EX-99.2 3 a2141373zex-99_2.htm EXHIBIT 99.2
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Exhibit 99.2

Quarterly Operating Supplement
Second Quarter 2004
June 30, 2004

Worksheet Page		Page
Selected Financial Highlights		1
Consolidated GAAP Income Statements		2
Consolidated Balance Sheet		3
Segment Results		4-5
Financial Guaranty PVP, Par Written and Par Outstanding		6-7
Fixed Income Investment Portfolio		8
Financial Guaranty Profile		9
Ratings Distribution		10
Geographic Distribution		11
CDO and Credit Derivative Ratings Distribution		12
25 Largest Municipal Exposures		13
25 Largest Structured Finance Exposures		14
Largest Single Name Corporate/Sovereign CDS Exposures		15
Claims Paying Resources		16
Assured Guaranty Corp. Financials		17-18
Assured Guaranty Corp. Financial Guaranty Profile		19-21
Assured Guaranty Re Int'l Financial Statements		22-23
Assured Guaranty Re Int'l Financial Guaranty Profile		24
Annual Financial and Statistical Data		25

This report is for informational purposes only. It should be read in conjunction with documents filed by Assured Guaranty Ltd. with the Securities and Exchange Commission, including our IPO prospectus dated April 22, 2004 and 10-Q dated March 31, 2004.

Cautionary Statement Regarding Forward-Looking Statements:

Any forward-looking statements made in this supplement reflect the Company's current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. For example, the Company's forward-looking statements, such as its statements regarding PVP, could be affected by a significant reduction in the amount of reinsurance ceded by one or more of our principal ceding companies, rating agency action such as a ratings downgrade, difficulties with the execution of the Company's business strategy, contract cancellations, developments in the world's financial and capital markets, more severe losses or more frequent losses associated with products affecting the adequacy of the Company's loss reserve, changes in regulation or tax laws, the Company's dependence on customers, decreased demand or increased competition, loss of key personnel, the effects of mergers, acquisitions and divestitures, changes in accounting policies or practices, and changes in general economic conditions, as well as management's response to these factors, and other risk factors identified in the Company's filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Assured Guaranty Ltd.
Selected Financial Highlights
(dollars in thousands except per share amounts)

		Quarter Ended June 30, 2004			Quarter Ended June 30, 2003			Percentage Change vs. 2Q 2003		6 Months Ended June 30, 2004			6 Months Ended June 30, 2003			Percentage Change vs. 1H 2003
Premium analysis:
Present value of financial guaranty gross premiums written ("PVP")(1)		$	53,645		$	39,259		37	%	$	136,115		$	98,502		38	%
	Present value of installment premiums written in period		(31,567	)		(27,672	)	14	%		(79,422	)		(64,063	)	24	%

	Upfront gross premiums writen		22,078			11,587		91	%		56,693			34,439		65	%
	Installment gross premiums written		31,422			43,213		-27	%		74,807			64,161		17	%

Financial guaranty gross premiums written		$	53,500		$	54,800		-2	%	$	131,500		$	98,600		33	%
	Mortgage guaranty		900			8,500		-89	%		14,900			16,600		-10	%
	Other		10,000			18,300		-45	%		(83,600	)		79,100		-206	%

Total gross premiums written		$	64,400		$	81,600		-21	%	$	62,800		$	194,300		-68	%

Net income		$	43,116		$	42,703		1	%	$	90,009		$	74,454		21	%
	less: After-tax realized gains (losses) on investments		6,306			1,773		256	%		6,337			3,070		106	%
	less: After-tax unrealized gains (losses) on derivatives		8,959			7,710		16	%		12,102			7,421		63	%

Operating income(2)		$	27,851		$	33,220		-16	%	$	71,569		$	63,963		12	%

Book value		$	1,421,871		$	1,329,789		7	%	$	1,421,871		$	1,329,789		7	%
	Net UPR less DAC—after-tax		222,589			156,155		43	%		222,589			156,155		43	%
	Net present value of installment premiums in- force—after-tax		261,800			216,700		21	%		261,800			216,700		21	%

Adjusted book value		$	1,906,260		$	1,702,644		12	%	$	1,906,260		$	1,702,644		12	%

ROE, excluding AOCI			12.4	%		14.1	%	-12	%		13.2	%		12.5	%	6	%
	less: After-tax realized gains (losses) on investments		1.8	%		0.6	%	205	%		0.9	%		0.5	%	76	%
	less: After-tax unrealized gains (losses) on derivatives		2.6	%		2.6	%	2	%		1.8	%		1.2	%	45	%

Operating ROE, excluding AOCI(2)			8.0	%		11.0	%	-27	%		10.5	%		10.7	%	-2	%
Average basic shares outstanding *			75,000,000			75,000,000		0	%		75,000,000			75,000,000		0	%
Average diluted shares outstanding *			75,000,879			75,000,000		0	%		75,000,879			75,000,000		0	%
Per diluted share:
Net income		$	0.57		$	0.57		—		$	1.20		$	0.99		21	%
	less: After-tax realized gains (losses) on investments		0.08			0.02		300	%		0.08			0.04		106	%
	less: After-tax unrealized gains (losses) on derivatives		0.12			0.10		20	%		0.16			0.10		63	%

Operating income		$	0.37		$	0.45		-18	%	$	0.95		$	0.85		12	%

Book value		$	18.96		$	17.73		7	%	$	18.96		$	17.73		7	%
	Net UPR less DAC—after-tax		2.97			2.08		43	%		2.97			2.08		43	%
	Net present value of installment premiums in- force—after-tax		3.49			2.89		21	%		3.49			2.89		21	%

Adjusted book value(3)		$	25.42		$	22.70		12	%	$	25.42		$	22.70		12	%

Financial guaranty par insured
Consolidated claims paying resources
Par insured to consolidated claims paying resources

*: Historical amounts represent shares issued upon the IPO closing

(1): PVP, which is a non-GAAP measure, represents gross premiums related to financial guaranty contracts written in the current period, including the full amount of upfront installment premiums received and the present value of all installment premiums, discounted at 6% per year. Management, equity analysts and investors use this non-GAAP measure to evaluate the value of new financial guaranty business production for Assured Guaranty, as the GAAP gross premiums written measure does not adequately measure the value of installment premiums on new contracts underwritten in a reporting period.
(2): Operating income is defined as net income excluding after-tax realized gains (losses) on investments and after-tax unrealized gains (losses) on derivative financial instruments. Operating ROE represents operating income as a percentage of average shareholder's equity, excluding accumulated other comprehensive income "AOCI". We believe the presentation of operating income and operating ROE enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business. We exclude net realized gains (losses) on investments and net unrealized gains (losses) on derivative financial instruments because the amount of these gains (losses) is heavily influenced by, and fluctuates in part according to, the market interest rates, credit spreads and other factors that management cannot control or predict. This measure should not be viewed as a substitute for net income determined in accordance with generally accepted accounting principles (GAAP).
(3): Adjusted book value, which is a non-GAAP measure, is derived by beginning with shareholder's equity (book value) and adding or subtracting the after-tax value of: the financial guaranty net unearned premium reserve; deferred acquisition costs and the present value of estimated net future installment premiums (discounted at 6%). The adjustments described above will not be realized until future periods and may differ materially from the amounts used in determining adjusted book value. Management, investors and analysts use the calculation of adjusted book value to evaluate the net present value of the Company's in-force premium and capital base.

Assured Guaranty Ltd.
Consolidated GAAP Income Statements
(dollars in thousands)

		Quarter Ended June 30							Six Months Ended June 30
		Quarter Ended June 30					% Change versus 2Q-03		Six Months Ended June 30					% Change versus 1H-03
		2004			2003		% Change versus 2Q-03		2004			2003		% Change versus 1H-03
Revenues
	Gross written premiums	$	64,355		$	81,550	-21	%	$	62,812		$	194,285	-68	%
	Net written premiums		(47,352	)		119,044	-140	%		(54,223	)		223,117	-124	%
	Net earned premiums		(26,739	)		82,147	-133	%		59,927			145,735	-59	%
	Net investment income		23,456			24,003	-2	%		47,841			48,104	-1	%
	Other income		14			265	-95	%		546			821	-33	%

	Total revenues	$	(3,269	)	$	106,415	-103	%	$	108,314		$	194,660	-44	%
	Expenses
	Loss and loss adjustment expenses		(77,417	)		35,796	-316	%		(53,749	)		58,984	-191	%
	Profit commission expenses		4,847			2,681	81	%		10,334			5,650	83	%
	Acquisition costs		8,437			19,378	-56	%		21,544			31,221	-31	%
	Other operating expenses		26,608			7,535	253	%		39,229			19,169	105	%
	Goodwill expense		—			—	—			1,645			—	—
	Interest expense		2,546			1,434	78	%		3,980			2,868	39	%

	Total expenses	$	(34,979	)	$	66,824	-152	%	$	22,983		$	117,892	-81	%
	Income before provision for income taxes		31,710			39,591	-20	%		85,331			76,768	11	%
	Total provision for income taxes		3,859			6,371	-39	%		13,762			12,805	7	%
	(1)Operating income	$	27,851		$	33,220	-16	%	$	71,569		$	63,963	12	%
	After-tax net realized gains on investments		6,306			1,773	256	%		6,337			3,070	106	%
	After-tax unrealized gains on derivative instruments		8,959			7,710	16	%		12,102			7,421	63	%
	Net income	$	43,116		$	42,703	1	%	$	90,009		$	74,454	21	%

(1): Operating income is defined as net income excluding after-tax realized gains (losses) on investments and after-tax unrealized gains (losses) on derivative financial instruments. Operating ROE represents operating income as a percentage of average shareholder's equity, excluding AOCI. We believe the presentation of operating income and operating ROE enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business. We exclude net realized gains (losses) on investments and net unrealized gains (losses) on derivative financial instruments because the amount of these gains (losses) is heavily influenced by, and fluctuates in part according to, the market interest rates, credit spreads and other factors that management cannot control or predict. This measure should not be viewed as a substitute for net income determined in accordance with generally accepted accounting principles (GAAP).

Assured Guaranty Ltd.
Consolidated GAAP Balance Sheets
(dollars in thousands)

		As of
		June 30, 2004			December 31, 2003
Assets
	Fixed maturity securities available for sale, at fair value	$	1,853,270		$	2,052,217
	Short-term investments, at cost, which approximates market		178,915			137,517

	Total investments		2,032,185			2,189,734
	Cash		28,584			32,365
	Accrued investment income		21,364			23,758
	Deferred acquisition costs		186,812			178,673
	Premium receivable		33,155			63,997
	Prepaid reinsurance premiums		25,140			10,974
	Reinsurance recoverable on ceded losses		200,760			122,124
	Due from affiliate		—			115,000
	Unrealized gains on derivative financial instruments		13,445			—
	Value of reinsurance business assumed		—			14,226
	Goodwill		85,417			87,062
	Other assets		28,446			19,954

Total assets		$	2,655,308		$	2,857,867

Liabilities
	Unearned premium reserve	$	525,351		$	625,429
	Reserve for losses and loss adjustment expenses		297,197			522,593
	Profit commissions payable		56,009			71,237
	Reinsurance balances payable		67,480			4,908
	Deferred federal income taxes payable		5,213			55,637
	Unrealized losses on derivative financial instruments		—			8,558
	Funds held by Company under reinsurance contracts		52,040			9,635
	Long-term debt		197,311			75,000
	Other liabilities		32,836			47,246

Total liabilities			1,233,437			1,420,243
Shareholders' equity
	Common stock		759			16,403
	Treasury stock		(7,850	)		—
	Additional paid-in capital		899,062			955,490
	Accumulated other comprehensive income		57,978			81,185
	Unearned stock grant compensation		(8,112	)		(5,479	)
	Retained earnings		480,034			390,025

Total shareholders' equity			1,421,871			1,437,624
Total liabilities & shareholders' equity		$	2,655,308		$	2,857,867

Assured Guaranty Ltd.
Segment Results
(dollars in millions)

		Quarter Ended June 30, 2004(1)
		Financial Guaranty Direct			Financial Guaranty Reinsurance(2)			Mortgage Guaranty			Subtotal			Other			Total
Present value of gross premiums written:
Municipal		$	2.9		$	30.4					$	33.4					$	33.4
Structured finance			11.4			8.9						20.3						20.3

	Total	$	14.4		$	39.3					$	53.6					$	53.6
Income statement:
Gross premiums written		$	17.7		$	35.8		$	0.9		$	54.4		$	10.0		$	64.4
Net premiums written			17.3			35.8			0.9			54.0			(101.4	)		(47.4	)
Net premiums earned			16.1			25.6			15.0			56.7			(83.4	)		(26.7	)
Loss and loss adjustment expenses			1.6			(0.9	)		(3.3	)		(2.6	)		(74.8	)		(77.4	)
Profit commission expense			—			0.3			4.3			4.6			0.2			4.8
Acquisition costs			0.1			6.6			1.7			8.4			—			8.4
Operating expenses			4.3			6.9			4.0			15.2			—			15.2
Underwriting gain (loss)		$	10.1		$	12.7		$	8.3		$	31.1		$	(8.8	)	$	22.3
Loss and loss adjustment expense ratio			9.9	%		-3.5	%		-22.0	%		-4.6	%		89.7	%		289.9	%
Expense ratio			27.3	%		53.9	%		66.7	%		49.7	%		-0.2	%		-106.4	%

Combined ratio			37.3	%		50.4	%		44.7	%		45.1	%		89.4	%		183.5	%

		Quarter Ended June 30, 2003
		Financial Guaranty Direct			Financial Guaranty Reinsurance(1)			Mortgage Guaranty			Subtotal			Other			Total
Present value of gross premiums written:
Municipal		$	—		$	12.6					$	12.6					$	12.6
Structured finance			15.4			11.3						26.7						26.7

	Total	$	15.4		$	23.8						39.3					$	39.3
Income statement:
Gross premiums written		$	20.8		$	34.0		$	8.5		$	63.3		$	18.3		$	81.6
Net premiums written			20.6			33.9			8.2			62.7			56.3			119.0
Net premiums earned			21.2			30.1			9.4			60.7			21.4			82.1
Loss and loss adjustment expenses			6.4			0.9			3.7			11.0			24.8			35.8
Profit commission expense			—			0.9			1.4			2.3			0.4			2.7
Acquisition costs			—			11.9			1.5			13.4			6.0			19.4
Operating expenses			1.9			2.8			0.9			5.6			1.9			7.5
Underwriting gain (loss)		$	12.9		$	13.6		$	1.9		$	28.4		$	(11.7	)	$	16.7
Loss and loss adjustment expense ratio			30.2	%		3.0	%		39.4	%		18.1	%		115.9	%		43.6	%
Expense ratio			9.0	%		51.8	%		40.4	%		35.1	%		38.8	%		36.1	%

Combined ratio			39.2	%		54.8	%		79.8	%		53.2	%		154.7	%		79.7	%

(1): Excludes $11.3 million of operating expenses, related to the accelerated vesting of stock awards at the IPO date.
(2): Due to the timing of receipts of reports prepared by our ceding companies, present value of financial guaranty gross premiums written, par written and par outstanding in our Financial Guaranty Reinsurance segment are reported on a one-quarter lag.

Assured Guaranty Ltd.
Segment Results
(dollars in millions)

		Six Months Ended June 30, 2004(1)
		Financial Guaranty Direct			Financial Guaranty Reinsurance(2)			Mortgage Guaranty			Subtotal			Other			Total
Present value of gross premiums written:
Municipal		$	2.9		$	72.7					$	75.7					$	75.7
Structured finance			19.3			41.2						60.5						60.5

	Total	$	22.2		$	113.9					$	136.1					$	136.1
Income statement:
Gross premiums written		$	43.3		$	88.2		$	14.9		$	146.4		$	(83.6	)	$	62.8
Net premiums written			42.6			88.2			14.9			145.7			(199.9	)		(54.2	)
Net premiums earned			56.8			46.0			23.4			126.2			(66.3	)		59.9
Loss and loss adjustment expenses			15.0			3.0			(4.5	)		13.5			(67.2	)		(53.7	)
Profit commission expense			—			0.4			9.3			9.7			0.6			10.3
Acquisition costs			1.5			13.7			2.6			17.8			3.8			21.6
Operating expenses			7.6			11.0			5.7			24.3			3.6			27.9
Underwriting gain (loss)		$	32.7		$	17.9		$	10.3		$	60.9		$	(7.1	)	$	53.8
Loss and loss adjustment expense ratio			26.4	%		6.5	%		-19.2	%		10.7	%		101.4	%		-89.6	%
Expense ratio			16.0	%		54.6	%		75.2	%		41.0	%		-12.1	%		99.8	%

Combined ratio			42.4	%		61.1	%		56.0	%		51.7	%		89.3	%		10.2	%

		Six Months Ended June 30, 2003
		Financial Guaranty Direct			Financial Guaranty Reinsurance(2)			Mortgage Guaranty			Subtotal			Other			Total
Present value of gross premiums written:
Municipal		$	—		$	39.3					$	39.3					$	39.3
Structured finance			36.1			23.1						59.2						59.2

	Total	$	36.1		$	62.4					$	98.5					$	98.5
Income statement:
Gross premiums written		$	34.8		$	63.8		$	16.6		$	115.2		$	79.1		$	194.3
Net premiums written			34.4			63.0			16.3			113.7			109.4			223.1
Net premiums earned			35.9			47.0			19.0			101.9			43.8			145.7
Loss and loss adjustment expenses			8.4			2.7			4.9			16.0			43.0			59.0
Profit commission expense			—			1.0			4.6			5.6			—			5.6
Acquisition costs			—			17.4			2.5			19.9			11.3			31.2
Operating expenses			4.6			5.9			2.7			13.2			6.1			19.3
Underwriting gain (loss)		$	22.9		$	20.0		$	4.3		$	47.2		$	(16.6	)	$	30.6
Loss and loss adjustment expense ratio			23.4	%		5.7	%		25.8	%		15.7	%		98.2	%		40.5	%
Expense ratio			12.8	%		51.7	%		51.6	%		38.0	%		39.7	%		38.5	%

Combined ratio			36.2	%		57.4	%		77.4	%		53.7	%		137.9	%		79.0	%

(1): Excludes $11.3 million of operating expenses, related to the accelerated vesting of stock awards at the IPO date.
(2): Due to the timing of receipts of reports prepared by our ceding companies, present value of financial guaranty gross premiums written, par written and par outstanding in our Financial Guaranty Reinsurance segment are reported on a one-quarter lag.

Assured Guaranty Ltd.
Financial Guaranty PVP, Par Written and Par Outstanding
(dollars in millions)

		Quarter Ended June 30, 2004
		Financial Guaranty Direct			Financial Guaranty Reinsurance			Total
Present value of financial guaranty gross premiums written ("PVP"):		$	14.4		$	39.3		$	53.6
	Present value of installment premiums written in period		(14.4	)		(17.2	)		(31.6	)

	Upfront gross premiums writen		—			22.1			22.1
	Installment gross premiums written		17.7			13.7			31.4

Financial guaranty gross premiums written		$	17.7		$	35.8		$	53.5
Present value of financial guaranty gross premiums written:
Municipal		$	2.9		$	30.4		$	33.4
Structured finance			11.4			8.9			20.3

	Total	$	14.4		$	39.3		$	53.6
Par written:
Municipal		$	246		$	1,590		$	1,836
Structured finance			2,444			629			3,074

	Total	$	2,691		$	2,219		$	4,910
Par outstanding:
Municipal		$	2,321		$	52,061		$	54,382
Structured finance			23,454			13,514			36,968

	Total	$	25,775		$	65,575		$	91,350
Present value of installment premiums in force		$	219.7		$	147.2		$	366.9
Unearned premium reserve		$	12.9		$	445.0		$	457.9

		Quarter Ended June 30, 2003
		Financial Guaranty Direct			Financial Guaranty Reinsurance			Total
Present value of financial guaranty gross premiums written ("PVP"):		$	15.4		$	23.8		$	39.3
	Present value of installment premiums written in period		(15.4	)		(12.2	)		(27.7	)

	Upfront gross premiums writen		—			11.6			11.6
	Installment gross premiums written		20.8			22.4			43.2

Financial guaranty gross premiums written		$	20.8		$	34.0		$	54.8
Present value of financial guaranty gross premiums written:
Municipal		$	—		$	12.6		$	12.6
Structured finance			15.4			11.3			26.7

	Total	$	15.4		$	23.8		$	39.3
Par written:
Municipal		$	—		$	914		$	914
Structured finance			1,163			737			1,899

	Total	$	1,163		$	1,651		$	2,813
Par outstanding:
Municipal		$	2,381		$	47,001		$	49,382
Structured finance			18,140			12,976			31,116

	Total	$	20,521		$	59,977		$	80,498
Present value of installment premiums in force		$	205.4		$	105.6		$	311.1
Unearned premium reserve		$	11.8		$	343.6		$	355.4

Assured Guaranty Ltd.
Financial Guaranty PVP, Par Written and Par Outstanding
(dollars in millions)

		Six Months Ended June 30, 2004
		Financial Guaranty Direct			Financial Guaranty Reinsurance			Total
Present value of financial guaranty gross premiums written ("PVP"):		$	22.2		$	113.9		$	136.1
	Present value of installment premiums written in period		(22.2	)		(57.2	)		(79.4	)

	Upfront gross premiums writen		—			56.7			56.7
	Installment gross premiums written		43.3			31.5			74.8

Financial guaranty gross premiums written		$	43.3		$	88.2		$	131.5
Present value of financial guaranty gross premiums written:
Municipal		$	2.9		$	72.7		$	75.7
Structured finance			19.3			41.2			60.5

	Total	$	22.2		$	113.9		$	136.1
Par written:
Municipal		$	246		$	3,522		$	3,769
Structured finance			3,932			1,783			5,715

	Total	$	4,178		$	5,305		$	9,483
Par outstanding:
Municipal		$	2,321		$	52,061		$	54,382
Structured finance			23,454			13,514			36,968

	Total	$	25,775		$	65,575		$	91,350
Present value of installment premiums in force		$	219.7		$	147.2		$	366.9
Unearned premium reserve		$	12.9		$	445.0		$	457.9

		Six Months Ended June 30, 2003
		Financial Guaranty Direct			Financial Guaranty Reinsurance			Total
Present value of financial guaranty gross premiums written ("PVP"):		$	36.1		$	62.4		$	98.5
	Present value of installment premiums written in period		(36.1	)		(27.9	)		(64.1	)

	Upfront gross premiums writen		—			34.4			34.4
	Installment gross premiums written		34.8			29.4			64.2

Financial guaranty gross premiums written		$	34.8		$	63.8		$	98.6
Present value of financial guaranty gross premiums written:
Municipal		$	—		$	39.3		$	39.3
Structured finance			36.1			23.1			59.2

	Total	$	36.1		$	62.4		$	98.5
Par written:
Municipal		$	—		$	2,193		$	2,193
Structured finance			2,375			2,000			4,375

	Total	$	2,375		$	4,193		$	6,568
Par outstanding:
Municipal		$	2,381		$	47,001		$	49,382
Structured finance			18,140			12,976			31,116

	Total	$	20,521		$	59,977		$	80,498
Present value of installment premiums in force		$	205.4		$	105.6		$	311.1
Unearned premium reserve		$	11.8		$	343.6		$	355.4

Assured Guaranty Ltd.
Fixed Income Investment Portfolio
as of June 30, 2004
(dollars in thousands)

			Amortized Cost		Fair Value		Pre-Tax Book Yield		Duration	Annualized Investment Income
Fixed maturity securities available for sale:
	U.S. Treasury securities and obligations of U.S. government agencies		$	248,484	$	255,902	5.14	%	5.6	$	12,772
Obligations of states and political subdivisions				329,596		338,647	4.50	%	7.5		14,832
Insured obligations of state and political subdivisions				451,209		476,461	5.00	%	7.8		22,560
Corporate securities				178,340		186,715	5.99	%	4.8		10,683
Mortgage-backed securities:
	Pass-thrus			386,668		391,623	5.17	%	2.0		19,991
	PACs			145,364		144,280	4.75	%	3.4		6,905
Asset-backed securities				58,748		59,642	5.81	%	5.4		3,413

		Total fixed maturity securities available for sale		1,798,409		1,853,270	5.07	%	5.6		91,156
Short-term investments				178,915		178,915	0.91	%	—		1,628

		Total investments available for sale	$	1,977,324	$	2,032,185	4.69	%	—	$	92,784

		Fair Value		%
Maturity Schedule:
Due within one year		$	12,218	0.7	%
Due in one to five years			151,316	8.2	%
Due in five to ten years			319,539	17.2	%
Due in greater than ten years			834,294	45.0	%
Mortgage-backed securities			535,903	28.9	%

	Total	$	1,853,270	100.0	%

		Fair Value		%
Quality Distribution:
Treasury		$	37,247	2.0	%
Agency			218,655	11.8	%
AAA			1,156,427	62.4	%
AA			308,925	16.7	%
A			128,750	6.9	%
BBB			3,266	0.2	%

	Total	$	1,853,270	100.0	%

Assured Guaranty Ltd.

Financial Guaranty Profile
(dollars in millions)

						Outstanding as of June 30, 2004
		Gross Par Written				Outstanding as of June 30, 2004
Sector		Gross Par Written								Avg. Rating(8)
Sector		Q2 2004		Q2 2003		Net Par		%		Avg. Rating(8)
Municipal Finance
General obligation bonds		$	698	$	137	$	12,519	13.7	%	A+
Tax backed			128		425		9,406	10.3	%	A+
Municipal utilities			82		49		10,829	11.9	%	A+
Higher education			10		10		966	1.1	%	A+
Housing			21		47		1,155	1.3	%	AA-
Transportation			109		44		6,865	7.5	%	A
Healthcare			429		132		6,286	6.9	%	A
Structured municipal(1)			—		—		3,266	3.6	%	AAA
Investor-owned utilities			108		42		2,110	2.3	%	A-
Other municipal(2)			250		27		980	1.1	%	A

	Total Municipal	$	1,836	$	914	$	54,382	59.5	%	A+
Structured Finance
CDO's(3)		$	1,066	$	647	$	16,751	18.3	%	AA+
Consumer receivables(4)			473		216		3,962	4.3	%	A+
Single name corporate CDS(5)			—		30		1,900	2.1	%	A+
Commercial Receivables(6)			254		423		5,470	6.0	%	AA-
Mortgage-backed & home equity			1,136		344		7,031	7.7	%	A+
Other structured finance(7)			145		239		1,855	2.0	%	A+

	Total Structured Finance	$	3,074	$	1,899	$	36,968	40.5	%	AA
Total Exposure		$	4,910	$	2,813	$	91,350	100.0	%	AA-

1.: Structured municipal: includes excess of loss reinsurance on portfolios of municipal credits where the Company attached in excess of the AAA rating level.
2.: Other municipal: primarily includes student loans and government-sponsored project finance.
3.: Collateralized debt obligations (CDO's) are structured financings backed by a pool of investment grade assets. These financings are typically structured in multiple tranches (layers) from equity (first loss) through super senior (high excess). Losses on defaulted pool assets are allocated successively first to the equity tranche then to higher rated tranches.
4.: Consumer receivables: principally includes auto loan receivables and credit card receivables.
5.: Single name corporate CDS includes CDS of Investor-owned utilities.
6.: Commercial receivables: principally includes equipment leases and commercial mortgage-backed securities.
7.: Other structured Finance: predominantly trade receivable securitization, secured structured lending, and future flow transactions.
8.: Ratings are internally determined based on rating agency guidelines.

Assured Guaranty Ltd.
Ratings Distribution
(dollars in millions)

Distribution by Ratings of Financial Guaranty Portfolio

Ratings *	June 30, 2004 Net Par Outstanding		%		December 31, 2003 Net Par Outstanding		%
AAA	$	28,272	30.9	%	$	26,374	30.1	%
AA		18,762	20.5	%		17,587	20.1	%
A		29,998	32.8	%		30,008	34.3	%
BBB		12,878	14.1	%		12,051	13.8	%
Below investment grade		1,440	1.6	%		1,505	1.7	%

	$	91,350	100	%	$	87,524	100	%

Assured Guaranty Corp.

Distribution by Ratings of Financial Guaranty Portfolio

Ratings *	June 30, 2004 Net Par Outstanding		%		December 31, 2003 Net Par Outstanding		%
AAA	$	22,369	29.5	%	$	22,268	28.4	%
AA		16,036	21.1	%		16,211	20.7	%
A		25,014	33.0	%		27,208	34.7	%
BBB		10,994	14.5	%		11,258	14.4	%
Below investment grade		1,436	1.9	%		1,454	1.9	%

	$	75,849	100	%	$	78,399	100	%

Assured Guaranty Re International

Distribution by Ratings of Financial Guaranty Portfolio

Ratings *	June 30, 2004 Net Par Outstanding		%		December 31, 2003 Net Par Outstanding		%
AAA	$	5,904	38.1	%	$	4,106	45.0	%
AA		2,726	17.6	%		1,375	15.1	%
A		4,983	32.1	%		2,800	30.7	%
BBB		1,884	12.2	%		793	8.7	%
Below investment grade		4	0.0	%		50	0.6	%

	$	15,501	100	%	$	9,125	100	%

* Assured Guaranty internal rating

Assured Guaranty Ltd.
Geographic Distribution
(dollars in millions)

Geographic Distribution of Financial Guaranty Portfolio, as of June 30, 2004

U.S.:		Net Par Outstanding		%		International:	Net Par Outstanding		%
California		$	7,200	7.9	%	United Kingdom	$	4,735	5.2	%
New York			5,584	6.1	%	Australia		526	0.6	%
Texas			3,221	3.5	%	Brazil		352	0.4	%
Illinois			2,850	3.1	%	France		336	0.4	%
Florida			2,803	3.1	%	Italy		202	0.2	%
New Jersey			2,338	2.6	%	Other		1,962	2.1	%

Pennsylvania			1,996	2.2	%	Total International	$	8,113	8.9	%

Massachusetts			1,857	2.0	%
Puerto Rico			1,792	2.0	%
Washington			1,578	1.7	%	Total	$	91,350	100.0	%

Other—Muni			19,821	21.7	%
Other—Non Muni			32,197	35.2	%

	Total U.S.	$	83,237	91.1	%

Assured Guaranty Corp.

Geographic Distribution of Financial Guaranty Portfolio, as of June 30, 2004

U.S.:		Net Par Outstanding		%		International:	Net Par Outstanding		%
California		$	6,175	8.1	%	United Kingdom	$	3,680	4.9	%
New York			4,471	5.9	%	Australia		431	0.6	%
Texas			2,900	3.8	%	Brazil		338	0.4	%
Illinois			2,564	3.4	%	France		215	0.3	%
Florida			2,421	3.2	%	Italy		186	0.2	%
New Jersey			1,975	2.6	%	Other		933	1.2	%

Pennsylvania			1,790	2.4	%	Total International	$	5,783	7.6	%

Massachusetts			1,615	2.1	%
Puerto Rico			1,444	1.9	%
Washington			1,245	1.6	%	Total	$	75,849	100.0	%

Other—Muni			16,110	21.2	%
Other—Non Muni			27,355	36.1	%

	Total U.S.	$	70,066	92.4	%

Assured Guaranty Re International

Geographic Distribution of Financial Guaranty Portfolio, as of June 30, 2004

U.S.:		Net Par Outstanding		%		International:	Net Par Outstanding		%
New York		$	1,113	7.2	%	United Kingdom	$	1,055	6.8	%
California			1,026	6.6	%	Germany		345	2.2	%
Ohio			458	3.0	%	France		121	0.8	%
Florida			382	2.5	%	Netherlands		117	0.8	%
New Jersey			364	2.3	%	Japan		109	0.7	%
Puerto Rico			348	2.2	%	Other		582	3.8	%

Wisconsin			333	2.2	%	Total International	$	2,330	15.0	%

Washington			333	2.1	%
Texas			321	2.1	%
Alabama			318	2.0	%	Total	$	15,501	100.0	%

Other—Muni			3,335	21.5	%
Other—Non Muni			4,841	31.2	%

	Total U.S.	$	13,171	85.0	%

Assured Guaranty Ltd.
CDO and Credit Derivative Ratings Distribution
(dollars in millions)

Distribution by Ratings of CDO and Credit Derivative Exposure

Ratings*	June 30, 2004 Net Par Outstanding		%		December 31, 2003 Net Par Outstanding		%
AAA	$	20,785	76.9	%	$	20,703	76.1	%
AA		2,548	9.4	%		2,534	9.3	%
A		2,443	9.0	%		2,575	9.5	%
BBB		1,182	4.4	%		1,216	4.5	%
Below investment grade		79	0.3	%		158	0.6	%

	$	27,036	100	%	$	27,187	100	%

Assured Guaranty Corp.

Distribution by Ratings of CDO and Credit Derivative Exposure

Ratings*	June 30, 2004 Net Par Outstanding		%		December 31, 2003 Net Par Outstanding		%
AAA	$	16,122	79.8	%	$	17,584	74.9	%
AA		2,043	10.1	%		2,342	10.0	%
A		1,273	6.3	%		2,420	10.3	%
BBB		678	3.4	%		1,011	4.3	%
Below investment grade		79	0.4	%		135	0.6	%

	$	20,195	100	%	$	23,491	100	%

Assured Guaranty Re International

Distribution by Ratings of CDO and Credit Derivative Exposure

Ratings*	June 30, 2004 Net Par Outstanding		%		December 31, 2003 Net Par Outstanding		%
AAA	$	4,662	68.1	%	$	3,119	84.4	%
AA		505	7.4	%		192	5.2	%
A		1,170	17.1	%		155	4.2	%
BBB		504	7.4	%		206	5.6	%
Below investment grade		—	0.0	%		24	0.6	%

	$	6,842	100	%	$	3,695	100	%

*: Assured Guaranty internal rating

Assured Guaranty Ltd.
25 Largest Municipal Exposures
as of June 30, 2004
(dollars in millions)

Revenue Source		Net Par In Force *		Rating **
California State General Obligation & Leases		$	899	BBB
Long Island Power Authority			720	A-
New Jersey State General Obligation & Leases			702	AA
New York City General Obligation			642	A
Denver Colorado Airport System			632	A
Jefferson County Alabama Sewer			606	A
Chicago Illinois General Obligation			589	A+
Massachusetts State GO & Bay Transportation & Leases			559	AA-
Puerto Rico Electric Power Authority			544	A-
New York State Metro Trans Auth—Trans Revenue			535	A
New York City Municipal Water Finance Authority			526	AA
San Francisco California Airport			489	A
Energy Northwest (FKA WPPSS)			480	AA-
Puerto Rico General Obligation & Leases			467	A-
New York State General Obligation			428	AA
Mental Health Services Facilities—New York			398	AA-
Houston Texas Water & Sewer System			393	A+
Los Angeles County Metro Trans—Sales Tax—1st			356	AA
Dade County Florida Water & Sewer System			327	A
Illinois State General Obligation & Leases			306	AA
Chicago Illinois Public Building—Board of Education			296	A+
Municipal Electric Authority of Georgia			295	A
Los Angeles County California Pension Obligation			274	A-
Pennsylvania State General Obligation			273	AA
Chicago O'Hare International Airport			271	A-

	Total Top 25 Municipal Finance Exposures	$	12,008

*: Excludes Net Par In Force for transactions insured by a AAA monoline financial guaranty company
**: Assured Guaranty internal rating

Assured Guaranty Ltd.

25 Largest Structured Finance Exposures
as of June 30, 2004
(dollars in millions)

Revenue Source	Net Par In Force *		Rating **
Private Structured Finance Corporate Pool	$	884	AAA
Synthetic CDO — IG Corporate		740	AAA
Argent Securities Inc. 2003-W6 — RMBS		680	BBB+
Synthetic CDO — IG ABS		594	AAA
Synthetic CDO — IG ABS		569	AAA
Synthetic CDO — IG Corporate		557	A+
Synthetic Credit Card Master Trust		550	AAA
Synthetic CDO — IG Corporate		500	AAA
Synthetic CDO — IG Corporate		470	AA
Synthetic CDO — IG Corporate		440	AAA
Synthetic CDO — IG Corporate		440	AAA
Synthetic CDO — IG Corporate		430	AAA
Providian Gateway Master Trust		417	BB+
Synthetic CDO — IG Corporate		410	AAA
Private Residential Mortgage Backed Securities		395	AAA
Synthetic CDO — IG Corporate		360	AAA
Synthetic CDO — IG Corporate		360	AAA
Synthetic CDO — IG Corporate		347	AAA
Private Residential Mortgage Backed Securities		312	AAA
Synthetic CDO — IG Corporate		300	AAA
Synthetic CDO — IG Corporate		288	BBB+
Synthetic CDO — IG CDO		281	AAA
Metris Master Credit Card Trust		281	BB
Synthetic CDO — IG Corporate		278	AAA
Synthetic Commercial Mortgage Backed Securities		277	AAA

Total Top 25 Structured Finance Exposures	$	11,158

*: Excludes Net Par In Force for transactions insured by a AAA monoline financial guaranty company
**: Assured Guaranty internal rating

Assured Guaranty Ltd.
Largest Single Name Corporate / Sovereign CDS Exposures
as of June 30, 2004
(dollars in millions)

Obligor		Net Par In Force*		Rating**
General Electric Company		$	60	AAA
Japan Republic Sovereign Obligation			50	AA-
American International Group, Inc. (AIG)			50	AAA
Allianz AG			50	AA-
FNMA—Fannie Mae			45	AAA
France Telecom			40	BBB+
Deutsche Telekom AG			40	BBB+
Citigroup, Inc.			39	AA-
Oesterreichische Elektrizitaertswirtschafts AG			36	A
Zurich Insurance Company			35	A

	Total Top 10 Single Name/Sovereign CDS Exposure	$	444

Single Name Corporate CDS by Rating	2Q 2004		Gross Par Written 2Q 2003		Net Par Outstanding
AAA	$	—	$	—		419
AA		—		30		333
A		—		—		878
BBB		—		—		269
Below investment grade		—		—		—

*Total*	$	—	$	30	$	1,900

	Outstanding Net Par
Single Name Corporate CDS Run-off	Outstanding Net Par
Single Name Corporate CDS Run-off	2004***		2005		2006		2007		2008
Beginning Outstanding Par	$	1,900	$	1,693	$	704	$	518	$	292
Scheduled Runoff Amount	$	207	$	988	$	186	$	226	$	100

Ending Outstanding Par	$	1,693	$	704	$	518	$	292	$	192

*: Excludes Net Par In Force for transactions insured by a AAA monoline financial guaranty company
**: Assured Guaranty internal rating
***: Beginning balance as of July 1, 2004

Assured Guaranty Ltd.
Statutory Capital & Claims Paying Resources
(dollars in millions)

			As of June 30, 2004						As of December 31, 2003
			AGC		AGR(1)		Consolidated		AGC		AGR(1)		Consolidated
Statutory surplus and reserves
	Unearned premium reserve(2)		$	449	$	123	$	572	$	467	$	233	$	699
	Contingency rserve			438		—		438		400		—		400
	Policyholders' surplus			306		601		907		256		560		816
	Loss & loss adjustment expense reserves			32		174		207		55		390		445

		Total policyholders' surplus & reserve	$	1,225	$	898	$	2,123	$	1,177	$	1,183	$	2,360

Claims paying resources
	Policyholder's surplus		$	306	$	601	$	907	$	256	$	560	$	816
	Contingency reserve			438		—		438		400		—		400

		Statutory capital		744		601		1,345		656		560		1,216
	Unearned premium reserve(2)			449		123		572		467		233		699
	Loss & loss adjustment expense reserves			32		174		207		55		390		445

		Total policyholders' reserves		481		297		778		522		623		1,144
	Present value of installment premium			286		81		367		293		52		345
	Standby line of credit/stop loss			255		—		255		255		—		255

		Total claims paying resources	$	1,766	$	979	$	2,745	$	1,726	$	1,235	$	2,960

(1): AGR numbers are our estimate of US statutory as the company files Bermuda statutory financial statements
(2): Unearned Premium Reserve for AGR is GAAP based and net of Prepaid Reinsurance Premiums

Assured Guaranty Corp.
Consolidated GAAP Income Statements
(dollars in thousands)

		Quarter Ended June 30							Six Months Ended June 30
		Quarter Ended June 30					% Change versus 2Q-03		Six Months Ended June 30					% Change versus 1H-03
		2004			2003		% Change versus 2Q-03		2004			2003		% Change versus 1H-03
Revenues
	Gross written premiums	$	45,963		$	61,507	-25	%	$	93,933		$	115,321	-19	%
	Net written premiums		(6,695	)		100,400	-107	%		40,870			152,745	-73	%
	Net earned premiums	$	7,089		$	52,493	-86	%	$	45,022		$	87,503	-49	%
	Net investment income		13,201			11,356	16	%		25,943			22,807	14	%
	Other income		—			286	-100	%		—			507	-100	%

	Total revenues	$	20,290		$	64,135	-68	%	$	70,965		$	110,817	-36	%
Expenses
	Loss and loss adjustment expenses		(22,160	)		14,869	-249	%		(13,447	)		22,904	-159	%
	Profit commission expenses		(181	)		894	-120	%		122			913	-87	%
	Acquisition costs		2,959			16,047	-82	%		12,146			25,832	-53	%
	Other operating expenses		13,697			4,686	192	%		24,613			10,024	146	%
	Goodwill impairment		—			—	—			1,645			—	—
	Interest expense		1,831			—	—			1,831			—	—

	Total expenses	$	(3,854	)	$	36,496	-111	%	$	26,910		$	59,673	-55	%
	Income before provision for income taxes		24,144			27,639	-13	%		44,055			51,144	-14	%
	Total provision for income taxes		5,654			7,487	-24	%		10,604			13,562	-22	%
	(1)Operating income	$	18,490		$	20,152	-8	%	$	33,451		$	37,582	-11	%
	After-tax net realized gains on investments		(132	)		572	-123	%		(132	)		1,458	-109	%
	After-tax unrealized gains (losses) on derivative instruments		10,960			7,153	53	%		17,415			4,268	308	%

	Net income	$	29,318		$	27,877	5	%	$	50,734		$	43,308	17	%

(1): Operating income is defined as net income excluding after-tax realized gains (losses) on investments and after-tax unrealized gains (losses) on derivative financial instruments. Operating ROE represents operating income as a percentage of average shareholder's equity, excluding AOCI. We believe the presentation of operating income and operating ROE enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business. We exclude net realized gains (losses) on investments and net unrealized gains (losses) on derivative financial instruments because the amount of these gains (losses) is heavily influenced by, and fluctuates in part according to, the market interest rates, credit spreads and other factors that management cannot control or predict. This measure should not be viewed as a substitute for net income determined in accordance with generally accepted accounting principles (GAAP).

Assured Guaranty Corp.
Consolidated GAAP Balance Sheets
(dollars in thousands)

		As of
		June 30, 2004			December 31, 2003
Assets
	Fixed maturity securities available for sale, at fair value	$	1,119,864		$	1,126,723
	Short-term investments, at cost, which approximates market		84,761			56,738

	Total investments		1,204,625			1,183,461
	Cash		14,280			22,075
	Accrued investment income		14,374			14,031
	Deferred acquisition costs		150,934			146,926
	Premium receivable		35,070			28,434
	Prepaid reinsurance premiums		20,543			7,254
	Reinsurance recoverable on ceded losses		29,882			—
	Funds held under reinsurance contracts		2,081			1,816
	Goodwill		85,417			87,062
	Other assets		8,552			13,126

Total assets		$	1,565,758		$	1,504,185

Liabilities
	Unearned premium reserve	$	398,163		$	389,027
	Reserve for losses and loss adjustment expenses		110,234			106,252
	Profit commissions payable		3,887			4,007
	Reinsurance balances payable		51,818			5,183
	Deferred federal income taxes payable		26,514			78,054
	Unrealized losses on derivative financial instruments		(8,652	)		18,141
	Funds held by Company under reinsurance contracts		5,055			5,055
	Long-term debt		197,311			—
	Other liabilities		40,402			19,340

Total liabilities			824,732			625,059
Shareholder's equity
	Common stock		15,025			15,025
	Additional paid-in capital		188,428			353,256
	Accumulated other comprehensive income		24,907			45,285
	Unearned stock grant compensation		(6,477	)		(2,849	)
	Retained earnings		519,143			468,409

Total shareholder's equity			741,026			879,126
Total liabilities & shareholder's equity		$	1,565,758		$	1,504,185

Assured Guaranty Corp.
Financial Guaranty Profile
(dollars in millions)

		Outstanding as of June 30, 2004
Sector		Net Par		%		Avg. Rating(8)
Municipal Finance
General obligation bonds		$	9,942	13.1	%	A+
Tax backed			8,207	10.8	%	A+
Municipal utilities			8,925	11.8	%	A
Higher education			835	1.1	%	A+
Housing			996	1.3	%	AA-
Transportation			5,951	7.8	%	A
Healthcare			5,419	7.1	%	A
Structured municipal(1)			2,414	3.2	%	AAA
Investor-owned utilities			1,819	2.4	%	A-
Other municipal(2)			814	1.1	%	A

	Total Municipal	$	45,322	59.8	%	A+
Structured Finance
CDO's(3)		$	14,394	19.0	%	AA+
Consumer receivables(4)			3,604	4.8	%	A+
Single name corporate CDS(5)			—	0.0	%	A+
Commercial Receivables(6)			5,043	6.6	%	AA-
Mortgage-backed & home equity			5,996	7.9	%	A+
Other structured finance(7)			1,489	2.0	%	A+

	Total Structured Finance	$	30,527	40.2	%	AA
Total Exposure		$	75,849	100.0	%	AA-

(1): Structured municipal: includes excess of loss reinsurance on portfolios of municipal credits where the Company attached in excess of the AAA rating level.
(2): Other municipal: primarily includes student loans and government-sponsored project finance.
(3): Collateralized debt obligations (CDO's) are structured financings backed by a pool of investment grade assets. These financings are typically structured in multiple tranches (layers) from equity (first loss) through super senior (high excess). Losses on defaulted pool assets are allocated successively first to the equity tranche then to higher rated tranches.
(4): Consumer receivables: principally includes auto loan receivables and credit card receivables.
(5): Single name corporate CDS: Exposure ceded to Assured Guaranty International Re Ltd in 2004.
(6): Commercial receivables: principally includes equipment leases and commercial mortgage-backed securities.
(7): Other structured Finance: predominantly trade receivable securitization, secured structured lending, and future flow transactions.
(8): Ratings are internally determined based on rating agency guidelines

Assured Guaranty Corp.
25 Largest Municipal Exposures
as of June 30, 2004
(dollars in millions)

Revenue Source		Net Par In Force *		Rating **
New Jersey State General Obligation & Leases		$	702	AA
California State General Obligation & Leases			650	BBB
Massachusetts State GO & Bay Transportation & Leases			499	AA-
New York State Metro Trans Auth—Trans Revenue			476	A
Chicago Illinois General Obligation			475	A+
Denver Colorado Airport System			472	A
Long Island Power Authority			467	A-
Puerto Rico General Obligation & Leases			466	A-
Puerto Rico Electric Power Authority			464	A-
Jefferson County Alabama Sewer			448	A
San Francisco California Airport			434	A
Energy Northwest (FKA WPPSS)			411	AA-
New York City General Obligation			405	A
New York State General Obligation			393	AA
New York City Municipal Water Finance Authority			388	AA
Houston Texas Water & Sewer System			382	A+
Los Angeles County Metro Trans—Sales Tax—1st			314	AA
Illinois State General Obligation & Leases			299	AA
Municipal Electric Authority of Georgia			295	A
Chicago Illinois Public Building—Board of Education			291	A+
Pennsylvania State General Obligation			269	AA
Massachusetts State Turnpike Authority—Metro			267	A-
Dade County Florida Water & Sewer System			264	A
Mental Health Services Facilities—New York			250	AA-
Intermountain Power Agency			243	A+

	Total Top 25 Municipal Finance Exposures	$	10,023

*: Excludes Net Par In Force for transactions insured by a AAA monoline financial guaranty company
**: Assured Guaranty internal rating

Assured Guaranty Corp.
25 Largest Structured Finance Exposures
as of June 30, 2004
(dollars in millions)

Revenue Source		Net Par In Force *		Rating **
Private Structured Finance Corporate Pool		$	884	AAA
Argent Securities Inc. 2003-W6—RMBS			680	BBB+
Synthetic CDO—IG ABS			594	AAA
Synthetic CDO—IG ABS			569	AAA
Synthetic CDO—IG Corporate			557	A+
Synthetic Credit Card Master Trust			550	AAA
Synthetic CDO—IG Corporate			540	AAA
Synthetic CDO—IG Corporate			500	AAA
Synthetic CDO—IG Corporate			470	AA
Synthetic CDO—IG Corporate			440	AAA
Synthetic CDO—IG Corporate			430	AAA
Synthetic CDO—IG Corporate			417	AAA
Private Residential Mortgage Backed Securities			395	AAA
Providian Gateway Master Trust			360	BB+
Synthetic CDO—IG Corporate			360	AAA
Synthetic CDO—IG Corporate			350	AAA
Synthetic CDO—IG Corporate			347	AAA
Synthetic CDO—IG Corporate			344	AAA
Private Residential Mortgage Backed Securities			312	AAA
Synthetic CDO—IG Corporate			300	AAA
Synthetic CDO—IG Corporate			288	BBB+
Synthetic CDO—IG CDO			281	AAA
Metris Master Credit Card Trust			281	BB
Synthetic CDO—IG Corporate			278	AAA
Synthetic Commercial Mortgage Backed Securities			277	AAA

	Total Top 25 Structured Finance Exposures	$	10,801

*: Excludes Net Par In Force for transactions insured by a AAA monoline financial guaranty company
**: Assured Guaranty internal rating

Assured Guaranty Re International
Consolidated GAAP Income Statements
(dollars in thousands)

		Quarter Ended June 30							6 Months Ended June 30
		Quarter Ended June 30					% Change versus 1Q-03		6 Months Ended June 30					% Change versus 1H-03
		2004			2003		% Change versus 1Q-03		2004			2003		% Change versus 1H-03
Revenues
	Gross written premiums	$	26,969		$	22,939	18	%	$	(20,385	)	$	85,628	-124	%
	Net written premiums		(40,657	)		18,644	-318	%		(95,093	)		70,372	-235	%
	Net earned premiums	$	(33,828	)	$	29,654	-214	%	$	14,905		$	58,232	-74	%
	Net investment income		10,250			12,644	-19	%		21,890			25,293	-13	%
	Other income		—			2	-100	%		554			360	54	%

	Total revenues	$	(23,578	)	$	42,300	-156	%	$	37,349		$	83,885	-55	%
Expenses
	Loss and loss adjustment expenses		(55,258	)		20,927	-364	%		(40,303	)		36,080	-212	%
	Profit commission expenses		5,028			1,787	181	%		10,212			4,737	116	%
	Acquisition costs		5,477			4,348	26	%		9,399			4,830	95	%
	Other operating expenses		6,873			2,766	148	%		8,643			8,993	-4	%

	Total expenses	$	(37,880	)	$	29,828	-227	%	$	(12,049	)	$	54,640	-122	%
	Income before provision for income taxes		14,302			12,472	15	%		49,398			29,245	69	%
	Total provision for income taxes		(1,596	)		1,903	-184	%		3,856			4,721	-18	%
(1)Operating Income		$	15,898		$	10,569	50	%	$	45,542		$	24,524	86	%
	After-tax net realized gains on investments		6,438			1,201	436	%		6,469			1,612	301	%
	After-tax unrealized gains (losses) on derivative instruments		(2,001	)		557	-459	%		(5,313	)		3,153	-269	%

	Net income	$	20,335		$	12,327	65	%	$	46,698		$	29,289	59	%

(1): Operating income is defined as net income excluding after-tax realized gains (losses) on investments and after-tax unrealized gains (losses) on derivative financial instruments. Operating ROE represents operating income as a percentage of average shareholder's equity, excluding AOCI. We believe the presentation of operating income and operating ROE enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business. We exclude net realized gains (losses) on investments and net unrealized gains (losses) on derivative financial instruments because the amount of these gains (losses) is heavily influenced by, and fluctuates in part according to, the market interest rates, credit spreads and other factors that management cannot control or predict. This measure should not be viewed as a substitute for net income determined in accordance with generally accepted accounting principles (GAAP).

Assured Guaranty Re International
Consolidated GAAP Balance Sheets
(dollars in thousands)

		As of
		June 30, 2004			December 31, 2003
Assets
	Fixed maturity securities available for sale, at fair value	$	733,406		$	925,494
	Short-term investments, at cost, which approximates market		94,154			80,779

	Total investments		827,560			1,006,273
	Cash		13,266			9,622
	Accrued investment income		6,990			9,727
	Deferred acquisition costs		32,428			28,297
	Premium receivable		10,076			155,631
	Prepaid reinsurance premiums		10,733			7,685
	Reinsurance recoverable on ceded losses		173,157			122,124
	Value of reinsurance business assumed		—			14,226
	Funds held under reinsurance contracts		6,636			6,520
	Other assets		12,919			7,343

Total assets		$	1,093,765		$	1,367,448

Liabilities
	Unearned premium reserve	$	133,323		$	240,367
	Reserve for losses and loss adjustment expenses		189,243			416,341
	Profit commissions payable		52,122			67,230
	Deferred federal income taxes payable		(21,664	)		(22,781	)
	Reinsurance balances payable		27,653			4,857
	Unrealized losses on derivative financial instruments		(7,322	)		(12,112	)
	Funds held by Company under reinsurance contracts		52,040			9,635
	Other liabilities		7,593			31,611

Total liabilities			432,988			735,148
Shareholder's equity
	Common stock		1,378			1,378
	Additional paid-in capital		387,862			386,222
	Accumulated other comprehensive income		13,694			35,799
	Unearned stock grant compensation		(308	)		(2,552	)
	Retained earnings		258,151			211,453

Total shareholder's equity			660,777			632,300
Total liabilities & shareholder's equity		$	1,093,765		$	1,367,448

Assured Guaranty Re International
Financial Guaranty Profile
(dollars in millions)

		Outstanding as of June 30, 2004
Sector		Net Par		%		Avg. Rating(8)
Municipal Finance
General obligation bonds		$	2,576	16.6	%	A+
Tax backed			1,199	7.7	%	A+
Municipal utilities			1,904	12.3	%	A+
Higher education			132	0.8	%	AA-
Housing			159	1.0	%	A+
Transportation			915	5.9	%	A
Healthcare			867	5.6	%	AA-
Structured municipal(1)			851	5.5	%	AAA
Investor-owned utilities			291	1.9	%	A-
Other municipal(2)			165	1.1	%	BBB+

	Total Municipal	$	9,060	58.4	%	A+
Structured Finance
CDO's(3)		$	2,357	15.2	%	AAA
Consumer receivables(4)			358	2.3	%	A-
Single name corporate CDS(5)			1,900	12.3	%	A+
Commercial Receivables(6)			426	2.8	%	A+
Mortgage-backed & home equity			1,034	6.7	%	A-
Other structured finance(7)			366	2.4	%	A+

	Total Structured Finance	$	6,441	41.6	%	AA-
Total Exposure		$	15,501	100.0	%	AA-

(1): Structured municipal: includes excess of loss reinsurance on portfolios of municipal credits where the Company attached in excess of the AAA rating level.
(2): Other municipal: primarily includes student loans and government-sponsored project finance.
(3): Collateralized debt obligations (CDO's) are structured financings backed by a pool of investment grade assets. These financings are typically structured in multiple tranches (layers) from equity (first loss) through super senior (high excess). Losses on defaulted pool assets are allocated successively first to the equity tranche then to higher rated tranches.
(4): Consumer receivables: principally includes auto loan receivables and credit card receivables.
(5): Single name corporate CDS includes CDS of Investor-owned utilities.
(6): Commercial receivables: principally includes equipment leases and commercial mortgage-backed securities.
(7): Other structured Finance: predominantly trade receivable securitization, secured structured lending, and future flow transactions.
(8): Ratings are internally determined based on rating agency guidelines.

Assured Guaranty Ltd.
Annual Financial and Statistical Data
(dollars in millions)

			2003			2002			2001			2000
GAAP Summary Income Statement Data
	Gross premiums written		$	349.2		$	417.2		$	442.9		$	206.0
	Net earned premiums			310.9			247.4			293.5			140.7
	Net investment income			96.3			97.2			99.5			98.1
	Total expenses			266.1			218.8			282.8			131.8
	Income before income taxes			246.2			83.2			110.1			118.1
	Net income			214.5			72.6			63.8			93.2
	Operating income			127.3			115.7			96.1			87.6
	Net income per diluted common share			2.86			0.97			0.85			1.24
	Operating income per diluted common share			1.70			1.54			1.28			1.17

GAAP Summary Balance Sheet Data
	Total investments and cash		$	2,222.1		$	2,061.9		$	1,710.8		$	1,549.6
	Total assets			2,857.9			2,719.9			2,322.1			1,913.7
	Unearned premium reserve			625.4			613.3			500.3			444.6
	Loss and LAE reserves			522.6			458.8			401.1			171.0
	Long-term debt			75.0			75.0			150.0			150.0
	Shareholders' equity			1,437.6			1,257.2			1,061.6			994.5
	Book value per share			19.17			16.76			14.15			13.26

AGC Statutory Data
	Net income		$	66.6		$	46.2		$	44.9		$	60.5
	Policyholders' surplus			255.6			287.0			334.0			323.4
	Contingency reserve			400.0			307.0			223.1			180.6

		Statutory Capital		655.6			594.0			557.2			504.0
	Unearned premium reserve			466.7			369.9			351.5			330.2
	Present value of installment premiums			293.3			220.4			149.2			89.1
		Premium resources		760.0			590.3			500.7			419.3
	Loss and LAE reserves			58.9			42.4			18.2			16.0
	Standby line of credit / stop loss			255.0			415.0			450.0			250.0

		Total Claims-Paying Resources		1,729.5			1,641.6			1,526.1			1,189.3

Financial Ratios
	Consolidated GAAP
		Loss and LAE ratio		46.5	%		48.6	%		60.5	%		21.6	%
		Expense ratio		37.2	%		35.5	%		30.6	%		61.2	%
		Combined ratio		83.7	%		84.1	%		91.1	%		82.8	%
	AGC Statutory
		Loss and LAE ratio		25.9	%		35.4	%		18.3	%		-0.7	%
		Expense ratio		31.5	%		44.8	%		50.2	%		45.8	%
		Combined ratio		57.4	%		80.2	%		68.5	%		45.1	%

Other Financial Information
Net debt service outstanding			$	130,047		$	124,082		$	117,909		$	102,744
Net par amount outstanding				87,524			80,394			75,249			65,756

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Exhibit 99.2