(Operator Instructions) Welcome to the Assured Guaranty Third Quarter Earnings Conference Call. I would now like to turn the call over to Sabra Purtill, Managing Director, Investor Relations.

Thank you all for joining us this evening for Assured Guaranty’s third quarter 2008 earnings conference call. We appreciate your interest in Assured Guaranty and hope that the change in our call time didn’t cause you too much inconvenience. We believe that this might be a more convenient time for some of our investors and analysts particularly those located in the Central and Western portions of the US. Our speakers today are Dominic Frederico, President and Chief Executive Officer of Assured Guaranty Limited and Bob Mills, Chief Financial Officer. After their prepared remarks, they will take questions from the audience. Please note that our call is not web enabled for Q&A, so if you would like to ask a questions please dial our conference call organizer at 1-800-591-6945 and join the call live in order to ask a question. I would remind you that management’s comments today or responses to questions today may contain forward-looking statements such as statements relating to our business outlook, growth prospects, market conditions, credit spreads, ratings, loss reserves, and other items where our outlook is subject to change. Listeners are cautioned not to place undue reliance on the forward-looking statements made on this conference call today as management does not undertake to publicly update or revise any forward-looking statements whether as a result of new information, future events, or otherwise. You should refer to the Investor Information section of our website and to our most recent SEC filings for the most current financial information and for more information on factors that could affect our future financial results and forward looking statements. I’ll now like to turn the call over to Dominic.

Thanks all of you for your interest and participation in our third quarter earnings call. The last quarter was a continuation of a series of challenging quarters that Assured has had to navigate. Given this environment I believe our earnings, production, and credit performance were fair although obviously disappointing to us. In particular the credit and liquidity concerns and the global financial market have increased the uncertainty surrounding the future performance of our RMBS portfolio and some other exposures. This uncertainty leads us to proactively establish loss reserves that take into account an increasingly stressed economic environment in 2008 and 2009. I think it’s important to keep in mind, however, that throughout these difficult times Assured has maintained operating profitability as well as its presence in the market as one of the few highly rated viable options for issuers and income investors. The company’s well established underwriting and risk management principles have protected us from the credit losses that have impaired the market presence and balance sheets of many other financial institutions. There’s not a day that goes by that I’m not thankful for our decision not to underwrite CDO’s of ABS or other risky securities. Furthermore, our decision not to expand into business lines within embedded liquidity risks such as financial products or guaranteed investment contracts has protected us from further threats to our ratings and franchise. As you are well aware, several financial guarantors are facing liquidity challenges due to their need to collateralize investment agreements or obligations due to their own rating downgrades and the decline in market value on the assets representing the collateral supporting the debt. In spite of our many good decisions we are not immune to the fallout from the worst credit crisis to face this country and the world since the great…

I’d like to cover some brief highlights of the quarter. Please refer to our press release and financial supplement for further details on our financial position and results of operations. Operating income which we calculate as net income excluding after tax realized gains and losses on investments and after tax unrealized gains and losses on credit derivatives for the third quarter 2008 was $26 million or $0.28 per diluted share compared to $48.2 million or $0.70 per diluted share for the third quarter 2007. The principal reason for the decline in operating income was that we had a pre-tax loss and loss adjustment expense on US RMBS exposures written in either insurance or credit derivative form of $95.8 million or $0.89 after tax per diluted share. These losses incurred were largely related to Heloc and other second lien transactions including $52.3 million for two Countrywide transactions underwritten in our direct segment. Our PVP or Present Value of gross written Premiums for insurance and credit derivatives totaled $139.4 million for the quarter down 16% to $165.5 million which we had in the third quarter 2007. Direct US public finance rose to $67.7 million for the third quarter 2008 compared to $10.3 million for the third quarter 2007 while re-insurance PVP was $57.2 million up from $32.8 million in the third quarter 2007 reflecting two facultative transactions. The overall decline in PVP was due to minimal activity in structured and international finance reflecting overall weakness in the global economy. Net earned premiums and earned revenues on credit derivatives for the quarter totaled $115.5 million up 105% from third quarter 2007 with growth in both direct and re-insurance. The amount included $31.7 million of refundings in our re-insurance segment a much higher than normal amount due to the refinancing of auction rate securities…

(Operator Instructions) Your first question comes from Andrew Wessel – JP Morgan Andrew Wessel – JP Morgan: Looking at the credit migration that you saw your internal ratings on Alt-A and sub-prime RMBS it looked pretty significant everything that’s getting captured now in the single A and lower category. Especially for the non-investment and below investment grade stuff how much of that was captured in the reserving this quarter or actually it would be more the CDS mark to market there.

Remember of the CDS mark to market that we look at separately from real credit impairment. If you look at Alt-A predominantly what you’ve seen is a migration from the AAA and the Super Senior down into the AA, AA-, A, with some migration in terms of the below investment grade or down to the BBB. I think we’re trying to keep in step with what we see happening in the market and projecting that 2008 and 2009 we’re delaying the economic recovery and as you know in our world of how we reserve once we do that it automatically kicks off the portfolio reserves which are included in the total reserve position that Bob had talked about.

One clarifying point on the reserve amount that you had mentioned so that we can display any credit impact of credit derivatives actually the number that I quoted is a combination of two losses, loss and loss adjustment expense line of $82.5 million plus the incurred losses of credit derivatives of $10.1 million so that’s where you get the credit aspect of what comes through on the CDS line.

Fundamentally as we move things into our CMC list or downgrade them remember they are still in our view a high probability that there will be no loss realized however, based on our reserving methodology there is a portfolio reserve created. Andrew Wessel – JP Morgan: The other question I have was based on really just looking out and seeing how the markets responded to you folks being put on review for downgrade by Moody’s. Obviously that had an impact this quarter but it seems like you still had pretty decent production overall. Is assuming that maybe if the markets looking through to Moody’s and saying maybe Moody’s is looking at a AA whereas S&P and Fitch would still be a AAA. Do you feel like the reception in the market is still there for you that production this quarter is somewhat emblematic of the markets reception to you despite the ratings loss or do you think really the lot effort came right before the Moody’s announcement then it really trickled off post that?

A good question, a little hard to answer. I think there’s so much uncertainty and so much concern in the market that it’s really hard to establish a trend. As we look at our activity over the quarter obviously we had a significant setback at the onset of the Moody’s announcement because I think general panic ensues and they’re saying okay where does this ultimately end and is it the same spiral that we’ve experienced on behalf of other guarantors. If you look to the balance sheet, if you look to the exposures that we’re very public and transparent about we just don’t have the size numbers and we definitely don’t have the exposure to those highly volatile and highly leveraged transactions that would cause those kinds of significant losses. As you can see we’re still reporting an operating profit even in spite of having to absorb what we consider a catastrophic meltdown in the real estate market now into the general economy. That was the first setback so then we started to recover and we internally report every day our activity in the public finance market so we’re all thinking good comfort then Lehman goes bankrupt and the same level of uncertainty and panic hit through the markets and once again we lose about another three or four or five trading days until that gets digested and then once again the activity starts to pick up witnessed by that Pennsylvania Turnpike deal that we did in the last week. Then you have the AIG overhang. I think the market wants to do business, needs to do business, values the guaranty, has confidence in Assured but it still has to digest these market disruptions that continue to take place. We’re obviously certain that once and when Moody’s comes to a decision if its adverse you’re going to have that same market setback until such time as the market can digest, get comfortable and then once again activity emerges. We think activity has got to get better because there’s just too much financing that’s not being accomplished that for this economy to continue to operate is going to have to ultimately go through the securitization and the insurance marketplace. We’re hopeful that we’re seeing the worst of the experience relative to production activity and as I said trying to set aside Moody’s and not making a value judgment on what the market thinks of their activity to date. There is going to be continued acceptance and opportunity and as we continue to trade through all the issues that exist out there we’re confident in that and we’re pleased with the results that we put up for the current quarter.

Your next question comes from Joseph Marino – Piper Jaffray Joseph Marino – Piper Jaffray: I think you mentioned you had revised your economic assumptions. Could you give us some detail on that?

As we look out one of the things as you’re in a market dislocation first you’ve got to predict the depth and severity of the dislocation then you’ve got to predict its duration and then you’ve got to predict its method of recovery or the slip of its recovery. What we’ve basically done is stretched everything out so as we anticipate the peaking and dropping of delinquencies will result in loss curve everything is extended out so you’re trapping losses within the area of loss recognition and you’re extending forward the potential recoveries. Remember the deals are all structured you have collateral; you have certain other rights to cash streams so all of that gets factored in. The extension causes the loss and that’s what reflected and the sad part of this I’ve said is that the challenge is because its real estate and most of our issues are in the home equity lines of credit all of your remedies or offsets are really back end loaded. As you extend out that curve of recovery once again it gets harder to predict what is going to be the beneficial stream. Since we do everything on a net present value basis its discounting back at a smaller number so all of that tends to result in a higher loss reserve which is exactly what we posted in the quarter. We would have thought we had a recovery somewhere in mid to late 2009 we’re now pushing it out beyond that. Joseph Marino – Piper Jaffray: Your reserves, your L&LE went up pretty good in the quarter compared to last quarter a little bit more than double. It doesn’t sound like your economic assumptions have worsened to the extent that you provisioned for reserves during the quarter, is that what that’s reflecting part of the discounts that you just mentioned and how do you reconcile that?

I think the economic assumptions have worsened as I said if we look at a flattening and decreasing of delinquencies and default curve which in effect equates to losses in the real estate side as we now push that out an additional six months you’re creating a lot more loss under the curve. That’s what’s reflected in the reserves and were posted. Delinquencies have decreased but they haven’t decreased in enough of a way that really has started to fully shape the loss curve. The top of the curve is looking more like a plateau and we now have to extend our loss projections across the plateau and extend out where we think the ultimate dropping of the delinquencies in there for the reduction or losses will occur. As I said, that also pushes out the recognition of the recoveries through excess spread, through draws, though reps and warranties so therefore all of that adds up to as you’re pointing out a significant loss increase or loss provisioning in the current quarter. Joseph Marino – Piper Jaffray: Regarding the Countrywide transactions what percentage of those are now reserved for?

The total outstanding if we look at 05’ is $545.8 million and we have reserves that would equate to about; $545 million for ‘05, its $648.8 million for ’07 and the total incurred losses which doesn’t mean the total losses we expect to emerge because remember the offsets are $94 million roughly a net 7.9% reserve but you have to add back to get to the full loss provision that we’re expecting in those securitizations the excess spread, the future draws, the subordination we had at the beginning of the deal as well as the put backs in terms of reps and warranties. It’s a net, net, net position. Joseph Marino – Piper Jaffray: Back to Moody’s do you feel that hypothetically speaking a downgrade by Moody’s bears less of an impact on the re-insurance business as opposed to your direct business?

It depends on what they do with the re-insurance company. One of our issues has been other re-insurance companies have a very different portfolio than the direct company and once again put them into the same situation as the direct company we didn’t think was quite proper at the beginning. The re-insurance company has portfolio opportunities basically they’re taking portfolios from further lower rated companies so the rating arbitrage or the ratings value still exists. Obviously they have the capability in terms of servicing and holding the business on a go forward basis. A downgrade hurts everybody and to try to apportion it who gets hurt worse it’s a little bit more difficult. Joseph Marino – Piper Jaffray: Can you give some commentary on the environment overseas, international business?

The international business is recognized by the production of zero in the quarter is basically frozen. There is no activity; there is a lack of any deals coming to the public market. They’re being held on balance sheet today which we obviously believe creates an opportunity for the future as well as large infrastructure projects are being delayed as well. That’s going to be a market opportunity that we hope to see in the probably 2009 and maybe mid to late 2009 is those markets themselves are going through tremendous liquidity issues and financial concern.

Your next question comes from Mark Lane – William Blair & Company Mark Lane – William Blair & Company: On the two Countrywide transactions in the past you’ve been willing to estimate what you believe your stress test case worse loss case scenario would be are you still willing to do that?

I’ve got about 18 people writing on a piece of paper we now have established a case reserve on an accounting basis that represents our best estimate of what we think our exposure is for those two securitizations. Mark Lane – William Blair & Company: I know it’s your best estimate but I’m assuming you also have a stress test case.

We have stress test cases that would be a lot lower than that number as well as other cases that would be higher than that number. I would say we have cases that show a lower number to a greater extent than we have a higher number if that makes it comfortable for you. Mark Lane – William Blair & Company: The public finance business that you’re doing is there any consistency in the type of issuer or the type of deal or banks that are bringing you the deals or is it just completely random?

As far as numbers done in the quarter like we did 316 deals during the quarter 287 of those deals were general government deals and then beyond that there were a smattering of other deals in the public finance sector. In other words certainly a couple of sizeable deals with Louisville and the Twins Fall Park. Substantially general government deals.

Its typically the smaller issuers that obviously would not be able to go out on an uninsured basis and the fact that the insurance still provides them access but also ultimate finance savings. That’s the guys obviously you’ve seen enough press about the bigger states or the higher rated guys that have been going out on an uninsured basis or in some cases using a letter of credit as a liquidity support feature to get the deal done. The nice thing we take away from that is if you look at letters of credit and the amount of enhancement that we’ve been able to do plus the rest of the market there’s still a significant percent of the market that needs some level of credit enhancement and we believe obviously the letter of credit market has a limited applicability and capacity such that we should be able to respond further and further in terms of penetration opportunities on an insured basis in the public finance market. Mark Lane – William Blair & Company: Would it be your guess that these smaller municipalities that that demand would seem to be pretty consistent even if you were downgraded to AA?

It’s a very resilient demand it’s done in a competitive bid market which as we’ve talked about probably a quarter ago we had moved additional resources to make sure that we were more involved in that marketplace. The second thing we’re going to tell is we still, as we talked in our brief comments we expect to see stress in the public finance markets and we expect to see downgrades there which would once again call for increase in the demand for insurance. Mark Lane – William Blair & Company: That downgrade comment about the Moody’s is that mean to send a message that to expect higher loss provisions in next year as you start to see downgrades there as well?

No obviously in our methodology which obviously is subject to the new accounting laws it would have theoretically generated a portfolio reserve but we are still quite optimistic that those municipalities tend to have the opportunity to resolve their issues. Remember in this market severities are very, very low so even if you have an eye on higher incidents of potential downgrades the severities are not significant. With the ability to reschedule the lay as well as secure advance funding they typically can work these things out but it does hit to the need for more insurance. Mark Lane – William Blair & Company: The automatic reserving impact from the downgrades you’re saying is?

Small.

Your next question comes from Brian Meredith – UBS Brian Meredith – UBS: I noticed that in your public finance area and the non-investment grade you’ve now got this other public finance that’s got a decent size there. Can you explain what is exactly in there?

We know that Jefferson County is in there. We had three student loan deals that we did for re-insurance back a few years ago that they were auction rate securities based on the failed auction and the higher interest rate that they’ve had to now pay. There is a negative carry between the underlying loans and the interest on the debt and therefore we internally downgraded it and that’s what is popped in there it’s about $340 million. They’re government guaranteed loans that’s why they’re considered public finance.

I don’t think we really think there is a great deal of exposure there but because of the nature.

Because of the negative carry we downgraded it internally. Brian Meredith – UBS: In your discussions you’ve had with Moody’s over the last couple of months do you think the reserve you put up this quarter will be a surprise to them?

Not at all. Brian Meredith – UBS: All the issues that we’re getting right now with ant back and the downgrade what impact do you think that’s going to have on your potential business going forward just as investors eventually continue to lose confidence in the municipal bond insurance industry?

I don’t think there is a continued loss of confidence. I think the activity of today is just a continued play out of the sorry situation that has happened relative to some of the guarantors in our industry. We can all argue about the timing and whether it was anticipated or not but I think if you look at some things like their ability to trade the value of the stock etc. I think there were indications that there were severe problems and whether these problems are the manifestation through a ratings process or not I don’t think the market is at any difference of opinion whatsoever. Brian Meredith – UBS: Capital management tier you probably do want to wait until the Moody’s decision but obviously with the stock where it is its pretty attractive investment here.

It’s an attractive investment on behalf of everyone especially if you listen to Bob’s adjusted book value be that as it may. The one thing we’re obviously being very conservative about is everyone’s being residential loss forecast or downgrading more instruments. Although we think we’re pretty proactive in our downgrade process as I said we call our surveillance guy Dr. Know. That still does generate capital and we want to make sure that we’re protected relative to an increase in capital requirements.

There are no questions at this time. I would now like to turn the call over to Sabra Purtill for closing remarks.

Thank you all today for joining us. We appreciate your interest in Assured Guaranty and if you have any additional questions or require further information please feel free to contact me either by email or by phone. Thanks again and have a good evening.

This concludes today’s presentation.