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Assured Guaranty Ltd. Reports Results for First Quarter 2014

  Assured Guaranty Ltd. Reports Results for First Quarter 2014

  *First quarter 2014 operating income^1 was $132 million, or $0.72 per
    share, compared with first quarter 2013 operating income of $260 million,
    or $1.34 per share.
  *First quarter 2014 net income was $42 million, or $0.23 per share,
    compared with first quarter 2013 net loss of $144 million, or $0.74 per
    share.
  *Operating shareholders' equity per share^1 increased to a new record of
    $34.45 and adjusted book value^1 per share increased to $49.79.
  *PVP^1 increased 72% compared with first quarter 2013, to $31 million.

Business Wire

HAMILTON, Bermuda -- May 7, 2014

Assured Guaranty Ltd. (NYSE:AGO) (AGL and, together with its subsidiaries,
Assured Guaranty or the Company) announced today its financial results for the
three-month period ended March 31, 2014 (first quarter 2014).

The Company reported first quarter 2014 operating income of $132 million, or
$0.72 per share, compared with $260 million, or $1.34 per share, in the
three-month period ended March 31, 2013 (first quarter 2013). Operating income
for first quarter 2014 includes $32 million in representation and warranty
(R&W) development, $20 million in net earned premium accelerations and $12
million in commutation gains. Operating income was higher in first quarter
2013 because that quarter included: a $71 million benefit from a settlement
with one of Assured Guaranty’s largest R&W providers; higher net earned
premiums arising from refundings and terminations; and higher scheduled net
earned premiums and credit derivative revenues due to a larger insured
structured finance portfolio.

First quarter 2014 net income was $42  million, or $0.23  per share, compared
with first quarter 2013 net loss of $144  million, or $0.74  per share. The
main driver of the increase was lower non-economic net unrealized fair value
losses on credit derivatives.

“We've begun the year with a solid first quarter, reaching a new high in
operating shareholders' equity per share and increasing our new business
production," said Dominic Frederico, President and CEO. "Importantly, in
March, S&P raised the financial strength ratings of our operating subsidiaries
to AA with a stable outlook – an acknowledgment of our financial strength, the
improvement in our risk profile, the fundamental market acceptance of our
guarantees and our strong competitive position.

“In addition, we resumed repurchasing our shares, a critical component of our
capital management. It is our intent to fully utilize the remaining capacity
under our current share repurchase authorization by September 30 of this year
and, at that time, to request further authorization from our Board of
Directors. As in the past, our capital management execution is contingent on
our available free cash and capital position, the maintenance of our strong
financial strength ratings, and other factors."

^1 Please see “Explanation of Non-GAAP Financial Measures” at the end of this
press release and the tables within the press release for a definition of the
non-GAAP financial measures and a reconciliation to the most directly
comparable GAAP financial measures, if available.

Table 1: Reconciliation of Net Income (Loss) to Operating Income
(in millions, except per share amounts)

                                                      Quarter Ended March 31,
                                                       2014         2013
                                                                             
Net income (loss)                                      $  42         $ (144  )
Less after-tax adjustments:
Realized gains (losses) on investments                 (1       )    19
Non-credit impairment unrealized fair value gains
(losses) on credit
derivatives                                            (171     )    (434    )
Fair value gains (losses) on committed capital         (5       )    (6      )
securities (CCS)
Foreign exchange gains (losses) on remeasurement of
premiums receivable and loss and loss adjustment       0             (11     )
expense (LAE) reserves
Effect of consolidating financial guaranty variable    87           28      
interest entities (FG VIEs)
Operating income                                       $  132       $ 260   
                                                                             
Net income (loss) per diluted share                    $  0.23       $ (0.74 )
Operating income per diluted share                     0.72          1.34
                                                                             
Diluted shares outstanding - Net income (loss)         183.1         193.9
Diluted shares outstanding - Operating income          183.1         194.6


New Business Production

Table 2: Present Value of New Business Production (PVP)
and Gross Par Written
(in millions)

                           Quarter Ended March 31,
                            2014         2013
                                          
PVP:
Public finance - U.S.       $  23           $ 16
Public finance non - U.S.   7               —
Structured finance - U.S.   1              2
Total PVP                   $  31          $ 18
                                            
Gross Par Written:
Public finance - U.S.       $  1,737        $ 1,580
Public finance non - U.S.   128             —
Structured finance - U.S.   4              14
Gross par written           $  1,869       $ 1,594


In U.S. public finance, the Company achieved a 10% increase in gross par
written and a 44% increase in PVP, despite a 26% decline in new issue volume.
This was due primarily to overall improving demand for financial guaranty
insurance products. In the U.K, the Company guaranteed another infrastructure
bond during first quarter 2014.

First Quarter 2014 Operating Income Highlights

Table 3 highlights the components of Assured Guaranty's operating income and
provides reconciliations of GAAP income statements, as reported, to non-GAAP
operating income results.

Table 3: Reconciliation of GAAP
to Non-GAAP Income Results
(in millions, except per share amounts)

              Quarter Ended March 31, 2014         Quarter Ended March 31, 2013
               GAAP        Less:         Non-GAAP    GAAP        Less:         Non-GAAP

               Income      Operating     Operating   Income      Operating     Operating
                                                                          
               Statement   Income        Income      Statement   Income        Income

               As          Adjustments   Results     As          Adjustments   Results
               Reported                              Reported
Revenues:
Net earned     $  132      $   (17  )    $  149      $ 248       $  (18   )    $  266
premiums
Net
investment     103         4             99          94          0             94
income
Net realized
investment     2           0             2           28          29            (1      )
gains
(losses)
Net change
in fair
value of       (211    )   (231     )    20          (592    )   (620     )    28
credit
derivatives
Fair value
gains          (9      )   (9       )    —           (10     )   (10      )    —
(losses) on
CCS
Fair value
gains          157         157           —           70          70            —
(losses) on
FG VIEs
Other income   21         (6       )    27         (14     )   (17      )    3       
(loss)
Total          195         (102     )    297         (176    )   (566     )    390
revenues
                                                                                       
Expenses:
Loss
expense:
Financial
guaranty       41          1             40          (48     )   7             (55     )
insurance
Credit         —           8             (8      )   —           (10      )    10
derivatives
Amortization
of deferred
acquisition    5           —             5           3           —             3
costs
Interest       20          —             20          21          —             21
expense
Other
operating      60         —            60         60         —            60      
expenses
Total          126        9            117        36         (3       )    39      
expenses
                                                                                       
Income
(loss)         69          (111     )    180         (212    )   (563     )    351
before
income taxes
Provision
(benefit)      27         (21      )    48         (68     )   (159     )    91      
for income
taxes
Income         $  42      $   (90  )    $  132     $ (144  )   $  (404  )    $  260  
(loss)
                                                                                       
Diluted        183.1                     183.1       193.9                     194.6
shares
                                                                                       
Earnings per
share,         $  0.23                   $  0.72     $ (0.74 )                 $  1.34
diluted


Certain components of first quarter 2014 operating income are compared with
the same items in first quarter 2013.

  *Net earned premiums and credit derivative revenues: Net earned premiums
    and credit derivative revenues on an operating income basis were $169
    million for first quarter 2014, compared with $294 million for first
    quarter 2013, as shown in Table 4 below.

Table 4: Components of
Net Earned Premiums and Credit Derivative Revenues
(in millions)

                                                    Quarter Ended March 31,
                                                     2014           2013
                                                                     
Net earned premiums:
Scheduled amortization                               $   120         $  153
Accelerations:
Refundings                                           19              52
Terminations                                         10             61
Total accelerations                                  29             113
Net earned premiums                                  149             266
Credit derivative revenue:
Scheduled amortization                               20              27
Accelerations                                        0              1
Credit derivative revenue                            20             28
Net earned premiums and credit derivative revenues   $   169        $  294


  *Other income (loss): Other income increased in first quarter 2014 compared
    with first quarter 2013 due primarily to commutation gains related to the
    reassumption of previously ceded business.
  *Loss expense: First quarter 2014 loss expense was $32 million ($29 million
    after tax, or $0.16 per share), compared with a benefit of $45 million
    ($25 million after tax, or $0.13 per share) for first quarter 2013. The
    increase was due primarily to (i) an R&W settlement in first quarter 2013
    and (ii)higher U.S. public finance losses in first quarter 2014. See
    Economic Loss Development below.
  *Income taxes: First quarter 2014 effective tax rate on operating income
    was 26.7%, compared with 25.8% for first quarter 2013. The higher
    effective tax rate was due to a higher proportion of loss expense in
    non-taxable jurisdictions.

Economic Loss Development

Economic loss development represents the change in net expected loss to be
paid attributable to the effects of changes in assumptions based on observed
market trends, changes in discount rates, accretion of discount and the
economic effects of loss mitigation efforts. Economic loss development is the
principal measure that Assured Guaranty uses to evaluate the loss experience
in its insured portfolio. Expected loss to be paid includes all transactions
insured by the Company, whether written in insurance or credit derivative
form, regardless of the accounting model prescribed under GAAP. Table 5
provides a roll forward of net expected loss to be paid.

Table 5: Roll Forward of Net Expected Loss to be Paid on
Insurance Contracts and Credit Derivatives
Quarter Ended March 31, 2014
(in millions)

                     Net Expected                                 Net Expected
                     Loss                                         Loss
Insurance                            Economic Loss
Contracts and       to be Paid as                 Losses      to be Paid
Credit               of              Development/                 as of

                     December 31,                                 March 31,
Derivatives          2013            (Benefit)       (Paid)/      2014
                                                     Recovered
                                                                            
U.S. Residential
mortgage-
backed securities
(RMBS):
Before benefit for
recoveries for
breaches
of R&W (R&W          $   1,205       $    38         $  (42  )    $  1,201
benefit)
R&W benefit          (712       )    (48       )     39          (721      )
U.S. RMBS after
R&W
benefit              493             (10       )     (3      )    480
Public finance       321             23              (6      )    338
Other                168            (1        )     (1      )    166       
Total                $   982        $    12        $  (10  )    $  984    


Total economic loss development was $12 million for first quarter 2014
primarily due to developments in certain public finance credits, partially
offset by a net benefit from U.S. RMBS. The net benefit attributable to U.S.
RMBS was due primarily to R&W developments in 2014, offset in part by lower
risk-free rates used to discount reserves. The effect of changes in discount
rates that is included in total economic loss development is not indicative of
credit impairment or improvement.

Book Value Measurements and Share Repurchase Program

Under the $400 million share repurchase authorization approved in November
2013, the Company repurchased 1.4 million common shares in first quarter 2014
for $35 million at an average price of $25.92 per share. On a year-to-date
basis through May 7, 2014, the Company has repurchased a total of 3.0 million
common shares for $75 million at an average price of $25.19 per share.

Adjusted book value (ABV) per share was higher at March 31, 2014 than at
December 31, 2013 due primarily to PVP, reassumptions and share repurchases.
Operating shareholders' equity per share was also positively affected by the
share repurchases and by positive operating income for first quarter 2014.

Table 6: Reconciliation of Shareholders' Equity to
Operating Shareholders' Equity and Adjusted Book Value
(in millions, except per share amounts)

                                                As of
                                                                  December 31,
                                                 March 31, 2014 
                                                                  2013
                                                                            
Shareholders' equity                             $   5,209        $  5,115
Less after-tax adjustments:
Effect of consolidating FG VIEs                  (87         )    (172      )
Non-credit impairment unrealized fair value
gains (losses) on credit
derivatives                                      (1,219      )    (1,052    )
Fair value gains (losses) on CCS                 24               30
Unrealized gain (loss) on investment portfolio
excluding foreign
exchange effect                                  250             145       
Operating shareholders' equity                   6,241            6,164
After-tax adjustments:
Less: Deferred acquisition costs                 159              161
Plus: Net present value of estimated net         138              146
future credit derivative revenue
Plus: Net unearned premium reserve on
financial guaranty contracts in
excess of expected loss to be expensed           2,800           2,884     
Adjusted book value                              $   9,020       $  9,033  
                                                                            
Shares outstanding at the end of the period      181.2            182.2
                                                                            
Per share:
Shareholders' equity                             $   28.76        $  28.07
Operating shareholders' equity                   34.45            33.83
Adjusted book value                              49.79            49.58
                                                                            

Conference Call and Webcast Information:

The Company will host a conference call for investors at 10:00 a.m. Eastern
Time (11:00 a.m. Atlantic Time) on Thursday, May 8, 2014. The conference call
will be available via live and archived webcast in the Investor Information
section of the Company's website at AssuredGuaranty.com or by dialing
1-888-317-6016 (in the U.S.) or 1-412-317-6016 (International). A replay of
the call will be made available through July 8, 2014. To listen to the replay,
dial 1-877-344-7529 (in the U.S.) or 1-412-317-0088 (International), passcode
10045162. The replay will be available one hour after the conference call
ends.

Please refer to Assured Guaranty's March 31, 2014 Financial Supplement, which
is posted on the Company's website at
assuredguaranty.com/investor-information/by-company/assured-guaranty-ltd, for
more information on the Company's financial guaranty portfolios, investment
portfolio and other items. The Company is also posting on the same page of its
website:

  *“Public Finance Transactions in 1Q 2014,” which lists the U.S. public
    finance new issues insured by the Company in first quarter 2014, and
  *“Structured Finance Transactions at March 31, 2014,” which lists the
    Company's structured finance exposure as of that date.

In addition, the Company is posting at assuredguaranty.com/presentations the
“March 31, 2014 Equity Investor Presentation.” Furthermore, the Company's
separate-company subsidiary financial supplements and its Fixed Income
Presentation for the current quarter will be posted on the Company's website
when available. Those documents will be furnished to the Securities and
Exchange Commission in a Current Report on Form 8-K.

Assured Guaranty Ltd. is a publicly traded (NYSE: AGO) Bermuda-based holding
company. Its operating subsidiaries provide credit enhancement products to the
U.S. and international public finance, infrastructure and structured finance
markets. More information on Assured Guaranty Ltd. and its subsidiaries can be
found at AssuredGuaranty.com.

Assured Guaranty Ltd.
Consolidated Statements of Operations (unaudited)
(in millions)

                                                            Quarter Ended
                                                             March 31,
                                                             2014     2013
Revenues:
Net earned premiums                                          $ 132     $ 248
Net investment income                                        103       94
Net realized investment gains (losses)                       2         28
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements                19        18
Net unrealized gains (losses)                                (230  )   (610  )
Net change in fair value of credit derivatives               (211  )   (592  )
Fair value gains (losses) on CCS                             (9    )   (10   )
Fair value gains (losses) on FG VIEs                         157       70
Other income (loss)                                          21       (14   )
Total revenues                                               195       (176  )
                                                                             
Expenses
Loss and LAE                                                 41        (48   )
Amortization of deferred acquisition costs                   5         3
Interest expense                                             20        21
Other operating expenses                                     60       60    
Total expenses                                               126       36
                                                                          
Income (loss) before income taxes                            69        (212  )
Provision (benefit) for income taxes                         27       (68   )
Net income (loss)                                            42        (144  )
Less after-tax adjustments:
Realized gains (losses) on investments                       (1    )   19
Non-credit impairment unrealized fair value gains (losses)   (171  )   (434  )
on credit derivatives
Fair value gains (losses) on CCS                             (5    )   (6    )
Foreign exchange gains (losses) on remeasurement of          0         (11   )
premiums receivable and loss and LAE reserves
Effect of consolidating FG VIEs                              87       28    
Operating income                                             $ 132    $ 260 

Assured Guaranty Ltd.
Consolidated Balance Sheets (unaudited)
(in millions)

                                           As of
                                            March 31, 2014  December 31, 2013
Assets
Investment portfolio:
Fixed maturity securities,                  $   10,094       $      9,711
available-for-sale, at fair value
Short-term investments, at fair value       720              904
Other invested assets                       134             170
Total investment portfolio                  10,948           10,785
                                                             
Cash                                        219              184
Premiums receivable, net of commissions     863              876
payable
Ceded unearned premium reserve              454              452
Deferred acquisition costs                  122              124
Reinsurance recoverable on unpaid losses    37               36
Salvage and subrogation recoverable         241              174
Credit derivative assets                    78               94
Deferred tax asset, net                     637              688
FG VIE assets, at fair value                1,257            2,565
Other assets                                250             309
Total assets                                $   15,106      $      16,287
                                                             
Liabilities and shareholders' equity
Liabilities
Unearned premium reserve                    $   4,504        $      4,595
Loss and LAE reserve                        636              592
Reinsurance balances payable, net           165              148
Long-term debt                              812              816
Credit derivative liabilities               2,001            1,787
Current income tax payable                  26               44
FG VIE liabilities with recourse, at fair   1,346            1,790
value
FG VIE liabilities without recourse, at     101              1,081
fair value
Other liabilities                           306             319
Total Liabilities                           9,897            11,172
                                                             
Shareholders' equity
Common stock                                2                2
Additional paid-in capital                  2,434            2,466
Retained earnings                           2,504            2,482
Accumulated other comprehensive income      264              160
Deferred equity compensation                5               5
Total shareholders' equity                  5,209           5,115
Total liabilities and shareholders'         $   15,106      $      16,287
equity

Explanation of Non-GAAP Financial Measures:

The Company references financial measures that are not in accordance with
GAAP. Management and the board of directors utilize non-GAAP measures in
evaluating the Company's financial performance and as a basis for determining
senior management incentive compensation. By providing these non-GAAP
financial measures, investors, analysts and financial news reporters have
access to the same information that management reviews internally. In
addition, Assured Guaranty's presentation of non-GAAP financial measures is
consistent with how analysts calculate their estimates of Assured Guaranty's
financial results in their research reports on Assured Guaranty and with how
investors, analysts and the financial news media evaluate Assured Guaranty's
financial results.

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

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

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

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

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

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

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

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

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

2) Elimination of the after-tax non-credit-impairment unrealized fair value
gains (losses) on credit derivatives, which is the amount in excess of the
present value of the expected estimated economic credit losses and
non-economic payments. Such fair value adjustments are heavily affected by,
and in part fluctuate with, changes in market interest rates, credit spreads
and other market factors and are not expected to result in an economic gain or
loss.

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

4) Elimination of the after-tax 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.

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

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

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

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

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

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

Reconciliation of PVP to Gross Written Premiums
(in millions)

                                                                Quarter Ended
                                                                 March 31,
                                                                 2014    2013
                                                                          
Total PVP                                                        $ 31     $ 18
Less: financial guaranty installment premium PVP                 10      1
Total: financial guaranty upfront gross written premiums         21       17
Plus: financial guaranty installment gross written premiums
and other
GAAP adjustments(1)                                              9       —
Total gross written premiums                                     $ 30    $ 17

__________________

1. Includes present value of new business on installment policies, gross
written premiums adjustment on existing installment policies due to changes in
assumptions, any cancellations of assumed reinsurance contracts, and other
GAAP adjustments.

Cautionary Statement Regarding Forward-Looking Statements:

Any forward-looking statements made in this press release reflect the
Company's current views 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. For example, Assured Guaranty's calculations of
adjusted book value, PVP, net present value of estimated future installment
premiums in force and total estimated net future premium earnings and
statements regarding its capital position and demand for its insurance and
other forward-looking statements could be affected by rating agency action,
including a ratings downgrade, a change in outlook, the placement of ratings
on watch for downgrade, or a change in rating criteria, at any time, of
Assured Guaranty or any of its subsidiaries and/or of transactions that
Assured Guaranty’s subsidiaries have insured; reduction in the amount of
available insurance opportunities and/or in the demand for Assured Guaranty's
insurance; developments in the world’s financial and capital markets that
adversely affect obligors’ payment rates, Assured Guaranty’s loss experience,
or its exposure to refinancing risk in transactions (which could result in
substantial liquidity claims on its guarantees); the possibility that budget
shortfalls or other factors will result in credit losses or impairments on
obligations of state and local governments that the Company insures or
reinsures; the failure of Assured Guaranty to realize insurance loss
recoveries or damages through loan putbacks, settlement negotiations or
litigation; deterioration in the financial condition of Assured Guaranty’s
reinsurers, the amount and timing of reinsurance recoverables actually
received and the risk that reinsurers may dispute amounts owed to Assured
Guaranty under its reinsurance agreements; increased competition, including
from new entrants into the financial guaranty industry; rating agency action
on obligors, including sovereign debtors, resulting in a reduction in the
value of securities in the Company’s investment portfolio and in collateral
posted by and to the Company; the inability of Assured Guaranty to access
external sources of capital on acceptable terms; changes in the world’s credit
markets, segments thereof or general economic conditions; the impact of market
volatility on the mark-to-market of Assured Guaranty’s contracts written in
credit default swap form; changes in applicable accounting policies or
practices; changes in applicable laws or regulations, including insurance and
tax laws; other governmental actions; difficulties with the execution of
Assured Guaranty’s business strategy; contract cancellations; loss of key
personnel; adverse technological developments; the effects of mergers,
acquisitions and divestitures; natural or man-made catastrophes; other risks
and uncertainties that have not been identified at this time; management’s
response to these factors; and other risk factors identified in Assured
Guaranty’s filings with the U.S. Securities and Exchange Commission. Readers
are cautioned not to place undue reliance on these forward-looking statements.
These forward-looking statements are made as of May 7, 2014, and 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.

Contact:

Assured Guaranty Ltd.
Robert Tucker, 212-339-0861
Managing Director, Investor Relations and Corporate Communications
rtucker@assuredguaranty.com
or
Ashweeta Durani, 212-408-6042
Vice President, Corporate Communications
adurani@assuredguaranty.com
 
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