SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2007

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-12644

Financial Security Assurance Holdings Ltd.

(Exact name of registrant as specified in its charter)

New York		13-3261323
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)


31 West 52nd Street
New York, New York 10019
(Address of principal executive offices)

(212) 826-0100
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

At August 13, 2007, there were 33,276,017 outstanding shares of Common Stock of the registrant (excludes 241,978 shares of treasury stock).

INDEX

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements
	Consolidated Financial Statements (unaudited)
	Financial Security Assurance Holdings Ltd. and Subsidiaries
	Consolidated Balance Sheets (unaudited)	1
	Consolidated Statements of Operations and Comprehensive Income (unaudited)	2
	Consolidated Statement of Changes in Shareholders’ Equity (unaudited)	3
	Consolidated Statements of Cash Flows (unaudited)	4
	Notes to Consolidated Financial Statements (unaudited)	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37

Item 4T.	Controls and Procedures	37

PART II. OTHER INFORMATION

Item 4.	Submission of Matters to a Vote of Security Holders	38

Item 6.	Exhibits	38

SIGNATURES		39

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

FINANCIAL SECURITY ASSURANCE HOLDINGS LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands, except share data)

	June 30, 2007			December 31, 2006
ASSETS
General investment portfolio:
Bonds at fair value (amortized cost of $4,579,549 and $4,546,147)	$	4,662,708		$	4,721,512
Equity securities at fair value (cost of $39,316 and $54,291)	39,380			54,325
Short-term investments (cost of $126,913 and $96,055)	128,253			96,578
Financial products segment investment portfolio:
Bonds at fair value (amortized cost of $18,013,847 and $16,692,183)	17,980,660			16,757,979
Short-term investments	850,585			659,704
Trading portfolio at fair value	342,149			119,424
Assets acquired in refinancing transactions:
Bonds at fair value (amortized cost of $26,483 and $40,133)	28,012			41,051
Securitized loans	201,577			241,785
Other	50,346			55,036
Total investment portfolio	24,283,670			22,747,394
Cash	48,995			32,471
Deferred acquisition costs	346,618			340,673
Prepaid reinsurance premiums	1,027,984			1,004,987
Reinsurance recoverable on unpaid losses	39,834			37,342
Other assets	1,243,591			1,610,759
TOTAL ASSETS	$	26,990,692		$	25,773,626
LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS’ EQUITY
Deferred premium revenue	$	2,683,201		$	2,653,321
Loss and loss adjustment expense reserve	238,975			228,122
Financial products segment debt	19,384,688			18,349,665
Deferred federal income taxes	225,832			298,542
Notes payable	730,000			730,000
Other liabilities and minority interest	1,041,969			791,664
TOTAL LIABILITIES AND MINORITY INTEREST	24,304,665			23,051,314
COMMITMENTS AND CONTINGENCIES
Common stock (200,000,000 shares authorized; 33,517,995 issued; par value of $.01 per share)	335			335
Additional paid-in capital—common	906,687			906,687
Accumulated other comprehensive income (net of deferred income taxes of $19,723 and $86,119)	36,732			160,038
Accumulated earnings	1,742,273			1,655,252
Deferred equity compensation	19,225			19,225
Less treasury stock at cost (241,978 shares held)	(19,225		)	(19,225		)
TOTAL SHAREHOLDERS’ EQUITY	2,686,027			2,722,312
TOTAL LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS’ EQUITY	$	26,990,692		$	25,773,626

The accompanying Notes are an integral part of the Consolidated Financial Statements (unaudited).

FINANCIAL SECURITY ASSURANCE HOLDINGS LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (unaudited)
(in thousands)

	Three Months Ended June 30,				Six Months Ended June 30,
	2007		2006		2007		2006
REVENUES
Net premiums written	$	111,715	$	150,996	$	211,915	$	239,728
Net premiums earned	$	106,021	$	98,461	$	205,033	$	192,957