Exhibit 99.3
                                 ------------





<PAGE>









                     FINANCIAL GUARANTY INSURANCE COMPANY

                             Financial Statements

                          December 31, 2002 and 2001

                  (With Independent Auditors' Report Thereon)





<PAGE>

                     FINANCIAL GUARANTY INSURANCE COMPANY



                               Table of Contents




                                                                          Page

Independent Auditors' Report                                                1

Balance Sheets                                                              2

Statements of Income                                                        3

Statements of Stockholder's Equity                                          4

Statements of Cash Flows                                                    5

Notes to Financial Statements                                               6






<PAGE>

                         Independent Auditors' Report



The Board of Directors and Stockholder
Financial Guaranty Insurance Company:


We have audited the accompanying balance sheets of Financial Guaranty
Insurance Company as of December 31, 2002 and 2001, and the related statements
of income, stockholder's equity and cash flows for each of the years in the
three-year period ended December 31, 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion. In our opinion, the
financial statements referred to above present fairly, in all material
respects, the financial position of Financial Guaranty Insurance Company as of
December 31, 2002 and 2001, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 2002
in conformity with accounting principles generally accepted in the United
States of America.






/s/ KPMG LLP






New York, New York
February 14, 2003



<PAGE>

<TABLE>
<CAPTION>


                     FINANCIAL GUARANTY INSURANCE COMPANY

                                Balance Sheets

                          December 31, 2002 and 2001

               (Dollars in thousands, except per share amounts)





                                Assets                                            2002                   2001
                                                                           --------------------   --------------------
<S>                                                                     <C>                              <C>
Fixed maturity securities, at fair value (amortized cost of
    $2,714,016 in 2002 and $2,339,319 in 2001)                          $         2,795,382              2,317,022
Preferred stock, at fair value (cost of $30,598 in 2002 and 2001)                    30,090                 29,888
Short-term investments, at cost, which approximates fair value                       43,144                255,271
Cash                                                                                  7,260                    281
Accrued investment income                                                            33,077                 34,262
Receivable for securities sold                                                          991                     --
Reinsurance recoverable                                                               8,371                  9,640
Prepaid reinsurance premiums                                                        129,958                130,298
Deferred policy acquisition costs                                                    71,350                 71,700
Property and equipment, net of accumulated depreciation ($8,266 in
    2002 and $8,213 in 2001)                                                            375                    428
Prepaid expenses and other assets                                                     7,799                  9,383
                                                                           --------------------   --------------------
              Total assets                                              $         3,127,797              2,858,173
                                                                           ====================   ====================
              Liabilities and Stockholder's Equity

Liabilities:
    Unearned premiums                                                   $           683,532                612,791
    Loss and loss adjustment expenses                                                47,868                 48,855
    Ceded reinsurance balances payable                                                2,239                  1,928
    Accounts payable and accrued expenses                                            11,858                 18,037
    Payable for securities purchased                                                  5,333                 14,667
    Current Federal income taxes payable                                             97,477                 87,729
    Deferred Federal income tax liability                                            90,595                 67,288
                                                                           --------------------   --------------------
              Total liabilities                                                     938,902                851,295
                                                                           --------------------   --------------------
Stockholder's equity:
    Common stock, par value $1,500 per share; 10,000 shares
      authorized, issued and outstanding                                             15,000                 15,000
    Additional paid-in capital                                                      383,511                383,511
    Accumulated other comprehensive income (loss), net of tax                        49,499                (14,932)
    Retained earnings                                                             1,740,885              1,623,299
                                                                           --------------------   --------------------
              Total stockholder's equity                                          2,188,895              2,006,878
                                                                           --------------------   --------------------
              Total liabilities and stockholder's equity                $         3,127,797              2,858,173
                                                                           ====================   ====================

See accompanying notes to financial statements.


</TABLE>


                                      2
<PAGE>

<TABLE>
<CAPTION>


                     FINANCIAL GUARANTY INSURANCE COMPANY

                             Statements of Income

                 Years ended December 31, 2002, 2001, and 2000

                            (Dollars in thousands)



                                                                  2002                  2001                   2000
                                                           -------------------   --------------------   --------------------
      <S>                                               <C>                               <C>                    <C>
      Revenues:
          Gross premiums written                        $           232,579               154,627                102,323
          Ceded premiums written                                    (26,602)              (18,765)               (18,182)
                                                           -------------------   --------------------   --------------------
                    Net premiums written                            205,977               135,862                 84,141

      Increase in net unearned premiums                             (71,080)              (33,380)                (4,058)
                                                           -------------------   --------------------   --------------------
                    Net premiums earned                             134,897               102,482                 80,083

      Net investment income                                         119,595               124,992                135,624
      Net realized gains                                             68,546                77,043                 21,929
      Other income                                                    5,309                 1,896                     --
                                                           -------------------   --------------------   --------------------
                    Total revenues                                  328,347               306,413                237,636
                                                           -------------------   --------------------   --------------------
      Expenses:
          Loss and loss adjustment expenses                             501                 1,752                  3,550
          Underwriting expenses                                      34,092                27,097                 24,074
          Policy acquisition costs deferred                         (14,911)              (11,742)                (8,096)
          Amortization of deferred policy acquisition
            costs                                                    15,261                 8,472                 11,396
                                                           -------------------   --------------------   --------------------
                    Total expenses                                   34,943                25,579                 30,924
                                                           -------------------   --------------------   --------------------
                    Income before provision for
                      Federal income taxes                          293,404               280,834                206,712
                                                           -------------------   --------------------   --------------------
      Federal income tax expense (benefit):
          Current                                                    87,203                63,011                 34,687
          Deferred                                                  (11,385)                2,555                  1,285
                                                           -------------------   --------------------   --------------------
                    Total Federal income
                      tax expense                                    75,818                65,566                 35,972
                                                           -------------------   --------------------   --------------------
                    Net income                          $           217,586               215,268                170,740
                                                           ===================   ====================   ====================

      See accompanying notes to financial statements.

</TABLE>


                                      3
<PAGE>


<TABLE>
<CAPTION>


                     FINANCIAL GUARANTY INSURANCE COMPANY

                      Statements of Stockholder's Equity

                 Years ended December 31, 2002, 2001, and 2000

                            (Dollars in thousands)


                                                                                          Accumulated
                                                                                             other
                                                                                         comprehensive
                                                                          Additional        income
                                                                            paid-in       (loss), net      Retained
                                                         Common Stock       capital          of tax        earnings       Total
                                                         --------------  --------------  --------------  --------------  ----------
<S>                                                      <C>                    <C>            <C>           <C>         <C>
Balance at December 31, 1999                             $       15,000         383,511        (46,687)      1,687,291   2,039,115
Net income                                                           --              --                        170,740     170,740
Other comprehensive income:
   Change in fixed maturity securities
     available-for-sale, net of tax of $37,126                       --              --         68,946              --      68,946
   Change in foreign currency translation adjustment,
     net of tax of $464                                              --              --            861              --         861
                                                                                                                         ----------
           Total comprehensive income                                --              --             --              --     240,547
                                                                                                                         ----------
Dividend declared                                                    --              --             --        (250,000)   (250,000)
                                                         --------------  --------------  --------------  --------------  ----------
Balance at December 31, 2000                                     15,000         383,511         23,120       1,608,031   2,029,662
Net income                                                           --              --             --         215,268     215,268
Other comprehensive income:
   Change in fixed maturity securities
     available-for-sale, net of tax benefit of $19,890               --              --        (36,940)             --     (36,940)
   Change in foreign currency translation adjustment,
     net of tax benefit of $599                                      --              --         (1,112)             --      (1,112)
                                                                                                                         ----------
           Total comprehensive income                                --              --             --              --     177,216
                                                                                                                         ----------
Dividend declared                                                    --              --             --        (200,000)   (200,000)
                                                         --------------  --------------  --------------  --------------  ----------
Balance at December 31, 2001                                     15,000         383,511        (14,932)      1,623,299   2,006,878
Net income                                                           --              --             --         217,586     217,586
Other comprehensive income:
   Change in fixed maturity securities
   available-for-sale, net of tax of $36,138                         --              --         67,113              --      67,113
   Change in foreign currency translation adjustment,
   net of tax benefit of $1,445                                      --              --         (2,682)             --      (2,682)
                                                                                                                         ----------
           Total comprehensive income                                --              --             --              --     282,017
                                                                                                                         ----------
Dividend declared                                                    --              --             --        (100,000)   (100,000)
                                                         --------------  --------------  --------------  --------------  ----------
Balance at December 31, 2002                           $         15,000         383,511         49,499       1,740,885   2,188,895
                                                         ==============  ==============  ==============  ==============  ==========


See accompanying notes to financial statements.


</TABLE>


                                      4
<PAGE>

<TABLE>
<CAPTION>


                     FINANCIAL GUARANTY INSURANCE COMPANY

                           Statements of Cash Flows

                 Years ended December 31, 2002, 2001, and 2000

                            (Dollars in thousands)



                                                                 2002                  2001                   2000
                                                          -------------------   --------------------   --------------------
<S>                                                    <C>                               <C>                    <C>
Operating activities:
    Net income                                         $           217,586               215,268                170,740
    Adjustments to reconcile net income to net cash
      provided by operating activities:
        Amortization of deferred policy acquisition
          costs                                                     15,261                 8,472                 11,396
        Policy acquisition costs deferred                          (14,911)              (11,742)                (8,096)
        Net realized gains on investments                          (68,546)              (77,043)               (21,929)
        Change in unearned premiums                                 70,741                31,406                  2,455
        Change in loss and loss adjustment expenses                   (987)                2,148                  1,506
        Depreciation of property and equipment                          53                   198                    341
        Change in reinsurance recoverable                            1,269                  (684)                  (838)
        Change in prepaid reinsurance premiums                         340                 1,973                  1,603
        Change in accrued investment income, and
          prepaid expenses and other assets                          2,769                 5,949                  5,755
        Change in ceded reinsurance balances
          payable, and accounts payable and accrued
          expenses                                                  (5,867)                4,014                 (2,624)
        Deferred Federal income tax liability                      (11,385)                2,555                  1,285
        Amortization of fixed maturity securities                   12,081                 5,320                  4,494
        Change in current Federal income taxes
          payable                                                    9,748                10,637                 14,911
                                                          -------------------   --------------------   --------------------
              Net cash provided by operating
                activities                                         228,152               198,471                180,999
                                                          -------------------   --------------------   --------------------

Investing activities:
    Sales and maturities of fixed maturity securities            2,155,864             2,106,761                988,931
    Purchases of fixed maturity securities                      (2,478,839)           (1,989,270)              (910,707)
    Purchases, sales, and maturities of short-term
      investments, net                                             212,127              (131,339)                (9,156)
    Receivable for securities sold                                    (991)                   --                     --
    Payable for securities purchased                                (9,334)               14,667                     --
                                                          -------------------   --------------------   --------------------
              Net cash (used in) provided by
                investing activities                              (121,173)                  819                 69,068
                                                          -------------------   --------------------   --------------------
Financing activities:
    Dividends paid                                                (100,000)             (200,000)              (250,000)
                                                          -------------------   --------------------   --------------------
              Net cash used in financing activities               (100,000)             (200,000)              (250,000)
                                                          -------------------   --------------------   --------------------
              Net (decrease) increase in cash                        6,979                  (710)                    67
Cash at beginning of year                                              281                   991                    924
                                                          -------------------   --------------------   --------------------
Cash at end of year                                    $             7,260                   281                    991
                                                          ===================   ====================   ====================


See accompanying notes to financial statements.

</TABLE>

                                      5
<PAGE>

                     FINANCIAL GUARANTY INSURANCE COMPANY

                         Notes to Financial Statements

                          December 31, 2002 and 2001


(1)    Business

       Financial Guaranty Insurance Company (the Company) is a wholly owned
       insurance subsidiary of FGIC Corporation (the Parent). The Parent was
       owned approximately 99% by General Electric Capital Corporation (GE
       Capital) until late 2001 when it became a wholly owned subsidiary. The
       Company provides financial guarantee insurance on newly issued
       municipal bonds and municipal bonds trading in the secondary market,
       the latter including bonds held by unit investment trusts and mutual
       funds. The Company also insures structured debt issues outside the
       municipal market. Approximately 88% of the business written since
       inception by the Company has been municipal bond insurance.

       The Company insures only those securities that, in its judgment, are of
       investment grade quality. Municipal bond insurance written by the
       Company insures the full and timely payment of principal and interest
       when due on scheduled maturity, sinking fund, or other mandatory
       redemption and interest payment dates to the holders of municipal
       securities. The Company's insurance policies do not provide for
       accelerated payment of the principal of, or interest on, the bond
       insured in the case of a payment default. If the issuer of a
       Company-insured bond defaults on its obligation to pay debt service,
       the Company will make scheduled interest and principal payments as due
       and is subrogated to the rights of bondholders to the extent of
       payments made by it.

       The preparation of financial statements in conformity with accounting
       principles generally accepted in the United States of America (GAAP)
       requires management to make estimates and assumptions that effect the
       reported amounts of assets and liabilities and disclosure of contingent
       assets and liabilities at the date of the financial statements and the
       reported amounts of revenues and expenses during the reporting period.
       Actual results could differ from those estimates.

(2)    Significant Accounting Policies

       The accompanying financial statements have been prepared on the basis
       of GAAP which differ in certain respects from the accounting practices
       prescribed or permitted by regulatory authorities (see note 3).
       Significant accounting policies are as follows:

       (a)    Investments

              Securities held as available-for-sale are recorded at fair value
              and unrealized holding gains/losses are recorded as a separate
              component of accumulated other comprehensive income, net of
              applicable income taxes. Short-term investments are carried at
              cost, which approximates fair value.

              Bond discounts and premiums are amortized over the remaining
              terms of the securities. Realized gains or losses on the sale of
              investments are determined on the basis of specific
              identification.

              Securities which have been determined to be other-than-
              temporarily impaired are reduced to realizable value -
              establishing a new cost basis - with a charge to earnings at
              such date.


                                                                   (Continued)

                                      6
<PAGE>

                     FINANCIAL GUARANTY INSURANCE COMPANY

                         Notes to Financial Statements

                          December 31, 2002 and 2001




       (b)    Premium Revenue Recognition

              Premiums for policies where premiums are collected in a single
              payment at policy inception are earned over the period at risk,
              based on the total exposure outstanding at any point in time.
              Ceded premiums are earned in the same manner. Financial
              guarantee insurance policies exposure generally declines
              according to predetermined schedules. For policies with premiums
              that are collected periodically, premiums are reflected in
              income pro rata over the period covered by the premium payment.

       (c)    Policy Acquisition Costs

              Policy acquisition costs include only those expenses that relate
              directly to premium production. Such costs include compensation
              of employees involved in underwriting, marketing and policy
              issuance functions, rating agency fees, state premium taxes, and
              certain other underwriting expenses, offset by ceding commission
              income on premiums ceded to reinsurers (see note 6). Net
              acquisition costs are deferred and amortized over the period in
              which the related premiums are earned. Anticipated loss and loss
              adjustment expenses and maintenance costs are considered in
              determining the recoverability of acquisition costs.

       (d)    Loss and Loss Adjustment Expenses

              Provision for loss and loss adjustment expenses includes
              principal and interest and other payments due under insured
              risks at the balance sheet date for which, in management's
              judgment, the likelihood of default is probable. Such reserves
              amounted to $47.9 million and $48.9 million at December 31, 2002
              and 2001, respectively. As of December 31, 2002 and 2001, such
              reserves included $26.4 million and $36.2 million, respectively
              of reserves, established based upon an evaluation of the insured
              portfolio in light of current economic conditions and other
              relevant factors. As of December 31, 2002 and 2001, discounted
              case-basis loss and loss adjustment expenses reserves were $21.5
              million and $12.7 million, respectively. Loss and loss
              adjustment expenses included amounts discounted at an
              approximate interest rate of 3.4% in 2002 and 5.7% in 2001. The
              amount of the discount at December 31, 2002 and 2001 was $4.0
              million and $5.9 million, respectively. The discount rate used
              is based upon the risk free rate for the average maturity of the
              applicable bond sector. The reserve for loss and loss adjustment
              expenses is necessarily based upon estimates; however, in
              management's opinion, the reserves for loss and loss adjustment
              expenses is adequate. However, actual results will likely differ
              from those estimates.

       (e)    Income Taxes

              Deferred tax assets and liabilities are recognized for the
              future tax consequences attributable to differences between the
              financial statement carrying amounts of existing assets and
              liabilities and their respective tax bases. These temporary
              differences relate principally to unrealized gains (losses) on
              fixed maturity securities available-for-sale; premium revenue
              recognition; deferred acquisition costs; discount on loss and
              loss adjustment reserves and portfolio loss reserves; AMT credit
              carry forwards; profit commission; and the rate differential on
              tax and loss bonds. Deferred tax assets and liabilities are
              measured using enacted tax rates expected to apply to taxable
              income in the years in which those temporary differences are
              expected to be recovered or settled. The effect on deferred tax
              assets and liabilities of a change in tax rates is recognized in
              income in the period that includes the enactment date.




                                                                   (Continued)

                                      7
<PAGE>

                     FINANCIAL GUARANTY INSURANCE COMPANY

                         Notes to Financial Statements

                          December 31, 2002 and 2001



              Financial guarantee insurance companies are permitted to deduct
              from taxable income, subject to certain limitations, amounts
              added statutory contingency reserves (see note 3). The amounts
              deducted must be included in taxable income upon their release
              from the reserves. The amounts deducted are allowed as
              deductions from taxable income only to the extent that U.S.
              government non-interest bearing tax and loss bonds are purchased
              and held in an amount equal to the tax benefit attributable to
              such deductions.

       (f)    Property and Equipment

              Property and equipment consists of office furniture, fixtures,
              computer equipment and software, and leasehold improvements
              which are recorded at cost and are charged to income over their
              estimated service lives. Office furniture and fixtures are
              depreciated straight-line over five years. Leasehold
              improvements are amortized over their estimated service life or
              over the life of the lease, whichever is shorter. Computer
              equipment and software are depreciated over three years.
              Maintenance and repairs are charged to expense as incurred.

       (g)    Foreign Currency Translation

              The Company has established foreign branches in France and the
              United Kingdom and determined that the functional currencies of
              these branches are their local currencies. Accordingly, the
              assets and liabilities of these foreign branches are translated
              into U.S. dollars at the rates of exchange existing at December
              31, 2002 and 2001 and revenues and expenses are translated at
              average monthly exchange rates. The cumulative translation loss
              gain (loss) at December 31, 2002 and 2001 was $(2,729,000) and
              $(47,000), respectively, net of tax, (expense) benefit of
              $1,470,000 and $25,000, respectively, and is reported as a
              separate component or accumulated other comprehensive income in
              the statement of stockholder's equity.

       (h)    New Accounting Pronouncements

              The Financial Accounting Standards Board (FASB) issued and then
              subsequently amended Statement of Financial Accounting Standards
              (SFAS) No. 133, Accounting for Derivative Instruments and
              Hedging Activities, effective for Financial Guaranty Insurance
              Company on January 1, 2001. Upon adoption of SFAS No. 133, all
              derivative instruments (including certain derivative instruments
              embedded in other contracts) are to be recognized in the balance
              sheet at their fair values; changes in such fair values must be
              recognized immediately in earnings unless specific hedging
              criteria are met. Management determined that at January 1, 2001,
              there was no effect on the Company's financial statements
              related to the adoption of SFAS 133.

       (i)    Issued But Not Yet Implemented Accounting Pronouncements

              In January 2003, the FASB issued Financial Interpretation Number
              (FIN) 46, Consolidation of Variable Interest Entities, which the
              Company will adopt on July 1, 2003. FIN 46's consolidation
              criteria are based upon analysis of risks and rewards, not
              control, and represent a significant and complex modification of
              previous accounting principles. FIN 46 represents an accounting
              change not a change in the underlying economics associated with
              the transactions which may be affected by the Interpretation.
              FIN 46 clarifies the consolidation criteria for certain entities
              in which equity investors do not have the characteristics of a
              controlling financial interest or do not have sufficient equity
              at risk for the entity to finance its activities without
              additional subordinated financial support from




                                                                   (Continued)

                                      8
<PAGE>

                     FINANCIAL GUARANTY INSURANCE COMPANY

                         Notes to Financial Statements

                          December 31, 2002 and 2001





              other parties. FIN 46 requires variable interest entities to be
              consolidated by their primary beneficiaries if the entities do
              not effectively disperse risk among parties involved. Variable
              interest entities that effectively disperse risks will not be
              consolidated. FIN 46 requires disclosures for entities that have
              either a primary or significant variable interest in a variable
              interest entity.

              As a part of its structured finance business, the Company
              insures debt obligations or certificates issued by special
              purposes entities. At December 31, 2002, the Company had $1.4
              billion of gross principal outstanding related to insurance
              contracts issued to commercial paper conduits - variable
              interest entities under FIN 46 - which the Company does not
              believe will require consolidation but which will require
              disclosure. With respect to the remainder of the structured
              finance transactions insured, the Company is continuing to
              evaluate the transactions, but does not currently believe any
              such transactions will require consolidation or disclosure under
              FIN 46.

(3)    Statutory Accounting Practices

       The financial statements are prepared on the basis of GAAP, which
       differs in certain respects from accounting practices prescribed or
       permitted by state insurance regulatory authorities. The National
       Association of Insurance Commissioners (NAIC) has approved the
       codification project (Codification) effective January 1, 2001 and the
       State of New York - the Company's state of domicile - has adopted
       certain but not all provisions of Codification.

       The Company has assessed the impact of Codification as adopted by its
       state of domicile (New York) on its statutory financial statements and
       it had no material effect on statutory capital and surplus. The
       following are the significant ways in which statutory basis accounting
       practices differ from GAAP:

       (a)    premiums are earned directly in proportion to the scheduled
              principal and interest payments rather than in proportion to the
              total exposure outstanding at any point in time;

       (b)    policy acquisition costs are charged to current operations
              as incurred rather than as related premiums are earned;

       (c)    a contingency reserve is computed on the basis of statutory
              requirements for the security of all policyholders, regardless
              of whether loss contingencies actually exist, whereas under
              GAAP, a reserve is established based on an ultimate estimate of
              exposure;

       (d)    certain assets designated as nonadmitted assets are charged
              directly against surplus but are reflected as assets under GAAP,
              if recoverable;

       (e)    Beginning in 2002, deferred income tax assets and
              liabilities are recorded on the statutory statement of admitted
              assets, liabilities, and capital and surplus under the asset and
              liability method of accounting subject to certain admissibility
              limitations for deferred tax assets. Additionally, for statutory
              basis accounting, the change in deferred tax assets and
              liabilities is recorded as a charge to statutory surplus rather
              than as a component of net income as is the case for GAAP.



                                                                   (Continued)

                                      9
<PAGE>

                     FINANCIAL GUARANTY INSURANCE COMPANY

                         Notes to Financial Statements

                          December 31, 2002 and 2001



       (f)    purchases of tax and loss bonds are reflected as admitted
              assets, while under GAAP they are recorded as Federal income tax
              payments;

       (g)    all fixed income investments are carried at amortized cost
              rather than at fair value for securities classified as
              available-for-sale under GAAP;

       (h)    profit commissions are recognized as received while under
              GAAP management's best estimate of the Company's ultimate
              recoverable is accrued; and

       (i)    case reserves are discounted at the average investment
              portfolio yield for statutory purposes and at the risk free rate
              under GAAP.

       The following is a reconciliation of net income and stockholder's
       equity presented on a GAAP basis to the corresponding amounts reported
       on a statutory basis for the periods indicated below (in thousands):

<TABLE>
<CAPTION>



                                                                     Years ended December 31,
                                ---------------------------------------------------------------------------------------------------
                                     2002                              2001                              2000
                                --------------------------------  --------------------------------  -------------------------------
                                                 Stockholder's                     Stockholder's                     Stockholder's
                                  Net income         equity         Net income         equity         Net income        equity
                                ---------------  ---------------  ---------------  ---------------  ---------------  --------------
<S>                           <C>                    <C>                 <C>            <C>                <C>           <C>
GAAP basis amount             $        217,586        2,188,895          215,268        2,006,878          170,740       2,029,662
Premium revenue recognition              5,022         (206,395)          (6,443)        (211,417)         (10,415)       (204,974)
Deferral of acquisition costs              349          (71,351)          (3,270)         (71,700)           3,300         (68,430)
Contingency reserve                          -       (1,072,791)               -         (937,680)               -        (823,570)
Contingency reserve tax
  deduction (see note 2)                     -          102,540                -           95,008                -          74,059
Nonadmitted assets                           -          (28,621)               -             (439)               -            (592)
Case basis loss reserves                 1,009              414             (397)            (595)           1,023            (198)
Portfolio loss reserves                 (7,700)          21,000                -           28,700            2,800          28,700
Deferral of income taxes               (11,385)          92,372            2,555           75,220            1,285          73,195
Unrealized (gains) losses on
  fixed maturity securities
  net of tax                                 -          (52,228)               -           14,885                -         (21,985)
Recognition of profit
  commission                               595           (7,630)            (820)          (8,220)            (256)         (7,399)
Unauthorized reinsurance                     -              (17)               -              (16)               -             (87)
Allocation of tax benefit due
  to Parent's net operating
  loss to the Company                        -           11,385                -           11,385              292          11,385
                                ---------------  ---------------  ---------------  ---------------  ---------------  --------------
       Statutory basis amount $        205,476          977,573          206,893        1,002,009          168,769       1,089,766
                                ===============  ===============  ===============  ===============  ===============  ==============

</TABLE>

(4)    Investments

       Investments in fixed maturity securities carried at fair value of $3.9
       million and $3.5 million as of December 31, 2002 and 2001,
       respectively, were on deposit with various regulatory authorities as
       required by law.



                                      10
                                                                   (Continued)

<PAGE>


                     FINANCIAL GUARANTY INSURANCE COMPANY

                         Notes to Financial Statements

                          December 31, 2002 and 2001


       The amortized cost and fair values of short-term investments and of
       investments in fixed maturity securities and preferred stock classified
       as available-for-sale are as follows (in thousands) as of December 31:

<TABLE>
<CAPTION>


                                                                                 Gross                Gross
                                                          Amortized            unrealized           unrealized
                                                            cost             holding gains         holding losses        Fair value
                                                      ------------------   -------------------  ------------------- ---------------
<S>                                            <C>                                 <C>                   <C>              <C>
December 31, 2002:
  Obligations of states and
    political subdivisions                     $          2,141,391                73,155                4,586            2,209,960
  Asset and mortgage backed                                 525,607                10,900                   63              536,444
  U.S. Treasury securities and
    obligations of U.S. Government
    corporations and agencies                                 3,365                   833                    -                4,198
  Debt securities issued by foreign
    governments                                              43,653                 1,127                    -               44,780
  Preferred stock                                            30,598                     7                  515               30,090
                                                      ------------------   -------------------  -------------------   -------------
             Investments
               available-for-sale                         2,744,614                86,022                5,164            2,825,472

Short-term investments                                       43,144                     -                    -               43,144
                                                      ------------------   -------------------  -------------------   -------------
                  Total                        $          2,787,758                86,022                5,164            2,868,616
                                                      ==================   ===================  ===================   =============


                                                                                 Gross                Gross
                                                          Amortized            unrealized           unrealized
                                                            cost              holding gains        holding losses        Fair value
                                                      ------------------   ------------------------------------------ -------------
December 31, 2001:
  Obligations of states and
    political subdivisions                     $          2,239,824                 8,880               31,675            2,217,029
  U.S. Treasury securities and
    obligations of U.S. Government
    corporations and agencies                                 3,404                   373                    -                3,777
  Debt securities issued by foreign
    governments                                              49,702                   429                    -               50,131
  Preferred stock                                            30,598                     -                  710               29,888
  Other                                                      46,389                    19                  323               46,085
                                                      ------------------   -------------------  -------------------   -------------
             Investments
               available-for-sale                         2,369,917                 9,701               32,708            2,346,910
Short-term investments                                      255,271                     -                    -              255,271
                                                      ------------------   -------------------  -------------------   -------------
                  Total                        $          2,625,188                 9,701               32,708            2,602,181
                                                      ==================   ===================  ===================   =============


</TABLE>




                                      11

                                                                (Continued)
<PAGE>

                     FINANCIAL GUARANTY INSURANCE COMPANY

                         Notes to Financial Statements

                          December 31, 2002 and 2001



The amortized cost and fair values of short-term investments and of
investments in fixed maturity securities - including preferred stock -
available-for-sale at December 31, 2002, by contractual maturity date, are
shown below (in thousands). Expected maturities may differ from contractual
maturities because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties.

                                              Amortized cost        Fair value
                                             ----------------     ------------
Due in one year or less                      $        44,076            44,088
Due after one year through five years                 93,255            96,646
Due after five years through ten years               613,559           631,417
Due after ten years through twenty years           1,507,033         1,557,104
Due after twenty years                               529,835           539,361
                                             ----------------     ------------
             Total                           $     2,787,758         2,868,616
                                             ================     ============

In 2002, 2001, and 2000, proceeds from sales and maturities of investments in
fixed maturity securities available-for-sale carried at fair value were
$2,155.9 million, $2,106.7 million, and $988.9 million, respectively. For
2002, 2001, and 2000, gross gains of $68.6 million, $78.4 million, and $22.7
million respectively, and gross losses of $0.1 million, $1.4 million, and $0.8
million, respectively, were realized on such sales.

Net investment income of the Company is derived from the following sources (in
thousands):

<TABLE>
<CAPTION>

                                                                         Year ended December 31
                                                --------------------------------------------------------------------------
                                                        2002                      2001                      2000
                                                ----------------------    ----------------------    ----------------------
<S>                                             <C>                                 <C>                       <C>
Income from fixed maturity securities           $         113,108                   120,162                   120,926
Income from short-term investments                          7,485                     5,838                    15,734
                                                ----------------------    ----------------------    ----------------------
          Total investment income                         120,593                   126,000                   136,660
Investment expenses                                          (998)                   (1,008)                   (1,036)
                                                ----------------------    ----------------------    ----------------------
          Net investment income                 $         119,595                   124,992                   135,624
                                                ======================    ======================    ======================

</TABLE>


                                      12
                                                                (Continued)

<PAGE>

                     FINANCIAL GUARANTY INSURANCE COMPANY

                         Notes to Financial Statements

                          December 31, 2002 and 2001


       As of December 31, 2002, the Company did not have more than 3% of its
       investment portfolio concentrated in a single issuer or industry;
       however, the Company had the following exposures by state:

                                                  Fair Value
                                             ---------------------
        New York                             $          270,799
        Texas                                           269,916
        Illinois                                        174,435
        Florida                                         161,092
        Michigan                                        149,925
        New Jersey                                      129,745
        Colorado                                         89,149
        Maryland                                         77,292
        Pennsylvania                                     66,854
        Massachusetts                                    66,336
                                              ---------------------
                                                      1,455,543

        All other                                     1,413,073
                                              ---------------------
                                             $        2,868,616
                                              =====================



(5)    Income Taxes

       The Company files its Federal tax return as part of the consolidated
       return of General Electric Capital Corporation (GE Capital). Under the
       tax sharing agreement with GE Capital, tax is allocated to the Company
       and the Parent based upon their respective contributions to
       consolidated net income. The Company also has a separate tax sharing
       agreement with its Parent.

       The Company's effective Federal corporate tax rate (25.8% in 2002,
       23.3% in 2001, and 17.4% in 2000) is less than the corporate tax rate
       on ordinary income of 35% in 2002, 2001, and 2000, primarily due to
       tax-exempt interest on municipal investments.

       The following is a reconciliation of Federal income taxes computed at
       the statutory rate and the provision for Federal income taxes (in
       thousands):

<TABLE>
<CAPTION>

                                                                              Year ended December 31
                                                     --------------------------------------------------------------------------
                                                             2002                      2001                      2000
                                                     ----------------------    ----------------------    ----------------------
       <S>                                           <C>                               <C>                    <C>
       Income taxes computed on income before
         provision for Federal income taxes,
         at the statutory rate                       $        102,691                   98,292                 72,349

       Tax effect of:
         Tax-exempt interest                                  (26,788)                 (32,730)               (32,428)
         Other, net                                               (85)                       4                 (3,949)
                                                     ----------------------    ----------------------    ----------------------
             Provision for income taxes              $         75,818                   65,566                 35,972
                                                     ======================    ======================    ======================


</TABLE>



                                      13

                                                                (Continued)

<PAGE>

                     FINANCIAL GUARANTY INSURANCE COMPANY

                         Notes to Financial Statements

                          December 31, 2002 and 2001



       The tax effects of temporary differences that give rise to significant
       portions of the net deferred tax liability at December 31, 2002 and
       2001 are presented below (in thousands):

<TABLE>
<CAPTION>


                                                                            2002              2001
                                                                     ------------------    -------------
       <S>                                                          <C>                         <C>
       Deferred tax assets:
         Unrealized losses on fixed maturity securities,
           available-for-sale                                        $              -            8,015
       Loss and loss adjustment expense reserves                                7,495            9,976
       AMT credit carryforward                                                      -            3,456
       Property and equipment                                                     656              500
       Foreign currency                                                         1,470               25
       Deferred compensation                                                      319              298
       Other                                                                      934               80
                                                                    ------------------    --------------
              Total gross deferred tax assets                                  10,874           22,350
                                                                    ------------------    --------------
       Deferred tax liabilities:
         Unrealized gains on fixed maturity securities,
           available-for-sale                                                  28,123                -
       Deferred acquisition costs                                              24,973            25,095
       Premium revenue recognition                                             45,640            49,709
       Rate differential on tax and loss bonds                                      -             9,454
       Profit commission                                                        2,671             2,877
       Other                                                                       62             2,503
                                                                    ------------------    --------------
              Total gross deferred tax liabilities                            101,469            89,638
                                                                    ------------------    --------------
              Net deferred tax liability                             $         90,595            67,288
                                                                    ==================    ===============

</TABLE>


       Based upon the level of historical taxable income, projections of
       future taxable income over the periods in which the deferred tax assets
       are deductible and the estimated reversal of future taxable temporary
       differences, the Company believes it is more likely than not that it
       will realize the benefits of these deductible differences and has not
       established a valuation allowance at December 31, 2002 and 2001. The
       Company anticipates that the related deferred tax asset will be
       realized based on future profitable business.

       Total Federal income tax payments during 2002, 2001, and 2000 were
       $90.1 million, $38.3 million, and $22.6 million, respectively.

(6)    Reinsurance

       The Company reinsures portions of its risk with other insurance
       companies through quota share reinsurance treaties and, where
       warranted, on a facultative basis. This process serves to limit the
       Company's exposure on risks underwritten. In the event that any or all
       of the reinsuring companies were unable to meet their obligations, the
       Company would be liable for such defaulted amounts. The Company
       evaluates the financial condition of its reinsurers and monitors
       concentrations of credit risk arising from




                                      14
                                                                (Continued)
<PAGE>

                     FINANCIAL GUARANTY INSURANCE COMPANY

                         Notes to Financial Statements

                          December 31, 2002 and 2001


       activities or economic characteristics of the reinsurers to minimize
       its exposure to significant losses from reinsurer insolvencies. The
       Company holds collateral under reinsurance agreements in the form of
       letters of credit and trust agreements in various amounts with various
       reinsurers totaling $66.4 million at December 31, 2002 that can be
       drawn on in the event of default.

       Net premiums earned are presented net of ceded earned premiums of $27.0
       million, $20.6 million, and $19.8 million for the years ended December
       31, 2002, 2001, and 2000, respectively. Loss and loss adjustment
       expenses incurred are presented net of ceded losses of $0.8 million,
       $0.7 million, and $1.9 million for the years ended December 31, 2002,
       2001, and 2000, respectively. At December 31, 2002 and 2001, ceded case
       reserves were $3.0 million and $2.1 million, respectively. Ceded
       portfolio reserves were $5.4 million at December 31, 2002 and 2001.

       In accordance with an amendment to an existing reinsurance agreement,
       the Company received additional ceding commission income of $3.3
       million in 2000 from the reinsurer. In addition, the Company bought
       back $2.6 million and $4.8 million of ceded premium in 2002 and 2001,
       respectively, from the reinsurers and subsequently ceded the risk to a
       different reinsurer.

(7)    Loss and Loss Adjustment Expenses

       Activity in the reserve for loss and loss adjustment expenses is
       summarized as follows (in thousands):

<TABLE>
<CAPTION>


                                                                    Year ended December 31
                                              --------------------------------------------------------------------------
                                                     2002                      2001                      2000
                                              ----------------------    ----------------------    ----------------------
       <S>                                    <C>                                <C>                      <C>
       Balance at January 1                   $         48,855                   46,707                   45,201
         Less reinsurance recoverable                   (9,640)                  (8,956)                  (8,118)
                                              ----------------------    ----------------------    ----------------------
              Net balance at January 1                  39,215                   37,751                   37,083
                                              ----------------------    ----------------------    ----------------------
       Incurred related to:
         Current year                                    5,074                        -                      119
         Prior years                                     3,127                    1,752                      631
         Portfolio reserves                             (7,700)                       -                    2,800
                                              ---------------------    ----------------------    -----------------------
              Total incurred                               501                    1,752                    3,550
                                              ---------------------    ----------------------    -----------------------
       Paid related to:
         Current year                                        -                        -                       (6)
         Prior years                                      (219)                    (288)                  (2,876)
                                              ---------------------    ----------------------    -----------------------
              Total paid                                  (219)                    (288)                  (2,882)
                                              ---------------------    ----------------------    ----------------------
       Net balance at December 31                       39,497                   39,215                   37,751
         Plus reinsurance recoverable                    8,371                    9,640                    8,956
                                              ---------------------    ----------------------    ----------------------
       Balance at December 31                 $         47,868                   48,855                   46,707
                                              =====================    ======================    ======================

</TABLE>


                                      15

                                                                    (Continued)

<PAGE>

                     FINANCIAL GUARANTY INSURANCE COMPANY

                         Notes to Financial Statements

                          December 31, 2002 and 2001


       During 2002, the decrease in the incurred portfolio reserve and the
       increase in the case reserves principally related to the establishment
       of case reserves on several structured finance transactions of one
       particular issuer. Certain transactions related to the issuer were
       identified as potential problem credits in 2000 and 2001 and case
       reserves were established during those years. In 2000 the Company also
       increased its portfolio reserves related to such transactions. In 2002,
       there was further adverse development on such transactions and a
       determination was made by management that several other transactions
       related to that issuer also required case reserves.

(8)    Related Party Transactions

       The Company has various agreements with subsidiaries of General
       Electric Company (GE) and GE Capital. These business transactions
       include appraisal fees and due diligence costs associated with
       underwriting structured finance mortgage-backed security business;
       certain payroll and office expenses incurred but processed by a GE
       subsidiary; investment fees pertaining to the management of the
       Company's investment portfolio; and telecommunication service charges.
       Approximately $2.2 million, $1.2 million, and $1.3 million in expenses
       were incurred in 2002, 2001, and 2000, respectively, related to such
       transactions.

       The Company also insured certain nonmunicipal issues with GE Capital
       involvement as sponsor of the insured securitization and/or servicer of
       the underlying assets. For some of these issues, GE Capital also
       provides first loss protection in the event of default. Gross premiums
       written on these issues amounted to $.05 million in 2002, $0.1 million
       in 2001, and $0.3 million in 2000. As of December 31, 2002, par
       outstanding on these deals before reinsurance was $80.9 million.

       The Company insures bond issues and securities in trusts that were
       sponsored by affiliates of GE (approximately 1% of gross premiums
       written) in 2002, 2001, and 2000.

(9)    Compensation Plans

       Officers and other key employees of the Company participate in the
       Parent's incentive compensation, deferred compensation, and profit
       sharing plans. Expenses incurred by the Company under compensation
       plans and bonuses amounted to $3.8 million, $2.7 million, and $2.5
       million in 2002, 2001, and 2000, respectively.

(10)   Dividends

       Under New York insurance law, the Company may pay a dividend only from
       earned surplus subject to the following limitations: (a) statutory
       surplus after such dividend may not be less than the minimum required
       paid-in capital, which was $72.5 million in 2002 and 2001, and (b)
       dividends may not exceed the lesser of 10% of its surplus or 100% of
       adjusted net investment income, as defined by New York insurance law,
       for the twelve-month period ending on the preceding December 31,
       without the prior approval of the Superintendent of the New York State
       Insurance Department. At December 31, 2002, $97.8 million in dividends
       were available for payment in 2003 without prior approval of the New
       York State Insurance Department.

       During 2002 and 2001, the Company declared dividends of $100.0 million
       and $200.0 million, respectively. The $200.0 million in dividends
       declared in 2001 were approved by the New York State Insurance
       Department as an extraordinary dividend.






                                      16

                                                                   (Continued)
<PAGE>

                     FINANCIAL GUARANTY INSURANCE COMPANY

                         Notes to Financial Statements

                          December 31, 2002 and 2001

(11)   Financial Instruments

       (a)    Fair Value of Financial Instruments

              The following methods and assumptions were used by the Company
              in estimating fair values of financial instruments:

              Fixed Maturity Securities and Preferred Stock: Fair values for
              fixed maturity securities and preferred stock are based on
              quoted market prices, if available. If a quoted market price is
              not available, fair values are estimated using quoted market
              prices for similar securities. Fair value disclosure for fixed
              maturity securities and preferred stock are included in the
              balance sheets and in note 4.

              Short-Term Investments: Short-term investments are carried at
              cost, which approximates fair value.

              Cash, Accrued Investment Income, Prepaid Expenses and Other
              Assets, Ceded Reinsurance Balances Payable, Accounts Payable and
              Accrued Expense, and Payable for Securities Purchased: The
              carrying amounts of these items approximate their fair values.

              The estimated fair values of the Company's financial instruments
              at December 31, 2002 and 2001 are as follows (in thousands):

<TABLE>
<CAPTION>


                                            2002                                2001
                              ----------------------------------  ----------------------------------
                                Carrying                            Carrying
                                 amount          Fair value          amount          Fair value
                              ----------------  ----------------  ----------------  ----------------
<S>                           <C>                      <C>               <C>               <C>
Financial assets:
  Cash:
    On hand and in demand
      accounts                $          7,260             7,260               281               281
    Short-term investments              43,144            43,144           255,271           255,271
    Fixed maturity securities        2,795,382         2,795,382         2,317,022         2,317,022
    Preferred stock                     30,090            30,090            29,888            29,888

</TABLE>


              Financial Guarantees: The carrying value of the Company's
              financial guarantees is represented by the unearned premium
              reserve, net of deferred acquisition costs, and loss and loss
              adjustment expense reserves. Estimated fair values of these
              guarantees are based on amounts currently charged to enter into
              similar agreements (net of applicable ceding commission),
              discounted cash flows (5% discount rate at December 31, 2002 and
              2001) considering contractual revenues to be received adjusted
              for expected prepayments, the present value of future
              obligations and estimated losses, and current interest rates.
              The estimated fair values of such financial guarantees range
              between $603.2 million and $664.0 million compared to a carrying
              value of $521.5 million as of December 31, 2002 and between
              $449.6 million and $494.7 million compared to a carrying value
              of $450.0 million as of December 31, 2001.

              As of December 31, 2002 and 2001, the net present value of
              future installment premiums was $100.2 million and $105.7
              million, respectively, discounted at 5% at December 31, 2002 and
              2001.


                                      17
                                                                (Continued)

<PAGE>


                     FINANCIAL GUARANTY INSURANCE COMPANY

                         Notes to Financial Statements

                          December 31, 2002 and 2001


       (b)    Concentrations of Credit Risk

              The Company considers its role in providing insurance to be
              credit enhancement rather than credit substitution. The Company
              insures only those securities that, in its judgment, are of
              investment grade quality. The Company has established and
              maintains its own underwriting standards that are based on those
              aspects of credit that the Company deems important for the
              particular category of obligations considered for insurance.
              Credit criteria include economic and social trends, debt
              management, financial management and legal and administrative
              factors, the adequacy of anticipated cash flows, including the
              historical and expected performance of assets pledged for
              payment of securities under varying economic scenarios and
              underlying levels of protection such as insurance or over
              collateralization.

              In connection with underwriting new issues, the Company
              sometimes requires, as a condition to insuring an issue, that
              collateral be pledged or, in some instances, that a third-party
              guarantee be provided for a term of the obligation insured by a
              party of acceptable credit quality obligated to make payment
              prior to any payment by the Company. The types and extent of
              collateral pledged varies, but may include residential and
              commercial mortgages, corporate debt, government debt, and
              consumer receivables.

              As of December 31, 2002, the Company's total insured principal
              exposure to credit loss in the event of default by bond issues
              was $188.0 billion, net of reinsurance of $37.4 billion. The
              Company's insured portfolio as of December 31, 2002 was broadly
              diversified by geography and bond market sector with no single
              debt issuer representing more than 1% of the Company's principal
              exposure outstanding, net of reinsurance.

              As of December 31, 2002, the composition of principal exposure
              by type of issue, net of reinsurance, was as follows (in
              millions):



                                                  Net principal
                                                   outstanding
                                                -------------------
                   Municipal:
                     General obligation         $           91,808
                     Special revenue                        78,915
                     Industrial revenue                        341
                   Nonmunicipal                             16,893
                                                -------------------
                           Total                $          187,957
                                                ===================




                                      18
                                                                (Continued)

<PAGE>

                     FINANCIAL GUARANTY INSURANCE COMPANY

                         Notes to Financial Statements

                          December 31, 2002 and 2001


       As of December 31, 2002, the composition of principal exposure ceded to
       reinsurers was as follows (in millions):

                                                     Ceded
                                                   principal
                                                  outstanding
                                                --------------
           Reinsurer:
             Ace Guarantee Re, Inc.             $      11,646
             Radian Reinsurance Company                 7,809
             Axa Re Finance                             5,220
             American Re-Insurance Company              4,926
             Other                                      7,872
                                                -------------
                 Total                          $     37,473
                                                ==============



       The Company did not have recoverables in excess of 3% of equity from
       any single reinsurer.

       The Company's gross and net exposure outstanding, which includes
       principal and interest, was $384.6 billion and $317.0 billion,
       respectively, as of December 31, 2002.

       The Company is authorized to do business in 50 states, the District of
       Columbia, and in the United Kingdom and France. Principal exposure
       outstanding at December 31, 2002 by state, net of reinsurance, was as
       follows (in millions):

                                                         Net principal
                                                          outstanding
                                                        --------------
           California                                   $      20,809
           New York                                            17,242
           Pennsylvania                                        15,426
           Florida                                             15,039
           Illinois                                            13,322
           Texas                                                9,896
           Michigan                                             7,522
           New Jersey                                           7,493
           Massachusetts                                        5,528
           Washington                                           5,050
                                                        --------------
                         Sub-total                            117,327
           Other states                                        70,472
           International                                          158
                                                        --------------
                         Total                          $     187,957
                                                        ==============




                                                                (Continued)
                                      19
<PAGE>

                     FINANCIAL GUARANTY INSURANCE COMPANY

                         Notes to Financial Statements

                          December 31, 2002 and 2001




(12)   Commitments

       Total rent expense was $4.3 million, $2.2 million, and $2.4 million in
       2002, 2001, and 2000, respectively. The minimum future rental payments
       under noncancelable operating leases, net of subleases, having
       remaining terms in excess of one year approximate (in thousands):

                                                              Amount
                                                          -------------
                Year:
                  2003                                    $       2,770
                  2004                                            2,770
                  2005                                            2,770
                  2006                                            2,770
                                                          -------------
           Total minimum future rental payments           $      11,080
                                                          =============



(13)   Comprehensive Income

       Comprehensive income requires that an enterprise (a) classify items of
       other comprehensive income by their nature in a financial statement and
       (b) display the accumulated balance of other comprehensive income
       separately from retained earnings and additional paid-in capital in the
       equity section of a statement of financial position. Accumulated other
       comprehensive income (loss) of the Company consists of net unrealized
       gains on investment securities and foreign currency translation
       adjustments.

       The following are the reclassification adjustments for the years ended
       December 31, 2002, 2001, and 2000 (in thousands):

<TABLE>
<CAPTION>

                                                                             2002
                                                      -------------------------------------------------
                                                           Before                            Net of
                                                         tax amount           Tax          tax amount
                                                      ---------------    -------------   --------------
       <S>                                            <C>                    <C>             <C>
       Unrealized holding gains arising during
         the period                                   $     171,797         (60,129)         111,668
            Less reclassification adjustment for
               gains realized in net income                 (68,546)         23,991          (44,555)
                                                      ---------------    -------------   --------------
                 Unrealized losses on
                    investments                       $     103,251         (36,138)          67,113
                                                      ===============    =============   ==============


</TABLE>

                                      20
                                                                (Continued)
<PAGE>

<TABLE>
<CAPTION>


                                                                              2001
                                                      ------------------------------------------------
                                                            Before                           Net of
                                                          tax amount          Tax          tax amount
                                                      ---------------    -------------   ------------
         <S>                                          <C>                    <C>             <C>
         Unrealized holding gains arising during
           the period                                 $      20,213          ( 7,075)         13,138
             Less reclassification adjustment for
               gains realized in net income                 (77,043)          26,965         (50,078)
                                                      ---------------    -------------   -------------
                  Unrealized losses on
                     investments                      $      56,830          (19,890)        (36,940)
                                                      ===============    =============   =============



                                                                              2000
                                                      -----------------------------------------------
                                                            Before                           Net of
                                                          tax amount          Tax          tax amount
                                                      ---------------    -------------   ------------

         Unrealized holding gains arising during
           the period                                 $     128,001          (44,801)         83,200
             Less reclassification adjustment for
               gains realized in net income                 (21,929)           7,675         (14,254)
                                                      ---------------    -------------   ------------
                  Unrealized losses on
                     investments                    $       106,072          (37,126)         68,946
                                                      ===============    =============   =============



</TABLE>