Underwriting

Our financial guaranty reinsurance portfolio was built upon conservative underwriting standards both in terms of the types of risks we reinsured as well as the risk limits that we established. Our reinsurance was underwritten to a remote-loss standard, which means that at the time a policy on any particular transaction was issued (and when we reinsured it), no losses were expected for the entire term of the policy. In addition to our own views on the quality of the risks we assumed, such investment grade quality standards were independently established by the primary financial guaranty insurers and/or the rating agencies, Moody's and Standard & Poor's, in substantially all of the transactions reinsured.

AORE continues the efforts it began in 2008 to reduce the volatility of its insured portfolio. Since 2008, AORE has commuted a significant portion of its insured portfolio, including exposures in troubled sectors such as US residential mortgage-backed securities ("RMBS"), asset-backed collateralized debt obligations ("CDOs") backed by RMBS and CDOs backed by commercial mortgage-backed securities ("CMBS"). At the present time, the Company does not intend to reenter the financial guaranty market; however, the Company is considering writing short-term, non-catastrophe, property/casualty reinsurance business. Any new business undertaken would be subject to regulatory approval.