Fitch Rates Assured's Senior Notes 'A+' and Junior Hybrids 'A'; Outlook Stable.

NEW YORK -- Fitch Ratings assigns an 'A+' rating to Assured Guaranty Ltd.'s (AGL) $200 million of 7.0% senior notes due 2034 and an 'A' rating to AGL's $150 million series A enhanced junior subordinated debentures due in 2066. Fitch also affirms the 'AAA' insurer financial strength (IFS) ratings assigned to Assured Guaranty Corp. (AGC) and Assured Guaranty (UK) Ltd.(AG UK), as well as the 'AA' IFS ratings assigned to Assured Guaranty Re Ltd. (AG Re), Assured Guaranty Re Overseas Ltd., and Assured Guaranty Re Mortgage Insurance Company. The Rating Outlook for all ratings is Stable.

AGL intends to use the proceeds of the enhanced junior subordinated debentures to repurchase a portion of the shares of its common stock currently owed by ACE Ltd., reducing ACE's ownership percentage in AGL from 35.5% to 30.0%. The debentures will pay a fixed rate of interest until December 2016. After this point the debentures will pay a floating rate based on three month LIBOR plus a margin that is expected to result in a step-up of 100 basis points (bps) over the initial fixed rate, based on current spreads. AGL has the right to defer interest for up to 10 consecutive years.

Based on Fitch's new hybrid rating criteria published on Sept. 27, 2006, the debentures have a high equity component. Fitch has assigned a class D designation to the debentures and will allocate 75% of the principal to adjusted equity and 25% to adjusted debt in evaluating the financial leverage of AGL. Key features supporting the 75% equity credit accorded to the debentures include the junior subordinated ranking, 10-year deferral period, and a long maturity with no put provision. AGL's call option in 10 years is balanced by a replacement capital covenant for the benefit of certain designated indebtedness of AGL not to redeem the debentures prior to 2036 unless replaced by the issuance of similar equity-like securities.

Including the impact of the issuance of the enhanced junior subordinated debentures, AGL's pro forma equity-credited adjusted leverage was 12.3% at Sept. 30, 2006, which is lower than the 15%-16% range for the most established guarantors. However, even at this relatively moderate level of leverage, AGL's debt to EBITDA is about 1.15 times relative to about 1.00 times for the more established guarantors, reflecting the larger companies' more robust earnings stream relative to their debt load and indicating their stronger capacity to service debt, even at higher leverage levels. Based on its analysis, Fitch expects that subsequent to issuing this hybrid security, AGL will refrain from further debt issuance until it can demonstrate that debt to EBITDA, including the impact of any future debt, will remain in line with the levels of AGL's largest competitors. Additionally, even if the earnings coverage minimums can be achieved, Fitch would expect that AGL would limit any future indebtedness so that equity-credit adjusted leverage will remain at or below the 15%-16% range.

Fitch assigns the following ratings with a Stable Outlook:

Assured Guaranty Ltd

--$200 million of 7.0% senior notes due 2034 'A+';

--$150 million series A enhanced junior subordinated debentures 'A';

Fitch affirms the following ratings with a Stable Outlook:

Assured Guaranty Corp.

Assured Guaranty (UK) Ltd.

--Insurer financial strength at 'AAA'.

Assured Guaranty Re Ltd.

Assured Guaranty Re Overseas Ltd.

Assured Guaranty Re Mortgage Insurance Company

--Insurer financial strength at 'AA'.

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.