UPDATE 1-Assured Guaranty Q3 trails market view

* Q3 oper EPS down, miss estimates

* Total expenses rose more than 200 pct

Nov 6 (Reuters) - Bond insurer Assured Guaranty Ltd's (AGO.N) third-quarter operating profit fell 46 percent and missed analysts' estimates, hurt by an increase in loss and loss adjustment expenses on U.S. residential mortgage-backed securities exposures.

"Market volatility, economic conditions and Moody's review for possible downgrade of Assured's ratings clearly presented us with many challenges this quarter," Chief Executive Dominic Frederico said in a statement.

The company posted a quarterly net loss of $63.3 million, or 70 cents a share, compared with net loss of $115.0 million, or $1.70, last year.

Operating income, which excludes unrealized losses on credit derivatives, was $26.0 million, or 28 cents a share.

Analysts' on average had expected earnings of 50 cents a share, excluding items, according to Reuters Estimates.

Assured Guaranty took $72.2 million of unrealized after-tax losses on credit derivatives during the latest third quarter.

Assured's third-quarter total expenses were $129.3 million compared with $39.8 million last year. The increase was largely due to an $80.5 million increase in pre-tax loss and loss adjustment expenses from the year-ago third quarter.

Assured Guaranty has largely avoided the credit problems that have plagued its rivals like Ambac Financial Group Inc (ABK.N) and MBIA Inc (MBI.N) because it stayed away from insuring repackaged subprime mortgages and other risky debt.

Assured is one of the established bond insurers with top "AAA" ratings.

Assured shares closed at $8.80 Thursday on the New York Stock Exchange. (Reporting by Ratul Ray Chaudhuri in Bangalore; Editing by Gopakumar Warrier)