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, with the international portion rising 72%. Insured international securities totaled $58.9 billion of par value, 15.0% of AFGI members' total par insured.

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.

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. International Insurance Written
In addition to the United States, AFGI member companies insure securities originating from Asia, Australia, Europe, Mexico and South America. 2003's par volume of international insured securities of $58.9 billion was a decline from last year's record but more than double the level of four years ago. (See attached tables.)

The par value of international public sector bonds reached $13.9 billion, soaring 72% in 2003 over the prior year's record level. The par value of insured municipal bonds in the United States was also a record. The par value of international asset-backed securities (ABS) decreased in 2003 by 29% to $45.0 billion, virtually paralleling the U.S. asset-backed decline. AFGI attributes the lower ABS volume to low interest rates and tight credit rate spreads, which left little room for insurance.

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 the international marketplace. For issuers, our insurance provides borrowing cost savings and enhanced securities distribution, and for investors, the unconditional guarantee of timely interest and principal payments.

"Looking ahead, AFGI members view the asset-backed environment as cyclical and short term, and expect our insurance penetration of these securities to increase internationally and domestically when interest rates rise and credit spreads widen. Further, we're predicting continued strong demand in the international public sector arena for financial guaranty insurance. Because of the improved liquidity, high credit standards and risk management our products provide, we believe the financial guaranty industry will help drive continued expansion of the global capital markets."

International Presence
With offices in Australia, Bermuda, France, Italy, Japan, Singapore, Spain and the United Kingdom, as well as the United States, AFGI member companies have been insuring international securities for eighteen years. Today AFGI companies provide credit enhancements for a full range of issues, including public sector infrastructure and project financings; securitizations backed by trade receivables, other corporate assets and consumer assets; structured finance transactions; and sovereign and quasi-sovereign debt.

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.

CLICK HERE FOR COMPLETE FINANCIAL TABLES*

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