Syncora Guarantee Inc. Completes Comprehensive Restructuring

Financial Guarantor Closes 2009 MTA and Expects to Complete Remediation of Approximately $4.0 billion Policyholders' Surplus Deficit

NEW YORK, July 17 /PRNewswire-FirstCall/ -- Syncora Holdings Ltd. ("Syncora") today announced that its wholly owned New York financial guarantee subsidiary, Syncora Guarantee Inc. ("Syncora Guarantee" or the "Company"), completed substantially all of the steps of its comprehensive restructuring. On July 15, 2009, the Company closed substantially all the transactions contemplated by the master transaction agreement (the "2009 MTA") between Syncora Guarantee and certain financial counterparties to Syncora Guarantee's credit default swap ("CDS") and financial guarantee policies and accepted the tender offer for certain residential mortgage-backed securities insured by Syncora Guarantee (the "RMBS Tender Offer"). As a result, pending the closing and settlement of all related transactions, the Company believes it will remediate its policyholders' surplus deficit in the range of $3.9 and $4.1 billion that is expected to be reported as of June 30, 2009. The restructuring will effectively relieve the Company of approximately $6.0 billion in losses and loss reserves. The Company expects that the successful remediation of its policyholders' surplus deficit will allow the Company to return to compliance with the New York State Insurance Department's (the "NYID") minimum policyholders' surplus requirement of $65 million. Syncora Guarantee is not currently writing new insurance business and, along with its newly formed financial guarantee insurance subsidiary, Syncora Capital Assurance Inc. ("Syncora Capital Assurance"), will not resume writing new insurance business.

The NYID approved the transactions relating to the restructuring and directed that, upon the completion of each of the transactions so approved, the Company will confirm to the NYID that such closings have occurred and the impairment to its policyholders' surplus has been removed. The NYID will review such submission and notify the Company when the restriction on claims payments under the existing claims suspension order issued on April 10, 2009 is lifted so that the Company may recommence claim payments. The one remaining transaction not yet closed or subject to binding documentation and in settlement under the RMBS Tender Offer is documented by an executed letter agreement providing for negotiation of definitive agreements by July 31, 2009, failing which the associated term sheet terminates.

"We are pleased to announce this very significant and unprecedented restructuring in the financial guarantee industry. We expect that the successful completion of all the various transactions will restore Syncora Guarantee to positive policyholders' surplus," commented Mike Esposito, Chairman of Syncora's Board of Directors.

Acting Chief Executive Officer Susan Comparato added, "This result would not have been possible without the hard work and dedication of the Company's employees and its advisors. Thank you also to the NYID for their ongoing oversight of the restructuring process, which was essential in helping the Company achieve its goals. BSG Markets LLC and Deutsche Bank Securities, as dealer managers for the RMBS Tender Offer, should be commended for their efforts."

Following the closing of the 2009 MTA, Syncora Guarantee's financial counterparties received 23,736,349 common shares of Syncora and 6,332,700 of the common shares of Syncora that were previously held in trust for the benefit of Syncora Guarantee were cancelled. As of July 15, 2009, Syncora had 59,339,343 total common shares outstanding, with the financial counterparties holding approximately 40% of the aggregate equity ownership. In addition, the financial counterparties received surplus notes of an aggregate amount of $625 million issued by Syncora Guarantee.

Additionally, Syncora announced that in connection with the closing of the 2009 MTA, Syncora Capital Assurance reinsures on a cut-through basis substantially all of Syncora Guarantee's public finance and selected global infrastructure business. Policyholders reinsured by Syncora Capital Assurance will be notified of their ability to make claims directly to Syncora Capital Assurance. Syncora Capital Assurance also assumed, via novation from Syncora Guarantee, substantially all of Syncora Guarantee's financial guarantee insurance policies issued on any CDS contracts that were not commuted under the 2009 MTA.

Information Regarding Syncora Guarantee's Financial Position Following the Consummation of the 2009 MTA, the RMBS Tender Offer and Related Transactions

As of June 30, 2009, Syncora Guarantee expects to report a policyholders' surplus deficit in the range of $3.9 to $4.1 billion. The comprehensive restructuring to remediate the Company's policyholders' surplus deficit included three primary components: (1) the commutation and restructuring of substantially all of Syncora Guarantee's CDS portfolio; (2) the remediation of expected losses on the Company's insured RMBS; and (3) the creation of Syncora Capital Assurance. The closing of the transactions related to the 2009 MTA effectively commuted or restructured all of Syncora Guarantee's $56 billion of CDS exposure. The 2009 MTA provided for the effective commutation of the Company's financial guarantees of CDS relating to collateralized debt obligations of asset-backed securities ("ABS CDOs") and other structured products with an aggregate par approximating $15 billion and case basis loss reserves in accordance with statutory accounting principles as permitted by the NYID ("SAP") approximating $4.6 billion. This represents all of Syncora Guarantee's CDS exposure for which the Company has reserves or expects losses with respect to ABS CDOs and substantially all of Syncora Guarantee's financial guarantee exposure to ABS CDOs with expected losses.

The RMBS Tender Offer closed on July 15, 2009 and, upon settlement thereof, Syncora Guarantee will effectively commute approximately $3.8 billion of insured RMBS and approximately $1.2 billion in loss and loss reserves associated with Syncora Guarantee's RMBS portfolio. Syncora Guarantee achieved a total of 68.4 remediation points, or 95% of the target amount, in the RMBS Tender Offer. Along with the reinsurance of certain insured public finance and selected global infrastructure bonds by Syncora Capital Assurance, Syncora Guarantee has restructured or commuted in aggregate approximately $110 billion of par bonds insured.

On a SAP basis, after giving effect to the transactions contemplated by the 2009 MTA, the RMBS Tender Offer and related transactions on a pro forma basis as if they had been consummated on June 30, 2009, Syncora Guarantee would expect to report total policyholders' surplus at June 30, 2009 in the range of $150 million to $210 million, as compared to an expected policyholders' surplus deficit (unaudited) at June 30, 2009 in the range of $3.9 to $4.1 billion. The policyholders' surplus of Syncora Capital Assurance, reflecting its initial capitalization and its assumption of certain business from Syncora Guarantee, is expected to be in the range of $265 million to $295 million.

Set forth in the table below is certain combined projected pro forma summary balance sheet financial information of Syncora Guarantee and Syncora Capital Assurance, prepared in accordance with SAP, which gives effect to transactions contemplated by the 2009 MTA, the RMBS Tender Offer and related agreements as if they had been consummated on June 30, 2009. The pro forma adjustments in the table below reflect the mid-point of the range of pro forma policyholders' surplus discussed above.

                                        SYNCORA GUARANTEE

                                Expected
                                 to be
                                Reported      Pro Forma      Pro Forma
    ($ amounts in millions)     06/30/2009    Adjustments    06/30/2009

    Assets
        Cash, invested assets,
         and accrued investment
         income                    $3,228       $(542) (a)        $391
                                                 (364) (b)
                                               (1,249) (c)
                                                 (572) (d)
                                                 (111) (e)
        Investment in subsidiaries
            SGI-UK                      -          40  (f)          40
            SCAI                        -         542  (a)         281
                                        -        (261) (b)

        Other assets                  211         105  (d)         316
            Total Assets           $3,439     $(2,412)          $1,027

    Liabilities and Capital
     and Surplus
        Liabilities:
            Unpaid losses and loss
             adjustment expenses   $6,353     $(4,624) (c)         384
                                               (1,293) (d)
                                                  (52) (e)
            Deferred premium
             revenue                  711        (438) (b)         273
            Mandatory contingency
             reserves                 296        (187) (b)          98
                                                   (2) (c)
                                                   (1) (d)
                                                   (7) (e)
             Other liabilities         77           5  (c)          91
                                        -           9  (e)           -
                Total liabilities   7,437      (6,590)             847

        Capital and Surplus:
            Surplus notes               -         625              625
            Preferred stock -
             Series B
             non-cumulative
             perpetual                200                          200
            Common stock and
             additional
             paid-in-capital        2,014                        2,014
            Accumulated deficit    (6,212)      2,747  (c)      (2,659)
                                                  827  (d)
                                                  (61) (e)
                                        -          40  (f)           -
                Total Capital
                 and Surplus       (3,998)      4,178              180
                Total Liabilities
                 and Capital and
                 Surplus           $3,439     $(2,412)          $1,027



                            SYNCORA CAPITAL ASSURANCE

                                      Pro Forma
    ($ amounts in millions)           06/30/2009

    Assets
        Cash, invested assets,
         and accrued investment
         income                       $542 (a)
                                       364 (b)



        Investment in subsidiaries
            SGI-UK
            SCAI


        Other assets                     -
            Total Assets              $905

    Liabilities and Capital
     and Surplus
        Liabilities:
            Unpaid losses and loss
             adjustment expenses        $-


            Deferred premium
             revenue                   438 (b)
            Mandatory contingency
             reserves                  187 (b)



             Other liabilities           -

                Total liabilities      625

        Capital and Surplus:
            Surplus notes              350 (a)
            Preferred stock -
             Series B
             non-cumulative
             perpetual
            Common stock and
             additional
             paid-in-capital           192
            Accumulated deficit       (261) (b)


                                         -
                Total Capital
                 and Surplus           280
                Total Liabilities
                 and Capital and
                 Surplus              $905

(a) To record capitalization of Syncora Capital Assurance.

(b) To record reinsurance and novation of certain business to Syncora Capital Assurance from Syncora Guarantee.

(c) To record the commutation of certain of Syncora Guarantee's CDS contracts and related insurance policies.

(d) To record the in-substance defeasement of RMBS tendered in connection with the RMBS Transaction Agreement, resumption of RMBS claim payments and direct purchases of RMBS.

(e) To record certain other transactions related to the 2009 MTA.

(f) To record permitted practice to admit the carrying value of Syncora Guarantee's UK subsidiary.

The table below provides a summary of combined net par outstanding and loss estimates for Syncora Guarantee and Syncora Capital Assurance expected as of June 30, 2009 and on a pro forma basis giving effect to the completion of the transactions contemplated by the 2009 MTA, the RMBS Tender Offer and related transactions, as if they had been completed on June 30, 2009.

               SYNCORA GUARANTEE AND SYNCORA CAPITAL ASSURANCE
                             ON A COMBINED BASIS

                            Expected                         Pro Forma
                             Net Par                          Net Par
                            Outstanding                      Outstanding
    Amounts in Millions     06/30/2009    Adjustments (1)    06/30/2009

    Public Finance            $53,065        $(477)            $52,588
    RMBS                        8,303       (3,870)              4,433
    ABS CDOs                   14,117      (13,855)                262
    CDOs of CDOs                1,425       (1,119)                306
    All other                  54,860         (379)             54,482
         Total               $131,771     $(19,700)           $112,071


                            Expected                          Pro Forma
                              Loss                              Loss
                            Reserves                          Reserves
                            06/30/2009    Adjustments (1)     06/30/2009
    Public Finance                $34           $-                 $34
    RMBS                        1,588       (1,286)                302
    ABS CDOs                    4,318       (4,305)                 13
    CDOs of CDOs                  338         (328)                 10
    All other                      75          (50)                 25
         Total                 $6,353      $(5,969)               $384

(1) Represents pro forma adjustments giving effect to the transactions contemplated by the 2009 MTA, the RMBS Tender Offer and related agreements as if they had been consummated on June 30, 2009.

About Syncora Holdings Ltd.

Syncora Holdings Ltd. (OTC: SYCRF) is a Bermuda-domiciled holding company. Syncora Guarantee Inc. is a wholly owned subsidiary of Syncora Holdings Ltd. For more information, please visit www.syncora.com.

    Investor and Media Contact:
    Michael Gormley
    +1 212-478-3463
    michael.gormley@scafg.com

FORWARD-LOOKING STATEMENTS

This release contains statements about future results, plans and events that may constitute "forward-looking" statements. You are cautioned that these statements are not guarantees of future results, plans or events and such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Syncora Guarantee's control. These factors include, but are not limited to: the suspension of all claims payments; Syncora Guarantee's ability to maintain minimum policyholders' surplus following the closing of the 2009 MTA and the RMBS Tender Offer; higher losses on guaranteed obligations due to deterioration in the credit and mortgage markets; the suspension of writing substantially all new business; the effect of adverse developments in the credit and mortgage markets on Syncora Guarantee's in-force business; higher loss reserves estimates and the adequacy of the loss reserves; uncertainty as to the fair value of CDS contracts and liabilities thereon; decision by Syncora Guarantee's regulators to take regulatory action such as rehabilitation or liquidation of Syncora Guarantee at any time; Syncora Capital Assurance being required to make mark-to-market termination payments under its CDS contracts; Syncora Guarantee's ability to continue as a going concern; the performance of invested assets; payment of claims on guaranteed obligations, including Jefferson County, Alabama and RMBS; the ability of the Company to successfully conclude the negotiation of definitive agreements with respect to one of the remaining transactions approved by the NYID as part of its restructuring; bankruptcy events involving counterparties to CDS contracts; the potential loss of certain control rights under certain financial guarantee insurance; non-payment of premium and makewholes owed or cancellation of policies; impact of the non-payment of dividends on Syncora's series A preference shares on the composition of Syncora's Board of Directors; uncertainty in portfolio modeling which makes it difficult to estimate potential paid claims and loss reserves; unavailability of funds due to the purchase of certain RMBS and the potential inability to convert those assets to cash at their carrying value; unavailability of funds due to capitalization of Syncora Capital Assurance; unavailability of funds due to consideration expected to be paid to certain of the counterparties under the 2009 MTA; potential adverse developments at Syncora Capital Assurance and recapture of business to be ceded to Syncora Capital Assurance under the 2009 MTA; the financial condition of Syncora Guarantee (U.K.) Limited and action by the Financial Services Authority; requirement of Syncora Guarantee to provide Syncora Guarantee (U.K.) Limited with sufficient funds to maintain its minimum solvency margin; challenges to the Master Commutation, Release and Restructuring Agreement dated July 28, 2008, as amended, and related commutations and releases and/or the 2009 MTA; ratings downgrades or the withdrawal of ratings; defaults by counterparties to reinsurance arrangements; the interconnectedness of risks that affect Syncora Guarantee's reinsurance and insurance portfolio and financial guarantee products; termination payments related to less traditional products, including CDS contracts, possibly in excess of current resources; nonpayment of premiums by policyholders; changes in accounting policies or practices or the application thereof; uncertainty with respect to the valuation of CDS contracts; changes in officers or key employees; further deterioration in general economic conditions, including as a result of the financial crisis as well as inflation, interest rates, foreign currency exchange rates and other factors and the effects of disruption or economic contraction due to catastrophic events or terrorist acts; the commencement of new litigation or the outcome of current and new litigation; legislative or regulatory developments, including changes in tax laws and regulation of mortgages; losses from fraudulent conduct due to the unconditional and irrevocable nature of financial guarantee insurance; problems with the transaction servicers in relation to structured finance transactions; limitations on the availability of net operating loss carryforwards; uncertainty as to federal income tax treatment of CDS contracts; liquidity risks including due to undertakings with the NYID; conflicts of interests with significant shareholders of Syncora; limitations on the transferability of the common shares of Syncora and other additional factors, risks or uncertainties described in Syncora's filings with the Securities and Exchange Commission, including in its Annual Report on Form 10-K for the fiscal year ended December 31, 2008, as amended. Readers are cautioned not to place undue reliance on forward-looking statements which speak only as of the date they are made. Syncora does not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements are made.

SOURCE Syncora Holdings Ltd.