"We are pleased that Assured Guaranty Corp. and FSA remain in the double-A rating category, a designation indicative of significant financial strength. We believe the one-notch rating downgrades primarily incorporate Fitch's stress loss estimates based on an extremely pessimistic view of the future performance of residential mortgage exposures and point out that Fitch noted our ability to mitigate potential future losses and improve rating agency capital.

"Importantly, the removal of our ratings from Rating Watch Negative to the longer-term designation Negative Outlook provides time for more clarity on the direction of the economy and future performance of the residential mortgage portfolio versus pure estimates. Additionally, the capital bases of Assured Guaranty Corp. and FSA will further benefit from the run-off of the existing residential mortgage and asset-backed portfolios; loss mitigation initiatives, including recoveries through representation and warranty claims; the use of external reinsurance; and the emergence of capital through earnings.

"Despite the ratings uncertainty over the past few months, demand for our guaranty products has remained strong in the municipal market. Through the third quarter of 2009, Assured Guaranty Corp., which provides guarantees for both municipal and structured financings, and FSA, which exclusively serves the municipal market, guaranteed $29.6 billion of new issue municipal bonds, which represents 10.3% of total municipal issuance. Newpremium revenue also adds to our claims-paying resources and will further enhance our capital adequacy model results.

"Finally, as a financial institution providing credit protection for more than $663 billion of exposure, of which $424 billion are U.S. municipal bonds, we play an important role in the capital markets, which would benefit significantly from uniform financial guaranty regulation. Currently, we are subject to the sometimes conflicting and not readily transparent requirements of three disparate rating entities.