S&P REAFFIRMS RADIAN ASSET

Two bond insurers were heading in different directions this week.

Standard & Poor’s affirmed Radian Asset Assurance’s “AA” rating and Stable outlook, reflecting Radian’s continued capital strength and lack of mortgage related troubles plaguing other bond insurers.

Radian Asset has minimal exposure to the mortgage sector. Its rating was maintained, although the insurer’s parent, Radian Group, Inc., and mortgage-dependent subsidiaries were lowered one notch and placed on CreditWatch with Negative implications.

Radian Group has repeatedly assured S&P that it will continue to insulate Radian Asset’s financial position from the mortgage-related problems affecting the rest of the company, and will take whatever possible steps necessary to ensure the continued viability of Radian Asset.

FGIC downgraded

While Radian Asset enjoys rating stability, FGIC saw its financial strength rating downgraded to “A3” from “Aaa” by Moody’s. The rating decline reflected Moody’s assessment that FGIC’s exposure to the U.S. mortgage market has significantly weakened the company’s capitalization and business profile. FGIC’s rating remains on review for possible downgrade to “Baa,” reflecting uncertainty about the firm’s future and capital position.

Moody’s also commented that both Ambac and MBIA, still under review at the “Aaa” level, are better positioned from a capital and business point of view than were FGIC and XLCA (lowered to “A3” Feb. 7, 2008).

2/14/08