		Total		U.S.			Non - U.S.		U.S.			Non - U.S.		Total
Total GWP	$	93	$	4	$	(1	)	$	—	$	96	$	58		$	13	$	(4	)	$	5	$	72
Less: Installment GWP and other GAAP adjustments(1)	25		3		(1		)	—		27		(2		)	13		(4		)	2		9
Upfront GWP	68		1		—			—		69		60			—		—			3		63
Plus: Installment premium PVP	21		2		1			3		27		(1		)	8		7			—		14
Total PVP	$	89	$	3	$	1		$	3	$	96	$	59		$	8	$	7		$	3	$	77
Gross par written	$	4,555	$	96	$	25		$	174	$	4,850	$	4,367		$	116	$	246		$	47	$	4,776

Reconciliation of GWP to PVP for the Year Ended December 31, 2018 and December 31, 2017

	Year Ended										Year Ended
	December 31, 2018										December 31, 2017
	Public Finance				Structured Finance						Public Finance					Structured Finance
	U.S.		Non - U.S.		U.S. (2)		Non - U.S.		Total		U.S.			Non - U.S.		U.S.			Non - U.S.		Total
Total GWP	$	320	$	115	$	167	$	10	$	612	$	190		$	105	$	(1	)	$	13	$	307
Less: Installment GWP and other GAAP adjustments(1)	34		75		9		1		119		(3		)	103		(1		)	—		99
Upfront GWP	286		40		158		9		493		193			2		—			13		208
Plus: Installment premium PVP(2)	105		54		8		3		170		3			64		12			2		81
Total PVP	$	391	$	94	$	166	$	12	$	663	$	196		$	66	$	12		$	15	$	289
Gross par written	$	19,572	$	3,817	$	902	$	333	$	24,624	$	15,957		$	1,376	$	489		$	202	$	18,024

1) Includes present value of new business on installment policies discounted at the prescribed GAAP discount rates, GWP adjustments on existing installment policies due to changes in assumptions, any cancellations of assumed reinsurance contracts, and other GAAP adjustments.

2) Includes PVP of credit derivatives assumed in the Syncora Guarantee Inc. (SGI) transaction in the second quarter of 2018.

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

10

Assured Guaranty Ltd.

Gross Par Written

(dollars in millions)

Gross Par Written by Asset Type

	Three Months Ended			Year Ended
	December 31, 2018			December 31, 2018
	Gross Par Written		Avg. Internal Rating	Gross Par Written		Avg. Internal Rating
Sector:
U.S. public finance:
General obligation	$	1,702	BBB+	$	6,272	A-
Tax backed	851		BBB+	3,583		A-
Municipal utilities	218		A-	2,607		A
Transportation	562		BBB	1,366		A-
Infrastructure finance	191		BBB	1,307		A
Healthcare	661		BBB+	1,156		BBB
Higher education	222		A	927		A
Investor owned utilities	—		—	862		A-
Housing revenue	148		BBB-	352		BBB
Other	—		—	1,140		A
Total U.S. public finance	4,555		BBB+	19,572		A-
Non-U.S. public finance:
Regulated utilities	—		—	2,590		BBB+
Infrastructure finance	96		A-	1,094		BBB-
Other	—		—	133		A+
Total non-U.S. public finance	96		A-	3,817		BBB
Total public finance	$	4,651	BBB+	$	23,389	A-
U.S. structured finance:
Residential mortgage-backed securities (RMBS)	$	—	—	$	327	B-
Pooled corporate obligations	—		—	271		A
Commercial receivables	—		—	139		BBB
Commercial mortgage-backed securities (CMBS)	—		—	85		BBB
Structured credit	25		BBB	66		BBB
Other	—		—	14		A-
Total U.S. structured finance	25		BBB	902		BB+
Non-U.S. structured finance:
Commercial receivable	—		—	139		BBB+
RMBS	—		—	19		BBB
Other	174		BBB-	175		BBB-
Total non-U.S. structured finance	174		BBB-	333		BBB
Total structured finance	$	199	BBB-	$	1,235	BBB-
Total gross par written	$	4,850	BBB+	$	24,624	A-

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

11

Assured Guaranty Ltd.

New Business Production by Quarter

(dollars in millions)

																	Year Ended
	1Q-17		2Q-17		3Q-17		4Q-17		1Q-18		2Q-18		3Q-18		4Q-18		2017		2018
PVP:
Public finance - U.S.	$	52	$	46	$	39	$	59	$	35	$	234	$	33	$	89	$	196	$	391
Public finance - non-U.S.	40		14		4		8		26		53		12		3		66		94
Structured finance - U.S.	5		—		—		7		—		158		7		1		12		166
Structured finance - non-U.S.	2		10		—		3		—		9		—		3		15		12
Total PVP	$	99	$	70	$	43	$	77	$	61	$	454	$	52	$	96	$	289	$	663
Reconciliation of GWP to PVP:
Total GWP	$	111	$	79	$	45	$	72	$	73	$	393	$	50	$	96	$	307	$	612
Less: Installment GWP and other GAAP adjustments	55		25		10		9		22		58		12		27		99		119
Upfront GWP	56		54		35		63		51		335		38		69		208		493
Plus: Installment premium PVP	43		16		8		14		10		119		14		27		81		170
Total PVP	$	99	$	70	$	43	$	77	$	61	$	454	$	52	$	96	$	289	$	663
Gross par written:
Public finance - U.S.	$	3,430	$	4,832	$	3,328	$	4,367	$	2,004	$	10,675	$	2,338	$	4,555	$	15,957	$	19,572
Public finance - non-U.S.	990		181		89		116		187		3,345		189		96		1,376		3,817
Structured finance - U.S.	243		—		—		246		11		393		473		25		489		902
Structured finance - non-U.S.	28		127		—		47		—		158		1		174		202		333
Total	$	4,691	$	5,140	$	3,417	$	4,776	$	2,202	$	14,571	$	3,001	$	4,850	$	18,024	$	24,624

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

12

Assured Guaranty Ltd.

Investment Portfolio and Cash

As of December 31, 2018

(dollars in millions)

			Amortized Cost		Pre-Tax Book Yield		After-Tax Book Yield		Fair Value		Annualized Investment Income (1)
Investment portfolio:
Fixed maturity securities, available-for-sale:
	U.S. obligations of states and political subdivisions(4)		$	4,632	3.52	%	3.28	%	$	4,772	$	163
	Insured obligations of state and political subdivisions (2)		129		4.64		4.24		139		6
	U.S. Treasury securities and obligations of U.S. government agencies		111		3.17		2.59		114		4
	Agency obligations		56		5.34		4.87		61		3
	Corporate securities (4)		2,175		3.14		2.71		2,136		68
	Mortgage-backed securities:
		RMBS (3)(4)	999		4.78		4.03		982		48
		CMBS	542		3.31		2.87		539		18
	Asset-backed securities (4)		942		7.64		6.09		1,068		72
	Non-U.S. government securities		298		1.50		1.21		278		4
		Total fixed maturity securities	9,884		3.91		3.43		10,089		386
Short-term investments			729		2.22		1.82		729		16
Cash (5)			104		—		—		104		—
		Total	$	10,717	3.79	%	3.32	%	$	10,922	$	402
Ratings (6):			Fair Value		% of Portfolio
	U.S. Treasury securities and obligations of U.S. government agencies		$	114	1.2	%
	Agency obligations		61		0.6	%
	AAA/Aaa		1,589		15.7	%
	AA/Aa		4,686		46.4	%
	A/A		1,994		19.8	%
	BBB		504		5.0	%
	Below investment grade (BIG) (7)		1,087		10.8	%
	Not rated		54		0.5	%
		Total fixed maturity securities, available-for-sale	$	10,089	100.0	%
Duration of fixed maturity securities and short-term investments (in years):					4.9
Average ratings of fixed maturity securities and short-term investments					A+

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 S&P Global Ratings, a division of Standard & Poor's Financial Services LLC (S&P) or Moody's Investors Service, Inc. (Moody's), average A. Includes fair value of $9 million insured by AGM.

3) Includes fair value of $226 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) Cash is not included in the yield calculation.

6) Ratings are represented by the lower of the Moody's and S&P classifications except for bonds purchased for loss mitigation (loss mitigation securities) or other 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 $1,609 million in par with carrying value of $1,084 million.

13

Assured Guaranty Ltd.

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

and Credit Derivative Revenues

(dollars in millions)

						Financial Guaranty Insurance (2)
		Estimated Net Debt Service Amortization		Estimated Ending Net Debt Service Outstanding		Expected PV Net Earned Premiums		Accretion of Discount		Effect of FG VIE Consolidation on Expected PV Net Earned Premiums and Accretion of Discount			Future Credit Derivative Revenues
2018 (as of December 31)				$	371,586
2019 Q1		$	8,176	363,410		$	87	$	5	$	(3	)	$	4
2019 Q2		6,710		356,700		84		5		(2		)	4
2019 Q3		8,354		348,346		82		4		(2		)	3
2019 Q4		6,553		341,793		79		4		(2		)	3
2020		22,592		319,201		302		17		(7		)	13
2021		23,358		295,843		275		15		(6		)	12
2022		20,880		274,963		250		14		(5		)	11
2023		17,934		257,029		229		13		(4		)	10
2019-2023		114,557		257,029		1,388		77		(31		)	60
2024-2028		86,801		170,228		898		49		(15		)	44
2029-2033		68,379		101,849		603		28		(12		)	36
2034-2038		48,458		53,391		339		15		(9		)	28
After 2038		53,391		—		284		12		—			28
	Total	$	371,586			$	3,512	$	181	$	(67	)	$	196

1) Represents the future expected amortization of current debt service outstanding (principal and interest), assuming no advance refundings, as of December 31, 2018. Actual amortization differs from expected maturities because borrowers may have the right to call or prepay guaranteed obligations, terminations and because of management's assumptions on structured finance amortization.

2) See page 16, ‘‘Net Expected Loss to be Expensed.’’

14

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
2018 (as of December 31)													$	11,137
2019 Q1		$	23	$	213	$	33		$	375	$	644	10,493
2019 Q2		17		175		(6		)	169		355		10,138
2019 Q3		17		163		(8		)	121		293		9,845
2019 Q4		21		154		(13		)	106		268		9,577
2020		173		580		(2		)	444		1,195		8,382
2021		169		487		1			538		1,195		7,187
2022		109		466		73			512		1,160		6,027
2023		47		348		8			226		629		5,398
2019-2023		576		2,586		86			2,491		5,739		5,398
2024-2028		272		922		243			873		2,310		3,088
2029-2033		186		238		551			389		1,364		1,724
2034-2038		228		516		164			588		1,496		228
After 2038		79		8		50			91		228		—
	Total structured finance	$	1,341	$	4,270	$	1,094		$	4,432	$	11,137

Public Finance

		Estimated Net Par Amortization		Estimated Ending Net Par Outstanding
2018 (as of December 31)				$	230,665
2019 Q1		$	4,802	225,863
2019 Q2		3,632		222,231
2019 Q3		5,478		216,753
2019 Q4		3,727		213,026
2020		11,484		201,542
2021		12,827		188,715
2022		10,940		177,775
2023		8,999		168,776
2019-2023		61,889		168,776
2024-2028		50,296		118,480
2029-2033		44,188		74,292
2034-2038		33,709		40,583
After 2038		40,583		—
	Total public finance	$	230,665

Net par outstanding (end of period)

		1Q-17		2Q-17		3Q-17		4Q-17		1Q-18		2Q-18		3Q-18		4Q-18
Public finance - U.S.		$	238,050	$	232,418	$	218,216	$	209,392	$	201,337	$	200,378	$	190,418	$	186,562
Public finance - non-U.S.		39,343		40,533		42,727		42,922		43,747		45,442		44,735		44,103
Structured finance - U.S.		18,446		15,655		13,142		11,224		10,681		10,749		10,611		9,944
Structured finance - non-U.S.		2,404		2,014		1,682		1,414		1,324		1,235		1,176		1,193
	Net par outstanding	$	298,243	$	290,620	$	275,767	$	264,952	$	257,089	$	257,804	$	246,940	$	241,802

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

15

Assured Guaranty Ltd.

Net Expected Loss to be Expensed

As of December 31, 2018

(dollars in millions)

		Net Expected Loss to be Expensed (1)
		GAAP
2019 Q1		$	8
2019 Q2		10
2019 Q3		9
2019 Q4		9
2020		37
2021		39
2022		40
2023		38
2019-2023		190
2024-2028		156
2029-2033		104
2034-2038		47
After 2038		10
	Total expected present value of net expected loss to be expensed(2)	507
Future accretion		88
	Total expected future loss and LAE	$	595

1) The present value of net expected loss to be paid is discounted using risk free rates ranging from 0.0% to 3.06% for U.S. dollar denominated obligations.

2) Excludes $42 million related to FG VIEs, which are eliminated in consolidation.

16

Assured Guaranty Ltd.

Financial Guaranty Profile (1 of 3)

(dollars in millions)

Net Par Outstanding and Average Rating by Asset Type

			December 31, 2018			December 31, 2017
			Net Par Outstanding		Avg. Internal Rating	Net Par Outstanding		Avg. Internal Rating
U.S. public finance:
	General obligation		$	78,800	A-	$	90,705	A-
	Tax backed		40,616		A-	44,350		A-
	Municipal utilities		28,462		A-	32,357		A-
	Transportation		15,197		A-	17,030		A-
	Healthcare		6,750		A-	8,763		A
	Higher education		6,643		A-	8,195		A
	Infrastructure finance		5,489		A-	4,216		BBB+
	Housing revenue		1,435		BBB+	1,319		BBB+
	Investor-owned utilities		1,001		A-	523		A-
	Other public finance		2,169		A-	1,934		A
		Total U.S. public finance	186,562		A-	209,392		A-
Non-U.S. public finance:
	Regulated utilities		18,325		BBB+	16,689		BBB+
	Infrastructure finance		17,216		BBB	18,234		BBB
	Pooled infrastructure		1,373		AAA	1,561		AAA
	Other public finance		7,189		A	6,438		A
		Total non-U.S. public finance	44,103		BBB+	42,922		BBB+
Total public finance			$	230,665	A-	$	252,314	A-
U.S. structured finance:
	RMBS		$	4,270	BBB-	$	4,818	BBB-
	Insurance securitizations		1,435		A+	1,449		A+
	Consumer receivables		1,255		A-	1,590		A-
	Pooled corporate obligations		1,215		AA-	1,347		A
	Financial products		1,094		AA-	1,418		AA-
	Other structured finance		675		A-	602		A
		Total U.S. structured finance	9,944		A-	11,224		BBB+
Non-U.S. structured finance:
	RMBS		576		A-	637		A-
	Pooled corporate obligations		126		A	157		A+
	Other structured finance		491		A	620		A
		Total non-U.S. structured finance	1,193		A	1,414		A
Total structured finance			$	11,137	A-	$	12,638	A-
Total			$	241,802	A-	$	264,952	A-

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

17

Assured Guaranty Ltd.

Financial Guaranty Profile (2 of 3)

As of December 31, 2018

(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		$	413	0.2	%	$	2,399	5.4	%	1,533		15.4	%	273		22.9	%	$	4,618	1.9	%
AA		21,646		11.6		1,711		3.9		3,599		36.2		65		5.4		27,021		11.2
A		105,180		56.4		13,013		29.5		1,016		10.2		206		17.3		119,415		49.4
BBB		52,935		28.4		25,939		58.8		1,164		11.7		550		46.1		80,588		33.3
BIG		6,388		3.4		1,041		2.4		2,632		26.5		99		8.3		10,160		4.2
	Net Par Outstanding (1)	$	186,562	100.0	%	$	44,103	100.0	%	$	9,944	100.0	%	$	1,193	100.0	%	$	241,802	100.0	%

1) As of December 31, 2018, excludes $1.9 billion of net par attributable to loss mitigation strategies, including loss mitigation securities held in the investment portfolio, which are primarily BIG.

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

18

Assured Guaranty Ltd.

Financial Guaranty Profile (3 of 3)

As of December 31, 2018

(dollars in millions)

Geographic Distribution of Financial Guaranty Portfolio

			Net Par Outstanding		% of Total
U.S.:
U.S. public finance:
	California		$	33,847	14.0	%
	Texas		16,915		7.0
	Pennsylvania		16,866		7.0
	New York		15,077		6.2
	Illinois		14,914		6.2
	New Jersey		10,998		4.5
	Florida		8,518		3.5
	Michigan		5,635		2.3
	Puerto Rico		4,767		2.0
	Alabama		4,230		1.7
	Other		54,795		22.7
		Total U.S. public finance	186,562		77.1
U.S. structured finance			9,944		4.1
		Total U.S.	196,506		81.2
Non-U.S.:
	United Kingdom		31,128		12.9
	France		3,189		1.3
	Canada		2,659		1.1
	Australia		2,103		0.9
	Italy		1,176		0.5
	Other		5,041		2.1
		Total non-U.S.	45,296		18.8
Total net par outstanding			$	241,802	100.0	%

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

19

Assured Guaranty Ltd.

Non-Financial Guaranty Exposure

As of December 31, 2018

(dollars in millions)

	Gross Exposure				Net Exposure
	As of December 31, 2018		As of December 31, 2017		As of December 31, 2018		As of December 31, 2017
Life insurance capital relief transactions (1)	$	880	$	773	$	763	$	675
Aircraft residual value insurance policies	340		201		218		140

1) The life insurance capital relief transactions net exposure is expected to increase to approximately $1 billion prior to September 30, 2036.

20

Assured Guaranty Ltd.

Exposure to Puerto Rico (1 of 3)

As of December 31, 2018

(dollars in millions)

Exposure to Puerto Rico

	Par Outstanding				Debt Service Outstanding
	Gross		Net		Gross		Net
Total	$	4,971	$	4,767	$	8,035	$	7,743

Exposure to Puerto Rico by Risk

	Net Par Outstanding
	AGM		AGC		AG Re		Eliminations (1)			Total Net Par Outstanding		Gross Par Outstanding
Commonwealth Constitutionally Guaranteed
Commonwealth of Puerto Rico - General Obligation Bonds (2)(3)	$	647	$	301	$	393	$	(1	)	$	1,340	$	1,383
Puerto Rico Public Buildings Authority (PBA)	9		142		—		(9		)	142		148
Public Corporations - Certain Revenues Potentially Subject to Clawback
Puerto Rico Highways and Transportation Authority (PRHTA) (Transportation revenue) (3)	233		495		195		(79		)	844		874
PRHTA (Highways revenue) (3)	351		84		40		—			475		536
Puerto Rico Convention Center District Authority (PRCCDA)	—		152		—		—			152		152
Puerto Rico Infrastructure Financing Authority (PRIFA)	—		15		1		—			16		16
Other Public Corporations
Puerto Rico Electric Power Authority (PREPA) (3)	544		72		232		—			848		866
Puerto Rico Aqueduct and Sewer Authority (PRASA) (4)	—		284		89		—			373		373
Puerto Rico Municipal Finance Agency (MFA) (4)	189		40		74		—			303		349
Puerto Rico Sales Tax Financing Corporation (COFINA) (5)	264		—		9		—			273		273
University of Puerto Rico (U of PR) (4)	—		1		—		—			1		1
Total exposure to Puerto Rico	$	2,237	$	1,586	$	1,033	$	(89	)	$	4,767	$	4,971

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.

2) Includes exposure to capital appreciation bonds with a current aggregate net par outstanding of $2 million and fully accreted net par at maturity of $3 million.

3) As of the date of this filing, the seven-member financial oversight board established by the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) has certified a filing under Title III of PROMESA for these exposures.

4) As of the date of this filing, the Company has not paid claims on these credits.

5) As of the date of this filing, a plan of adjustment under PROMESA is effective for this credit.

21

Assured Guaranty Ltd.

Exposure to Puerto Rico (2 of 3)

As of December 31, 2018

(dollars in millions)

Amortization Schedule of Net Par Outstanding of Puerto Rico

	2019 Q1		2019 Q2		2019Q3		2019 Q4		2020			2021			2022			2023		2024		2025			2026			2027			2028			2029 -2033		2034 -2038		2039 -2043		2044 -2047		Total
Commonwealth Constitutionally Guaranteed
Commonwealth of Puerto Rico - General Obligation Bonds (1)	$	—	$	—	$	87	$	—	$	141		$	15		$	37		$	14	$	73	$	68		$	34		$	90		$	33		$	341	$	407	$	—	$	—	$	1,340
PBA	—		—		3		—		5			13			—			7		—		7			11			40			—			36		20		—		—		142
Public Corporations - Certain Revenues Potentially Subject to Clawback
PRHTA (Transportation revenue)	—		—		32		—		25			18			28			33		4		29			24			29			34			127		296		165		—		844
PRHTA (Highway revenue)	—		—		21		—		22			35			6			32		33		34			1			—			9			145		137		—		—		475
PRCCDA	—		—		—		—		—			—			—			—		—		—			—			19			—			50		83		—		—		152
PRIFA	—		—		—		—		—			—			—			2		—		—			—			—			—			—		3		11		—		16
Other Public Corporations
PREPA	—		—		26		—		48			28			28			95		93		68			106			105			68			174		9		—		—		848
PRASA	—		—		—		—		—			—			—			—		2		25			26			28			29			—		2		—		261		373
MFA	—		—		55		—		45			40			40			22		17		17			34			12			11			10		—		—		—		303
COFINA	—		—		—		—		(1		)	(2		)	(2		)	1		—		(2		)	(2		)	(2		)	(2		)	20		11		254		—		273
U of PR	—		—		—		—		—			—			—			—		—		—			—			—			—			1		—		—		—		1
Total	$	—	$	—	$	224	$	—	$	285		$	147		$	137		$	206	$	222	$	246		$	234		$	321		$	182		$	904	$	968	$	430	$	261	$	4,767

1) Includes exposure to capital appreciation bonds with a current aggregate net par outstanding of $2 million and fully accreted net par at maturity of $3 million.

22

Assured Guaranty Ltd.

Exposure to Puerto Rico (3 of 3)

As of December 31, 2018

(dollars in millions)

Amortization Schedule of Net Debt Service Outstanding of Puerto Rico

	2019 Q1		2019 Q2		2019Q3		2019 Q4		2020		2021		2022		2023		2024		2025		2026		2027		2028		2029 -2033		2034 -2038		2039 -2043		2044 -2047		Total
Commonwealth Constitutionally Guaranteed
Commonwealth of Puerto Rico - General Obligation Bonds (1)	$	35	$	—	$	121	$	—	$	206	$	74	$	94	$	71	$	128	$	119	$	82	$	136	$	73	$	512	$	457	$	—	$	—	$	2,108
PBA	3		—		7		—		12		20		6		13		6		13		17		44		4		51		23		—		—		219
Public Corporations - Certain Revenues Potentially Subject to Clawback
PRHTA (Transportation revenue)	22		—		54		—		67		59		68		72		41		66		59		63		66		262		374		180		—		1,453
PRHTA (Highway revenue)	13		—		34		—		46		58		27		52		51		51		17		15		25		208		152		—		—		749
PRCCDA	3		—		4		—		7		7		7		7		7		7		7		26		6		78		91		—		—		257
PRIFA	—		—		—		—		1		1		1		2		1		1		1		1		1		3		7		12		—		32
Other Public Corporations
PREPA	17		3		43		3		87		63		62		128		121		91		126		122		80		198		10		—		—		1,154
PRASA	10		—		10		—		19		19		19		19		21		44		44		44		44		68		70		68		300		799
MFA	8		—		62		—		58		50		48		28		23		21		37		14		11		11		—		—		—		371
COFINA	6		—		6		—		13		13		13		16		15		12		13		13		13		95		76		296		—		600
U of PR	—		—		—		—		—		—		—		—		—		—		—		—		—		1		—		—		—		1
Total	$	117	$	3	$	341	$	3	$	516	$	364	$	345	$	408	$	414	$	425	$	403	$	478	$	323	$	1,487	$	1,260	$	556	$	300	$	7,743

1) Includes exposure to capital appreciation bonds with a current aggregate net par outstanding of $2 million and fully accreted net par at maturity of $3 million.

23

Assured Guaranty Ltd.

Direct Pooled Corporate Obligations Profile

As of December 31, 2018

(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		$	268	20.9	%	46.6%	67.6%
	AA		541		42.2		45.5	57.7
	A		264		20.6		31.2	33.1
	BBB		166		13.0		41.5	44.6
	BIG		42		3.3		N/A	N/A
		Total exposures	$	1,281	100.0	%	41.9%	52.2%

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:
Trust preferred
Banks and insurance	$	797	62.2	%	44.7%	57.2%	AA
U.S. mortgage and real estate investment trusts	136		10.6		47.4	58.6	A-
Collateralized bond obligations / collateralized loan obligations	233		18.2		29.2	31.1	A-
Other pooled corporates	115		9.0		N/A	N/A	A+
Total exposures	$	1,281	100.0	%	41.9%	52.2%	A+

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

24

Assured Guaranty Ltd.

Consolidated U.S. RMBS Profile

As of December 31, 2018

(dollars in millions)

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

Ratings:	Prime First Lien		Alt-A First Lien		Option ARMs		Subprime First Lien		Second Lien		Total Net Par Outstanding
AAA	$	12	$	132	$	21	$	992	$	2	$	1,159
AA	20		140		20		253		—		433
A	—		—		—		51		—		51
BBB	17		46		—		29		148		240
BIG	87		383		46		1,116		755		2,387
Total exposures	$	136	$	701	$	87	$	2,441	$	905	$	4,270

Distribution of U.S. RMBS by Year Insured and Type of Exposure

Year insured:	Prime First Lien		Alt-A First Lien		Option ARMs		Subprime First Lien		Second Lien		Total Net Par Outstanding
2004 and prior	$	27	$	23	$	2	$	724	$	68	$	844
2005	62		241		29		233		172		737
2006	47		49		14		375		267		752
2007	—		388		42		1,049		398		1,877
2008	—		—		—		60		—		60
Total exposures	$	136	$	701	$	87	$	2,441	$	905	$	4,270

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

25

Assured Guaranty Ltd.

Below Investment Grade Exposures (1 of 4)

(dollars in millions)

BIG Exposures by Asset Exposure Type

			December 31, 2018		December 31, 2017
U.S. public finance:
	Tax backed		$	2,263	$	2,408
	General obligation		2,146		3,097
	Municipal utilities		1,487		1,324
	Higher education		217		102
	Transportation		85		94
	Healthcare		55		77
	Housing revenue		18		18
	Investor-owned utilities		5		—
	Infrastructure finance		2		2
	Other public finance		110		18
		Total U.S. public finance	6,388		7,140
Non-U.S. public finance:
	Infrastructure finance		654		1,320
	Other public finance		387		411
		Total non-U.S. public finance	1,041		1,731
Total public finance			$	7,429	$	8,871
U.S. structured finance:
	RMBS		$	2,387	$	2,761
	Consumer receivables		125		186
	Pooled corporate obligations		—		161
	Insurance securitizations		85		85
	Other structured finance		35		68
		Total U.S. structured finance	2,632		3,261
Non-U.S. structured finance:
	RMBS		45		48
	Pooled corporate obligations		42		42
	Commercial receivables		12		16
		Total non-U.S. structured finance	99		106
Total structured finance			$	2,731	$	3,367
Total BIG net par outstanding			$	10,160	$	12,238

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

26

Assured Guaranty Ltd.

Below Investment Grade Exposures (2 of 4)

(dollars in millions)

Net Par Outstanding by BIG Category⁽¹⁾  

				December 31, 2018		December 31, 2017
Category 1
	U.S. public finance			$	1,767	$	2,368
	Non-U.S. public finance			796		1,455
	U.S. structured finance			397		603
	Non-U.S. structured finance			98		102
		Total Category 1		3,058		4,528
Category 2
	U.S. public finance			399		663
	Non-U.S. public finance			245		276
	U.S. structured finance			293		418
	Non-U.S. structured finance			—		4
		Total Category 2		937		1,361
Category 3
	U.S. public finance			4,222		4,109
	Non-U.S. public finance			—		—
	U.S. structured finance			1,942		2,240
	Non-U.S. structured finance			1		—
		Total Category 3		6,165		6,349
			BIG Total	$	10,160	$	12,238

1) Assured Guaranty's surveillance department is responsible for monitoring the Company's 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 are claims 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 the Company's internal rating approach, presentation of net par outstanding and a description of various sectors.

27

Assured Guaranty Ltd.

Below Investment Grade Exposures (3 of 4)

As of December 31, 2018

(dollars in millions)

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

			Net Par Outstanding		Internal Rating (1)
Name or description
U.S. public finance:
		Puerto Rico, General Obligation, Appropriations and Guarantees of the Commonwealth	$	1,498	CCC
		Puerto Rico Highways & Transportation Authority	1,319		CCC
		Puerto Rico Electric Power Authority	848		CCC
		Puerto Rico Aqueduct & Sewer Authority	373		CCC
		Puerto Rico Municipal Finance Agency	303		CCC
		Puerto Rico Sales Tax Financing Corporation	273		CCC
		Jackson Water & Sewer System, Mississippi	191		BB
		Virgin Islands Public Finance Authority	169		BB
		Puerto Rico Convention Center District Authority	152		CCC
		Stockton Pension Obligation Bonds, California	110		B
		Alabama State University (Montgomery)	109		BB+
		Penn Hills School District, Pennsylvania	107		BB
		Coatesville Area School District, Pennsylvania	75		BB
		Pennsylvania Economic Development Financing Authority (Capitol Region Parking System)	70		BB
		Atlantic City, New Jersey	57		BB
		Virgin Islands Water and Power Authority	54		BB
	Total U.S. public finance		$	5,708
Non-U.S. public finance:
		Valencia Fair	$	316	BB-
		Road Management Services PLC (A13 Highway)	198		B+
		M6 Duna Autopalya Koncesszios Zartkoruen Mukodo Reszvenytarsasag	177		BB+
		Autovia de la Mancha, S.A.	113		BB
		CountyRoute (A130) plc	81		BB-
		Metropolitano de Porto Lease and Sublease of Railroad Equipment	51		B+
	Total non-U.S. public finance		$	936
Total			$	6,644

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

1) Transactions below B- are categorized as CCC.

28

Assured Guaranty Ltd.

Below Investment Grade Exposures (4 of 4)

As of December 31, 2018

(dollars in millions)

Structured Finance BIG Exposures Greater Than $50 Million

	Net Par Outstanding		Internal Rating (1)	60+ Day Delinquencies
Name or description
U.S. structured finance:
RMBS:
Option One 2007-FXD2	$	196	CCC	13.7%
Soundview 2007-WMC1	160		CCC	32.3%
Nomura Asset Accept. Corp. 2007-1	120		CCC	19.0%
Option One Mortgage Loan Trust 2007-Hl1	113		CCC	23.6%
New Century 2005-A	94		CCC	13.4%
Argent Securities Inc., Asset Backed Pass Through Certificates 2005-W4	93		CCC	14.1%
Countrywide Home Equity Loan Trust 2007-D	74		B	2.3%
MABS 2007-NCW	73		CCC	21.2%
Countrywide HELOC 2007-A	72		BB	3.1%
Countrywide HELOC 2006-F	69		BB	2.6%
Countrywide HELOC 2007-B	68		BB	2.7%
Countrywide Home Equity Loan Trust 2005-J	63		B	4.1%
Countrywide HELOC 2005-D	62		B	2.0%
Soundview (Delta) 2008-1	60		CCC	21.4%
Ace 2007-D1	58		CCC	24.7%
IndyMac 2007-H1 HELOC	54		CCC	2.4%
Ace Home Equity Loan Trust 2007-SL1	53		CCC	2.3%
Subtotal RMBS	$	1,482
Non-RMBS:
Ballantyne Re Plc	$	85	CCC	N/A
National Collegiate Trust Series 2006-2	68		CCC	2.8%
Subtotal non-RMBS	$	153
Total U.S. structured finance	$	1,635
Total non-U.S. structured finance	$	—
Total	$	1,635

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

1) Transactions below B- are categorized as CCC.

29

Assured Guaranty Ltd.

Largest Exposures by Sector (1 of 3)

As of December 31, 2018

(dollars in millions)

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

Credit Name:	Net Par Outstanding		Internal Rating (1)
New Jersey (State of)	$	4,245	BBB
Pennsylvania (Commonwealth of)	1,986		A-
Illinois (State of)	1,967		BBB
Puerto Rico, General Obligation, Appropriations and Guarantees of the Commonwealth	1,498		CCC
Puerto Rico Highways & Transportation Authority	1,319		CCC
Chicago (City of) Illinois	1,300		BBB
North Texas Tollway Authority	1,242		A
California (State of)	1,177		A
Massachusetts (Commonwealth of)	1,160		AA-
Wisconsin (State of)	1,124		A+
New York (City of) New York	1,088		AA-
Great Lakes Water Authority (Sewerage), Michigan	982		BBB+
New York Metropolitan Transportation Authority	981		A
San Diego Family Housing, LLC Military Housing	963		AA
Philadelphia (City of) Pennsylvania	951		BBB+
Chicago Public Schools, Illinois	916		BBB-
Port Authority of New York & New Jersey	861		BBB-
Philadelphia School District, Pennsylvania	860		A-
Puerto Rico Electric Power Authority	848		CCC
Massachusetts (Commonwealth of) Water Resources	837		AA
Suffolk County, New York	813		BBB
Metropolitan Pier & Exposition Authority, Illinois	811		BBB-
Long Island Power Authority	807		BBB+
Nassau County, New York	767		A-
Connecticut (State of)	759		A-
Pennsylvania Turnpike Commission	756		A-
Georgia Board of Regents	756		A
Clarksville Natural Gas Acquisition Corporation, Tennessee	751		A
Arizona (State of)	750		A+
Regional Transportation Authority, Illinois	693		AA-
Jefferson County Alabama Sewer	680		BBB
LCOR Alexandria LLC	615		BBB+
Metro Washington Airports Authority (Dulles Toll Road)	609		BBB+
Oglethorpe Power Corporation, Georgia	575		BBB
Garden State Preservation Trust (Open Space & Farmland), New Jersey	569		BBB+
Sacramento County, California	567		A-
ProMedica Healthcare Obligated Group	550		BBB+
New Jersey Turnpike Authority, New Jersey	548		A-
Pittsburgh Water & Sewer, Pennsylvania	524		BBB+
Miami-Dade County Aviation, Florida	475		A
Yankee Stadium LLC New York City Industrial Development Authority	468		BBB-
Miami-Dade County School Board, Florida	464		A
San Bernardino County, California	462		A+
Anaheim (City of), California	455		BBB+
Kentucky (Commonwealth of)	447		A
Miami-Dade County, Florida	446		A+
Oyster Bay, New York	445		BBB-
Central Florida Expressway Authority, Florida (fka Orlando-Orange County Expressway Authority)	442		A+
Oregon School Boards Association	441		A+
Montefiore Medical Center, New York	434		BBB
Total top 50 U.S. public finance exposures	$	44,184

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

1) Transactions below B- are categorized as CCC.

30

Assured Guaranty Ltd.

Largest Exposures by Sector (2 of 3)

As of December 31, 2018

(dollars in millions)

25 Largest U.S. Structured Finance Exposures

Credit Name:		Net Par Outstanding		Internal Rating (1)
	Private US Insurance Securitization	$	500	AA
	SLM Private Credit Student Trust 2007-A	500		A+
	Private US Insurance Securitization	424		AA
	SLM Private Credit Student Loan Trust 2006-C	257		AA-
	Private US Insurance Securitization	250		AA
	Brightwood Fund III Static 2018-1, LLC	231		A-
	Option One 2007-FXD2	196		CCC
	Timberlake Financial, LLC Floating Insured Notes	175		BBB-
	Soundview 2007-WMC1	160		CCC
	Countrywide HELOC 2006-I	132		BBB-
	CWABS 2007-4	124		A+
	Nomura Asset Accept. Corp. 2007-1	121		CCC
	CWALT Alternative Loan Trust 2007-HY9	116		A
	Option One Mortgage Loan Trust 2007-Hl1	113		CCC
	New Century Home Equity Loan Trust 2006-1	111		AAA
	Soundview Home Equity Loan Trust 2006-OPT1	111		AAA
	OwnIt Mortgage Loan ABS Certificates 2006-3	110		AAA
	Structured Asset Investment Loan Trust 2006-1	100		AAA
	New Century 2005-A	94		CCC
	Argent Securities Inc., Asset Backed Pass Through Certificates 2005-W4	93		CCC
	Countrywide 2007-13	92		AA-
	ALESCO Preferred Funding XIII, Ltd.	88		AA
	Ballantyne Re Plc	85		CCC
	Trapeza CDO XI	83		AA-
	Preferred Term Securities XXIV, Ltd.	81		AA-
	Total top 25 U.S. structured finance exposures	$	4,347

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

1) Transactions below B- are categorized as CCC.

31

Assured Guaranty Ltd.

Largest Exposures by Sector (3 of 3)

As of December 31, 2018

(dollars in millions)

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

Credit Name:		Country	Net Par Outstanding		Internal Rating
	Southern Water Services Limited	United Kingdom	$	2,592	A-
	Hydro-Quebec, Province of Quebec	Canada	2,060		A+
	Thames Water Utility Finance PLC	United Kingdom	1,900		A-
	Societe des Autoroutes du Nord et de l'Est de France S.A.	France	1,727		BBB+
	Southern Gas Networks PLC	United Kingdom	1,635		BBB
	Anglian Water Services Financing	United Kingdom	1,415		A-
	Dwr Cymru Financing Limited	United Kingdom	1,392		A-
	British Broadcasting Corporation (BBC)	United Kingdom	1,296		A+
	National Grid Gas PLC	United Kingdom	1,247		BBB+
	Channel Link Enterprises Finance PLC	France, United Kingdom	1,206		BBB
	Verbund - Lease and Sublease of Hydro-Electric equipment	Austria	1,003		AAA
	Capital Hospitals (Barts)	United Kingdom	886		BBB-
	Aspire Defence Finance PLC	United Kingdom	855		BBB+
	Verdun Participations 2 S.A.S.	France	720		BBB-
	National Grid Company PLC	United Kingdom	674		BBB+
	Sydney Airport Finance Company	Australia	625		BBB+
	Yorkshire Water Services Finance PLC	United Kingdom	612		A-
	InspirED Education (South Lanarkshire) PLC	United Kingdom	610		BBB-
	Campania Region - Healthcare receivable	Italy	590		BBB-
	Envestra Limited	Australia	585		A-
	Coventry & Rugby Hospital Company	United Kingdom	538		BBB-
	Derby Healthcare PLC	United Kingdom	508		BBB
	Wessex Water Services Finance PLC	United Kingdom	495		BBB+
	Severn Trent Water Utilities Finance PLC	United Kingdom	489		BBB+
	Central Nottinghamshire Hospitals PLC	United Kingdom	465		BBB
	Comision Federal De Electricidad (CFE) El Cajon Project	Mexico	463		BBB-
	North Staffordshire PFI	United Kingdom	460		BBB-
	NATS (En Route) PLC	United Kingdom	458		A
	International Infrastructure Pool	United Kingdom	458		AAA
	International Infrastructure Pool	United Kingdom	458		AAA
	International Infrastructure Pool	United Kingdom	458		AAA
	NewHospitals (St Helens & Knowsley) Finance PLC	United Kingdom	452		BBB
	United Utilities Water PLC	United Kingdom	427		BBB+
	South East Water	United Kingdom	404		BBB+
	Scotland Gas Networks PLC	United Kingdom	384		BBB
	The Hospital Company (QAH Portsmouth) Limited	United Kingdom	382		BBB
	BBI (DBCT) Finance Property Limited	Australia	374		BBB
	Octagon Healthcare Funding PLC	United Kingdom	328		BBB
	St. James's Oncology Financing PLC	United Kingdom	323		BBB
	Integrated Accommodation Services PLC	United Kingdom	317		BBB+
	Valencia Fair	Spain	316		BB-
	Bakethin Finance PLC	United Kingdom	310		A-
	Catalyst Healthcare (Romford) Financing PLC	United Kingdom	301		BBB
	MPC Funding Limited	Australia	301		BBB+
	Western Power Distribution (South Wales) PLC	United Kingdom	287		BBB+
	Dali Capital (Northumbrian Water) PLC	United Kingdom	285		BBB+
	The Republic of Poland	Poland	282		A-
	Sarawak Capital Incorporated	Malaysia	280		BBB+
	Province of Nova Scotia	Canada	267		A+
	Japan Expressway Holding and Debt Repayment Agency	Japan	258		A+
	Total top 50 non-U.S. exposures		$	35,158

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

32

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⁽¹⁾ for the Three Months Ended December 31, 2018

	Net Expected Loss to be Paid (Recovered) at September 30, 2018		Economic Loss Development During 4Q-18			(Paid) Recovered Losses During 4Q-18			Net Expected Loss to be Paid  (Recovered) as of December 31, 2018
Public Finance:
U.S. public finance	$	832	$	11		$	(11	)	$	832
Non-U.S public finance	38		(5		)	(1		)	32
Public Finance	870		6			(12		)	864
Structured Finance:
U.S. RMBS (2)	303		(17		)	7			293
Other structured finance	18		11			(3		)	26
Structured Finance	321		(6		)	4			319
Total	$	1,191	$	—		$	(8	)	$	1,183

Rollforward of Net Expected Loss and LAE to be Paid⁽¹⁾ for the Year Ended December 31, 2018

	Net Expected Loss to be Paid  (Recovered) as of December 31, 2017		Net Expected Loss to be Paid  on SGI Portfolio as of June 1, 2018		Economic Loss Development During 2018			(Paid) Recovered Losses During 2018			Net Expected Loss to be Paid  (Recovered) as of December 31, 2018
Public Finance:
U.S. public finance	$	1,157	$	—	$	70		$	(395	)	$	832
Non-U.S public finance	46		1		(14		)	(1		)	32
Public Finance	1,203		1		56			(396		)	864
Structured Finance:
U.S. RMBS (2)	73		130		(69		)	159			293
Other structured finance	27		—		8			(9		)	26
Structured Finance	100		130		(61		)	150			319
Total	$	1,303	$	131	$	(5	)	$	(246	)	$	1,183

1) Includes expected loss to be paid, economic loss development and paid (recovered) losses for all contracts (i.e. those accounted for as insurance, credit derivatives and FG VIEs).

2) Includes future net representations and warranties (R&W) receivable of $5 million as of December 31, 2018, $13 million as of September 30, 2018, and $117 million as of December 31, 2017.

33

Assured Guaranty Ltd.

Loss Measures

As of December 31, 2018

(dollars in millions)

	Total Net Par Outstanding for BIG Transactions		4Q-18  Loss and LAE			4Q-18 Loss and LAE included in Non-GAAP Operating Income (1)			4Q-18 Effect of FG VIE Consolidation (2)		YTD 2018  Loss and LAE			YTD 2018 Loss and LAE included in Non-GAAP Operating Income (1)			YTD 2018 Effect of FG VIE Consolidation (2)
Public finance:
U.S. public finance	$	6,388	$	14		$	14		$	—	$	90		$	90		$	—
Non-U.S public finance	1,041		(2		)	(2		)	—		(7		)	(7		)	—
Public finance	7,429		12			12			—		83			83			—
Structured finance:
U.S. RMBS	2,387		2			2			3		(15		)	(16		)	3
Other structured finance	344		7			13			—		(4		)	6			—
Structured finance	2,731		9			15			3		(19		)	(10		)	3
Total	$	10,160	$	21		$	27		$	3	$	64		$	73		$	3

1) Non-GAAP operating income includes financial guaranty insurance and credit derivatives.

2) The "Effect of FG VIE Consolidation" column represents amounts included in the consolidated statements of operations and non-GAAP operating income that the Company removes to arrive at the core financial measures that management uses in certain of its compensation calculations and its decision making process. 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 the presentation of net par outstanding and of the various sectors.

34

Assured Guaranty Ltd.

Summary of Financial and Statistical Data

(dollars in millions, except per share amounts)

			Year Ended December 31,
			2018			2017			2016			2015			2014
GAAP Summary Statements of Operations Data
	Net earned premiums		$	548		$	690		$	864		$	766		$	570
	Net investment income		398			418			408			423			403
	Total expenses		422			748			660			776			463
	Income (loss) before income taxes		580			991			1,017			1,431			1,531
	Net income (loss)		521			730			881			1,056			1,088
	Net income (loss) per diluted share		4.68			5.96			6.56			7.08			6.26
GAAP Summary Balance Sheet Data
	Total investments and cash		$	10,977		$	11,539		$	11,103		$	11,358		$	11,459
	Total assets		13,603			14,433			14,151			14,544			14,919
	Unearned premium reserve		3,512			3,475			3,511			3,996			4,261
	Loss and LAE reserve		1,177			1,444			1,127			1,067			799
	Long-term debt		1,233			1,292			1,306			1,300			1,297
	Shareholders’ equity		6,555			6,839			6,504			6,063			5,758
	Shareholders’ equity per share		63.23			58.95			50.82			43.96			36.37
Other Financial Information (GAAP Basis)
	Financial guaranty:
	Net debt service outstanding (end of period)		$	371,586		$	401,118		$	437,535		$	536,341		$	609,622
	Gross debt service outstanding (end of period)		375,080			408,492			455,000			559,470			646,722
	Net par outstanding (end of period)		241,802			264,952			296,318			358,571			403,729
	Gross par outstanding (end of period)		244,191			269,386			307,474			373,192			426,705
Other Financial Information (Statutory Basis)(1)
	Financial guaranty:
	Net debt service outstanding (end of period)		$	359,499		$	373,340		$	401,004		$	502,331		$	583,598
	Gross debt service outstanding (end of period)		362,974			380,478			417,072			524,104			619,475
	Net par outstanding (end of period)		230,664			239,003			262,468			327,306			379,714
	Gross par outstanding (end of period)		233,036			243,217			272,286			340,662			401,552
Claims-paying resources
	Policyholders' surplus		$	5,148		$	5,305		$	5,126		$	4,631		$	4,222
	Contingency reserve		1,663			1,750			2,008			2,263			2,330
	Qualified statutory capital		6,811			7,055			7,134			6,894			6,552
	Unearned premium reserve and net deferred ceding commission income		2,950			2,849			2,672			3,225			3,492
	Loss and LAE reserves		1,023			1,092			888			1,043			852
	Total policyholders' surplus and reserves		10,784			10,996			10,694			11,162			10,896
	Present value of installment premium		451			445			500			645			716
	CCS and standby line of credit		400			400			400			400			400
	Excess of loss reinsurance facility		180			180			360			360			450
	Total claims-paying resources		$	11,815		$	12,021		$	11,954		$	12,567		$	12,462
	Ratios:
		Net par outstanding to qualified statutory capital	34		:1	34		:1	37		:1	47		:1	58		:1
		Capital ratio	53		:1	53		:1	56		:1	73		:1	89		:1
		Financial resources ratio	31		:1	31		:1	34		:1	40		:1	47		:1
Par and Debt Service Written
	Gross debt service written:
		Public finance - U.S.	$	31,989		$	26,988		$	25,423		$	25,832		$	20,804
		Public finance - non-U.S.	7,166			2,811			848			2,054			233
		Structured finance - U.S.	1,191			500			1,143			355			423
		Structured finance - non-U.S.	369			202			30			69			387
	Total gross debt service written		$	40,715		$	30,501		$	27,444		$	28,310		$	21,847
	Net debt service written		$	40,630		$	30,476		$	27,444		$	28,310		$	21,847
	Net par written		24,538			17,962			17,854			17,336			13,171
	Gross par written		24,624			18,024			17,854			17,336			13,171

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

2) See page 9 for additional detail on claims-paying resources. Beginning in the second quarter of 2018, the Company incorporates deferred ceding commission income in claims-paying resources. The claims paying resources in prior periods have been updated to reflect this change.

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 the presentation of net debt service and net par outstanding and of the various sectors.

35

Assured Guaranty Ltd.

Summary of GAAP to Non-GAAP Reconciliations⁽¹⁾ (1 of 2)

(dollars in millions, except per share amounts)

	Year Ended December 31,
	2018			2017			2016			2015			2014
Total GWP	$	612		$	307		$	154		$	181		$	104
Less: Installment GWP and other GAAP adjustments (2)	119			99			(10		)	55			(22		)
Upfront GWP	493			208			164			126			126
Plus: Installment premium PVP	170			81			50			53			42
Total PVP	$	663		$	289		$	214		$	179		$	168
PVP:
Public finance - U.S.	$	391		$	196		$	161		$	124		$	128
Public finance - non-U.S.	94			66			25			27			7
Structured finance - U.S.	166			12			27			22			24
Structured finance - non-U.S.	12			15			1			6			9
Total PVP	$	663		$	289		$	214		$	179		$	168
Non-GAAP operating income reconciliation:
Net income (loss)	$	521		$	730		$	881		$	1,056		$	1,088
Less pre-tax adjustments:
Realized gains (losses) on investments	(32		)	40			(30		)	(27		)	(56		)
Non-credit impairment unrealized fair value gains (losses) on credit derivatives	101			43			36			505			687
Fair value gains (losses) on CCS	14			(2		)	—			27			(11		)
Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves	(32		)	57			(33		)	(15		)	(21		)
Total pre-tax adjustments	51			138			(27		)	490			599
Less tax effect on pre-tax adjustments	(12		)	(69		)	13			(144		)	(158		)
Non-GAAP operating income	$	482		$	661		$	895		$	710		$	647
Gain (loss) related to FG VIE consolidation included in non-GAAP operating income (net of tax provision (benefit) of $(1), $6, $7, $4, and $84)	$	(4	)	$	11		$	12		$	11		$	156
Non-GAAP operating income per diluted share reconciliation:
Net income (loss) per diluted share	$	4.68		$	5.96		$	6.56		$	7.08		$	6.26
Less pre-tax adjustments:
Realized gains (losses) on investments	(0.29		)	0.33			(0.23		)	(0.18		)	(0.32		)
Non-credit impairment unrealized fair value gains (losses) on credit derivatives	0.90			0.35			0.27			3.39			3.95
Fair value gains (losses) on CCS	0.13			(0.02		)	—			0.18			(0.06		)
Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves	(0.29		)	0.46			(0.25		)	(0.10		)	(0.12		)
Total pre-tax adjustments	0.45			1.12			(0.21		)	3.29			3.45
Less tax effect on pre-tax adjustments	(0.11		)	(0.57		)	0.09			(0.97		)	(0.92		)
Non-GAAP operating income per diluted share	$	4.34		$	5.41		$	6.68		$	4.76		$	3.73
Gain (loss) related to FG VIE consolidation included in non-GAAP operating income per diluted share	$	(0.03	)	$	0.10		$	0.10		$	0.07		$	0.90

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

2) Includes present value of new business on installment policies discounted at the prescribed GAAP discount rates, GWP adjustments on existing installment policies due to changes in assumptions, any cancellations of assumed reinsurance contracts, and other GAAP adjustments.

36

Assured Guaranty Ltd.

Summary of GAAP to Non-GAAP Reconciliations⁽¹⁾ (2 of 2)

(dollars in millions, except per share amounts)

	As of December 31,
	2018			2017			2016			2015			2014
Adjusted book value reconciliation:
Shareholders' equity	$	6,555		$	6,839		$	6,504		$	6,063		$	5,758
Less pre-tax adjustments:
Non-credit impairment unrealized fair value gains (losses) on credit derivatives	(45		)	(146		)	(189		)	(241		)	(741		)
Fair value gains (losses) on CCS	74			60			62			62			35
Unrealized gain (loss) on investment portfolio excluding foreign exchange effect	247			487			316			373			523
Less taxes	(63		)	(83		)	(71		)	(56		)	45
Non-GAAP operating shareholders' equity	6,342			6,521			6,386			5,925			5,896
Pre-tax adjustments:
Less: Deferred acquisition costs	105			101			106			114			121
Plus: Net present value of estimated net future revenue	204			146			136			169			159
Plus: Net unearned premium reserve on financial guaranty contracts in excess of expected loss to be expensed	3,005			2,966			2,922			3,384			3,461
Plus taxes	(524		)	(512		)	(832		)	(968		)	(960		)
Non-GAAP adjusted book value	$	8,922		$	9,020		$	8,506		$	8,396		$	8,435
Gain (loss) related to FG VIE consolidation included in non-GAAP operating shareholders' equity (net of tax (provision) benefit of $(1), $(2), $4, $11, and $20)	$	3		$	5		$	(7	)	$	(21	)	$	(37	)
Gain (loss) related to FG VIE consolidation included in non-GAAP adjusted book value (net of tax benefit of $4, $3, $12, $22, and $33)	$	(15	)	$	(14	)	$	(24	)	$	(43	)	$	(60	)
Adjusted book value per share reconciliation:
Shareholders' equity per share	$	63.23		$	58.95		$	50.82		$	43.96		$	36.37
Less pre-tax adjustments:
Non-credit impairment unrealized fair value gains (losses) on credit derivatives	(0.44		)	(1.26		)	(1.48		)	(1.75		)	(4.68		)
Fair value gains (losses) on CCS	0.72			0.52			0.48			0.45			0.22
Unrealized gain (loss) on investment portfolio excluding foreign exchange effect	2.39			4.20			2.47			2.71			3.30
Less taxes	(0.61		)	(0.71		)	(0.54		)	(0.41		)	0.29
Non-GAAP operating shareholders' equity per share	61.17			56.20			49.89			42.96			37.24
Pre-tax adjustments:
Less: Deferred acquisition costs	1.01			0.87			0.83			0.83			0.76
Plus: Net present value of estimated net future revenue	1.96			1.26			1.07			1.23			1.00
Plus: Net unearned premium reserve on financial guaranty contracts in excess of expected loss to be expensed	28.98			25.56			22.83			24.53			21.86
Plus taxes	(5.04		)	(4.41		)	(6.50		)	(7.02		)	(6.07		)
Non-GAAP adjusted book value per share	$	86.06		$	77.74		$	66.46		$	60.87		$	53.27
Gain (loss) related to FG VIE consolidation included in non-GAAP operating shareholders' equity per share	$	0.03		$	0.03		$	(0.06	)	$	(0.15	)	$	(0.24	)
Gain (loss) related to FG VIE consolidation included in non-GAAP adjusted book value per share	$	(0.15	)	$	(0.12	)	$	(0.18	)	$	(0.31	)	$	(0.39	)

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

37

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 as a result of loss mitigation strategies, including securities the Company has purchased for loss mitigation purposes that are held in the investment portfolio.

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.

Statutory Net Par and Net Debt Service Outstanding. Under statutory accounting, net par and net debt service outstanding 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).

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 is obtained:

60+ Day Delinquenciesare 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 Enhancementis 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.

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, 2018.

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.

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.

38

Glossary (continued)

Sectors (continued)

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.

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.

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.

Regulated Utility 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 credit default swap 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 include obligations of local, municipal, regional or national governmental authorities or agencies.

Structured Finance:

Residential Mortgage-Backed Securitiesare 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), whichrefers 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.

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

Pooled Corporate Obligationsare 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 (TruPS). 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.

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

Financial Products Businessis the guaranteed investment contracts (GICs) portion of a line of business previously conducted by Assured Guaranty Municipal Holdings Inc. (AGMH) that the Company did not acquire when it purchased AGMH in 2009 from Dexia SA and that is being run off. That line of business consisted of AGMH's GICs business, its medium term notes business and the equity payment agreements associated with AGMH's leveraged lease business. Assured Guaranty is indemnified by Dexia SA and certain of its affiliates against loss from the former Financial Products Business.

Other Structured Finance Obligationsare obligations backed by assets not generally described in any of the other described categories.

39

Non-GAAP Financial Measures

To reflect the key financial measures that management analyzes in evaluating the Company’s operations and progress towards long-term goals, the Company discloses both financial measures determined in accordance with GAAP and financial measures not determined in accordance with GAAP (non-GAAP financial measures).

Financial measures identified as non-GAAP should not be considered substitutes for GAAP financial measures. The primary limitation of non-GAAP financial measures is the potential lack of comparability to financial measures of other companies, whose definitions of non-GAAP financial measures may differ from those of the Company.

By disclosing non-GAAP financial measures, the Company gives investors, analysts and financial news reporters access to information that management and the Board of Directors review internally. The Company believes its presentation of non-GAAP financial measures, along with the effect of FG VIE consolidation, provides information that is necessary for analysts to calculate their estimates of Assured Guaranty’s financial results in their research reports on Assured Guaranty and for investors, analysts and the financial news media to evaluate Assured Guaranty’s financial results.

GAAP requires the Company to consolidate certain VIEs that have issued debt obligations insured by the Company. However, the Company does not own such VIEs and its exposure is limited to its obligation under its financial guaranty insurance contract. Management and the Board of Directors use non-GAAP financial measures adjusted to remove FG VIE consolidation (which the Company refers to as its core financial measures), as well as GAAP financial measures and other factors, to evaluate the Company’s results of operations, financial condition and progress towards long-term goals. The Company uses these core financial measures in its decision making process and in its calculation of certain components of management compensation. Wherever possible, the Company has separately disclosed the effect of FG VIE consolidation.

Many investors, analysts and financial news reporters use non-GAAP operating shareholders’ equity, adjusted to remove the effect of FG VIE consolidation, as the principal financial measure for valuing AGL’s current share price or projected share price and also as the basis of their decision to recommend, buy or sell AGL’s common shares. Many of the Company’s fixed income investors also use this measure to evaluate the Company’s capital adequacy.

Many investors, analysts and financial news reporters also use non-GAAP adjusted book value, adjusted to remove the effect of FG VIE consolidation, to evaluate AGL’s share price and as the basis of their decision to recommend, buy or sell the AGL common shares. Non-GAAP operating income adjusted for the effect of FG VIE consolidation enables investors and analysts to evaluate the Company’s financial results in comparison with the consensus analyst estimates distributed publicly by financial databases.

The core financial measures that the Company uses to help determine compensation are: (1) non-GAAP operating income, adjusted to remove the effect of FG VIE consolidation, (2) non-GAAP operating shareholders' equity, adjusted to remove the effect of FG VIE consolidation, (3) growth in non-GAAP adjusted book value per share, adjusted to remove the effect of FG VIE consolidation, and (4) PVP.

 The following paragraphs define each non-GAAP financial measure disclosed by the Company and describe why it is useful. To the extent there is a directly comparable GAAP financial measure, a reconciliation of the non-GAAP financial measure and the most directly comparable GAAP financial measureis presented within this financial supplement.

Non-GAAP Operating Income: Management believes that non-GAAP operating income is a useful measure because it clarifies the understanding of the underwriting results and financial condition of the Company and presents the results of operations of the Company excluding the fair value adjustments on credit derivatives and CCS that are not expected to result in economic gain or loss, as well as other adjustments described below. Management adjusts non-GAAP operating income further by removing FG VIE consolidation to arrive at its core operating income measure. Non-GAAP operating income is defined as net income (loss) attributable to AGL, as reported under GAAP, adjusted for the following:

1)    Elimination of 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.

2)    Elimination of non-credit-impairment unrealized fair value gains (losses) on credit derivatives that are recognized in net income, which is the amount of unrealized fair value gains (losses) 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, the Company's credit spreads, and other market factors and are not expected to result in an economic gain or loss.

3)    Elimination of fair value gains (losses) on the Company’s CCS that are recognized in net income. Such amounts are affected by changes in market interest rates, the Company's credit spreads, price indications on the Company's publicly traded debt, and other market factors and are not expected to result in an economic gain or loss.

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Non-GAAP Financial Measures (continued)

4)    Elimination of foreign exchange gains (losses) on remeasurement of net premium receivables and loss and LAE reserves that are recognized in net income. Long-dated receivables and loss and LAE reserves represent the present value of future contractual or expected cash flows. 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 tax effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.

Non-GAAP Operating Shareholders’ Equity and Non-GAAP Adjusted Book Value: Management believes that non-GAAP operating shareholders’ equity is a useful measure because it presents the equity of the Company excluding the fair value adjustments on investments, credit derivatives and CCS that are not expected to result in economic gain or loss, along with other adjustments described below. Management adjusts non-GAAP operating shareholders’ equity further by removing FG VIE consolidation to arrive at its core operating shareholders' equity and core adjusted book value.

Non-GAAP operating shareholders’ equity is the basis of the calculation of non-GAAP adjusted book value (see below). Non-GAAP operating shareholders’ equity is defined as shareholders’ equity attributable to AGL, as reported under GAAP, adjusted for the following:

1)    Elimination of non-credit-impairment unrealized fair value gains (losses) on credit derivatives, which is the amount of unrealized fair value gains (losses) 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.

2)    Elimination of fair value gains (losses) on the Company’s CCS. Such amounts are affected by changes in market interest rates, the Company's credit spreads, price indications on the Company's publicly traded debt, and other market factors and are not expected to result in an economic gain or loss.

3)    Elimination of 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.

 4) Elimination of the tax effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.

Management uses non-GAAP adjusted book value, adjusted for FG VIE consolidation, to measure the intrinsic value of the Company, excluding franchise value. Growth in non-GAAP adjusted book value per share, adjusted for FG VIE consolidation (core adjusted book value), is one of the key financial measures used in determining the amount of certain long-term compensation elements to management and employees and used by rating agencies and investors. Management believes that non-GAAP adjusted book value is a useful measure because it enables an evaluation of the Company’s in-force premiums and revenues net of expected losses. Non-GAAP adjusted book value is non-GAAP operating shareholders’ equity, as defined above, further adjusted for the following:

1)    Elimination of 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 net present value of estimated net future revenue. See below.

3)    Addition of the deferred premium revenue 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.

4) Elimination of the tax effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.

The unearned premiums and revenues included in non-GAAP adjusted book value will be earned in future periods, but actual earnings may differ materially from the estimated amounts used in determining current non-GAAP adjusted book value due to changes in foreign exchange rates, prepayment speeds, terminations, credit defaults and other factors.

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Non-GAAP Financial Measures (continued)

Non-GAAP Operating Return on Equity (Non-GAAP Operating ROE): Non-GAAP Operating ROE represents non-GAAP operating income for a specified period divided by the average of non-GAAP operating shareholders’ equity at the beginning and the end of that period. Management believes that non-GAAP 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 non-GAAP operating ROE, adjusted for FG VIE consolidation, to evaluate AGL’s share price and as the basis of their decision to recommend, buy or sell the AGL common shares. Quarterly and year-to-date non-GAAP operating ROE are calculated on an annualized basis. Non-GAAP operating ROE, adjusted for FG VIE consolidation, is one of the key management financial measures used in determining the amount of certain long-term compensation to management and employees and used by rating agencies and investors.

Net Present Value of Estimated Net Future Revenue: Management believes that this amount is a useful measure because it enables an evaluation of the value of future estimated revenue for contracts other than financial guaranty insurance contracts (such as non-financial guaranty insurance contracts and credit derivatives). There is no corresponding GAAP financial measure. This amount represents the present value of estimated future revenue from these contracts, net of reinsurance, ceding commissions and premium taxes, for contracts without expected economic losses, and is discounted at 6%. Estimated net future 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 the Company 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 management believes GAAP gross written premiums and the net credit derivative premiums received and receivable portion of net realized gains and other settlements on credit derivatives (Credit Derivative Realized Gains (Losses)) do not adequately measure. PVP in respect of 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, discounted, in each case, at 6%. Under GAAP, financial guaranty installment premiums 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 earned or written premiums and Credit Derivative Realized Gains (Losses) 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. 

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Assured Guaranty Ltd.    

30 Woodbourne Avenue

Hamilton HM 08

Bermuda

(441) 279-5705

www.assuredguaranty.com

Contacts:

Equity and Fixed Income Investors:

Robert Tucker

Senior Managing Director, Investor Relations and Corporate Communications

(212) 339-0861

rtucker@agltd.com

Michael Walker

Managing Director, Fixed Income Investor Relations

(212) 261-5575

mwalker@agltd.com

Andre Thomas

Managing Director, Equity Investor Relations

(212) 339-3551

athomas@agltd.com

Media:

Ashweeta Durani

Vice President, Corporate Communications

(212) 408-6042

adurani@agltd.com