1273813--3/2/2006--ASSURED_GUARANTY

related topics

{tax, income, asset}

{provision, law, control}

{loss, insurance, financial}

{debt, indebtedness, cash}

{acquisition, growth, future}

{regulation, change, law}

{condition, economic, financial}

{financial, litigation, operation}

{capital, credit, financial}

{personnel, key, retain}

{competitive, industry, competition}

Risks Related to Our Company A downgrade of the financial strength or financial enhancement ratings of any of our insurance subsidiaries could adversely affect our business and prospects and, consequently, our results of operations and financial condition. Our success depends on our ability to successfully execute our business strategy. We are dependent on a small number of ceding companies to provide us with a substantial part of our reinsurance business. General economic factors, including fluctuations in interest rates and housing prices, may adversely affect our loss experience and the demand for our products. If claims exceed our loss reserves, our financial results could be significantly adversely affected. Adverse selection by ceding companies may adversely affect our financial results. Our financial guaranty products may subject us to significant risks from individual or correlated credits. Some of our direct financial guaranty products may be riskier than traditional financial guaranty insurance. Competition in our industry may adversely affect our revenues. We are dependent on key executives and the loss of any of these executives, or our inability to retain other key personnel, could adversely affect our business. Our business could be adversely affected by Bermuda employment restrictions. We may be adversely affected by interest rate changes affecting the performance of our investment portfolio. The performance of our invested assets affects our results of operations and cash flows. Our net income may be volatile because a portion of the credit risk we assume is in the form of credit derivatives that are accounted for under FAS 133, which requires that these instruments be marked-to-market quarterly. An increase in our subsidiaries risk-to-capital ratio or leverage ratio may prevent them from writing new insurance. We may require additional capital in the future, which may not be available or may be available only on unfavorable terms. Adequate soft capital support may not be available. We may require additional liquidity in the future, which may not be available or may be available only on unfavorable terms. Changes in tax laws could reduce the demand or profitability of financial guaranty insurance, or negatively impact our investment portfolio. Legislative and regulatory changes and interpretations could harm our business. Our ability to meet our obligations may be constrained by our holding company structure. Our ability to pay dividends may be constrained by certain regulatory requirements and restrictions. There are provisions in our Bye-Laws that may reduce or increase the voting rights of our common shares. There are provisions in our Bye-Laws that may restrict the ability to transfer common shares, and that may require shareholders to sell their common shares. Applicable insurance laws may make it difficult to effect a change of control of the Company. Some reinsurance agreement terms may make it difficult to effect a change of control of the Company Anti-takeover provisions in our Bye-Laws could impede an attempt to replace or remove our directors, which could diminish the value of our common shares. Our non-U.S. companies other than AGRO may be subject to U.S. tax. We may become subject to taxes in Bermuda after 2016, which may have a material adverse effect on our results of operations and on your investment. U.S. Persons who hold common shares will be subject to adverse tax consequences if we or any of our Subsidiaries are considered to be a Personal Holding Company ( PHC ). U.S. Persons who acquire 10% or more of our common shares may be subject to taxation under the controlled foreign corporation ( CFC ) rules. U.S. Persons who hold common shares may be subject to U.S. income taxation at ordinary income rates on their proportionate share of our related person insurance income ( RPII ). U.S. Persons who dispose of our common shares may be subject to U.S. income taxation at ordinary income tax rates in a portion of their gain, if any. U.S. Persons who hold common shares will be subject to adverse tax consequences if we are considered to be a Passive Foreign Investment Company ( PFIC ) for U.S. federal income tax purposes. Changes in U.S. federal income tax law could materially adversely affect an investment in our common shares. The impact of Bermuda s letter of commitment to the Organization for Economic Cooperation and Development to eliminate harmful tax practices is uncertain and could adversely affect our tax status in Bermuda.

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1273813--3/2/2006--ASSURED_GUARANTY_LTD