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, 2006
	OR
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
incorporation or organization)	Identification No.)

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 11, 2006, there were 33,262,727 outstanding shares of Common Stock of the registrant (excludes 255,268 shares of treasury stock).

INDEX

		Page
PART I FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Financial Statements
	Financial Security Assurance Holdings Ltd. and Subsidiaries
	Condensed Consolidated Balance Sheets (unaudited)	1
	Condensed Consolidated Statements of Operations and Comprehensive Income (unaudited)	2
	Condensed Consolidated Statement of Changes in Shareholders’ Equity (unaudited)	3
	Condensed Consolidated Statements of Cash Flows (unaudited)	4
	Notes to Condensed Consolidated Financial Statements (unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29
PART II OTHER INFORMATION
Item 4.	Submission of Matters to a Vote of Security Holders	31
Item 6.	Exhibits	32
SIGNATURES		33

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

FINANCIAL SECURITY ASSURANCE HOLDINGS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)

(in thousands, except share data)

	June 30,			December 31,
	2006			2005
ASSETS
Bonds at fair value (amortized cost of $4,423,806 and $4,219,344)	$	4,504,095			$	4,382,037
Equity securities at fair value (cost of $54,462 and $54,370)	54,462				54,370
Short-term investments	49,144				182,645
Variable interest entities’ bonds at fair value (amortized cost of $1,149,432 and $1,155,832)	1,149,830				1,155,992
Variable interest entities’ short-term investment portfolio	4,184				2,674
Financial products bond portfolio at fair value (amortized cost of $13,424,434 and $11,754,330)	13,412,887				11,827,824
Financial products short-term investment portfolio	608,850				1,015,509
Total investment portfolio	19,783,452				18,621,051
Assets acquired in refinancing transactions:
Bonds at fair value (amortized cost of $48,445 and $65,865)	49,997				68,421
Securitized loans	273,877				296,965
Other	59,692				102,487
Total assets acquired in refinancing transactions	383,566				467,873
Total investments	20,167,018				19,088,924
Cash	62,809				20,117
Deferred acquisition costs	340,894				335,129
Prepaid reinsurance premiums	918,812				865,192
Reinsurance recoverable on unpaid losses	35,241				36,339
Other assets	1,486,547				1,655,941
TOTAL ASSETS	$	23,011,321			$	22,001,642
LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS’ EQUITY
Deferred premium revenue	$	2,475,451			$	2,375,059
Losses and loss adjustment expense	214,094				205,718
Guaranteed investment contracts and variable interest entities’ debt	15,815,644				14,947,118
Deferred federal income taxes	237,369				231,265
Notes payable	430,000				430,000
Minority interest in variable interest entities	—				180,406
Accrued expenses and other liabilities	948,779				809,174
TOTAL LIABILITIES AND MINORITY INTEREST	20,121,337				19,178,740
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	905,190				905,190
Accumulated other comprehensive income (net of deferred income taxes of $26,012 and $84,123)	48,411				156,229
Accumulated earnings	1,936,048				1,761,148
Deferred equity compensation	20,272				20,177
Less treasury stock at cost (255,268 and 254,736 shares held)	(20,272		)		(20,177		)
TOTAL SHAREHOLDERS’ EQUITY	2,889,984				2,822,902
TOTAL LIABILITIES AND MINORITY INTEREST AND SHAREHOLDERS’ EQUITY