v3.26.1
Contracts Accounted for as Financial Guaranty Insurance
 6 Months Ended
Jun. 30, 2026
Insurance [Abstract]  
Contracts Accounted for as Financial Guaranty Insurance Contracts Accounted for as Financial Guaranty Insurance
The portfolio of outstanding exposures discussed in Note 4. Outstanding Exposure, and Note 5. Expected Loss to be Paid (Recovered), includes contracts that are accounted for as financial guaranty insurance contracts, credit derivatives and consolidated FG VIEs. Amounts presented in this note relate only to contracts accounted for as financial guaranty insurance, unless otherwise specified. See Note 8. Derivatives, for amounts related to CDS and Note 10. Variable Interest Entities, for amounts related to consolidated FG VIEs.

Premiums

Net Earned Premiums
Second QuarterSix Months
2026202520262025
(in millions)
Financial guaranty insurance:
Scheduled net earned premiums$80 $75 $156 $151 
Accelerations from refundings, terminations and modifications 11 4 5 9 
Accretion of discount on net premiums receivable10 9 20 18 
Financial guaranty insurance net earned premiums101 88 181 178 
Specialty net earned premiums1 1 3 2 
  Net earned premiums$102 $89 $184 $180 
Gross Premium Receivable,
Net of Commissions Payable on Assumed Business and Allowance for Credit Losses
Roll Forward
Six Months
20262025
(in millions)
Beginning of year$1,572 $1,551 
Less: Specialty insurance premium receivable2 1 
Financial guaranty insurance premiums receivable1,570 1,550 
New business and supplemental premiums, net of commissions153 124 
Gross premiums received, net of commissions (180)(154)
Adjustments:
Changes in the expected term and debt service assumptions(6)(7)
Accretion of discount, net of commissions on assumed business11 17 
Foreign exchange gain (loss) on remeasurement(23)101 
Change in allowance for credit losses(4)(1)
Financial guaranty insurance premium receivable1,521 1,630 
Specialty insurance premium receivable2 1 
As of June 30,$1,523 $1,631 

Approximately 66% and 68% of gross premiums receivable, net of commissions payable, as of June 30, 2026 and December 31, 2025, respectively, are denominated in currencies other than the U.S. dollar, primarily the pound sterling and euro.
 
The timing and cumulative amount of actual collections and net earned premiums may differ from those of expected collections and of expected net earned premiums in the table below due to factors such as foreign exchange rate fluctuations, counterparty collectability issues, accelerations, commutations, restructurings, changes in the CPIs, changes in expected lives, new business and changes in ratings of the insured obligations and/or the Company’s financial guaranty insurance subsidiaries.
Financial Guaranty Insurance
Expected Future Premium Collections and Earnings
As of June 30, 2026
Future Net Premiums to be Earned (2)
Future Premiums
to be Collected (1)		Earnings of Deferred Premium RevenueAccretion of
Discount		Total
(in millions)
2026 (July 1 - September 30)$76 $81 $10 $91 
2026 (October 1 - December 31)46 80 10 90 
Subtotal 2026122 161 20 181 
2027144 297 37 334 
2028131 275 35 310 
2029116 253 33 286 
2030103 235 31 266 
2031-2035420 917 132 1,049 
2036-2040338 592 96 688 
2041-2045258 395 63 458 
2046-2050194 255 35 290 
2051-2055109 124 15 139 
After 2055102 88 10 98 
Total$2,037 $3,592 $507 $4,099 
____________________
(1)    Net of assumed commissions payable. The future premiums to be collected are not adjusted for the allowance for credit losses.
(2)    Net of reinsurance.

Selected Information for Financial Guaranty Insurance Policies with Premiums Paid in Installments
As of
June 30, 2026December 31, 2025
(dollars in millions)
Premiums receivable, net of commissions payable$1,521$1,570
Deferred premium revenue$1,801$1,831
Weighted-average risk-free rate used to discount premiums2.8%2.7%
Weighted-average period of premiums receivable (in years)11.811.7

Financial Guaranty Insurance Contracts’ Losses Reported in the Condensed Consolidated Financial Statements

Loss and LAE reserve and salvage and subrogation recoverable for financial guaranty insurance obligations are discounted at risk-free rates that ranged from 2.18% to 5.67% with a weighted average of 4.36% as of June 30, 2026 and 1.93% to 5.35% with a weighted average of 3.93% as of December 31, 2025.
The following table provides information on net reserve (salvage), which includes loss and LAE reserve and salvage and subrogation recoverable, both net of reinsurance.

Net Reserve (Salvage) by Sector
As of
SectorJune 30, 2026December 31, 2025
(in millions)
Public finance:
U.S. public finance$(73)$(66)
Non-U.S. public finance 28 18 
Public finance(45)(48)
Structured finance:
U.S. RMBS(133)(150)
Other structured finance58 59 
Structured finance(75)(91)
Total$(120)$(139)

The table below provides a reconciliation of net expected loss to be paid (recovered) for financial guaranty insurance contracts to net expected loss to be expensed. Expected loss to be paid (recovered) for financial guaranty insurance contracts differs from expected loss to be expensed due to: (i) the contra-paid, which represents the claim payments made and recoveries received that have not yet been recognized in the statements of operations; (ii) salvage and subrogation recoverable for transactions that are in a net recovery position where the Company has not yet received recoveries on claims previously paid (and therefore recognized in income but not yet received); and (iii) loss reserves that have already been established (and therefore expensed but not yet paid).

Reconciliation of Net Expected Loss to be Paid (Recovered) to Net Expected Loss to be Expensed
Financial Guaranty Insurance Contracts
As of June 30, 2026
(in millions)
Net expected loss to be paid (recovered) - Financial guaranty insurance $179 
Contra-paid, net 22 
Salvage and subrogation recoverable, net425 
Loss and LAE reserve - Financial guaranty insurance contracts, net of reinsurance(305)
Net expected loss to be expensed (present value)$321 

The following table provides a schedule of the expected timing of financial guaranty net expected losses to be expensed. The amount and timing of actual loss and LAE may differ from the estimates shown below due to factors such as accelerations, commutations, changes in expected lives, changes in foreign exchange rates, changes in ratings of insured obligations and updates to loss estimates. This table excludes amounts related to FG VIEs, which are eliminated in consolidation.
Net Expected Loss to be Expensed
Financial Guaranty Insurance Contracts
As of June 30, 2026
(in millions)
2026 (July 1 - September 30)$4 
2026 (October 1 - December 31)4 
Subtotal 20268 
202719 
202821 
202922 
203021 
2031-203588 
2036-204050 
2041-204539 
2046-205034 
2051-205516 
After 20553 
Net expected loss to be expensed (present value)321 
Future expected accretion(39)
Total expected future loss and LAE$282 
 
The following table presents the loss and LAE (benefit) reported in the condensed consolidated statements of operations by sector for financial guaranty insurance contracts.

Loss and LAE (Benefit) by Sector
Second QuarterSix Months
Sector2026202520262025
(in millions)
Public finance:
U.S. public finance$(3)$15 $9 $51 
Non-U.S. public finance4 14 11 20 
Public finance1 29 20 71 
Structured finance:
U.S. RMBS2 — 1 — 
Other structured finance1 (1)— (3)
Structured finance3 (1)1 (3)
Loss and LAE (benefit)$4 $28 $21 $68 
The following tables provide information on financial guaranty insurance contracts categorized as BIG.

Financial Guaranty Insurance
BIG Transaction Loss Summary
As of June 30, 2026
GrossNet Total BIG
BIG 1BIG 2 (4)BIG 3Total BIG
(dollars in billions)
Number of risks (1)83 15 93 191 191 
Remaining weighted-average period (in years)10.723.35.018.518.6
Outstanding exposure:
Par$2.37 $4.93 $1.18 $8.48 $8.47 
Interest1.11 6.10 0.28 7.49 7.49 
Total (2)$3.48 $11.03 $1.46 $15.97 $15.96 
GrossNet Total BIG
BIG 1BIG 2 (4)BIG 3Total BIG
(in millions)
Expected cash outflows (inflows) $114 $2,261 $1,216 $3,591 $3,583 
Potential recoveries (3)(381)(1,988)(1,084)(3,453)(3,443)
Subtotal(267)273 132 138 140 
Discount48 (1)(8)39 39 
Expected losses to be paid (recovered)$(219)$272 $124 $177 $179 
Deferred premium revenue$59 $251 $96 $406 $406 
Reserves (salvage)$(242)$73 $47 $(122)$(120)
Financial Guaranty Insurance
BIG Transaction Loss Summary
As of December 31, 2025
GrossNet Total BIG
BIG 1BIG 2BIG 3Total BIG
(dollars in billions)
Number of risks (1)87 13 95 195 195 
Remaining weighted-average period (in years)14.024.15.418.718.7
Outstanding exposure:
Par$3.73 $3.81 $1.21 $8.75 $8.73 
Interest2.52 4.84 0.32 7.68 7.68 
Total (2)$6.25 $8.65 $1.53 $16.43 $16.41 
GrossNet Total BIG
BIG 1BIG 2BIG 3Total BIG
(in millions)
Expected cash outflows (inflows) $172 $1,141 $1,242 $2,555 $2,547 
Potential recoveries (3)(445)(877)(1,110)(2,432)(2,422)
Subtotal(273)264 132 123 125 
Discount47 (77)(8)(38)(38)
Expected losses to be paid (recovered)$(226)$187 $124 $85 $87 
Deferred premium revenue$164 $162 $103 $429 $429 
Reserves (salvage)$(255)$71 $43 $(141)$(140)
____________________
(1)A risk represents the aggregate of the financial guaranty policies that share the same revenue source for purposes of making debt service payments.
(2)Includes amounts related to FG VIEs.
(3)Represents expected inflows from future payments by obligors pursuant to restructuring agreements, settlements, excess spread on any underlying collateral and other estimated recoveries. Potential recoveries also include recoveries on certain investment grade credits, related primarily to exposures that were previously BIG and for which claims have been paid in the past.
(4)The increases in BIG 2 exposure, expected losses to be paid and deferred premium revenue in 2026 relate primarily to Brightline.