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Investor InformationAnalyst Communications/PresentationsStatement

Statement Regarding Advisory Fees, Reserve Methodology, Credit Default Protection and Investments in Reinsurance Affiliates

April 1, 2005

In response to inquiries arising from recent government requests for information from another monoline guarantor, Financial Security Assurance Inc. (FSA) and its holding company, Financial Security Assurance Holdings Ltd. (the Company) are providing the following information:

• The Company has not received similar requests for information from governmental authorities.
• FSA has not charged advisory fees in connection with transactions it insures, and it does not reclassify any portion of its premiums as advisory or structuring fees.
• As discussed in the Notes to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K filed on March 31, 2005, the loss recognition and reserving methodologies of monoline guarantors differ from company to company. The Securities and Exchange Commission (SEC) staff has discussed these differences with financial guaranty industry participants. The Company understands that the Financial Accounting Standards Board (FASB) staff is considering whether additional guidance regarding financial guaranty insurance should be provided. When and if the FASB or SEC reach a conclusion on this issue, FSA and the rest of the financial guaranty industry may be required to change some aspects of their loss reserving policies. The Company cannot predict how the FASB or SEC will resolve this issue and the resulting impact on its financial statements. Until additional guidance is issued, FSA intends to continue applying its existing policy regarding the establishment of both non-specific and case reserves.
• The Company has not purchased credit default protection on itself or its subsidiaries.
• As disclosed in its most recent and previous 10-K filings, FSA has investments in two reinsurance affiliates that it does not wholly own. The affiliates were organized in connection with the establishment of a joint venture between the Company and XL Capital Ltd.

FSA has majority control of Financial Security Assurance International Ltd. (FSA International), which it consolidates on its financial statements. FSA International is a Bermuda-domiciled insurance company subject to applicable requirements of Bermuda law. XL Capital Ltd. holds preferred shares of FSA International representing 20% of the capitalization of FSA International.

FSA has an investment in preferred shares of XL Financial Assurance Ltd (XLFA), a financial guaranty insurance subsidiary of XL Capital Ltd., which has majority control. FSA's interest in XLFA represents 13% of the capitalization of XLFA.