Citigroup Inc.

for the near term, although the actual number of claims may differ and issubject to uncertainty. Furthermore, in Citi’s experience to date, approximatelyhalf of the repurchase claims have been successfully appealed and have resultedin no loss to Citi. The activity in the repurchase reserve for the years endedDecember 31, 2010 and 2009 was as follows:Year ended December 31,In millions of dollars 2010 2009Balance, beginning of period $ 482 $ 75Additions for new sales 16 34Change in estimate 917 492Utilizations (446) (119)Balance, end of period $ 969 $ 482As referenced above, the repurchase reserve is calculated by sales vintage.The majority of the repurchases in 2010 were from the 2006 through 2008sales vintages, which also represent the vintages with the largest loss severity.An insignificant percentage of 2010 repurchases were from vintages prior to2006, and Citi anticipates that this percentage will continue to decrease, asthose vintages are later in the credit cycle. Although still early in the creditcycle, Citi has to date experienced lower repurchases and loss severity fromthe 2009 and 2010 vintages.Sensitivity of Repurchase ReserveAs discussed above, the repurchase reserve estimation process is subject tonumerous estimates and judgments. The assumptions used to calculate therepurchase reserve contain a level of uncertainty and risk that, if differentfrom actual results, could have a material impact on the reserve amounts.For example, Citi estimates that if there were a simultaneous 10% adversechange in each of the significant assumptions noted above, the repurchasereserve would increase by approximately $342 million as of December 31,2010. This potential change is hypothetical and intended to indicate thesensitivity of the repurchase reserve to changes in the key assumptions. Actualchanges in the key assumptions may not occur at the same time or to thesame degree (i.e., an adverse change in one assumption may be offset by animprovement in another). Citi does not believe it has sufficient informationto estimate a range of reasonably possible loss (as defined under ASC 450)relating to its Consumer representations and warranties.Representation and Warranty Claims—By ClaimantThe representation and warranty claims by claimant for the years endedDecember 31, 2010 and 2009, respectively, were as follows:Year ended December 31,2010 2009OriginalprincipalbalanceOriginalprincipalbalanceDollars in millionsNumberof claimsNumberof claimsGSEs 9,512 $2,063 5,835 $1,218Private investors 321 73 409 69Mortgage insurers (1) 268 58 316 65Total 10,101 $2,194 6,560 $1,352(1) Represents the insurer’s rejection of a claim for loss reimbursement that has yet to be resolved. To theextent that mortgage insurance will not cover the claim on a loan, Citi may have to make the GSE orprivate investor whole.The number of unresolved claims by type of claimant as of December 31,2010 and 2009, respectively, was as follows:December 31,2010 2009OriginalprincipalbalanceOriginalprincipalbalanceDollars in millionsNumberof claims (1)Numberof claimsGSEs 4,344 $ 954 2,600 $572Privateinvestors 163 30 311 40Mortgageinsurers 76 17 204 42Total 4,583 $1,001 3,115 $654(1) For GSEs, the response to the repurchase claim is required within 90 days of the claim receipt. IfCiti does not respond within 90 days, the claim would then be discussed between Citi and the GSE.For private investors, the time period for responding is governed by the individual sale agreement. Ifthe specified timeframe is exceeded, the investor may choose to initiate legal action.112