Fitch Downgrades FSA's IFS to 'AA+'

NEW YORK--(Business Wire)--
Fitch Ratings has downgraded the Insurer Financial Strength rating of Financial
Security Assurance Inc. (FSA) to 'AA+' from 'AAA.' The ratings remain on Rating
Watch Negative. The debt ratings of Financial Security Assurance Holdings Ltd.
(FSA Holdings) have also been downgraded. The ratings of FSA were placed on
Rating Watch Negative last October based on concerns about the financial
products business and limitations on support from Dexia. A full list of affected
ratings is provided at the end of this release.

Today's rating action primarily reflects Fitch's view of the residual risks
retained by FSA following the transfer of its financial products business to
Dexia. Although the transaction has not closed, Fitch anticipates the sale to
Assured Guaranty Ltd. (Assured) will proceed as planned and views the
agreed-upon structure as more consistent with an 'AA+' level of risk.

As part of its sale of FSA to Assured, Dexia (rated 'A+' by Fitch) has agreed to
retain most of FSA's financial products business and to protect FSA/Assured from
the credit and liquidity risks associated with this business line through
various liquidity lines, guarantees and collateral posting mechanisms. In
addition, certain of Dexia's obligations will be guaranteed on a several basis
by the governments of Belgium (rated 'AA+') and France (rated 'AAA'). Given that
a large portion of the risk protection afforded to FSA is linked to these
sovereign guarantees, Fitch views FSA's rating as capped at the 'AA+' level
until such time as risks associated with the financial products portfolio
substantially decline.

Apart from the guaranteed risks of the financial products business, Fitch notes
that FSA remains well-capitalized at its current ratings level and the
transaction is expected to be capital accretive for the combined Assured-FSA
franchise. Further, under the purchase agreement there are limitations on
Assured's ability to dividend capital out of FSA for the first three years,
which is supportive of FSA's rating.

Notwithstanding, post-acquisition FSA will fall under the Assured umbrella of
financial guarantee companies, which raises longer-term uncertainties about
capital and business strategy, particularly as Fitch views Assured Guaranty as
capital-constrained at the present. Fitch rates Assured Guaranty Corp. 'AA',
Rating Watch Evolving.

Fitch would expect to resolve the Rating Watch status for both FSA and Assured
once the transaction has closed and there is greater clarity with respect to the
combined company's business strategy and capital management plans, as well as
developments in the markets for financial guaranty insurance. In the case of
FSA, if Fitch were to downgrade the company, the financial guarantor's IFS
rating would be unlikely to fall below 'AA'.

Fitch has downgraded the following ratings:

Financial Security Assurance Holdings Ltd.

--$100 million of 5.6% senior notes due 2103 to 'A+' from 'AA';

--$230 million of 6.25% senior notes due 2102 to 'A+' from 'AA';

--$100 million of 6.875% senior notes due 2101 to 'A+' from 'AA';

--$300 million junior subordinated debentures to 'A' from 'AA-';

Financial Security Assurance Inc.

FSA Insurance Co.

FSA International Ltd. (Bermuda)

FSA (UK)

FSA Seguros Mexico, S.A. de C.V.

--IFS to 'AA+' from 'AAA'.

The ratings remain on Rating Watch Negative.

The following financial guaranty subsidiary rating has been affirmed:

FSA Seguros Mexico, S.A. de C.V.

--National IFS at 'AAA(mex)'.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, www.fitchratings.com. Published ratings, criteria and
methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings, New York
Roger Merritt, 212-908-1636
George Masek, 212-908-0617
Jeff Berkes, 212-908-0734
or
Media Relations:
Brian Bertsch, 212-908-0549
Email: brian.bertsch@fitchratings.com

Copyright Business Wire 2009