Good day, ladies and gentlemen, and welcome to the Q4 2007 Assured Guaranty Earnings Call. My name is Lisa, and I will be your coordinator for today. At this time all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator Instructions) I would now like to turn the presentation over to your host for today's call, Ms. Sabra Purtill, Managing Director of Investor Relations. Please proceed.

Thank you, Lisa, and thank you all for joining us today for Assured Guaranty's fourth quarter 2007 earnings conference call. As most of you are aware, our earnings press release and financial supplement were released yesterday evening after the market closed, and these materials, and other information on Assured are posted in the investor information section of our website. On today's call, Dominic Frederico, President and Chief Executive Officer of Assured Guaranty Ltd.; and Bob Mills, Chief Financial Officer will provide a brief overview of the quarter. After their remarks the operator will poll the audience for questions. Please note that this call is being held for the benefit of analysts and investors and Assured Guaranty. And while members of the media are welcome to listen, we would kindly request them to confirm any quotations or request clarifications on comments made in the call prior to publishing details from this call. I would also like to remind everyone that management's comments or responses to questions may contain forward-looking statements. Such as statements relating to our business outlook, growth prospects, market conditions, credit spreads, pricing and other items that are subject to change. Our future results may differ materially from these statements. In addition, our outlook on these items may change. For those listening to the webcast, please keep in mind that more recent information on Assured may be available in later webcasts, press releases or SEC filings. Again, please refer to the investor information section of our website for the most current financial information on Assured and please also refer to our more SEC filings for more information on factors that could affect our forward-looking statements. Thank you and I’d now like to turn the call over to Dominic.

Thank you Sabra, and thanks to all of you on the call and webcast for your interest in Assured. 2007 was quite an interesting year. On the one hand, 2007 was a year of significant accomplishments for Assured Guaranty. In July we finally achieved our third AAA stable rating from Moody’s, equaling our ratings from S&P and Fitch. I am proud to say that we still hold those same AAA stable ratings from all three agencies today, as a testament to our strict underwriting discipline, highly rated portfolio, and strong capital base. We also achieved record production in 2007 for both our direct, and reinsurance operations, which was quite an accomplishment. On the other hand, 2007 was a year of challenges. Our industry and its impeccable record of consistent earnings and unquestionable financial strength has been threatened by the continued deterioration of the performance of securities collateralized by residential mortgages. As many of you know, we do not underwrite CDOs of ABS. This was not due to luck, or lack of AAA from Moody's, or losing bids on price. It resulted from our consistent focus on our five strategic goals, of which strict underwriting standard, and maintenance of our financial strength ratings are key, and have always been identified as the lifeblood of our company. The credit market turmoil caused by the CDO of ABS asset class will continue, until residential losses, and the industry's capital position, and ultimate ratings stabilize, which hopefully will happen sometime this year. One additional concern is the economy, which can have further negative influence on credit experience. We factor the deteriorating economy into all of our new business and surveillance underwriting models, in order to evaluate the future performance of our deals under strict economic stress. On a more positive note from today's uncertainty,…

Thanks, Dominic, and good morning to everyone on the call. I want to remind everyone to refer to our press release, and financial supplement for segment level details, and further explanations of our financial position and results of operations. Turning now to our performance for the quarter. 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 derivative financial instruments, for the fourth quarter of 2007, was $37 million or $0.53 per diluted share, compared to $41.5 million or $0.56 per diluted share for the fourth quarter of 2006. Assured had a net loss for the fourth quarter of 2007 of $260.1 million, or $3.77 per diluted share, compared to net income of $42.4 million, or $0.58 per diluted share for the fourth quarter of 2006. Let's look at the results for the quarter and some further detail. PVP or Present Value of Gross Written Premiums totaled $477 million for the quarter, a company record and up 311% compared to $116 million for the fourth quarter of 2006. PVP for the direct segment was $156.4 million for the quarter, which was also a record for the company. This was an increase of a 121% from the fourth quarter of 2006, reflecting the company's strong increase in market share in the US public finance markets and significant transaction levels in both the US Mortgage Backed Securities and Structured Finance Markets. PVP for the reinsurance segment totaled another record amount of $320.7 million, an increase of 610% from the fourth quarter 2006 amount of $45.2 million. This was principally due to the facultative reinsurance transaction with Ambac Assurance Corporation that was announced in December 2007. Net earned premium for the quarter totaled $67.6 million, up 16% from…

Thank you ladies and gentlemen. (Operator Instructions) Our first question comes from Andrew Wessel from JPMorgan. Please proceed.

Hey guys good morning

Good morning.

Good morning, Andrew.

I just have a couple of questions, I suppose the Mr. Buffett news, not the news about his benevolently reinsuring municipal bonds for all of the troubled competitors of yours. Could you put some color on that, I mean from my perspective it seems like reinsuring municipal bonds will be a great deal for you or for him, or for anybody in this environment, but from a capital perspective, does that really help anyone, or is that anything that’s been on the table and any discussion you've had with any of your competitors about reinsurance?

First answer I’d say that I would be more than happy to stand by Mr. Buffett, and take whatever percentage of that deal he would be willing to share. I think that would give you an idea of the value of that opportunity that you’ve got at the public finance, and you can kind of gauge from his comments in terms of the capital that he believes necessary to support that, which was obviously less than a 100 to 1 leverage versus the capital that would be required for the remaining part of the portfolio. None of the issues or exposures that we talked about today in terms of trouble, are dealing the public finance environment as of yet, obviously recessionary time could have an impact on that. But, by and large it's common relative to premium pricing is probably pretty accurate today's market place. However, the value that would be to an existing model line in terms of support I think it would take away more capital then it actually would provide benefit, and then obviously would remain a portfolio that would be highly leveraged the structured credit market place, and therefore being even greater expose to any deterioration in not only Subprime RBS, but in the other potential credit exposure that you have. So, I think it's an offer that stabilizes one into the market, but I think it creates as significant a problem at the other end as it would solve on the one-end.

Okay, thanks. And then on, in terms of your position in the municipal market, can you comment on where you currently lie in the competitive landscape? I mean obviously yourself and FSA are the biggest two insurers, can you put a number around and where you think you fall in the market, what's your market share since beginning of the year?

I think as you point out today, in most cases there are only two guarantors that are being sought after to provide raps on municipal exposures that being FSA and ourselves. Obviously, FSA has had a pretty good lead on us relative to there position, and we're more than happy to chase them around to a certain extent. Right now, if you look at January on an overall total basis I'd say FSA and I think we've got a comment in my statements this morning. They were like 60 plus percent in the market, you could assume that we are the remainder of that market. And we believe that as our paper gets issued more frequently, we get more liquidity out there, we will be able to continue to increase market share throughout the year, as well as just based on overall kind of philosophy of diversification. There is only two, we'd hope because it going to be a greater sharing as the year progresses, just because of single risk exposures by certain fixed income investors.

Great and the last question I'll jump again in on. In terms of that kind of market share growth, even if the insured market shrinks to some extent, given your half size in the business and now that kind of market share that we are talking now, it should be I guess in the range of 30% to 40%. What do you feel like the needs are going to be for potentially new capital, should you start hitting some capacity issues with certain of the big issuers in exposures?

Okay. Well first and foremost on capital, remember the public finance business is very beneficial to capital. Obviously creates a lot of capital because we earn a premium reserve and the low level of expected tail losses that created the capital need. So, from a Moody's and Fitch point of view, public finance is actually capital accretive. Right it is not for S&P, but then you got a jigger S&Ps, other requirements for the other wise of businesses. So, by and large that in and of itself does not create a capital issue per say. We however, will continue to gauge our opportunities in the market place, where capital those come into play single risk limits. So, as we see the size of the opportunities, the depth of it, the spread it, we will continue to evaluate capital. We do it on a three year forward basis. We reconcile every quarter as we complete it to see where the capital position was and obviously in today's opportunistic times we believe we are one of the few companies that can raise capital, we will take advantage where we see fit and move capital as necessary, but the principal driver in terms of the public finance growth would not be a major move other than single risk limit.

Okay, great. Thank you very much.

You are welcome.

Our next question comes from Mike Grasher from Piper Jaffray. Please proceed.

Hi, good morning everyone.

Good morning, Mike.

I guess Bob can you give us any more details on the trends that you'd be seeing with regard to the HELOCs, which created the provisioning in the quarter?

Yeah, I'll take that Mike. The HELOC trend is, where is losses going to peak and when will they start to revert to a normalized curve. We keep looking at the monthly trustee reports, and expecting to see some pullback of charge losses or even delinquencies. As of this point in time neither the two specific trouble transactions of '05-J and '07-D are we seeing that. So, we are writing out the proverbial storm here. We do still have excess or over collateralization left in the '07, but not significant, and that should evaporate if losses do not be, later on in this year, and obviously we're paying current shortfalls in '05-J transaction. As we said in '05-J, we get about 250 basis points of excess spread, '70-D 290 points, the pool factor on '07 is in the 80s, pool factor on '05 is in the 50s. So, we will continue to see if the excess spread starts to cover losses, which it is not doing now, and then we'll evaluate, where we are relative to the rapid amp trigger, which one that kicks and that's 1.8% for the '05-J, 1% for the '07-D and when 8-K it's kind of a different story, then it really gets to be a calculation what our draws, that will then be the responsible in the issuer in how that effects our previously paid loss position. So, walk straight short there is a tremendous amount of uncertainty. We are looking to see when and if the loss curve abates, and when it does, that will give us a better fix, and where we think this thing rolls out. Because let me get started providing projection in terms of good excess spread, if it doesn't abate, then we are obviously going to hit the rapid amp triggers, and if we do that and that's another different calculation, on how we ultimately can get taken out of a loss position. So, a lot of uncertainties still out there. We've also begun to file a lot, it's each of those deals at the specific offices of the issuer, and we are looking at those loans files relatively to rest of warranties, so this even potential issue that's going to rise as we go through this current year.

Okay. Couple of follow-up to just to clarify that, I think you said in your opening remarks that a significant loss, which you defined is a $100 million of more remains a rare remote occurrence, is that fair?

Yes, it is. We run more models and I won't even talk about, but the one think about these deals and specifically in the countrywide deals, the rapid amp trigger, which is a very interesting clause, really requires the issuer to find future draws on the loans that are included in the HELOC structure. And when they fund those draws, those loans become subordinated to us, and to that extent that we are not at our OC position or Over Collateralized percentage, we get the bill to back-up, here go you also get the reimbursed losses. Under the majority of our models if that OC trigger, if that the rapid amp trigger materializes, we will be taken out of our loss. So, to that extent ,and that based on a lot of factors lying still available, will people continue to draw on their loan etcetera and will the issuer still be sober enough to fund those draws, but in most cases if that happens there is a very low probability of us having any loss not, but loan of loss significant.

Okay. And then could you remind us what the landscape I guess looks like in terms of your HELOC portfolio and specifically I guess the D and the J issue in terms of LTVs, FICOs etcetera?

Well, yeah we kind of like reiterate in the ground I mean both of those deals were prime deals right. I think one had 710 average FICOs, which is the '05. The '07 I think was in the 720 range loan to values when the 70% combined loan to values, when you put into second, so that would be the first lane.

Okay.

The combined undervalue with the secondly would be in the 80-85 range, so they were well written at the time, but obviously as we look at market value declines, that's going to put those things back to 100% if not basically negative equity and every gets to an negative equity situation and all bets are off based on historical experience and in all of those cases we assume a 100% loss. We assume no recovery, no salvage, no subrogation. So, we take a very conservative view, and as I said if our portfolio reserving process, we have downgraded these exposures well below with the rating agents they are currently rating them and I know that that's not going to be considered much of a comp, but it does show you that we are trying to be as proactive in front of these thing as we possibly can be.

Okay. Final question then you mentioned the agencies any additional concerns coming from them in terms of your own portfolio, what does seem to be the greatest concern if any?

We think do not have that much in to have conversations with them at this point of time. If anything we've talked them about positive thing and some way, which we trying to do and accomplish in the industry. Their concerns is strictly around today in the residential asset exposure, thank God our portfolio other than the HELOC is very well protected, and even under their current model of new loss projections for sales six sub-prime, we do not believe and have not received communications from them that there are any issues relative to our capital based capital adequacy etcetera.

Thank you.

You are welcome.

Our next question comes from Tamara Kravec from Banc of America Securities. Please proceed.

Thank you. Good morning

Good morning

Good morning.

Just some add more specific question on reinsurance of your competitors book, and whether not you can tell us this year if your discussions are varying, it seems the Buffett's news is that one of them rejected Buffett's proposal and I'm not sure how -- if you can give us a sense of how actively your travel competitors are pursuing avenues of reinsurance through the industry, and through you, and what maybe the rating agencies views are of you taking on more deals like the Ambac deal.

We are in dialogue with some of our competitors for the type of portfolio transfer that we accomplished for Ambac at the end of the year. Obviously our way of thinking especially based on where equity values are today, that's going to be one of the most efficient capital relief mechanisms or capital creation mechanisms that anyone can use and therefore we are in dialogue with a number of those competitors looking at on the kind of same business we did the Ambac transaction. In terms of rating agents' reaction, obviously they were I'd say positive on the Ambac traction, both for Ambac and what it did for us. I mean they have obviously gone to the portfolio, we've gotten a lot of transparency to them relative to the assets included within that and it's a very good portfolio, very strong portfolio. Obviously further opportunities on the reinsurance side are going to be depended on, obviously the rating agencies finalizations of their existing outlooks or watches, and what impact that has on the other modal lines, obviously the worst you get the more opportunity it creates and we're poised and positioned to take advantage of that. The second thing is, we could be twice plus than that when the agencies conclude their review of the other reinsures that are currently on outlook, that could create further opportunities as direct companies would have the option of calling back those securities are not giving them the capital relief that they had envision and that would give us more opportunities in our reinsurance company.

Okay. And I'm also curious Dominic, your view on Buffets, if you've been able to see anything at all yet in terms of his bidding out business, is there any trend in pricing in terms of his strategy and what he is doing, or any thoughts about the potential for business gained or loss based on any trends you are seeing here?

Well, first I think I'd say is that the trends in pricing that he had mentioned this morning, we feel the exact same way and remember you're looking at transactions on an isolated basis, we can point two transactions or we got twice as much as well, so that's not uncommon in today's situation as the demand to have a security wrap that has an underlying rating say below AA, obviously is highly depending on who holds that security. So, in relative terms pricing is as he had pointed out, and that we see in the lot of opportunities. Overall I think we look at them that there is a still kind of in the secondary market, we don't see them a lot, but that doesn't mean they are not active, but right now the amount of business that we have coming in such an overwhelming level that we're not -- it does appeared whatsoever missing out on any of the opportunities let me put it that way. We're getting literally I guess I have a statistics, I'll give you relative to pipeline, give me second to pull it out, but for instance in public finance today in our pipeline, we have a 193 deals for $14 plus billion of par and that would compare to next year and of 16 deals for $880 million of par. So, $880 million goes $14 billion for 16 deals got through a 193.

Are you busy?

Yeah, I guess my idea is there is enough out there for everybody, remember the industry used to be 7 wide, it's now 2 or 3 wide, and you're dividing that opportunity among the market as it is and we see no drop off in that whatsoever.

Okay. And final question is what is your view on what the -- I'll take either short-term or long-term view on ROE of the business just given the profitability for writing now versus what you wrote in the past, or what you think longer-term this ROE should play out for the industry as a whole end for you?

Yeah, remember ROE has got two calculations in a rate.

Yeah.

The R and the E side, so…

Yeah. And if you could use the E on an operating basis without the marks, I think that would be more helpful.

Yeah. So obviously ROE is trending up and depending on what we do, and what the rating agencies do with capital requirements, they would trend up rather quickly because of the level of achieved pricing that we're seeing. Remember earnings do trail production, so '08 contribution of '08 business and the business we wrote in the fourth quarter of '07 might only account for about 10% of total earned premium or 15% of total earned premium. So, it's not going to immediately be reflected in first quarter, but you'll see a gradual continuing increase, also remember that in the fourth quarter we did what was comparable to three years production in the reinsurance company. So, its earnings will really start to generate higher returns just based on the fact of a greater leveraging in the portfolio, and although we did take on some additional capital obviously it's an average rating on an average calculation on the E side of that denominator. So you'll still get some benefits of that as it spreads to year. So, not trying to give you an absolute number, all I can tell you ROE goes up pretty strongly and then it's just a matter of whether E will still be D it is or did the rating agencies come back and reassess it.

As I've said during my comments I really expect our earned premium to increase to 25% to 30%, where the operating expense side was only looking to go up about 7%. The fact being a considering a normal loss circumstance, you can see the growth in ROE coming through quite well.

Yeah, the loss circumstance is the tough one for us. Because remember, through most of our history post IPO, we've had the benefit of favorable loss development. So, we've it really remember in our ROE today, we have to put in really normalized loss provisions. So, excluding extraordinary loss provisions, you're going to still see a little bit higher overall expense for because of a normalized loss provision.

Okay. Thank you.

Our next question comes from Ryan Zacharia from Jacobs Asset Management. Please proceed.

Good morning.

Good morning.

So, just as a follow-up question to Tamara's question about the earnings lag, is it safe to say that the Ambac transaction is diluted in the short-term because of the earnings lag?

No, not at all. It will be highly accretive, to be very honest with you.

Could you explain that, kind of given that net earned premium over the 18 days associated with the transaction was $1 million. Can you kind of walk us through the economics?

Yeah, well in total we have got $260 million of PVP, which includes about $160 million giving me wrong numbers, no, $140 million of municipal, $120 million of installment for the round number $260 million. The municipal has the added feature obviously it creates investment income as well. So, the earnings on that were twice blessed. If you look at the average duration of the portfolio of say being 10 years, you start to calculate what is going to be the beneficial pick up in earned premium as Bob said, we expect the substantial increase in earned premium, which is reflective of the Ambac transaction plus the higher level of business written in the fourth quarter, that to which reflects the fact that it is going to be a accretive not dilutive. It's a mature book of business, so we were able to immediately leverage to capital that we raise remember the capitals done on an average basis. So, it would be accretive, not dilutive.

Okay. Thanks a lot.

No problem.

Our next question comes from Darin Arita from Deutsche Bank. Please proceed.

Hi, good morning.

Good morning, Darin.

Hi, Darin.

Hi, it certainly sounds like the pipeline of your deals have increased significantly, but can you talk about the actual execution of deals since the startup this year how that compares to execution of deals in the fourth quarter.

Well, you're referring specifically to January. Typically the quarter is always weighted to the end of the quarter not the beginning, and we're seeing a tremendous amount of activity, and actually we close deals as of the January cut off. Currently, we closed in excess of 50 million of PVP, so for to-date in the January month and obviously strong percentage of that US public finance around 40% and the remainder spread out over structured credit. And most of the structured credit area ,either broken deals or deals that were previously mandated to another monocline, that are obviously being moved to us there, is monolines, so for a lot of favor and that's especially true in the international environment, where our international pipeline is growing substantially as well. So, in overall terms, I think we're seeing executions at a higher rate than we've had in the past. We've got a really good amount of already closed business through January that I think will benefit and show how strong the quarter can ultimately become and we've got a lot of proposals out there, today that we believe will be taken up and executed. So, we're very optimistic about first quarter executions.

Great, that's helpful. And then just turning to the commercial mortgage-backed securities market can you talk about what you're seeing is happening there. It looks like Assured Guaranty participated in some deals in the fourth quarter, or is it quite throughout the year in that sector?

Yeah, we are being given some unique opportunities to look at restructured deals or reconstituted deals that we believe today match our view of what we believe is proper underwriting protection, based on the new kind of economic circumstances than we look at today. They are highly rated. They are very, very well protected in terms of where we would ultimately be exposed. For instance on the deal referring to, not that this will mean much, but just to give you some statistics. We are three times the normal AAA attachment in that deal. We also have a cross collateral subordination that sits even below the three times AAA attachment point on those deals. So, they are highly protected and we don't see the same issues relative in the commercial markets is do in the residential market. In other words there has been no speculation investor -- hidden inventory properties. There has been no draft, no verification. The capitalization rates maybe got up a little bit in most recent vintages, but our book is predominantly older book except for the '07 transaction. So, you don't have the same kind of lie alone, you don't the same kind of inflationary movement, the market has not been over-build by any statutory imagination in terms of a commercial side. So, we don't see the same trends at all in our experience, in terms of current losses today, it has been virtually nothing. So, it's been a really well performing book and we are still highly confident in its performance.

Great, thank you.

Thank you.

We have a follow-up question from Andrew Wessel, please proceed.

Thanks. My questions have been answered. I appreciate it.

Our next question comes from Heather Hunt from Citi. Please proceed.

Thank you and good morning and nice quarter.

Thanks Heather.

Thank you.

Nice to hear that your involvement.

Yeah, I'm sure a lot of people will be back. So, there is a lot headline noise also around the CLO market and you have some exposure there. I wonder if you could just sort of walk us through what type of businesses underlie the loan. Are you watching corporate credit risk measures, just generally what are you watching and what's your comfort level there?

Okay. In the CLO market, remember the underlying risk is corporate. It is very well diversified both by industry, by geography, and even the mix of the investment credit within it. Our CLO book is very, very well protected. If you look at the overall pooled corporates as we talked about we having average current enhancement level of 34.8%, everything is rated AAA and still holds its AAA rating. The amount of the delinquencies in those books on specific issues are really based on liquidity more than any thing and it does revolve around the real estate market either be the builders, the construction company etcetera, but the amount of loss has been any one given security is insignificant relative to the total protection we have. I think in the worst case that we have on one of them had there it would might have been a 6% loss we got like 39% attachment. There is not the correlation issue right, so this is not where everything can go bust at the same time. You've got very diversed industries within this structures that really under the typical CDO structures, when we talk about diversification these are truly diversified. So, we are seeing spikes, and any thing related to real estate or construction, but they're insignificant as a percentage of the total pool and therefore we don't see any issues relative to threatening our attachment point or even getting to the level of us having to think about CMC list or portfolio reserves.

Okay, great. And then if I can just turn back over to the CMBS real quick. I wonder if you could just highlight the types of properties are they hotel, are they multifamily, and are they fixed versus floating?

Well, that's the magic of CMBS right. In there is everything you can thing of multifamily, commercial, retail they're very highly diversified pool, within themselves, which also lends us better protection and that it's not exposed to a single type of asset class. So very, very well spread throughout the portfolio.

Okay. And mostly fixed or fixed and floating?

I guess it will be more of a combination of the two.

Okay.

If your question was reset risks right does not a major exposure that we have in those deals.

Okay, great. So, there is like $84 billion that's going to be reset?

Yeah, no, no it doesn't run by the residential side it all.

Great.

And remember a lot of that portfolio was older, the cap rates or the evaluations of property, where reasonable some mature book in those cases. So, we don't have that same level of a stretching a cash flow to meet underline debt service, in most case we have significant protection even on the individual side.

Okay, great. Thank you so much.

You are welcome.

Our next question comes from [Ron Bobman] from [Capital Returns]. Please proceed.

Hi, I got a couple of questions, no particular order. Stress whether you're on the hiring front, whether you're attracting any people from your competitors, whether be sort of, noteworthy sort of relatively senior positions or any meaningful amount in numbers.

We're obviously seeing a lot of interest from some of the personnel at our competitors in terms of wanting to join Assured, and we are selectively going out our teams, as we continue to gauge the amount of volume of opportunities that we're seeing and therefore stepping up accordingly in those areas. Obviously at the senior level, we're very comfortable the team that we have, obviously we built from the top down as we started the company back in '04. So, by and large people that were here then are still here now and just running larger teams, thank god. To the extent that we do look for specific expertise now, so like in the public finance world, we're obviously bringing in more expertise as the various sub categories such as utilities or private hire head. Therefore, we are being benefited by a significant amount of really well qualified candidates that walk in the door with a role with rolo desk with the market presence and we are taking advantage of that where it's necessary.

Okay, thanks. Another question, Dominic you mentioned a sort of mortgage file audit that you've commenced on these two HELOC deals, and sounds like you said you are onside countrywide. Could you talk about what you -- I mean I know what reps and warranties are. In effect there a sort of standard of care or standard of underwriting that is assumed to be practiced and concerned processes pursued and in fact auditing that, if I'm right could you sort of confirm that and be a little more specific?

Well, I don't want to be too specific, because obviously we need ultimately to take position and see what the reaction of that position is going to be by the issuer, but you are exactly right. We are going file by file, and pulling all the information, and making sure that, what is actually covenant to us by the reps and warranties in terms of the borrower, the type of borrower, the type of loan, what was the loan's purpose, location, use of proceeds, etcetera are documented and supported by the file. And we are just exercising our rights with the credit enhancer to do those file reviews, and to the extent that we come with a list of loans that we believe do not reflect accurately the covenants that will provide to us, and obviously we're going to ask for reimbursement.

How many mortgages or HELOCs approximately makeup each of those two transactions?

I'd say thousands, but from the scribbling down. Yeah, 10,000 to 12,000.

Each and then -- okay. And then I had a question sort of a bit of a primer here, you talked pretty quickly about the rapid amp triggers in each of those deals. Could you educate me a little bit more about by what you mean by that and those protections?

Yeah, it's not the easiest thing to explain, but I'll give you the shot. So, in both deals and in the '05-J it's 1.8% of the original pool balance of charge losses or down losses that we'd have to pay. So, it's roughly a $27 million round number and in the '07 deal it's of 1% trigger, which for us is $9 million of loss. So, a very different thresholds, but once you hit the threshold your intimately any structure, the structure performs over it's like and in that because these are lines of credit, you have repayments, but you also have future draws or current draws. So, if a guy signs up for $50,000 line takes out $10,000 initially and ultimately pays that back he doesn't specifically, but as long as there is repayment track in the structure if that fellow wants to take out another $20 or maybe as the case maybe $20,000 three years out obviously they can draw $ 20,000 and if the structure's responsibility to fund those draws. So, basically when you look at your payments in the given markets, it's net payment. It's receipts minus draws going back out. Once you hit the rapid amp trigger, which we defined is that 1.8% and 1% of full losses charged getting results 1.85% on the '05. Once you hit the trigger, the future draws are no longer the responsibility of the securitization, but have to be funded by the issuer into the securitization. So, that we in effect get reimbursed for that draw that reimbursement comes into the structure because the draw going out is subordinate to our position, it in effect builds up our over collateralization or subordinate position, where it should have been in the deals. So, say in the '07-J I think if…

Thanks. Just a little bit more understand as the trigger -- I thought you said the trigger was already because you've already paid some losses on the '05-J and it trigger effect there or no?

No, we have only paid 3 plus million we've got to pay 27 million before you hit trigger.

Okay. I am sorry to have interrupted you.

And in the '07 deal we paid zero so far but the trigger is 19.

Okay. And then my last question was in this subject. Once this trigger is breached, is it forever breached, there is not where by the funding from the originator to fund additional draw downs on individual loans, sort of remedy the situation and drops you down below once breached?

No you still the turbo amortization, so we would still get off the deal, obviously prior to when we would normally expect that it is going to run its natural course.

We get the bill back up our production but the amortization still continues.

And the originator funds are future draw downs of remaining borrowing availability by you.

Yeah.

Okay, okay.

Yeah, there is no cure of that.

Okay. Thanks for time and best of luck. Hope it continues.

Thank you.

Our next question comes from Mike Grasher for Piper Jaffray. Please proceed.

Hi. Just a follow up, Ron had asked the people question but a follow up to that would be, to Bob and whether not the potential for new additions in terms of human capital that’s already in the budget or if that’s something would be additive and how significant would it be.

Not in the budget at this point. What was it? Give the question once more.

How significant would it be?

All the new people are there in the budget. I'm sorry. They absolutely are in the budget. One of the things that's difficult with the budget this year is the market and the opportunities and trying to gauge exactly what they will be. We have geared in headcount increase into the budgets. There is no doubt about that. If the opportunities are greater than we expect, we may alter that. There is no doubt about that. But they are geared into the budget and included in my estimate of operating expenses for next year that I get.

I think we are on our fourth version of the budget. Our board is also very interested in our budget as well, and we've actually told them we are going to give them a little bit greater clarity as we look through the March. So we are actually conveying probably our third official board meeting on the budget, our owned internally fifth version of the budget to try to figure out where we think '08 is going to be relative to where we see this kind of market opportunity as reflected in our pipeline.

Sounds good. Thanks.

Thank you.

(Operator Instructions). Our next question comes from Jonathan Adams from Oppenheimer Capital. Please proceed.

Good morning. I was wondering, how much flexibility do you have in the form in which you write your guaranty contracts. In other words, are you able to move away from the CDS form for certain products? Or is it pretty much locked in once you decide you're going to guaranty a particular type of product?

That's a good question. We have historically tried to avoid CDS where possible but in some cases that's a specific requirement of the person seeking the insurance, right? I mean in some cases, we just actually charge less to convert the execution of FG, just to get around issues like mark-to-market, which in the old days just be the biggest concern we had relative to the CDS execution. So, we typically target FG. We typically try to execute FG, but in some cases for the benefit, we realized be it accounting or capital, it has to be in swap form.

But all the public financial.

Yeah, but you know Bob points out because of the preponderance of our opportunities there in public finance, obviously they are all in FG form.

Right. And just to get one flavor of how severe some of these marks are. I know you have CDO that is maturing in April 08.

Yeah.

Do you have a negative mark against that today?

Yes.

Okay.

I know it's not considerable because…

No, I would realize that it would be minor. But I am just wondering.

Remember that one still hold its rating and it is mostly CMBS, not RMBS, therefore it has only taken the CMBS now.

As it approaches maturity like that, the impact of the negative markets, it's really not significant.

Thanks very much.

You are welcome.

We have a follow-up question from Ron Bobman. Please proceed.

Hi Dominic, I am curious to know when the plain review commence and how may bodies you have there?

We actually hired an outside firm that actually has expertise in it, so it is supervised by us, but we have got lot more bodies on the street that we can possibly provide and we have started this about three weeks ago. I mean we try to get in for while so you got understand, this is kind of by appointment always, they just don't ring the doorbell, walk-in and say hi. You know, I've got my army of auditors here ready to overwhelm your files.

And so they might be evaluating in-house also.

Well, I am sure they are there as well. So, I we are not by ourselves.

All right, thanks again.

It's time to create a data room, right.

Data building.

Yeah.

All right. Bye, bye.

Thanks.

(Operator Instructions). I would now like to turn the call back over to Sabra Purtill for closing remarks. Please proceed.

Thank you, Lisa, and thank you all for joining us today. We certainly appreciate your interest in the Assured and the many questions you have asked. I would just note that a replay of this call will be available on our website as well as by telephone number and those numbers were in original press release for the call. Furthermore, if members of the media have questions or inquiries to follow up with me on, I may be reached in Bermuda today at 441-278-6665 or via e-mail at spurtill@assuredguaranty.com. Thank you again and have a good day.

Thank you for participating in today's conference. This concludes the presentation. You may not disconnect. Have a great day thank you. Thank you.