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• Moody's downgrades MBIA's rating to A2; outlook is negative <br />fosses could increase in a sharp economic downtum, strong premium accretion, investment eamings and <br />portfolio amortization should help to offsel any resulting impact on capital adequacy. Moody's r►oted, <br />however, ihat downward rating pressure could occur if MBIA's capitat position eroded through the extraction <br />of capita� or due to further increases in projected stress loss estimates_ <br />Moody's wil! continue to evaivate MBIA's ratings in the context of the future performance of the company's <br />mortgage-related exposures relative to expectations and resulting capital adequacy levels, as well as <br />changes to the company's strategic and capital management plans as a single-A rated company. In <br />February, MBIA announced a long-term strategic objective of separafing its municipal insurance, structured <br />insurance and assef management businesses into distinct tegaf entities. Moody's said that managemenYs <br />recent decision to retain at the holding company the $1.1 bitlion in proceeds from its latest equity raise <br />suggests that the firm is coniemplating a more accelerated timeframe for such transformation. <br />LIST OF RATING ACTIONS <br />The following ratings have been downgraded: <br />• MBIA Insurance Corporation -- insurance financial strength to A2 from Aaa, and surplus notes to Baa1 from <br />Aa2; <br />• MBfA Insurance Corporation of Illinois — insurance financiaf strength 10 A2 from Aaa; <br />• Capital Markets Assurance Corporation — insurance financial strength to A2 from Aaa; <br />• MBIA 11K Insurance Limited -- insurance financial strength to A2 from Aaa; <br />• MBIA Assurance S.A. — insurance financial strength to A2 from Aaa; <br />• MBIA Mexico SA. de C.V.'s — insurance financial strength to A2 from Aaa (the firm's Aaa.mx -- national <br />scale rating — is affirmed); <br />• MBIA Inc. -- senior unsecured debf to Baa2 from Aa3, provisional senior debt to (P) Baa2 from (P} Aa3, <br />provisional subordinated debt to (P) Baa3 from (P) A1, and provisional preferred stock to (P) Ba1 from (P) <br />A2; <br />• North Castle Custodial Trusts I-Vlfl — contingent capital securities to Baa2 from Aa3; <br />Established in 1974, MBIA provides financial guarantees to issuers in the municipal and struciured finance <br />markeis in the t�nited States, as wel{ as intemalionally_ MBIA atso offers various complementary services, <br />such as investment ma�agement and municipa! invesUnent contracts. <br />New York <br />Stanislas Rouyer <br />Senior Vice President <br />Financial Institutions Group <br />Moody's Investors Service <br />JOU RNA L tSTS: 212-553-0376 <br />S U BS C R I B E RS: 212-553-1653 <br />New York <br />Jack Dorer <br />Managing Director <br />Financiaf Institutions Group <br />Moody's Investors Service <br />JOU RI�{AL ISTS: 212-553-0376 <br />S U BSC R I B E RS: 212-553-1653 <br />Page 2 of 3 <br />O Copyright 2008, Moody's Investors Service, Inc. and/or its licensors including Moody's Assurance Company, fnc. <br />(iogether, "MOODY'S")_ AIf rights reserved. <br />ALL It�fFORMATIOfd CO�dTAINED HEREIN IS PROTECFED BY COPYRIGHT LA1N AND PdOPfE OF SUCH IFJFORMATtON h1AY BE <br />COPIED OR OTHERYdISE REPRODUCED, REPACKAGED, FURTF{ER TRAFdSMITTED, TRAP�SFERRED, DISSEMIIVATE�, <br />http:Uwww.moodys.com/moodys/cust/research/MDCdocs/19/2007I000005] 1849.asp?doc.._ 6/19/2008 <br />