In the News:

NEW YORK, April 22, 2004 – The Association of Financial Guaranty Insurers (AFGI) announced record 2003 results for the industry in aggregate premiums written, revenues, net income and financial strength. Further, AFGI member firms insured a record volume of public sector bonds, both domestically and internationally. While the amount of insured asset-backed securities was lower than the record levels of recent years, it represented over 40% of total par insured in 2003.

In 2003, AFGI members' aggregate revenues reached a new high, totaling $3.4 billion, a 17% increase over the prior year's record revenues. Net income of $1.8 billion was also a record, representing the ninth straight year of profit growth.

In 2003, total AFGI par insured volume, including municipals and ABS, was $391.5 billion, the second highest volume in AFGI history. Although par insured volume was down 9% from 2002's record high, direct premiums written in 2003 grew to $4.0 billion, a 32% increase over the record set in 2002.

AFGI's ten member companies, highly rated insurers and reinsurers of municipal bonds and structured asset-backed securities, provide an unconditional and irrevocable guarantee of scheduled interest and principal payments on the securities they insure.

Neil G. Budnick, Chairman of AFGI and Vice Chairman and Chief Financial Officer of MBIA Insurance Corporation, said, "2003 was an extremely successful year for the financial guaranty industry by virtually all measures, and we're proud of the value our industry brings to issuers and investors. Our insurance provides borrowing cost savings and enhanced securities distribution for issuers, including governments and government agencies, financial institutions and asset managers. Investors value the high quality and liquidity of securities insured by AFGI members.

"In 2003, the amount of premiums written by AFGI members significantly exceeded the premium volume of the prior year, reaching a new high. This is a particularly notable achievement given that total par insured volume was less than in 2002.

"On the public sector front, municipal bond issuance reached record levels in 2003, as did our insurance of these securities. However, the industry's volume of insured asset-backed securities declined from record levels as the convergence of low interest rates and tight credit rate spreads left little room for insurance.

"Looking ahead, AFGI members view the asset-backed environment as cyclical and short term, and expect our insurance penetration of these securities to increase when interest rates rise and credit spreads widen. While it's unlikely that the level of municipal bond issuance in 2004 will match the past year, we're predicting continued strong demand in the U.S. and abroad for financial guaranty insurance."

Insurance Written
Of 2003's total par insured volume of $391.5 billion, public sector bonds accounted for 58%, reaching a record $226.1 billion in par value and eclipsing the industry's previous record volume in 2002 by 12%. The par value of insured domestic municipal bonds was $212.2 billion, a 9% increase. 2003 was a record year for municipal bond issuance, and about half of all new-issue bonds were insured. International public finance soared 72% to $13.9 billion. Growth, domestically and internationally, was fueled by continued low interest rates, budget shortfalls and infrastructure needs.

Municipal bonds insured by AFGI companies carry the high claims-paying ratings of the insurers, resulting in a lower cost of funding for issuers and savings for taxpayers. AFGI estimates that in 2003 U.S. municipal bond insurance saved taxpayers approximately $2.3 billion. Since the inception of municipal bond insurance in 1971, borrowing cost savings are estimated to total more than $35 billion nationwide.

In 2003, AFGI members insured $165.4 billion in par value of U.S. and international asset- backed securities, about 28% less than the prior year's record high. The domestic total of par insured ABS was $120.4 billion; the international, $45.0 billion.

Financial Strength
AFGI members' financial strength continued to grow in 2003. Qualified statutory capital, comprising policyholders' surplus and contingency reserves, increased 15%, reaching a record $17.0 billion. Unearned premium reserves were up a significant 21% to $9.2 billion. Bond insurance premiums are often collected in full when the securities are insured, and then booked as revenue proportionately over the life of the bond. This conservative accounting treatment of unearned premium reserves results in a consistent and predictable earnings pattern unique to the bond insurance industry, and provides a major and highly transparent source of future revenue and claims-paying ability.

About AFGI
AFGI is the trade association representing the ten insurers and reinsurers of municipal bonds and asset-backed securities. AFGI member companies are ACA Financial Guaranty Corporation, Ambac Assurance Corporation, Assured Guaranty Corp. (formerly ACE Guaranty Corp.), CDC IXIS Financial Guaranty North America, Inc., Financial Guaranty Insurance Company, Financial Security Assurance Inc., MBIA Insurance Corporation, Radian Reinsurance Inc., RAM Reinsurance Company Ltd. and XL Capital Assurance Inc.

All AFGI member firms operate under the strict risk-based capital provisions of Article 69 of the New York Insurance Law. To safeguard the rating of the insured obligations and to protect the interests of insured bond investors, AFGI firms subscribe to a "zero loss" or "remote loss" underwriting standard. Securities insured by AFGI members receive the unconditional guarantee of scheduled principal and interest payments to holders of these obligations. In the 33-year history of the financial guaranty industry, no issue insured by an AFGI member has ever been downgraded, and no member company has ever failed to fulfill its payment obligations to insured bond investors when due.

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