1352713--3/9/2007--RAM_Holdings

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Risks Related to Our Company An adverse rating action concerning RAM Re s ratings could have a material adverse effect on our ability to compete in the financial guaranty reinsurance industry and would significantly decrease the value of the reinsurance we provide. We depend on a small number of primary insurers to provide us with a substantial portion of our business. Our concentration on a single line of reinsurance business could make us more susceptible to unfavorable market or regulatory conditions affecting that line of business. If we are unable to renew our existing treaties with our customers, our business and financial condition could be adversely affected. The size of our capital base may not allow us to compete effectively in our industry and may adversely affect our ability to grow our business and execute our business strategy. Competition in our industry may adversely affect our revenues. If we cannot obtain necessary capital on favorable terms or at all, our business, operating results and financial condition could be adversely affected. We could be adversely affected by the loss of one or more principal employees or by an inability to retain and attract staff. Our ability to conduct our business may be adversely affected by Bermuda employment restrictions. We rely to a significant degree on the underwriting decisions of the primary insurers and the risks associated with reinsurance underwriting could adversely affect us. Adverse selection by ceding primary insurers may adversely affect our financial condition and results of operations. We may incur liabilities because of the unconditional nature of our financial guaranty reinsurance policies. The performance of our investment portfolio may be adversely affected by economic conditions and by decisions of our investment manager. 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 Statement of Financial Accounting Standards No. 133, or FAS 133, which requires that these instruments be revalued quarterly. We could face unanticipated losses from war, terrorism, business failures, political unrest and natural disasters, and these or other unanticipated losses could have a material adverse effect on our financial condition and results of operations. Our holding company structure and certain regulatory and other constraints affect our ability to pay dividends and make other payments. Estimates of losses, income and expenses relating to underwriting financial guaranty products are based on modeling and assumptions that, if incorrect, could have a material adverse affect on our financial condition and results of operations. If claims exceed our loss reserves, our financial results could be significantly adversely affected. Several of our founding shareholders may have conflicts of interest with us and they may take actions with respect to their ownership interests that have an adverse effect on us or on our other shareholders. Risks Related to Our Industry The primary financial guaranty insurance industry remains in an excess capital position which, if it continues, could result in lower amounts of insurance ceded. Increased capacity in the financial guaranty reinsurance industry may have a material adverse effect on the industry. Market demand for financial guaranty products may decrease, affecting the profitability and competitiveness of the reinsurance industry. Premium rates for financial guaranty reinsurance products may decline due to factors beyond the control of financial guaranty reinsurers. Changes to accounting rules relating to the financial guaranty insurance and reinsurance industry could have a material adverse effect on the industry. Legislative and regulatory changes and interpretations could harm the financial guaranty reinsurance industry. Risks Related to our Common Shares There are provisions in our bye-laws that may reduce or increase the voting rights of our common shares. Our board of directors may be more likely to exercise their right under our bye-laws to decline to approve a transfer of common shares because of potential adverse tax, legal or regulatory consequences, and that may require shareholders to sell their common shares. Our board of directors may be more likely to exercise their right under our bye-laws to decline to approve a repurchase of our own shares and an issuance of any of our unissued shares because of potential adverse tax, legal or regulatory consequences. Risks Related to Our Status as a Bermuda Company Risks of operating as a foreign corporation could adversely affect our ability to conduct business in the United States Bermuda insurance regulations may adversely affect our ability to write reinsurance policies. Our ability to pay dividends may be limited by Bermuda law. U.S. Persons who own our common shares may have more difficulty in protecting their interests than if they held shares of a U.S. corporation. Because we are a Bermuda company, it may be difficult to enforce judgments against us or against our directors and executive officers. We may become subject to taxes in Bermuda after 2016, which may have a material adverse effect on our financial condition and operating results and on an investment in our shares. The impact of Bermuda s letter of commitment to the Organization for Economic Cooperation and Development, or the OECD, to eliminate harmful tax practices is uncertain and could adversely affect our tax status in Bermuda. We may be subject to U.S. federal income tax, which would have an adverse effect on our financial condition and results of operations and on an investment in our shares. Holders of 10% or more of our shares may be subject to U.S. income taxation under the controlled foreign corporation rules. U.S. Persons who hold our shares may be subject to U.S. federal income taxation at ordinary income rates on their proportionate share of RAM Re s related person insurance income. U.S. Persons who dispose of our shares may be subject to U.S. federal income taxation at the rates applicable to dividends on a portion of their gains if any. U.S. Persons who hold our shares will be subject to adverse U.S. federal income tax consequences if RAM Holdings is considered to be a passive foreign investment company. U.S. tax-exempt organizations that own our common shares may recognize unrelated business taxable income. Changes in U.S. federal income tax law could materially adversely affect an investment in our common shares.

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1352713--3/9/2007--RAM_Holdings_Ltd.