Statement on Jefferson County, Alabama

November 10, 2011

Although the County Commission voted to authorize a chapter 9 bankruptcy filing on November 9, 2011, investors in Jefferson County bonds insured directly by AGM remain fully protected by our unconditional and irrevocable guaranty of scheduled payments of principal and interest when due. This commitment is backed by our strong capital base.

We are disappointed by the County Commission's decision.  We believe the settlement and refinancing transaction outlined in the term sheet approved by the County Commission on September 14, 2011 represented the parties’ best opportunity to resolve the County’s sewer debt crisis. As secured creditors of the County’s sewer system, Assured Guaranty’s interests remain secured during the bankruptcy proceeding, and we expect the rights and remedies available to the sewer system warrant holders under the transaction documents to be fully enforced.
                                                                                             
A significant portion of Assured Guaranty’s exposure to Jefferson County is related to the County’s sewer revenue warrants which are secured by a pledge of the net revenues of the sewer system. The County’s sewer revenue warrants should be treated as “special revenue bonds” under chapter 9 and, therefore, the net revenues of the sewer system should not be subject to the automatic stay and should continue to be applied to the payment of debt service on the sewer revenue warrants after the payment of sewer system operating expenses.

Assured Guaranty also has a number of other exposures to Jefferson County that are unrelated to the sewer system. These exposures are secured by, or payable from, certain revenues, taxes or lease payments that may have the benefit of a statutory lien or a lien on "special revenues" or other collateral that may minimize the impact of a County bankruptcy on such exposures.