Chief Financial Officer's (CFO) Report to the Board

DIF Balance Sheet - First Quarter 2016

Fund Financial Results

($ in millions)

Balance Sheet   Unaudited Mar-16 Audited Dec-15 Quarterly Change Unaudited Mar-15 Year-Over-Year Change Cash and cash equivalents $3,519 $877 $2,642 $3,729 ($210) Investment in U.S. Treasury obligations, net 63,833 62,497 1,336 50,591 13,242 Assessments receivable, net 2,238 2,172 66 2,051 187 Interest receivable on investments and other assets, net 474 418 56 373 101 Receivables from resolutions, net 9,638 11,578 (1,940) 17,258 (7,620) Property and equipment, net 370 378 (8) 365 5 Total Assets $80,072 $77,920 $2,152 $74,367 $5,705 Accounts payable and other liabilities 217 273 (56) 243 (26) Liabilities due to resolutions 4,059 4,419 (360) 7,868 (3,809) Postretirement benefit liability 233 233 - 243 (10) Contingent liability for anticipated failures 443 395 48 717 (274) Contingent liability for litigation losses - - - - - Total Liabilities $4,952 $5,320 ($368) $9,071 $(4,119) FYI: Unrealized gain (loss) on U.S. Treasury investments, net 403 (9) 412 282 121 FYI: Unrealized postretirement benefit (loss) gain (34) (34) - (58) 24 Fund Balance $75,120 $72,600 $2,520 $65,296 $9,824

DIF Fund Balance
	Dollars in millions
Professional liability claims, litigation settlements, and tax refunds received by receiverships	$126
Greater-than-anticipated collections from receivership assets	$23
Receivership share-loss liability	($46)
Estimated losses for future failures	($48)
Adjustments to receivership contingent liabilities	($6)
Total net adjustments to the DIF	$49

The estimated recoveries from assets held by receiverships and estimated payments related to shared-loss covered assets and other liabilities are used to derive the loss allowance on the receivables from resolutions.

The $23 million adjustment resulted from greater-than-anticipated collections from a receivership’s investment in a structured transaction.

The $46 million net adjustment to the receiverships’ shared-loss liability primarily resulted  from higher than estimated final payments on commercial shared-loss agreements (SLA) where loss coverage expired, net of savings on early SLA terminations.

The $6 million adjustment resulted from a $9 million increase in estimated rep & warranty liabilities, net of a $3 million decline in estimated litigation liabilities.