announced the completion of a joint venture to create two new financial guaranty insurance companies on the Island.

Each of the new companies have been initially capitalised with $100 million.

FSA subsidiary Financial Security Assurance International Ltd. has been given a claims paying ability rating of AAA by Fitch IBCA X.L. Financial Assurance Ltd., the Exel subsidiary, has been given an AA rating.

FSA and Exel swapped about $80 million worth of their common shares as part of the deal. FSA then sold about $60 million of the Exel shares to fund in part its investment in FSA International.

FSA is in the business of guaranteeing scheduled payments of principal and interest of municipal bonds and asset-backed securities, including residential mortgage-backed securities.

FSA's new Bermuda-based subsidiary will write non-US business. In rating the subsidiary Fitch IBCA cited the "significant cost savings'' for the company through being located in Bermuda.

"Bermuda does not have a corporate income tax,'' Fitch stated in a press release. "Furthermore, as a controlled foreign corporation, FSA International's earnings are not subject to US income tax. Finally, because FSA International will not directly write US business, it does not need to acquire licences in any US state.''