FOR IMMEDIATE RELEASE

NEW YORK, May 18, 1998 - The Association of Financial Guaranty Insurors (AFGI) today reported record financial results, including record net income for a third consecutive year. AFGI member firms unconditionally guarantee scheduled principal and interest payments on insured obligations.

For 1997, AFGI's eight insurers and reinsurers of municipal bonds and structured asset-backed securities, had combined net income of $980 million, 12% over the previous record of $875 million set in 1996. AFGI members' qualified statutory capital, revenues, par value insured, and insured municipal market penetration topped 1996's records as well.

"The continuing success of AFGI members demonstrates that financial guarantees are a permanent part of the global economic landscape," said Ann C. Stern, AFGI Chair. Ms. Stern is also Chairman, President and Chief Executive Officer of Financial Guaranty Insurance Company (FGIC). "In the municipal market, AFGI firms insured a record percentage of bond issues last year, helping America's communities develop and rebuild, while protecting investors and saving taxpayers money.

"Further, the asset-backed and international debt markets are strong growth areas for the financial guaranty industry," said Ms. Stern. "Our members' expertise in evaluating risk and responding with appropriate guarantees has brought added liquidity and access to more investors in these markets."

In 1997, AFGI firms insured a record $119.8 billion in par value of municipal bonds, surpassing the prior year's $97.9 billion by 22%. According to The Bond Buyer, 49% of new-issue municipal bonds were insured in 1997, up from the prior record in 1996 of 47%. For the first quarter of 1998, new-issue insured municipal bond market penetration remained at 49%.

Municipalities saved approximately $3.5 billion in 1997 through bond insurance. Because municipal bonds insured by AFGI members carry the insurer's high credit rating, issuers are able to reduce their borrowing costs over the life of the bonds. Since the inception of the municipal bond industry in 1971, the financial guaranty industry has saved municipalities over $20 billion in borrowing costs.

In the structured finance market, AFGI firms insured $92.6 billion of public asset-backed and mortgage-backed securities in 1997, beating last year's record-setting $74.5 billion

by 24%. According to Asset Sales Report, 20.5% of all public domestic asset-backed securities issued in 1997 were sold with financial guarantees from AFGI firms.

The international debt market, including municipal and asset backed securities, was also an area of growth. The total par value of outstanding international securities insured by AFGI members reached $23.6 billion at the end of 1997. This total was a 56% increase over the $15.1 billion in outstanding international securities that were insured at the end of 1996.

AFGI's qualified statutory capital increased to a record $8.9 billion, up 20% over 1996's $7.4 billion. Qualified statutory capital, the industry's capital base comprised of policyholders' surplus and contingency reserves, has risen annually, growing at an average annual rate of 15% since 1992.

In 1997, AFGI firms insured a record $212.4 billion in par value of municipal bonds and structured asset-backed financings, surpassing 1996's previous record of $172.4 billion by 23%. AFGI revenues (net premiums earned, net investment gain, and "other" income) totaled $1.7 billion in 1997, compared to $1.5 billion in 1996.

AFGI firms' domestic and international insurance in force (principal and interest outstanding) reached $1.26 trillion at the end of 1997, compared to $1.08 trillion at year-end 1996.

AFGI firms' direct premiums written in 1997 increased 30% to $1.33 billion. For municipal bonds, premiums are usually paid in full by the issuer when the securities are insured, accumulated in an unearned premium reserve, and then earned by the insurer proportionately over the life of the bond. Net premiums earned in 1997 were $797 million, up 21% over 1996. AFGI's unearned premium reserve was $5.3 billion, a 10% increase over the previous record in 1996 of $4.8 billion.

Net investment gain, comprising investment income and realized capital gains, totaled $846 million in 1997, up from $805 million in 1996.

AFGI member companies are ACA Financial Guaranty Corporation, Ambac Assurance Corporation, AXA Re Finance S.A., Capital Reinsurance Company, Enhance Reinsurance Company, Financial Guaranty Insurance Company, Financial Security Assurance Inc., and MBIA Insurance Corporation.

AFGI members operate primarily in the area of financial guaranty insurance. Seven AFGI members carry a triple-A claims-paying ability rating from one or more of the major rating agencies; one member carries a single-A rating from three rating agencies. Insured bonds receive the claims-paying ability rating of the insurance company rather than the rating of the issuer.

In the 27-year history of the bond insurance industry, no issue insured by an AFGI member company has ever been downgraded, and no insured bond investor has ever failed to receive an insured bond payment when due.

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TABLES FOLLOW

Association of Financial Guaranty Insurors																					5
Members' Combined Financial Highlights
Summary for the Years Ended December 31,
(Amounts in $ millions)				1997			1996			1995			1994			1993			1992
Insurance Written & Outstanding
Direct municipal par insured				$119,821			$97,857			$79,980			$78,917			$114,437			$83,941
Direct non-municipal par insured				92,593			74,508			44,655			24,718			21,390			11,783
Total direct par insured				$212,414			$172,365			$124,635			$103,635			$135,827			$95,724
Total outstanding net insured P&I				$1,262,697			$1,076,821			$895,559			$785,126			$704,569			$586,579
Financial Results
Income Statement
Direct premiums written				$1,334				$1,024			$825			$872			$1,277			$1,028
Net premiums earned				797			658			509			595			674			461
Net investment gain				846			805			677			564			631			563
Other income				29			15			14			6			7			6
Losses & loss expenses incurred, net of salvage received				66			32			27			67			5			64
Other underwriting expenses				359			320			270			310			304			255
Restructuring charges				0			0			0			0			85			0
Net Income before taxes				1,231			1,122			903			788			918			711
Income taxes				251			247			167			160			207			154
Net Income				$980			$875			$736			$628			$711			$557
Balance Sheet
Cash and invested assets				14,295			12,291			10,923			10,065			9,179			7,618
Other assets				642			493			398			277			238			319
Total assets				$14,937			$12,784			$11,321			$10,342			$9,417			$7,937
Losses and loss expense reserves				155			120			123			128			71			129
Unearned premium reserve (deferred premium revenue)				5,265			4,779			4,325			4,038			3,778			3,219
Contingency reserves				3,007			2,452			2,047			1,720			1,439			1,127
Other liabilities				666			535			378			369			373			197
Surplus				5,844			4,898			4,448			4,087			3,756			3,265
Total liabilities and surplus				$14,937			$12,784			$11,321			$10,342			$9,417			$7,937
Qualified statutory capital				$8,851			$7,350			$6,495			$5,807			$5,195			$4,392
Key Statistics
Capital ratio				143:1			147:1			138:1			135:1			136:1			134:1
Return on average surplus				18.2%			18.7%			17.3%			16.0%			20.2%			18.4%
Loss ratio				8.3%			4.9%			5.3%			11.3%			0.7%			13.8%
Expense ratio				28.1%			31.6%			32.7%			36.3%			23.8%			24.8%
Combined ratio				36.4%			36.5%			38.0%			47.6%			24.5%			38.6%
This report was prepared by AFGI and refers to the financial guaranty industry as a whole. The combined results are based on information provided by the member companies and are unaudited. All disclosures (except those submitted by AXA Re Finance, a Paris-based AXA reinsurer) are on a statutory accounting basis in accordance with rules and procedures prescribed or permitted by state regulatory authorities. AXA Re Finance's financial data was adjusted to approximate statutory results. 1997 results include financial data from ACA Financial Guaranty Corporation, which joined AFGI in 1997; combined results for 1993-1996 do not. Combined results for 1992-1995 do not include financial data from AXA Re Finance, which joined AFGI in 1996.

Insurance Outstanding										6
Net Par Outstanding
(Amounts in $ millions)										12/31/97
Municipal
General obligation										$186,764
Tax-backed revenue										80,984
Utility revenue										107,508
Health care revenue										66,937
Transportation revenue										46,612
University revenue										22,238
Housing revenue										18,911
Student loan										4,656
International										5,592
Other										18,998
Total municipal										$559,200
Non-Municipal
Mortgage-backed securities										$86,864
Asset-backed securities										60,944
Investor-owned utility obligations										15,455
International										18,041
Other										11,706
Total non-municipal/structured finance										193,010
TOTAL										$752,210

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