Bermuda-based RAM Re has raised additional capital of $91.6 million, clearing the way to have its triple-A rating affirmed by Standard & Poor's.

The PMI Group, Inc. announced that it had invested an additional $24.4 million investment in RAM Reinsurance Company Ltd., a financial guaranty reinsurer. PMI will maintain a 24.9 percent ownership interest with this additional investment. RAM Re raised $91.6 million of additional capital in total to strengthen its capital reserves.

The investment has led Standard & Poor's to affirm RAM Re's AAA rating, and to change the company's rating outlook to stable.

MBIA Inc. (MBIA), one of the world's largest triple-A rated primary financial guaranty insurers, also made an initial capital investment in RAM Re as part of the capital funding. MBIA is one of RAM Re's key customers.

Other participants in this round of capital investment are Transatlantic Reinsurance Company and CIVC Sidecar Fund, L.P.

"We're really excited about MBIA investing in RAM Re," said Brad Shuster, president of PMI Capital Corporation. "It has enabled RAM Re to preserve its triple-A rating. We believe the capital fortification uniquely positions RAM Re and we are very optimistic about RAM Re's future prospects."

RAM Re's increase in capital, and the resolution of its S&P rating outlook, will allow the company to focus on providing highly rated financial guaranty reinsurance to its customers.

"With this latest infusion of capital, the company is poised to take advantage of its economies of scale, provide higher returns to investors, and meet its long term return on equity goals," said Carolyn Thoms, chief financial officer of RAM Re.

The PMI Group, Inc. is headquartered in Walnut Creek, California and is one of the largest private mortgage insurers in the world.

Through its subsidiaries, PMI provides private mortgage insurance in the United States, Australia, New Zealand and Europe, and mortgage guaranty reinsurance in Hong Kong. It is also a leader in credit risk management and the development of structured credit enhancement solutions.

RAM Re was established through an $88 million placement in February, 1998, as a niche market play intended to take advantage of an increased emphasis of diversity of reinsurance sources by the "AAA/Aaa" rated financial guaranty primary insurers.

The company was formed as a response to the dominance of bond reinsurance at the time by two companies: Cap Re and Enhance Re. The RAM in the company's name is acronymic for Reinsurance of Asset-backed and Municipal bonds.

RAM Re reinsures investment grade securities insured in the municipal and structured finance markets. RAM Re has strong relationships with each of the four largest primaries and is developing relationships with the newer entrants in this market.

Financial guaranty reinsurance, or "bond reinsurance", as it is commonly known, is primarily the business of reinsuring bonds issued by municipalities and the structured finance market as asset-backed paper. The industry had its origins in the municipal bond industry in the early 1970s. Crucial to the business, and one of the causes of the concentration problem, is related to the need for a bond to carry the highest rating possible, to minimise the interest cost the issuer must pay.

The rating relates to the company's claims-paying ability. The modelling exercise on which the ratings are based subjects the company to a theoretical series of increasing levels of economic stress, up to and including a full-blown depression. Before it could offer its service, RAM Re had to prove to S&P that it would survive every conceivable economic crisis, including a depression of the magnitude of the 1930s.