7. FINANCIAL GUARANTEES IN FORCE

Financial guarantees outstanding includes the exposures of policies that insure variable interest entities (“VIEs”) consolidated in accordance with ASC Topic 810, Consolidation. Financial guarantees outstanding excludes the exposures of policies that insure bonds which have been called, pre-refunded or refunded. The gross par amount of financial guarantees outstanding was $197,691,000 and $245,030,000 at December 31, 2013 and 2012, respectively. The par amount of financial guarantees outstanding, net of reinsurance, was $179,092,000 and $223,633,000 at December 31, 2013 and 2012, respectively. As of December 31, 2013 and 2012, the guarantee portfolio was diversified by type of guaranteed bond as shown in the following table:


	Net Par Amount Outstanding
	Successor Ambac		Predecessor Ambac
	2013		2012
Public Finance:
Lease and tax-backed revenue	$	41,858,000	$	50,415,000
General obligation		29,115,000		34,623,000
Utility revenue		14,933,000		18,651,000
Transportation revenue		9,653,000		13,892,000
Higher education		7,810,000		10,382,000
Housing revenue		7,439,000		8,176,000
Health care revenue		3,903,000		5,266,000
Other		1,351,000		1,613,000

Total Public Finance		116,062,000		143,018,000

Structured Finance:
Mortgage-backed and home equity		16,026,000		19,117,000
Investor-owned utilities		5,881,000		7,071,000
Student loan		4,357,000		5,411,000
Asset-backed⁽¹⁾		2,361,000		2,905,000
CDOs		897,000		5,941,000
Other		1,890,000		1,914,000

Total Structured Finance		31,412,000		42,359,000

International Finance:
Investor-owned and public utilities		9,595,000		10,314,000
Sovereign/sub-sovereign		7,394,000		7,289,000
Asset-backed⁽¹⁾		6,884,000		8,702,000
Transportation		5,021,000		6,002,000
CDOs		822,000		3,191,000
Mortgage-backed and home equity		484,000		1,268,000
Other		1,418,000		1,490,000

Total International Finance		31,618,000		38,256,000

Total	$	179,092,000	$	223,633,000

(1)	At December 31, 2013 and 2012, all asset-backed net par amounts outstanding relate to commercial asset-based transactions.

As of December 31, 2013 and 2012, the International Finance guaranteed portfolio is shown in the following table by location of risk:


	Net Par Amount Outstanding
	Successor Ambac		Predecessor Ambac
	2013		2012
United Kingdom	$	21,282,000	$	22,585,000
Australia		3,331,000		4,820,000
Italy		2,412,000		3,068,000
Austria		967,000		943,000
New Zealand		526,000		529,000
Internationally diversified⁽¹⁾		1,918,000		3,968,000
Other international		1,182,000		2,343,000

Total International Finance	$	31,618,000	$	38,256,000

(1)	Internationally diversified obligations represent pools of geographically diversified exposures which may include components of U.S. exposure.

Gross financial guarantees in force (principal and interest) was $312,710,000 and $385,803,000 at December 31, 2013 and 2012, respectively. Net financial guarantees in force (after giving effect to reinsurance) was $282,210,000 and $350,163,000 as of December 31, 2013 and 2012, respectively.

In the United States, California, and New York were the states with the highest aggregate net par amounts in force, accounting for 14.3% and 6.5% of the total at December 31, 2013, respectively. No other state accounted for more than 5%. The highest single insured risk represented 1.5% of the aggregate net par amount guaranteed.