Assured Guaranty Ltd. Issues Statement In Response to Announcement of Ratings Review...

Assured Guaranty Ltd. Issues Statement In Response to Announcement of Ratings Review for Possible Downgrade by Moody's Investors Service

Announces Second Quarter 2008 Net Income Estimate of $5.63 to
$6.18 per Diluted Share; Operating Income Estimated at $0.42 per
Diluted Share
HAMILTON, Bermuda--(Business Wire)--
Assured Guaranty Ltd. (NYSE: AGO) ("Assured" or "the Company")
today issued a statement in response to the announcement by Moody's
Investors Service ("Moody's") that Moody's has placed under review for
possible downgrade the Aaa insurance financial strength ratings of
Assured Guaranty Corp., the Company's principal direct financial
guaranty insurance subsidiary, and Assured Guaranty (UK) Ltd., its
U.K. subsidiary, as well as the Aa2 insurance financial strength
ratings of Assured Guaranty Re Ltd. ("AG Re"), the Company's
Bermuda-based financial guaranty reinsurance subsidiary. Moody's
review also includes the Aa3 senior unsecured rating of Assured
Guaranty US Holdings Inc. and the Aa3 issuer rating of Assured
Guaranty Ltd.

The Company has scheduled a conference call to discuss this
announcement for 8:30 a.m. Eastern Time (9:30 a.m. Atlantic Time) on
Tuesday, July 22, 2008. The conference will be available by dialing
866-825-3209 (in the U.S.) or 617-213-8061 (International), passcode
80019821. A replay will be available until July 29, 2008. To listen to
the replay dial: 888-286-8010 (in the U.S.) or 617-801-6888
(International), passcode 68658510.

Statement by Dominic Frederico, President and Chief Executive
Officer of Assured Guaranty Ltd.:

"We are concerned by Moody's announcement at a time when Assured
is experiencing broad market acceptance and investor demand for our
insured paper," stated Dominic Frederico, President and Chief
Executive Officer of Assured Guaranty Ltd. "We believe it is important
for investors to know that Moody's action is not at all reflective of
a deterioration in Assured's capital base, credit exposures or
earnings outlook. I would draw your attention to the following
comments Moody's made today in their press release," continued Mr.
Frederico. "First, their revised assessment of stress-case loss
estimates on our residential mortgage-backed securities portfolio did
not change meaningfully from their prior estimates. Second, Assured
Guaranty Corp. and AG Re continue to exceed Moody's current capital
requirements for their current ratings of Aaa and Aa2, respectively.
In addition, in relation to the $40 billion of our pooled corporate
exposures Moody's referenced, I would note that 95% of the portfolio
is rated by Moody's and 84% is currently rated Aaa by them."

"We are hopeful that investors will focus on the fundamental
credit strength of our Company," commented Mr. Frederico. "It is our
view, however, that Moody's decision to reevaluate industry ratings
during a time of unusually high market volatility and lack of
liquidity in many credit markets could have been accomplished in a
different manner without affecting municipal and other policyholders.
Reflective of our current market position, we are also in negotiations
to assume via reinsurance large portfolios of principally municipal
risk into AG Re. We believe the cedents and their policyholders, as
well as Assured, should materially benefit from these transactions. In
light of the announcement by Moody's, we do not know when or if these
reinsurance opportunities will be realized," concluded Mr. Frederico.
"We are confident in Assured's financial strength and are committed to
maintaining our ratings and will work closely with Moody's in their
current review."

Assured also announced today that it expects to report net income
for the quarter ended June 30, 2008 in the range of $515 million to
$565 million, or $5.63 to $6.18 per diluted share, largely due to
after tax unrealized gains on credit derivatives, which are expected
to be in the range of $475 million to $525 million. Operating income,
a non-GAAP financial measure, is estimated at $38.7 million, or $0.42
per diluted share. Net income, operating income and the Company's
estimate of loss expenses could change based on new information the
Company receives from reinsurance clients or if the Company's
management revises loss estimates on specific credits prior to the
filing of the Company's second quarter 2008 financial Quarterly Report
on Form 10-Q, which is expected to be filed by August 11, 2008.

The Company's after tax unrealized gains on credit derivatives in
the quarter reflects an increase in the fair value of financial
guaranty contracts written in credit default swap ("CDS") form by the
Company's financial guaranty direct and reinsurance segments. The
Company's credit derivatives are generally held to maturity and
management expects that the unrealized gain or loss on a credit
derivative will reduce to zero as the exposure approaches its maturity
date, unless there is a payment default on the exposure. The Company
determines the fair value of its financial guaranty contracts written
in CDS form based on a combination of observable market data and
valuation models, using various market indices, credit spreads and
estimated contractual payments. The fair value of its financial
guaranty contracts written in CDS form also reflects the change in the
Company's own credit cost based on the price to purchase credit
protection on Assured Guaranty Corp., the Company's financial guaranty
direct subsidiary. Assured's current estimate of after tax unrealized
gains on derivatives of $475 million to $525 million includes a gain
of approximately $675 million after tax (approximately $958 million
before tax) associated with the change in Assured Guaranty Corp.'s CDS
spread, which widened substantially during June. See explanation of
"Non-GAAP Financial Measures" section of this press release for
definition of non-GAAP financial measures referenced in this press
release.

Assured's shareholders' equity at June 30, 2008 was $2,242.4
million, a 35% increase from December 31, 2007 shareholders' equity of
$1,666.6 million. The increase was largely due to the unrealized gains
on financial guaranty contracts that were written in CDS form that
were recorded in second quarter of 2008. Assured's book value per
share was $24.66 at June 30, 2008 compared to $20.85 at December 31,
2007. Book value per share excluding unrealized losses on credit
derivatives and fair value gain on Assured Guaranty Corp.'s committed
capital securities was $25.95 at June 30, 2008, compared to $26.43 at
December 31, 2007.

The Company also announced today that its second quarter 2008
consolidated new business production as measured by the present value
of insurance and credit derivative gross written premiums ("PVP"), a
non-GAAP financial measure, was approximately $279 million, and was
comprised of PVP of approximately $241 million in the financial
guaranty direct segment and approximately $38 million in the financial
guaranty reinsurance segment. Second quarter 2008 PVP in the U.S.
public finance market was approximately $183 million in the financial
guaranty direct segment and approximately $26 million in the financial
guaranty reinsurance segment, for total U.S. public finance PVP of
$209 million.

Assured expects second quarter 2008 net income and operating
income to include approximately $38.1 million of loss and loss
adjustment expenses on financial guaranty contracts and $5.6 million
of incurred losses on CDS contracts, for total second quarter 2008
loss and loss adjustment expenses and incurred losses of $43.7 million
before tax ($34.5 million after tax or $0.38 per diluted share), based
on the Company's most recent credit evaluations and information
received from reinsurance clients. Of the $43.7 million of incurred
losses before tax, approximately $39.7 million ($30.6 million after
tax or $0.33 per diluted share) is associated with the Company's U.S.
residential mortgage backed securities ("RMBS") exposures, principally
related to Assured's exposure to closed end second mortgage
transactions, and does not include any additional loss and loss
adjustment expense for CWHEQ Revolving Home Equity Loan Trust 2007-D
and Countrywide Home Equity Loan Trust 2005-J, two U.S. prime home
equity line of credit ("HELOC") transactions underwritten by the
Company's financial guaranty direct segment.

The Company also released today a Preliminary Second Quarter 2008
Financial Supplement that contains information on Assured's financial
guaranty portfolio, including summary information on ratings, vintage,
cumulative losses, subordination, credit enhancement levels and
delinquencies on the Company's U.S. RMBS portfolio. It also contains
information on Assured's Closely Monitored Credits list ("CMC list"),
pooled corporate obligations, and the Company's largest U.S. public
finance, U.S. structured finance and international exposures. A copy
of this document is available in the Investor Information section of
the Company's website located at http://www.assuredguaranty.com.

The Company's consolidated net par outstanding was $230.4 billion
as of June 30, 2008, of which 98.2% was rated investment grade by the
Company's internal rating scale, which is comparable to that of the
nationally recognized rating agencies, with an average rating of AA-.
Approximately $4.1 billion, or 1.8%, of the Company's net par
outstanding, is on the Company's CMC list, a modest increase of $77
million since March 31, 2008. Assured's CMC list is comprised of
non-investment grade and investment grade exposures whose credit
quality is deteriorating and where, in the view of the Company's
management, there is a significant potential that the risk quality of
the exposure will fall below investment grade. The majority of the
exposures on the Company's CMC list are associated with U.S. RMBS
securities and, in particular, HELOC transactions.

Assured's U.S. RMBS net par outstanding was $19.8 billion as of
June 30, 2008, or approximately 8.6% of total net par outstanding,
88.8% of that exposure was rated investment grade according to the
Company's internal rating scale. Approximately $2.2 billion of this
exposure is non-investment grade and is on the Company's CMC list,
including the Company's HELOC exposure. The Company's exposure to
HELOCs, which is included in the $19.8 billion of U.S. RMBS exposure
total, declined from $2.3 billion in the first quarter 2008 to $2.1
billion as of June 30, 2008. Approximately, $1.8 billion of the
Company's HELOC exposure is rated non-investment grade and is on the
Company's CMC list. Of the approximately $400 million of other U.S.
RMBS exposure that is also rated non-investment grade and is on the
Company's CMC list, $105 million is for prime closed end second liens,
$99 million alternate-A first lien mortgages and $190 million for
subprime first lien mortgages.

Assured intends to release its final second quarter 2008 financial
results on August 7, 2008 at approximately 5:00 p.m. Eastern Time
(6:00 p.m. Atlantic Time). The company will host a conference call to
discuss its financial results at 7:30 a.m. Eastern Time (8:30 a.m.
Atlantic Time) on Friday, August 8, 2008. The earnings conference call
will be available via live and archived webcast in the Investor
Information section of the Company's website at
http://www.assuredguaranty.com or by dialing 866-383-8009 (in the
U.S.) or 617-597-5342 (International), passcode 64840547. A replay of
the call will be available through September 9, 2008. To listen to the
replay dial: 888-286-8010 (in the U.S.) or 617-801-6888
(International), passcode 20369305.

Please refer to Assured's Preliminary Second Quarter 2008
Financial Supplement, which is posted on the Company's website at
http://www.assuredguaranty.com/investor/ltd/financial.aspx, for more
information on the Company's financial guaranty profile.

Assured Guaranty Ltd. is a publicly-traded Bermuda-based holding
company. Its operating subsidiaries provide credit enhancement
products to the U.S. and international public finance, structured
finance and mortgage markets. More information on the Company and its
subsidiaries can be found at www.assuredguaranty.com.

Non-GAAP Financial Measures

This press release references several non-GAAP financial measures
to assist analysts and investors in evaluating Assured's financial
results. These non-GAAP financial measures are defined below. In each
case, if available, the most directly comparable GAAP financial
measure is presented and a reconciliation of the non-GAAP financial
measure and GAAP financial measure is provided. This presentation is
consistent with how Assured's management, analysts and investors
evaluate its financial results and is comparable to estimates
published by analysts in their research reports on Assured. The
non-GAAP financial measures included in this press release are:
operating income and present value of insurance and credit derivative
gross written premiums ("PVP").

The following defines non-GAAP financial measures presented in
this press release and describes why they are useful for investors.

Operating income, which is a non-GAAP financial measure, is
defined as net income (loss) excluding: (i) after-tax realized gains
(losses) on investments; (ii) after-tax unrealized gains (losses) on
credit derivatives, other than the Company's net estimate of after-tax
losses incurred on credit derivatives, and (iii) the fair value
adjustment of the Company's committed capital securities. Management
believes that operating income is a useful measure for management,
investors and analysts because the presentation of operating income
enhances the understanding of Assured's results of operations by
highlighting the underlying profitability of the Company's business.
Realized gains (losses) on investments and unrealized gains (losses)
on credit derivatives and the fair value adjustment of the Company's
committed capital securities, other than incurred losses on credit
derivatives, are excluded because the amount of both of these gains
(losses) is heavily influenced by, and fluctuates, in part, according
to market interest rates, credit spreads and other factors that
management cannot control or predict. This measure should not be
viewed as a substitute for net income (loss) determined in accordance
with GAAP.

Present value of insurance and credit derivative gross written
premiums or PVP, which is a non-GAAP financial measure, is defined as
gross upfront and installment premiums received and the present value
of gross estimated future installment premiums, on insurance and
credit derivative contracts written in the current period, discounted
at 6% per year. Management believes that PVP is a useful measure for
management, investors and analysts because it permits the evaluation
of the value of new business production for Assured by taking into
account the value of estimated future installment premiums on all new
contracts underwritten in a reporting period, whether in insurance or
credit derivative contract form, which GAAP gross premiums written and
the net credit derivative premiums received and receivable portion of
net realized gains and other settlements on credit derivatives
("credit derivative premiums") do not measure. Actual future net
earned or written premiums and credit derivative premiums may differ
from PVP due to factors such as prepayments, amortizations,
refundings, contract terminations or defaults that may or may not be
influenced by market interest rates, refinancing or refunding
activity, prepayment speeds, policy changes or terminations, credit
defaults, or other factors that management cannot control or predict.
This measure should not be viewed as a substitute for gross written
premiums determined in accordance with GAAP. Assured uses 6% as the
present value discount rate for calculating PVP because it is the
approximate taxable equivalent yield on Assured's investment portfolio
for the periods presented.

-0-
*T
Analysis of PVP
($ in millions)

Gross written premiums (GWP) analysis:
Full Year
2Q-08 2Q-07 2007
------ ------ ----------
Present value of financial guaranty and credit
derivative GWP (PVP) $278.9 $125.3 $ 874.6
Less: PVP of credit derivatives 52.3 39.2 252.2
------ ------ ----------
PVP of financial guaranty GWP 226.6 86.1 622.4
Less: Financial guaranty installment premium
PVP 14.8 33.7 292.8
------ ------ ----------
Total: Financial guaranty upfront GWP 211.8 52.4 329.6
Plus: Financial guaranty installment GWP 34.0 18.7 88.6
------ ------ ----------
Total financial guaranty GWP 245.8 71.1 418.2
Plus: Mortgage guaranty segment GWP - 0.5 2.7
Plus: Other segment GWP - 0.1 3.5
------ ------ ----------
Total GWP per income statement $245.8 $ 71.8 $ 424.5
====== ====== ==========
*T

-0-
*T
The Company's estimate of the components of operating income for the
second quarter 2008 are as follows:

Net income $515 million - $565 million
----------------------------------------------------------------------
Less: After-tax realized gains on $0.9 million
investments
----------------------------------------------------------------------
Less: After-tax unrealized gains on
credit derivatives, other than the $475 million - $525 million
Company's net estimate of after-tax
losses incurred on credit derivatives
----------------------------------------------------------------------
Less: Fair value adjustment of the
Company's committed capital $5.8 million
securities
----------------------------------------------------------------------
Operating income $38.7 million
----------------------------------------------------------------------
*T

Cautionary Statement Regarding Forward-Looking Statements:

Any forward-looking statements made in this press release reflect
the Company's current views with respect to future events and
financial performance and are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Such statements involve risks and uncertainties that may cause actual
results to differ materially from those set forth in these statements.
For example, the Company's forward-looking statements, including its
calculations of adjusted book value, present value of insurance and
credit derivative gross written premiums ("PVP"), net income,
operating income, net present value of estimated future installment
premiums in force, total estimated net future premium earnings, and
statements regarding losses, pricing, ratings, capital adequacy and
the growth of the direct business could be affected by many events.
These events include a significant reduction in the amount of
reinsurance ceded by one or more of our principal ceding companies,
rating agency action such as a ratings downgrade, difficulties with
the execution of the Company's business strategy, contract
cancellations, developments or volatility in the world's financial and
capital markets, more severe or frequent losses associated with
products affecting the adequacy of the Company's loss reserves, more
recent information received from reinsurance clients, changes in
regulation or tax laws, governmental actions, natural catastrophes,
the Company's dependence on customers, decreased demand or increased
competition, loss of key personnel, technological developments, the
effects of mergers, acquisitions and divestitures, changes in
accounting policies or practices, changes in general economic
conditions, other risks and uncertainties that have not been
identified at this time, management's response to these factors, and
other risk factors identified in the Company's filings with the
Securities and Exchange Commission. Readers are cautioned not to place
undue reliance on these forward looking statements, which speak only
as of the dates on which they are made. The Company undertakes no
obligation to publicly update or revise any forward looking
statements, whether as a result of new information, future events or
otherwise.

Assured Guaranty:
Equity Investors and Analysts:
Sabra Purtill, CFA, 212-408-6044 or 441-299-9375
Managing Director, Global Communications
and Investor Relations
spurtill@assuredguaranty.com
or
Ross Aron, 212-261-5509
Associate, Investor Relations
raron@assuredguaranty.com
or
Fixed Income Investors:
Michael Walker, 212-261-5575
Director, Fixed Income Investor Relations
mwalker@assuredguaranty.com
or
Media:
Ashweeta Durani, 212-408-6042
Vice President, Communications
adurani@assuredguaranty.com

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