The global bond insurance market is frequently categorized into two main sectors, Public Finance and Structured Finance, divided geographically between the United States and International. Public finance obligations consist primarily of debt obligations issued by or on behalf of states or other governmental entities or their political subdivisions (counties, cities, towns and villages, utility districts, public housing and transportation authorities) and other public and quasi-public entities (including public universities and not-for-profit hospitals, and non-U.S. sovereigns and their political subdivisions), private universities and hospitals and investor-owned utilities. These obligations generally are supported by the taxing authority of the issuer, or the issuer’s or underlying obligor’s ability to collect fees or assessments for certain projects or public services.

Structured finance obligations are generally backed by pools of assets such as residential mortgage loans, consumer or trade receivables, securities or other assets having a specified cash flow or market value which are generally held by a special purpose issuing entity. Structured finance obligations include funded and synthetic transactions. Funded structured finance obligations are typically payable from cash flow generated by a pool of assets and take the form of either “pass-through” obligations, which represent interests in the related assets, or “pay-through” obligations, which generally are debt obligations collateralized by the related assets. Synthetic structured finance transactions are typically credit default swap contracts in which one party sells credit protection on a reference obligation (generally a fixed-income obligation) in return for a premium payment from another party.

The Company reinsures a number of different sectors of public finance obligations. Transactions in the general obligations sector are primarily backed by the full faith and credit of state and local governments. Also included in this sector are lease obligations of state and local governments. Transactions in the utilities sector are typically secured by a pledge of revenues from the operations of municipal-owned water, sewer or electric utilities. Transactions in the tax-backed obligations sector are primarily secured by sales, gas, motor vehicle registration and other miscellaneous excise taxes. Transactions in the hospitals sector are backed by the revenues of either stand-alone hospitals or healthcare systems and are also frequently secured by mortgages on the assets of such entities. Transactions in the transportation sector are secured by airport revenues, parking fees, highway tolls and port charges.

Transactions in the colleges and universities sector are secured by the general obligation pledge of a college or university, by student fees or by the revenues of a particular segment of an educational institution’s operations. Transactions in the investor-owned utilities sector comprise the debt obligations of IOUs in the United States with the majority comprised of electric utilities. The Other category represents transactions secured by miscellaneous state or local government revenues. The Company’s international public finance sector includes obligations of sovereigns and sub-sovereigns (such as Canadian provinces) as well as project finance transactions financed via public/private partnerships, typically patterned after the U.K. Private Finance Initiative. This sector also includes non-U.S. IOUs.

Gross written premiums for the first nine months of 2005 were $55.2 million, a 14.5% increase from the comparable 2004 period.

Earned premiums of $31.4 million during the first nine months of 2005 were 14.5% above the comparable period of 2004

Investment income was $12.9 million for the first nine months of 2005, a 7.5% improvement over the comparable 2004 period.

Net realized investment losses were $1.1 million during the first nine months of 2005, compared to net realized investment gains of $0.6 million in the comparable 2004 period.

Operating expenses for the first nine months of 2005 were $9.4 million, $1.2 million higher than the $8.2 million incurred for the first nine months of 2004.