1170593--3/16/2009--PRIMUS_GUARANTY

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{interest, director, officer}

{loan, real, estate}

{competitive, industry, competition}

{stock, price, share}

{loss, insurance, financial}

{regulation, change, law}

{tax, income, asset}

{system, service, information}

{debt, indebtedness, cash}

{operation, international, foreign}

{provision, law, control}

{personnel, key, retain}

We face risks in Primus Financial s credit protection business from its credit swaps sold on issuers in industries under severe stress, such as financial intermediaries, insurance companies, building/development, retailers, publishers and as well as brokers/dealers/investment houses. The failure to manage effectively the risk of credit losses would have a material adverse effect on our financial condition and results of operations. Primus Financial s counterparties are primarily global financial institutions and major credit swap dealers. Some of these institutions have been under significant stress which has impacted their balance sheets, capital ratios and ratings. A default by a major counterparty could have a material impact on Primus Financial and consequently on us. We are at risk to further deterioration in the credit markets and additional credit events in Primus Financial s tranche portfolio as well as its single name credit swap portfolio. As a result of the disruption in the credit markets and our inability to grow Primus Financial s credit swap portfolio, management has decided to change its strategy and there can be no assurance that our new business plans will be effective or profitable. We may have difficulty in servicing our outstanding debt and may require additional capital in the future, which may not be available on favorable terms or at all. We depend on a limited number of key employees. If we are not able to retain key employees or attract new employees in the future, we may be unable to successfully implement our strategic plan or operate our business. Variations in market credit swap premiums and correlation levels could cause our financial results to be volatile. Certain of our principal shareholders control us and the barriers to a change in control are very low. The commercial and investment activities of some of our principal shareholders and directors may compete with our business. There can be no assurance that funds will be available to pay cash dividends on our common shares. Our operations may become subject to increased regulation under U.S. federal and state law or existing regulations may change, which may result in administrative burdens, increased costs or other adverse consequences for us. Our common shares may be de-listed from the NYSE. We are exposed to significant credit market risk related to changes in foreign exchange rates which may adversely affect our results of operations, financial condition or cash flows. We are highly dependent on information systems and third-party service providers. Our status as a PFIC may result in significant additional tax costs for shareholders who are U.S. taxpayers. If we are found to be engaged in a U.S. trade or business, we may be liable for significant U.S. taxes. If the IRS successfully challenges the treatment Primus Financial has adopted for its credit swap transactions, the timing and character of taxable income recognized by Primus Financial could be adversely affected. Risks Related to Our Status as a Bermuda Company It may be difficult to effect service of process and enforcement of judgments against us and our officers and directors U.S. persons who own our common shares may have more difficulty in protecting their interests than U.S. persons who are shareholders of a U.S. corporation.

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1170593--3/16/2009--PRIMUS_GUARANTY_LTD