Exhibit 99.1

MBIA INSURANCE CORPORATION

AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2005 and December 31, 2004

and for the periods ended September 30, 2005 and 2004

MBIA INSURANCE CORPORATION

AND SUBSIDIARIES

INDEX

	PAGE
Consolidated Balance Sheets – September 30, 2005 and December 31, 2004 (Unaudited and Restated)	3
Consolidated Statements of Income – Three and nine months ended September 30, 2005 and 2004 (Unaudited and Restated)	4
Consolidated Statement of Changes in Shareholder’s Equity – Nine months ended September 30, 2005 (Unaudited and Restated)	5
Consolidated Statements of Cash Flows – Nine months ended September 30, 2005 and 2004 (Unaudited and Restated)	6
Notes to Consolidated Financial Statements (Unaudited)	7-11

MBIA INSURANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands except per share amounts)

	September 30, 2005		December 31, 2004
			Restated
Assets
Investments:
Fixed-maturity securities held as available-for-sale, at fair value (amortized cost $8,365,151 and $7,572,892)	$	8,717,538	$	8,059,329
Fixed-maturity securities pledged as collateral, at fair value (amortized cost $416,541 and $483,842)		414,985		489,759
Investments held-to-maturity, at amortized cost		800,000		600,000
Short-term investments, at amortized cost (which approximates fair value)		871,228		979,464
Other investments		158,306		185,037
Total investments		10,962,057		10,313,589
Cash and cash equivalents		106,254		182,347
Securities purchased under agreements to resell		415,408		476,251
Accrued investment income		125,098		129,210
Deferred acquisition costs		431,010		406,035
Prepaid reinsurance premiums		417,293		434,968
Reinsurance recoverable on unpaid losses		45,677		34,610
Goodwill		76,938		76,938
Property and equipment, at cost (less accumulated depreciation of $91,241 and $84,204)		97,942		102,283
Receivable for investments sold		38,982		2,023
Derivative assets		43,785		39,765
Other assets		219,340		251,845
Total assets	$	12,979,784	$	12,449,864
Liabilities and Shareholder’s Equity
Liabilities:
Deferred premium revenue	$	3,208,059	$	3,211,181
Loss and loss adjustment expense reserves		711,423		748,869
Securities sold under agreements to repurchase		415,408		476,251
Variable interest entity floating rate notes		801,115		600,505
Short-term debt		58,745		58,745
Deferred income taxes, net		445,231		482,764
Deferred fee revenue		15,957		20,624
Payable for investments purchased		58,298		15,686
Derivative liabilities		32,324		25,259
Other liabilities		205,711		232,631
Total liabilities		5,952,271		5,872,515
Shareholder’s Equity:
Preferred stock, par value $1,000 per share; authorized shares - 4,000.08, issued and outstanding - none		—		—
Common stock, par value $150 per share; authorized, issued and outstanding - 100,000 shares		15,000		15,000
Additional paid-in capital		1,668,342		1,654,201
Retained earnings		5,111,203		4,526,601
Accumulated other comprehensive income, net of deferred income tax of $145,897 and $194,130		232,968		381,547
Total shareholder’s equity		7,027,513		6,577,349
Total liabilities and shareholder’s equity	$	12,979,784	$	12,449,864

The accompanying notes are an integral part of the consolidated financial statements.

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MBIA INSURANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands)

	Three months ended September 30						Nine months ended September 30
	2005			2004			2005			2004
				Restated						Restated
Revenues:
Gross premiums written	$	228,962		$	263,969		$	776,984		$	860,735
Ceded premiums		(37,583	)		(45,601	)		(107,354	)		(117,257	)
Net premiums written		191,379			218,368			669,630			743,478
(Increase) decrease in deferred premium revenue		17,710			(2,327	)		(25,896	)		(86,630	)
Premiums earned (net of ceded premiums of $38,245, $35,605, $123,173 and $119,966)		209,089			216,041			643,734			656,848
Net investment income		116,925			109,571			344,215			327,670
Net realized gains (losses)		(7,666	)		(663	)		(7,148	)		62,271
Net gains (losses) on derivative instruments		(2,055	)		1,897			(3,045	)		3,167
Advisory fees		9,439			6,382			20,417			30,403
Other		1,497			32			3,560			52
Total revenues		327,229			333,260			1,001,733			1,080,411
Expenses:
Losses and loss adjustment		20,796			21,336			63,355			63,090
Amortization of deferred acquisition costs		16,121			16,200			49,636			49,495
Operating		35,025			28,424			100,127			91,892
Total expenses		71,942			65,960			213,118			204,477
Income before income taxes		255,287			267,300			788,615			875,934
Provision for income taxes		61,146			72,747			204,013			234,703
Net income	$	194,141		$	194,553		$	584,602		$	641,231

The accompanying notes are an integral part of the consolidated financial statements.

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MBIA INSURANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER’S EQUITY (Unaudited)

For the nine months ended September 30, 2005

(in thousands except per share amounts)

	Common Stock			Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholder’s Equity
	Shares	Amount
Balance, January 1, 2005	100,000	$	15,000	$	1,654,201	$	4,526,601	(1)	$	381,547		$	6,577,349
Comprehensive income:
Net income	—		—		—		584,602			—			584,602
Other comprehensive income (loss):
Change in unrealized appreciation of investments net of change in deferred income taxes of $(50,626)	—		—		—		—			(115,360	)		(115,360	)
Change in foreign currency translation net of change in deferred income taxes of $2,393	—		—		—		—			(33,219	)		(33,219	)
Other comprehensive income (loss)													(148,579	)
Comprehensive income													436,023
Stock-based compensation	—		—		14,141		—			—			14,141
Balance, September 30, 2005	100,000	$	15,000	$	1,668,342	$	5,111,203		$	232,968		$	7,027,513
(1)      Restated; previously reported $4,546,400.

Disclosure of reclassification amount:
Unrealized appreciation of investments arising during the period, net of taxes	$	(102,933	)
Reclassification adjustment, net of taxes		(12,427	)
Net unrealized appreciation, net of taxes	$	(115,360	)

The accompanying notes are an integral part of the consolidated financial statements.

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MBIA INSURANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands)

	Nine months ended September 30
	2005			2004
				Restated
Cash flows from operating activities:
Net income	$	584,602		$	641,231
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease in accrued investment income		4,112			1,877
Increase in deferred acquisition costs		(24,975	)		(28,223	)
Decrease (increase) in prepaid reinsurance premiums		17,675			(28,416	)
(Increase) decrease in deferred premium revenue		(3,122	)		83,922
(Increase) decrease in loss and loss adjustment expense reserves		(37,446	)		32,499
(Increase) decrease in reinsurance recoverable on unpaid losses		(11,067	)		27,504
Depreciation		7,037			8,280
Amortization of bond discount, net		18,207			26,879
Net realized gains (losses) on sale of investments		7,148			(62,271	)
Deferred income tax provision		16,433			41,342
Net (gains) losses on derivative instruments		3,045			(3,167	)
Stock option compensation		12,790			11,365
Other, net		(44,255	)		(56,026	)
Total adjustments to net income		(34,418	)		55,565
Net cash provided by operating activities		550,184			696,796
Cash flows from investing activities:
Purchase of fixed-maturity securities, net of payable for investments purchased		(2,256,490	)		(2,192,308	)
Sale of fixed-maturity securities, net of receivable for investments sold		1,224,993			981,423
Redemption of fixed-maturity securities, net of receivable for investments redeemed		404,234			631,247
Sale of short-term investments, net		(17,266	)		241,351
Other investments, net		29,439			54,228
(Purchase) redemption of held-to-maturity investments		(200,000	)		1,465,209
Capital expenditures		(4,457	)		(4,810	)
Disposals of capital assets		1,361			68
Net cash provided (used) by investing activities		(818,186	)		1,176,408
Cash flows from financing activities:
Net proceeds from issuance of short-term debt		—			1,408
Net proceeds from issuance of variable interest entity floating rate notes		200,000			—
Net repayment from redemption of medium-term notes		—			(1,503,001	)
Other borrowings and deposits		(5,907	)		(23,383	)
Capital issuance costs		(2,184	)		(1,761	)
Dividends paid		—			(290,000	)
Net cash provided (used) by financing activities		191,909			(1,816,737	)
Net (decrease) increase in cash and cash equivalents		(76,093	)		56,467
Cash and cash equivalents - beginning of period		182,347			98,019
Cash and cash equivalents - end of period	$	106,254		$	154,486
Supplemental cash flow disclosures:
Income taxes paid	$	182,242		$	196,463
Interest paid:
Other borrowings and deposits	$	3,039		$	5,446
Medium-term notes		—		$	18,939
Variable interest entity floating rate notes	$	16,218		$	6,039
Non cash items:
Stock compensation	$	12,790		$	11,365

The accompanying notes are an integral part of the consolidated financial statements.

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MBIA INSURANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The accompanying consolidated financial statements are unaudited and include the accounts of MBIA Insurance Corporation and Subsidiaries (MBIA Corp.) and other entities required by accounting principles generally accepted in the United States of America (GAAP). These statements do not include all of the information and disclosures required by GAAP. These statements should be read in conjunction with MBIA Corp.’s consolidated financial statements and notes thereto for the year ended December 31, 2004. The accompanying consolidated financial statements have not been audited by an independent registered public accounting firm in accordance with standards of the Public Company Accounting Oversight Board (United States), but in the opinion of management such financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of MBIA Corp.’s financial position and results of operations. The results of operations for the nine months ended September 30, 2005 may not be indicative of the results that may be expected for the year ending December 31, 2005. The December 31, 2004 balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP.

2. Restatement of Consolidated Financial Statements

On November 8, 2005, MBIA Corp. announced its decision to correct and restate its previously issued financial statements for 1998 and subsequent years in connection with potential settlements of investigations by the Securities and Exchange Commission (SEC) and the New York Attorney General’s Office (NYAG) regarding agreements entered into in 1998.

In 1998, three reinsurers, Converium Reinsurance (North America) Inc. (Converium), AXA Re Finance S.A. (ARF) and Muenchener Rueckversicherungs-Gesellshaft (Munich Re) paid MBIA Corp. $170 million under three separate agreements (the Excess-of-Loss Agreements) in connection with losses MBIA Corp. incurred on $265 million of MBIA-insured bonds issued by the Alleghany Health, Education and Research Foundation (AHERF). The Excess-of-Loss Agreements were structured as three successive excess-of-loss facilities that aggregated to $170 million. Under the Excess-of-Loss Agreements, Converium paid MBIA Corp. $70 million, and Munich Re and ARF each paid MBIA Corp. $50 million.

In connection with the arrangements for the Excess-of-Loss Agreements, MBIA Corp. entered into quota share agreements with Munich Re, ARF and Converium (each a Quota Share Agreement and, collectively, the Quota Share Agreements). Under the Quota Share Agreements, MBIA Corp. agreed to cede to the three reinsurers new business written with an aggregate par sufficient to generate $297 million in gross premiums over a six year period ending October 1, 2004. Of the $297 million in premiums to be ceded under the Quota Share Agreements, MBIA Corp. agreed to cede to Converium cash premiums equal to $102 million, to ARF adjusted gross premiums of $97 million and to Munich Re adjusted gross premiums of $98 million over this period.

On March 8, 2005, MBIA Corp. announced its decision to restate its financial statements for 1998 and subsequent years to correct the accounting for the agreements with Converium and reflected this correction in its consolidated financial statements for the year ended December 31, 2004. At that time, MBIA Corp. believed that the accounting for the Excess of Loss Agreements and Quota Share Agreements with Munich Re and ARF was appropriate under Statement of Financial Accounting Standards (SFAS) 113, “Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts.”

This restatement of MBIA Corp.’s financial statements for the Munich Re and ARF Excess-of-Loss and Quota Share Agreements, made in connection with the potential settlements, corrects and restates its accounting for these agreements because, taking into account developments in the regulatory investigations since March and further accounting analyses, they did not satisfy the risk transfer requirements for reinsurance accounting under SFAS 113. As a result, MBIA Corp. is restating its previously issued financial statements to reflect the Excess-of-Loss and Quota Share Agreements with Munich Re and ARF under deposit accounting in accordance with Statement of Position (SOP) 98-7, “Deposit Accounting: Accounting for Insurance and Reinsurance Contracts That Do Not Transfer Risk” instead of under reinsurance accounting. MBIA Corp. is also correcting and restating its 2004 statutory financial statements for the Munich Re and ARF Excess-of-Loss and Quota Share Agreements because they did not satisfy the requirements for reinsurance accounting under Regulation 108 of the New York State Insurance Department. The restatements do not have a significant effect on MBIA Corp.’s financial position.

The following table presents the effects of the Munich Re and ARF restatement on the consolidated financial statements of MBIA Corp. for the three months ended March 31, 2005 and June 30, 2005. The effect of the Converium restatement was reflected in the previously issued consolidated financial statements of MBIA Corp. for these periods.

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	As of and For the Three Months Ended March 31, 2005						As of and For the Three Months Ended June 30, 2005
In thousands	Previously Reported			Restated			Previously Reported			Restated
Consolidated Statement of Income Data:
Ceded premiums written	$	(38,757	)	$	(35,195	)	$	(36,595	)	$	(34,576	)
Net premiums written		252,357			255,919			220,313			222,332
Increase in deferred premium revenue		(40,692	)		(39,647	)		(6,392	)		(3,959	)
Premiums earned		211,665			216,272			213,921			218,373
Net gains (losses) on derivative instruments		1,522			1,525			(2,398	)		(2,515	)
Total revenues		333,340			337,950			332,219			336,554
Losses and loss adjustment expenses		20,385			20,851			21,265			21,708
Amortization of deferred acquisition costs		16,293			16,657			16,506			16,858
Operating expenses		37,236			38,332			25,777			26,770
Total expenses		73,914			75,840			63,548			65,336
Income before income taxes		259,426			262,110			268,671			271,218
Provision for income taxes		68,351			69,290			72,685			73,576
Net income	$	191,075		$	192,820		$	195,986		$	197,642
Consolidated Balance Sheet Data:
Deferred acquisition costs	$	371,932		$	417,454		$	383,006		$	428,613
Prepaid reinsurance premiums		462,390			427,028			451,113			418,184
Reinsurance recoverable on unpaid losses		33,202			34,091			42,869			41,671
Derivative assets		33,718			33,555			28,534			28,441
Other assets		384,544			383,655			211,872			213,070
Total assets		12,525,830			12,535,827			12,910,256			12,922,841
Loss and loss adjustment expense reserves		755,563			778,064			667,570			690,801
Deferred income taxes, net		465,608			455,886			503,898			495,067
Derivative liabilities		18,550			17,524			15,764			14,925
Other liabilities		159,455			175,753			170,289			185,712
Total liabilities		5,826,121			5,854,172			5,968,910			5,997,894
Retained earnings		4,737,475			4,719,421			4,933,461			4,917,062
Total shareholder’s equity	$	6,699,709		$	6,681,655		$	6,941,346		$	6,924,947

Additionally, the following table presents the effects of the ARF and Munich Re restatement on the consolidated financial statements of MBIA Corp. for the three and nine months ended September 30, 2004.

	As of and For the Three Months Ended September 30, 2004						As of and For the Nine Months Ended September 30, 2004
In thousands	Previously Reported			Restated			Previously Reported			Restated
Consolidated Statement of Income Data:
Ceded premiums written	$	(50,994	)	$	(45,601	)	$	(133,390	)	$	(117,257	)
Net premiums written		212,975			218,368			727,345			743,478
Increase in deferred premium revenue		(3,607	)		(2,327	)		(92,766	)		(86,630	)
Premiums earned		209,368			216,041			634,579			656,848
Net gains (losses) on derivative instruments		1,929			1,897			3,209			3,167
Total revenues		326,619			333,260			1,058,184			1,080,411
Losses and loss adjustment expenses		20,608			21,336			60,682			63,090
Amortization of deferred acquisition costs		15,680			16,200			47,759			49,495
Operating expenses		26,919			28,424			87,114			91,892
Total expenses		63,207			65,960			195,555			204,477
Income before income taxes		263,412			267,300			862,629			875,934
Provision for income taxes		71,386			72,747			228,817			234,703
Net income	$	192,026		$	194,553		$	633,812		$	641,231

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	As of and For the Three Months Ended September 30, 2004				As of and For the Nine Months Ended September 30, 2004
In thousands	Previously Reported		Restated		Previously Reported		Restated
Consolidated Balance Sheet Data:
Deferred acquisition costs	$	345,243	$	401,255	$	345,243	$	401,255
Prepaid reinsurance premiums		489,042		419,187		489,042		419,187
Reinsurance recoverable on unpaid losses		32,492		33,898		32,492		33,898
Derivative assets		41,558		41,065		41,558		41,065
Other assets		233,835		232,429		233,835		232,429
Total assets		12,546,945		12,532,609		12,546,945		12,532,609
Loss and loss adjustment expense reserves		721,841		744,330		721,841		744,330
Deferred income taxes, net		435,270		412,871		435,270		412,871
Derivative liabilities		32,093		30,020		32,093		30,020
Other liabilities		216,966		246,213		216,966		246,213
Total liabilities		5,728,989		5,756,253		5,728,989		5,756,253
Retained earnings		4,798,486		4,756,886		4,798,486		4,756,886
Total shareholder’s equity	$	6,817,956	$	6,776,356	$	6,817,956	$	6,776,356

Information presented in the Notes to Consolidated Financial Statements gives effect to the restatement, as applicable.

3. Dividends Declared

MBIA Corp. did not declare or pay dividends during the nine months ended September 30, 2005. In the first quarter of 2005, MBIA Corp. requested approval for the payment of additional special dividends as its capital position continues to exceed the capital required by New York State Insurance Law. Approval by the New York State Department of Insurance is still pending on this request.

4. Variable Interest Entities

MBIA Corp. provides structured funding and credit enhancement services to global finance clients through the use of certain bankruptcy-remote special purpose vehicles (SPVs) administered by subsidiaries of MBIA Inc. and through third-party SPVs. The purpose of the MBIA-administered SPVs is to provide clients with an efficient source of funding, which may offer MBIA Corp. the opportunity to issue financial guarantee insurance policies. Third-party SPVs are used in a variety of structures insured by MBIA Corp., whereby MBIA Corp. has risks analogous to those of MBIA-administered SPVs. MBIA Corp. has determined that such SPVs fall within the definition of a variable interest entity (VIE) under Financial Accounting Standards Board (FASB) Interpretation No. (FIN) 46(R), “Consolidation of Variable Interest Entities (Revised).”

Under the provisions of FIN 46(R), an entity is considered a VIE subject to consolidation if the equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support or if the equity investors lack one of three characteristics of a controlling financial interest. First, the equity investors lack the ability to make decisions about the entity’s activities through voting rights or similar rights. Second, they do not bear the obligation to absorb the expected losses of the entity if they occur. Lastly, they do not claim the right to receive expected returns of the entity if they occur, which is the compensation for the risk of absorbing the expected losses. A VIE is consolidated with its primary beneficiary, which is defined as the entity that will absorb the majority of the expected losses, receive the majority of the expected residual returns, or both, of the VIE.

In September 2004, MBIA Corp. consolidated two VIEs established in connection with the securitization of Capital Asset tax liens. As a result of a clean-up call exercised for the Capital Asset Research Funding Series 1997A and Series 1998A tax lien securitizations, these securitizations no longer met the conditions of a qualifying special purpose entity under Statement of Financial Accounting Standards 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities.” MBIA Corp. holds a variable interest in these entities, which resulted from its insurance policies, and has determined that it is the primary beneficiary under FIN 46(R). MBIA Corp. has reported the assets of the securitizations, totaling $9 million at September 30, 2005 and $17 million at December 31, 2004, principally within “Other assets” on its consolidated balance sheet. Liabilities of the securitizations substantially represented amounts due to MBIA Corp., which were eliminated in consolidation.

With respect to third-party SPVs, MBIA Corp. must determine whether it has a variable interest and if so, whether that variable interest would cause MBIA Corp. to be the primary beneficiary and, therefore, consolidate such entities. Under FIN 46(R), MBIA Corp.’s guarantee of the assets or liabilities of a VIE constitute a variable interest and require MBIA Corp. to assess whether it is the primary beneficiary. Consolidation of such VIEs does not increase MBIA Corp.’s exposure above that already committed to in its insurance policies. The assets and liabilities of a consolidated third-party VIE are primarily

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reported in “Investments held-to-maturity” and “Variable interest entity floating rate notes,” respectively, on the face of MBIA Corp.’s balance sheet and totaled approximately $801 million and $601 million at September 30, 2005 and December 31, 2004, respectively. The third-party VIE’s creditors do not have recourse to the general assets of MBIA Corp. outside of the financial guarantee provided to the VIE.

5. Recent Litigation

In July 2002, MBIA Corp. filed suit against Royal Indemnity Company (Royal), in the United States District Court for the District of Delaware, to enforce insurance policies that Royal issued on certain vocational student loan transactions that MBIA Corp. insured. To date, claims in the amount of approximately $351 million have been made under the Royal policies with respect to loans that have defaulted. MBIA Corp. expects that there will be additional claims made under the policies with respect to student loans that may default in the future. Royal has filed an action seeking a declaration that it is not obligated to pay on its policies. If Royal does not honor its policies, MBIA Corp. will be required to make payment on the notes it insured, and will incur material losses under its policies. In October 2003, the court granted MBIA Corp.’s motion for summary judgment and ordered Royal to pay all claims under its policies. Royal appealed the order, and pledged $391 million of investment grade collateral to MBIA Corp. to secure the entire amount of the judgment, with interest, and has agreed to post additional security for future claims and interest. The Federal District Court has ordered Royal to comply with the pledge agreement. On October 3, 2005, the Court of Appeals for the Third Circuit upheld the decision of the United States District Court for the District of Delaware enforcing the Royal insurance policies and remanded the case to the District Court for a determination of whether the Royal policies cover all losses claimed under the policies. In particular, the Court of Appeals directed the District Court to consider whether the Royal policies cover losses resulting from the misappropriation rather than from defaults by students. MBIA Corp. believes that the Royal policies cover losses even if they result from misappropriations of student payments, but in any event it appears that all or substantially all of the claims made under the Royal policies relate to defaults by students rather than misappropriation of funds. Therefore, MBIA Corp. expects Royal to be required to pay all or substantially all of the claims made under its policies and to be reimbursed for any payments MBIA Corp. made under its policies. Royal has appealed the Third Circuit’s ruling and requested that the case be reheard en banc.

MBIA Corp. believes that it will prevail in the litigation with Royal and will have no ultimate loss on these policies, although there can be no assurance that MBIA Corp. will in fact prevail. If MBIA Corp. does not prevail in the litigation and Royal does not make payments on the Royal Policies, MBIA Corp. expects to incur material losses under its policies. MBIA Corp. does not believe, however, that any such losses will have a material adverse effect on its financial condition.

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6. Loss and Loss Adjustment Expense (LAE) Reserves (Restated)

Loss and LAE reserves are established in an amount equal to MBIA Corp.’s estimate of unallocated losses, identified or case basis reserves and costs of settlement and other loss mitigation expenses on obligations it has insured. A summary of the unallocated and case basis activity and the components of the liability for loss and LAE reserves for the first three quarters of 2005 are shown in the following table:

In thousands	3Q 2005			Restated 2Q 2005			Restated 1Q 2005
Case basis loss and LAE reserves:
Beginning balance	$	372,338		$	463,161		$	434,924
Less: reinsurance recoverable		41,671			34,091			34,610
Net beginning balance		330,667			429,070			400,314
Case basis transfers from unallocated loss reserve related to:
Current year		21,689			23			—
Prior years		30,145			17,839			19,721
Total		51,834			17,862			19,721
Paid (recovered) related to:
Current year		390			(1	)		(4,231	)
Prior years		3,509			116,266			(4,804	)
Total paid (recovered)		3,899			116,265			(9,035	)
Net ending balance		378,602			330,667			429,070
Plus: reinsurance recoverable		45,677			41,671			34,091
Case basis loss and LAE reserve ending balance		424,279			372,338			463,161
Unallocated loss reserve:
Beginning balance		318,463			314,903			313,945
Losses and LAE incurred(1)		20,796			21,708			20,851
Channel Re elimination(2)		(281	)		(286	)		(172	)
Transfers to case basis and LAE reserves		(51,834	)		(17,862	)		(19,721	)
Unallocated loss reserve ending balance		287,144			318,463			314,903
Total	$	711,423		$	690,801		$	778,064

⁽¹⁾ Represents MBIA Corp.’s provision for losses calculated as 12% of scheduled net earned premium.

⁽²⁾ Represents the amount of losses and LAE incurred that have been eliminated in proportion to MBIA Corp.’s ownership interest in Channel Reinsurance Ltd., which is carried on an equity method accounting basis.

Case basis activity transferred from MBIA Corp.’s unallocated loss reserve was approximately $89 million in the first nine months of 2005 and primarily consisted of loss reserves related to insured obligations within the collateralized debt obligation, manufactured housing and mortgage-backed sectors and within MBIA Corp.’s guaranteed tax lien portfolios. Total paid and recovery activity of $111 million for the first nine months of 2005 primarily consisted of payments related to Fort Worth Osteopathic Hospital and estimated recoveries for AHERF reclassified from “Other assets,” both of which reduced the respective case basis loss reserve. Unallocated loss reserves approximated $287 million at September 30, 2005, which represent MBIA Corp.’s estimate of losses associated with credit deterioration that has occurred in its insured portfolio and are available for future case-specific activity. MBIA Corp. incurred $63 million of loss and loss adjustment expenses in the first nine months of 2005 based on 12% of scheduled net earned premium. See “Note 3: Significant Accounting Policies” in the Notes to Consolidated Financial Statements included in MBIA Corp.’s audited financial statements for the year ended December 31, 2004 for a description of the Company’s loss reserving policy.

        MBIA Corp. has significant exposures in its insured portfolio relating to regions impacted by hurricanes Katrina, Rita and Wilma. Insured credits in these regions encompass various types of sectors, including general obligation bonds, tax-backed, healthcare, transportation and higher education, among others. MBIA Corp. is continuing its communication efforts with issuers, trustees and relevant state officials to evaluate the actual and potential impact that the hurricanes may have on its insured credits. Based on available information, MBIA Corp. does not currently expect there to be material cases of prolonged nonpayment that would result in unreimbursed losses. As a result, during the third quarter of 2005, MBIA Corp. did not establish specific reserves for its exposure to the regions impacted by these hurricanes. To date, MBIA Corp. has paid $2 million in claim payments, for which it has been fully reimbursed.

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