<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-Q



           |X| QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) 0F THE
                         SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 1999

                                       OR

              |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                       For the period from ___________ to

--------------------------------------------------------------------------------

                         Commission file number 1-10967


                      ENHANCE FINANCIAL SERVICES GROUP INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


            New York                                        13-3333448
--------------------------------------------------------------------------------
  (State or other jurisdiction                           (I.R.S. Employer
of incorporation or organization)                       Identification No.)


                  335 Madison Avenue, New York, New York 10017
--------------------------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)


                                 (212) 983-3100
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


             (Former name, former address and former fiscal year, if
                           changed since last report)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the proceeding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: 38,055,743 shares of common
stock, par value $.10 per share, as of November 10, 1999.

<PAGE>

                      ENHANCE FINANCIAL SERVICES GROUP INC.

                                      INDEX
<TABLE>
<CAPTION>
                                                                                            PAGE
<S>                                                                                       <C>
PART I  FINANCIAL INFORMATION


Item 1.  Financial Statements

Consolidated Balance Sheets -September 30, 1999 and December 31, 1998 ................         3

Consolidated Statements of Income - Three months and nine months ended
        September 30, 1999 and 1998 ..................................................         4

Consolidated Statement of Shareholders' Equity -Nine months ended September 30, 1999 .         5

Consolidated Statements of Cash Flows - Nine months ended September 30, 1999 and 1998          6

Notes to Consolidated Financial Statements ...........................................      7-10

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations ....................................................     11-17

PART II  OTHER INFORMATION

Item 6. Exhibits and reports on Form 8-K .............................................        18

Signature ............................................................................        18

Exhibit 4.2.5.    Fourth Amendment to the Credit Agreement
Exhibit 27.       Financial data schedules


</TABLE>

                                       2
<PAGE>

                      ENHANCE FINANCIAL SERVICES GROUP INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                       (In thousands except share amounts)

<TABLE>
<CAPTION>

                                                            September 30, 1999  December 31, 1998
                                                               (unaudited)
<S>                                                             <C>               <C>
Assets
   Investments:
     Fixed maturities, held to maturity, at amortized cost
       (market value $187,875 and $205,792)                     $   182,897       $   196,768
     Fixed maturities, available for sale, at market
       (amortized cost $755,427 and $657,644)                       744,659           694,374
     Common stock, at market (cost $498)                                839               839
     Short-term investments                                          46,224            50,794
                                                                -----------       -----------
Total Investments                                                   974,619           942,775

   Cash and cash equivalents                                          2,756             5,542
   Investment in affiliates                                         114,630            96,867
   Premiums and other receivables                                    24,409            35,950
   Accrued interest and dividends receivable                         16,889            15,241
   Deferred policy acquisition costs                                118,788           103,794
   Federal income taxes recoverable                                  11,342             9,717
   Prepaid reinsurance premiums                                       9,600             7,000
   Reinsurance recoverable on unpaid losses                           2,278             2,500
   Receivable from affiliates                                        10,965            16,710
   Receivable for securities                                         10,575             9,590
   Other assets                                                     138,012            90,731
                                                                -----------       -----------
TOTAL ASSETS                                                    $ 1,434,863       $ 1,336,417
                                                                ===========       ===========

Liabilities and Shareholders' Equity
LIABILITIES
   Losses and loss adjustment expenses                          $    37,418       $    36,239
   Reinsurance payable on paid losses
      and loss adjustment expenses                                    8,927             5,994
   Deferred premium revenue                                         335,878           315,215
   Accrued profit commissions                                         2,383             2,511
   Deferred income taxes                                             62,789            79,569
   Long-term debt                                                    75,000            75,000
   Short-term debt                                                  105,950            54,290
   Payable for securities                                            30,412            11,557
   Accrued expenses and other liabilities                            72,862            49,843
   Payable to affiliates                                             12,176            43,553
                                                                -----------       -----------
TOTAL LIABILITIES                                                   743,795           673,771
                                                                -----------       -----------

SHAREHOLDERS' EQUITY
   Common stock-$.10 par value, authorized-100,000,000
      shares, issued-39,996,537 and 39,812,937 shares                 3,999             3,981
   Additional paid-in capital                                       251,934           249,851
   Retained earnings                                                475,417           418,214
   Accumulated other comprehensive income                            (7,696)           23,186
   Treasury stock                                                   (32,586)          (32,586)
                                                                -----------       -----------
TOTAL SHAREHOLDERS' EQUITY                                          691,068           662,646
                                                                -----------       -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                      $ 1,434,863       $ 1,336,417
                                                                ===========       ===========
</TABLE>

                 See notes to consolidated financial statements.

                                       3
<PAGE>

                      ENHANCE FINANCIAL SERVICES GROUP INC.
                                AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
                     (In thousands except per share amounts)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                   Three Months Ended               Nine Months Ended
                                                      September 30,                   September 30,
                                                 -----------------------       -------------------------
                                                   1999           1998           1999            1998
                                                 --------       --------       ---------       ---------
<S>                                              <C>            <C>            <C>             <C>
REVENUES
   Net premiums written                          $ 28,928       $ 27,619       $  93,358       $  88,582
   (Increase)/decrease in deferred premium
     revenue                                       (4,031)         1,469         (18,064)        (11,452)
                                                 --------       --------       ---------       ---------
     Premiums earned                               24,897         29,088          75,294          77,130
   Net investment income                           15,274         13,752          42,762          39,991

   Net realized (losses)/gains on sale of
     investments                                     (140)         2,083          (4,480)          2,060
   Assignment sales                                12,215         12,718          28,521          35,189
   Other (loss)/income                             (1,271)         1,534           4,940           4,535
                                                 --------       --------       ---------       ---------

     Total revenues                                50,975         59,175         147,037         158,905
                                                 --------       --------       ---------       ---------

EXPENSES
   Losses and loss adjustment expenses              3,837          4,647           9,223           8,514
   Policy acquisition costs                         8,915         10,158          27,022          26,826
   Profit commissions                                 155             97             711             901
   Other operating expenses - insurance             3,912          3,334          12,114          10,011
                            - non-insurance        14,914         11,150          41,332          29,839
                                                 --------       --------       ---------       ---------
        Total expenses                             31,733         29,386          90,402          76,091
                                                 --------       --------       ---------       ---------

Income from operations                             19,242         29,789          56,635          82,814
   Equity in net income of affiliates               4,460          3,167          17,026           9,565
   Foreign currency losses                            (27)            (6)            (33)            (15)
   Interest expense                                (3,070)        (2,190)         (7,998)         (6,252)
                                                 --------       --------       ---------       ---------
   Income before income taxes                      20,605         30,760          65,630          86,112
   Income tax (benefit)/expense                    (1,790)         8,033           1,587          23,633
                                                 --------       --------       ---------       ---------
     Net income                                  $ 22,395       $ 22,727       $  64,043       $  62,479
                                                 ========       ========       =========       =========

Basic earnings per share                         $   0.59       $   0.61       $    1.69       $    1.67
                                                 ========       ========       =========       =========

Diluted earnings per share                       $   0.57       $   0.58       $    1.64       $    1.59
                                                 ========       ========       =========       =========

Basic weighted average shares outstanding          38,031         37,422          37,981          37,484
                                                 ========       ========       =========       =========

Diluted weighted average shares outstanding        39,027         39,110          39,074          39,255
                                                 ========       ========       =========       =========
</TABLE>

                 See notes to consolidated financial statements.

                                       4
<PAGE>

                      ENHANCE FINANCIAL SERVICES GROUP INC.
                                AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
                (In thousands except share and per share amounts)
                                   (unaudited)

<TABLE>
<CAPTION>




                                                          Outstanding Common
                                                                Stock                   Treasury Stock           Additional
                                                        ----------------------      -----------------------       Paid-in
                                                          Shares        Amount       Shares         Amount        Capital
                                                        ----------      ------      ---------      --------       --------
<S>                                                     <C>             <C>         <C>            <C>            <C>
Balance,  December 31, 1998                             39,812,937      $3,981      1,950,794      ($32,586)      $249,851
 Comprehensive income:
   Net income for the period                                    --          --             --            --             --
   Unrealized foreign currency translation
     adjustment (net of tax of $625)                            --          --             --            --             --
   Unrealized losses during the period
     (net of tax of $19,324)                                    --          --             --            --             --
   Reclassification adjustment for realized losses
     included in net income (net of tax of $1,580)              --          --             --            --             --
 Total comprehensive income                                     --          --             --            --             --
 Dividends paid ($0.18 per share)                               --          --             --            --             --
 Exercise of stock options                                 183,600          18             --            --          2,083
                                                        ----------      ------      ---------      --------       --------
Balance,  September 30, 1999                            39,996,537      $3,999      1,950,794      $(32,586)      $251,934
                                                        ==========      ======      =========      ========       ========

<CAPTION>
                                                                     Accumulated
                                                              Other Comprehensive Income
                                                         -------------------------------------
                                                                        Foreign
                                                                        Currency    Unrealized
                                                           Unearned    Translation    Gains          Retained
                                                         Compensation   Adjustment   (Losses)        Earnings          Total
                                                         ------------   ----------  ---------        ---------       ---------
<S>                                                         <C>         <C>           <C>            <C>             <C>
Balance,  December 31, 1998                                 ($493)      $   714       $ 22,965       $ 418,214       $ 662,646
 Comprehensive income:
   Net income for the period                                   --            --             --          64,043              --
   Unrealized foreign currency translation
     adjustment (net of tax of $625)                           --        (1,161)            --              --              --
   Unrealized losses during the period
     (net of tax of $19,324)                                   --            --        (32,654)             --              --
   Reclassification adjustment for realized losses
     included in net income (net of tax of $1,580)             --            21          2,912              --              --
 Total comprehensive income                                    --            --             --              --          33,161
 Dividends paid ($0.18 per share)                              --            --             --          (6,840)         (6,840)
 Exercise of stock options                                     --            --             --              --           2,101
                                                            -----       -------       --------       ---------       ---------
Balance,  September 30, 1999                                $(493)      $  (426)      $ (6,777)      $ 475,417       $ 691,068
                                                            =====       =======       ========       =========       =========
</TABLE>


                 See notes to consolidated financial statements.

                                       5
<PAGE>

                      ENHANCE FINANCIAL SERVICES GROUP INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                      NINE MONTHS ENDED
                                                                        SEPTEMBER 30,
                                                                    1999            1998
                                                                  ---------       ---------
<S>                                                               <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                                                       $  64,043       $  62,479
 Adjustments to reconcile net income to net cash provided by
     operating activities:
  Depreciation and amortization, net                                 (7,286)         (7,476)
  Loss/(gain) on sale of investments, net                             4,480          (2,529)
  Equity in net income of affiliates                                (17,026)         (9,565)

  Compensation, restricted stock award program                           --            (248)
  Change in assets and liabilities:
    Premiums and other receivables                                   11,541          (2,799)
    Accrued interest and dividends receivable                        (1,648)         (2,296)
    Accrued expenses and other liabilities                           23,019            (592)
    Deferred policy acquisition costs                               (14,994)         (2,304)
    Deferred premium revenue, net                                    18,063          11,451
    Accrued profit commissions                                         (128)         (1,410)
    Losses and loss adjustment expenses, net                          4,334           8,688
    Payable to (receivable from) affiliates                         (25,632)        (21,739)
    Payable (receivable) for securities                              17,870          (9,503)
    Other assets                                                    (34,027)         19,450
    Income taxes, net                                                (1,625)          9,403
                                                                  ---------       ---------
Net cash provided by operating activities                            40,984          51,010
                                                                  ---------       ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of property and equipment                                  (4,368)         (1,307)
 Proceeds from sales and maturities of investments                  273,968         220,898
 Purchase of investments                                           (350,927)       (269,985)
 Purchase of mortgage backed securities                             (13,720)             --
 Sales of short-term investments, net                                 4,570          11,366

 Investment in affiliates                                            (2,497)        (13,097)
                                                                  ---------       ---------
Net cash used in investing activities                               (92,974)        (52,125)
                                                                  ---------       ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Capital stock                                                        2,101           8,381
 Short-term debt                                                     51,660          25,000
 Dividends paid                                                      (4,557)         (6,376)
 Purchase of treasury stock                                              --         (15,256)
                                                                  ---------       ---------
Net cash provided by financing activities                            49,204          11,749
                                                                  ---------       ---------

Net change in cash and cash equivalents                              (2,786)         10,634
 Cash and cash equivalents, beginning of period                       5,542          21,405
                                                                  ---------       ---------
Cash and cash equivalents, end of period                          $   2,756       $  32,039
                                                                  =========       =========
</TABLE>

                 See notes to consolidated financial statements.

                                       6
<PAGE>

                      ENHANCE FINANCIAL SERVICES GROUP INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    PERIODS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (unaudited)

1. BASIS OF PRESENTATION

         The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q under Rules and
Regulations of the Securities and Exchange Commission and do not include all of
the information and disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Annual Report on Form
10-K for the year ended December 31, 1998 of Enhance Financial Services Group
Inc. ("Enhance Financial").

         The accompanying unaudited consolidated financial statements have not
been audited by independent auditors in accordance with generally accepted
auditing standards. However, in the opinion of management, such financial
statements include all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the financial position and results of
operations of Enhance Financial and Subsidiaries (collectively the "Company").
The results of operations for the nine months ended September 30, 1999 may not
be indicative of the results that may be expected for the year ending December
31, 1999.

2. DIVIDENDS DECLARED

         In the first nine months of 1999, Enhance Financial declared cash
dividends of $.18 per share totaling approximately $6,840,000.

3. COMMON STOCK

         On June 26, 1998, Enhance Financial effected a two-for-one split of its
common stock. An amount equal to the par value of common shares issued to effect
the split was transferred from additional paid-in capital to the common stock
account. This transfer has been reflected in the consolidated statement of
shareholders' equity at January 1, 1998. On June 3, 1998, the Company's
shareholders approved an increase in the number of shares of common stock
authorized for issuance to 100 million. All references to number of common
shares and to per-share information in the consolidated financial statements and
related notes have been adjusted to reflect the stock split on a retroactive
basis.

         During the first nine months of 1999, Enhance Financial made no common
stock repurchases.

4. COMPREHENSIVE INCOME


         Total comprehensive income for the nine months ended September 30, 1999
and 1998 was $33.2 million and $72.6 million, respectively. Currently, other
comprehensive income represents net income plus changes in unrealized gains and
losses on available for sale securities, foreign currency translation
adjustments and unearned compensation.

                                       7
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    PERIODS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (unaudited)

5. NEW ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standard Board ("FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
which becomes effective for the Company January 1, 2001. This pronouncement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. The Company will be required to recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. The accounting for a change in fair value of a
derivative in earnings or other comprehensive income will depend on the intended
use of the derivative and the resulting designation. Derivatives can be
designated as (a) a hedge of the exposure to changes in the fair value of a
recognized asset or liability or a firm commitment, (b) a hedge of the exposure
to variable cash flow of a forecast transaction, or (c) a hedge of foreign
currency exposure of a net investment in foreign operations, an unrecognized
firm commitment, an available-for-sale security, or a foreign currency
denominated forecasted transaction.

         In March 1998, the National Association of Insurance Commissioners
adopted the Codification of Statutory Accounting Principles (the
"Codification"). The Codification is intended to standardize regulatory
accounting and reporting for the insurance industry and is proposed to become
effective January 1, 2001. However, statutory accounting principles will
continue to be established by individual state laws and permitted practices, and
it is uncertain when or if, the State of New York will require adoption of the
Codification for the preparation of statutory financial statements. The Company
has not finalized the quantification of the effects of Codification on its
statutory statements.

6. INCOME TAXES

         The Company files a consolidated federal income tax return with its
includable subsidiaries. Subject to the provisions of a tax sharing agreement,
income tax allocation is based upon separate return calculations.

         On April 8, 1999, the Company completed a $13,720,000 purchase of a
portfolio of approximately 500 residential mortgage-backed securities. The
transaction was structured by Credit-Based Asset Servicing and Securitization
LLC ("C-BASS"), a New York City-based joint venture, which will also manage and
service the portfolio for the Company. The purchase price was financed by a
short-term credit arrangement of $10,290,000. As of September 30, 1999, the
balance of outstanding debt related to such arrangement was $5,950,000. The
transaction is expected to produce significant pre-tax economic profits over the
life of the acquired portfolio, which is anticipated to be for a period of eight
to ten years. Additionally, the transaction will provide ancillary benefits that
will result in a lowering of the Company's effective tax rate in 1999 and
beyond. The Company currently expects that it will continue to receive tax
benefits from the portfolio at a level comparable to the current year at least
through 2001 and will receive some additional tax benefits over a period of six
to eight years thereafter. However, the amount of pre-tax economic profits and
tax benefits recognized from year to year may vary significantly depending on
factors relating to the portfolio, some of which are outside the control of the
Company. The Company's effective tax rate for the first nine months of 1999 was
2.4% compared to 27.4% for the comparable period of 1998.

         The investment in the portfolio is carried at amortized cost and is
classified on the consolidated balance sheet with other assets.


7. RECLASSIFICATIONS

         Certain of the 1998 amounts have been reclassified to conform to the
current year presentation.


                                       8
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    PERIODS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (unaudited)

8 - SEGMENT REPORTING

         The Company has two reportable segments: insurance and credit-based
businesses. The insurance segment provides credit-related insurance coverage to
meet the needs of customers in a wide variety of domestic and international
markets. The Company's largest insurance business is the provision of
reinsurance to the monoline primary financial guaranty insurers for both
municipal bonds and non-municipal obligations. The Company also provides trade
credit reinsurance, financial responsibility bonds, excess-SIPC insurance and
direct financial guaranty insurance. The credit-based businesses segment deals
primarily with credit-based servicing and securitization of assets in
underserved markets, in particular, the origination, purchase, servicing and
securitization of special assets, including lottery awards, structured
settlement payments, sub-performing/non-performing and seller financed
residential mortgages and delinquent consumer assets. The Company's reportable
segments are strategic business units that are managed separately as each
business requires different marketing and sales expertise.

         The Company evaluates performance based on profit or loss from
operating earnings, which it defines as net income excluding the impact of
capital and foreign exchange gains and losses, and certain non-recurring items,
net of taxes. Summarized financial information concerning the Company's
operating segments is presented in the following tables:

<TABLE>
<CAPTION>

In thousands
                                                              SEPTEMBER 30, 1999

                                                    INSURANCE          CREDIT-BASED            TOTALS
                                                    ---------          ------------            ------
<S>                                                   <C>                  <C>                <C>
Revenues from external customers                      $75,601              $33,154            $108,755
Net investment income                                  42,762                 --                42,762
Operating earnings                                     56,561               13,011              69,572
Segment assets                                      1,213,998              220,865           1,434,863

                                                              SEPTEMBER 30, 1998
In thousands
                                                    INSURANCE          CREDIT-BASED            TOTALS
                                                    ---------          ------------            ------
Revenues from external customers                     $ 80,790              $36,064            $116,854
Net investment income                                  39,991                 --                39,991
Operating earnings                                     48,362               12,788              61,150
Segment assets                                      1,140,161              132,567           1,272,728

</TABLE>


                                       9
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    PERIODS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (unaudited)

     The following are reconciliations of reportable segment revenues and profit
to Enhance Financial's consolidated totals:

<TABLE>
<CAPTION>
In thousands                                                             SEPTEMBER 30,
                                                                    ------------------------
                                                                       1999           1998
                                                                    ---------       --------
<S>                                                                 <C>             <C>
REVENUES

Total revenues from external customers for reportable segments      $ 108,755       $116,854

Net investment income for reportable segments                          42,762         39,991

Realized gains (losses)                                                (4,480)         2,060
                                                                    ---------       --------

     Total consolidated revenues                                    $ 147,037       $158,905
                                                                    =========       ========

NET INCOME

Operating earnings for reportable segments                          $  69,572       $ 61,150


Capital and foreign exchange gains (losses) and net of tax             (2,933)         1,329
Non-recurring Van-Am losses, net of tax                                (2,596)            --
                                                                    ---------       --------

     Net income                                                     $  64,043       $ 62,479
                                                                    =========       ========
</TABLE>



                                       10
<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


GENERAL

         The Company divides its business operations into two reportable
operating segments: insurance businesses and credit-based businesses.

         The insurance businesses of the Company, which are engaged in through
Enhance Financial's indirectly held subsidiaries, Enhance Reinsurance Company
and Asset Guaranty Insurance Company (collectively the "Insurance
Subsidiaries"), include principally the reinsurance of financial guaranties of
municipal and asset-backed debt obligations issued by monoline financial
guaranty insurers. The Company's other insurance businesses involve the issuance
of direct financial guaranties of municipal debt obligations, trade credit
reinsurance, financial institutions credit insurance (which includes
excess-SIPC/excess-ICS and related type bonds) and financial responsibility
bonds. Some of these other insurance businesses are conducted by Van-American
Insurance Company ("Van-Am"), a Kentucky domiciled insurer that writes
reclamation bonds for the coal mining industry, and surety bonds covering the
closure and post-closure obligations of landfill operators. Due to intense
pricing competition in Van-Am's core business and a poor strategic fit with the
Company's other operations, the Company has decided to exit this line of
business. The Company has put up for sale its approximately 96% interest in Van
American Companies, Inc, the corporate parent of Van-Am. While efforts to sell
Van-Am are continuing, those efforts may prove unsuccessful, at which point the
Company may put Van-Am into run-off. The Company also provides surety and other
credit-based insurance products through its 50% ownership of UBF Guarantias &
Seguros S.A.

         The credit-based businesses of the Company, which are engaged in
primarily through Enhance Financial's wholly-owned subsidiaries, Singer Asset
Finance Company, L.L.C. ("Singer") and Enhance Life Benefits LLC, and partially
owned affiliates, Credit-Based Asset Servicing and Securitization LLC ("C-BASS")
and Sherman Financial Group LLC ("Sherman"). The Company's credit-based
businesses include the origination, purchase, servicing and/or securitization of
special assets, including lottery awards, structured settlement payments,
viatical settlements (the lump-sum purchase of life insurance policies of
individuals facing imminent life-threatening illness) and
sub-performing/non-performing and seller-financed residential mortgages, real
estate and subordinated residential mortgage-backed securities and delinquent
unsecured consumer assets.

         The Company's revenues consist primarily of (a) premiums earned on
insurance and reinsurance contracts, (b) investment income and (c) the sale of
securitized lottery prizes and structured settlement payment streams.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 1999 VS. THREE MONTHS ENDED SEPTEMBER 30, 1998

         Gross premiums written in the third quarter of 1999 were $34.4 million
compared with $28.4 million in the same period in 1998, representing an increase
of 21.1%.

         Net premiums written increased 4.7% to $28.9 million in the third
quarter of 1999 from $27.6 million in the same period in 1998. Of the Company's
net premiums written in the third quarter of 1999, 24.8%, 17.2% and 58.0% were
derived from the reinsurance of municipal bonds, the reinsurance of
non-municipal obligations and the Company's other insurance lines, respectively,
compared to 41.9%, 16.3% and 41.8%, respectively, during the same period in
1998.

         In the third quarter of 1999, municipal new-issue volume was $48
billion, a decline of 27% from $66 billion during the same period in 1998. The
insured portion of such new issues was 46% and 56% during the third quarters of
1999 and 1998, respectively. Total municipal bond refundings in the third
quarter of 1999 represented approximately 14% of new-issue volume, down from 30%
for the third quarter of 1998.

                                       11
<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


         Earned premiums decreased 14.4% to $24.9 million in the third quarter
of 1999 from $29.1 million in the third quarter of 1998. Earned premiums from
refundings contributed $4.8 million (or 19.3%) of earned premiums in the third
quarter of 1999 compared to $5.3 million (or 18.2%) in the same period in 1998.
Deferred premium revenue, net of prepaid reinsurance premiums, grew to $326.3
million at September 30, 1999 from $308.2 million at December 31, 1998.

         Net investment income (which excludes capital and foreign exchange
gains or losses) increased 10.9% to $15.3 million in the third quarter of 1999
from $13.8 million in the same period in 1998. This increase resulted primarily
from the growth in the Company's fixed maturities portfolio and short-term
investments from $917.9 million at September 30, 1998 to $973.8 million at
September 30, 1999. The third-quarter 1999 investment income also includes
income of $0.7 million from the portfolio of mortgage-backed securities
purchased during April of 1999. The average yields on the Company's investment
portfolio were 6.3% and 6.2% for the third quarters of 1999 and 1998,
respectively. In addition, the Company realized $(0.1) million of capital losses
in the third quarter of 1999 compared with $2.1 million of capital gains in the
third quarter of 1998.

         The Company recognized revenues from disposition of assignments,
through securitization and other sales, of $12.2 million in the third quarter of
1999 compared to $12.7 million in the third quarter of 1998.

         Incurred losses and LAE were $3.8 million in the third quarter of 1999
compared to $4.6 million for the same period of 1998.

         The Company's insurance expense ratio was 52.1% in the third quarter of
1999 compared to 46.7% in the third quarter of 1998. Non-insurance expenses
increased to $14.9 million in the third quarter of 1999 from $11.2 million
during the same period in 1998, principally reflecting the cost of Singer's
start-up expenses in its new viatical settlement product. Policy acquisition
costs ("PAC") were $8.9 million and $10.2 million for the third quarters of 1999
and 1998, respectively, representing 35.8% and 34.9% of earned premiums in those
respective periods.

         The Company realized income of $4.5 million from its investments in
affiliates in the third quarter of 1999 compared to $3.2 million in the third
quarter of 1998, reflecting continued strong performance at C-BASS.

         Interest expense totaled $3.1 million and $2.2 million in the third
quarters of 1999 and 1998, respectively, reflecting the increase in the
Company's short-term debt outstanding.

         The Company's effective tax rate for the third quarter of 1999 was a
negative 8.7% compared to 26.1% for the 1998 third quarter as a result of the
April 1999 purchase of a portfolio of residential mortgage-backed securities.
The third quarter's effective tax rate also reflected a change in overall
effective tax rate to 2.4% at September 30, 1999 compared to 7.5% at June 30,
1999. As described more fully in the notes to the consolidated financial
statements, the transaction is expected to provide ancillary benefits that will
result in a lowering of the Company's effective tax rate through at least 2001.

         The Company's 1999 third-quarter net income decreased 1.5% to $22.4
million from net income of $22.7 million in the third quarter of 1998. Basic and
diluted earnings per share decreased 3.3% and 1.7%, respectively, to $.59 and
$.57 in third quarter 1999 from $.61 and $.58 in the same period of 1998. Net
income for third quarter 1999 includes a non-recurring reserve of $1.9 million
or $.05 per share, related to losses expected to be incurred in the event of a
run-off of Van-Am.

         The diluted weighted-average shares outstanding during the third
quarter of 1999 were 39.0 million compared to 39.1 million during the third
quarter of 1998.

         The Company experienced unrealized losses of $16.7 million in its
available-for-sale portfolio during the third quarter of 1999, compared with
unrealized gains of $13.4 million during the same period in

                                       12
<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


1998. Such losses are directly attributable to an increase in interest rates
during such period. The Company does not believe it is possible to predict
changes in interest rates or that the higher interest rates during such period
are necessarily indicative of a trend.

         Singer contributed net income of $.03 per share in third quarter 1999
compared to $.06 per share during the comparable period in 1998. C-BASS
contributed $.10 per share to Enhance Financial's third quarter 1999 net income,
compared to $.04 per share during the comparable period in 1998. Sherman
contributed a nominal net loss in third quarter 1999.

         During the first quarter of 1999, Singer made several management
changes aimed at strengthening and streamlining its operations, in connection
with which Singer entered into severance agreements with several employees. In
addition, Singer incurred significant start-up expenses in its new viatical
settlements product, primarily in the marketing thereof. Singer incurred an
aggregate of $3.0 million in expenses through September 30, 1999 ($1.2 million
of which was expensed during the third quarter of 1999), and may incur in the
remainder of 1999 additional expenses related to these activities. However,
these additional expenses are not expected to be material, and the aggregate of
these expenses is not expected to have a material impact on cash flow, liquidity
or segment profitability.

NINE MONTHS ENDED SEPTEMBER 30, 1999 VS. NINE MONTHS ENDED SEPTEMBER 30, 1998

         Gross premiums written in the first nine months of 1999 were $99.1
million compared with $89.4 million in the same period in 1998, representing an
increase of 10.9%.

         Net premiums written increased 5.4% to $93.4 million in the first nine
months of 1999 from $88.6 million in the same period in 1998. Of the Company's
net premiums written in the first nine months of 1999, 32.2%, 20.2% and 47.6%
were derived from the reinsurance of municipal bonds, the reinsurance of
non-municipal obligations and the Company's other insurance lines, respectively,
compared to 45.8%, 17.3% and 36.9%, respectively, during the same period in
1998.

         In the first nine months of 1999, municipal new-issue volume was $171
billion, a decline of 21% from $216 billion during the same period in 1998. The
insured portion of such new issues was 47% and 51% during the first nine months
of 1999 and 1998, respectively. Total municipal bond refundings in the first
nine months of 1999 represented 18% of new-issue volume, down from 30.0% for the
first nine months of 1998.

         Earned premiums decreased 2.4% to $75.3 million in the first nine
months of 1999 from $77.1 million in the first nine months of 1998. Earned
premiums from refundings contributed $9.7 million (or 12.9%) of earned premiums
in the first nine months of 1999 compared to $13.2 million (or 17.1%) in the
same period in 1998.

         Net investment income (which excludes capital and foreign exchange
gains or losses) increased 7.0% to $42.8 million in the first nine months of
1999 from $40.0 million in the same period in 1998. This increase resulted
primarily from the growth in the Company's fixed maturities portfolio and
short-term investments from $917.9 million at September 30, 1998 to $973.8
million at September 30, 1999. Investment income for the first nine months of
1999 also includes income of $1.0 million from the portfolio of mortgage backed
securities purchased during April 1999. The average yields on the Company's
investment portfolio were 6.0% and 6.2% for the first nine months of 1999 and
1998, respectively. In addition, the Company realized $4.5 million of capital
losses in the first nine months of 1999 compared with $2.1 million of capital
gains in the first nine months of 1998. The 1999 capital loss includes the
recognition of a $4.7 million pre-tax write down of two asset-backed securities
serviced by Commercial Financial Services, Inc. ("CFS"), which were purchased by
the Company in December 1997 for $6.1 million. CFS is currently protected under
Chapter 11 of the bankruptcy code as an outgrowth of allegations of improper
activities, although it continues to service the debt on a current basis. The
Company has joined in a lawsuit against CFS and certain other parties that
participated in the sale of the subject securities. Nevertheless, the Company
does not expect to recover its entire investment. The ultimate realizable amount

                                       13
<PAGE>

depends on the outcome of the bankruptcy of CFS and the lawsuit, and is
therefore subject to further adjustments.

         The Company recognized revenues from disposition of assignments,
through securitization and other sales, of $28.5 million in the first nine
months of 1999 compared to $35.2 million in the first nine months of 1998.

         Incurred losses and LAE were $9.2 million in the first nine months of
1999 compared to $8.5 million for the same period of 1998.

         The Company's insurance expense ratio was 52.9% in the first nine
months of 1999 compared to 48.9% in the first nine months of 1998. Non-insurance
expenses increased to $41.3 million in the first nine months of 1999 from $29.8
million during the same period in 1998, reflecting the cost of Singer's
management reorganization and significant start-up expenses in its new viatical
settlement product. PACs were $27.0 million and $26.8 million for the first nine
months of 1999 and 1998, respectively, representing 35.9% and 34.8% of earned
premiums in those respective periods.

         The Company realized income of $17.0 million from its investments in
affiliates in the first nine months of 1999 compared to $9.6 million in the
first nine months of 1998, reflecting continued strong performance at C-BASS.

         Interest expense totaled $8.0 million and $6.3 million in the first
nine months of 1999 and 1998, respectively, reflecting the increase in the
Company's short-term debt outstanding.

         The Company's effective tax rate for the first nine months of 1999 was
2.4% compared to 27.4% for the same period of 1998 as a result of the April 1999
purchase of a portfolio of residential mortgage-backed securities. As described
more fully in the notes to the consolidated financial statements, the
transaction is expected to provide ancillary benefits that will result in a
lowering of the Company's effective tax rate through at least 2001.

         The Company's 1999 first nine-months' net income increased 2.5% to
$64.0 million from net income of $62.5 million in the first nine months of 1998.
Basic and diluted earnings per share increased 1.2% and 3.1%, respectively, to
$1.69 and $1.64 in the first nine months of 1999 from $1.67 and $1.59 for the
same period of 1998. Net income for the first nine months of 1999 includes a
non-recurring reserve of $1.9 million, or $.05 per share, related to losses
expected to be incurred from the potential run-off of Van-Am.

         The diluted weighted-average shares outstanding during the first nine
months of 1999 was 39.1 million compared to 39.3 million during the same period
of 1998.

         The Company experienced unrealized losses of $47.5 million in its
available-for-sale portfolio during the first nine months of 1999, compared with
unrealized gains of $14.9 million during the same period in 1998. Such losses
are directly attributable to an increase in interest rates during such period.
The Company does not believe it is possible to predict changes in interest rates
or that the higher interest rates during such period are necessarily indicative
of a trend.

         Singer contributed a net loss of $.05 per share during the first nine
months of 1999 compared to net income of $.19 per share during the same period
in 1998. C-BASS contributed $.42 per share during the first nine months 1999
compared to $.14 per share during the same period in 1998. Sherman contributed a
net loss of $.04 per share during the first nine months of 1999.

         During the first quarter of 1999, Singer made several management
changes aimed at strengthening and streamlining its operations in connection
with which Singer entered into severance agreements with several employees. In
addition, Singer incurred significant start-up expenses in its new viatical
settlements product, primarily in the marketing thereof. Singer incurred an
aggregate of $3.0 million in expenses

                                       14
<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


through September 30, 1999 and Singer may incur in the remainder of 1999
additional expenses related to these activities. However, these additional
expenses are not expected to be material, and the aggregate of these expenses is
not expected to have a material impact on cash flow, liquidity or segment
profitability.

LIQUIDITY AND CAPITAL RESOURCES

         As a holding company, Enhance Financial funds the payment of its
operating expenses, principal and interest on its debt obligations, dividends to
its shareholders and the repurchase of common stock primarily from dividends
from its wholly-owned subsidiary, Enhance Investment Corporation ("Enhance
Investment"), whose ability to provide such dividends to Enhance Financial
depends upon dividends and other payments from the Insurance Subsidiaries;
manages cash flows associated with the Company's diversification activities and
draws on its line of credit provided under the credit agreement described below.
Payments of dividends to Enhance Investment by the Insurance Subsidiaries are
subject to restrictions relating to statutory capital and surplus and net
investment income. During the first nine months of 1999, the Insurance
Subsidiaries paid $19.5 million of dividends to Enhance Investment, which paid a
dividend of $6.5 million to Enhance Financial in March 1999, a dividend of $6.45
million to Enhance Financial in June 1999 and a dividend of $6.49 million to
Enhance Financial in September 1999. As of September 21, 1999, the date of
declaration, the maximum amount of dividends remaining available from the
Insurance Subsidiaries without prior approval of the insurance regulatory
authorities was $13.0 million.

         The Company's cash flow provided from operations for the first nine
months of 1999 was $41.0 million compared to cash flow provided from operations
of $51.0 million for the same period in 1998. The decrease in cash flow provided
from operations in the first nine months of 1999 was primarily due to Singer's
increased purchases of lottery receivables and structured settlements and new
products including the lump-sum purchases of life insurance policies of
individuals facing imminent life-threatening illness. Enhance Financial does not
expect this trend to continue and believes that the current level of cash flow
from operations provides the Company with sufficient liquidity to meet its
operating needs. The carrying value of the Company's investment portfolio
increased to $974.6 million at September 30, 1999 from $942.8 million at
December 31, 1998.

         The Company maintains a credit facility providing for borrowings to be
used for general corporate purposes. During the second quarter of 1998, the
Company entered into a new unsecured credit agreement with four major commercial
banks for up to $100 million of borrowings, an increase of $25 million over the
previous agreement (which was terminated). During the third quarter of 1999, the
borrowing limit under the credit facility was increased to $125 million through
March 31, 2000, at which time the limit is to revert to $100 million. As of
September 30, 1999, $100 million in principal was outstanding under the credit
agreement.

         In July 1996, the Company formed C-BASS, a joint venture in which each
of Enhance Financial and Mortgage Guaranty Insurance Company ("MGIC") owns
approximately a 48% interest. Enhance Financial has contributed $55.5 million to
C-BASS through September 30, 1999 (including its 100% interest in Litton Loan
Servicing Inc.) and expects that it will provide additional funding. In January
1998 Enhance Financial guaranteed repayment of up to $25 million of the amount
outstanding under a $50 million LIBOR-based unsecured revolving credit facility
that C-BASS obtained from a major commercial bank. In July 1999, C-BASS repaid
the outstanding principal and interest under the facility in full and terminated
the facility. Enhance Financial's repayment guarantee was terminated
accordingly.

         In December 1998, the Company formed Sherman, a joint venture in which
each of the Company and MGIC own a 45.5% interest. Enhance Financial has
contributed approximately $1.6 million to Sherman through September 30, 1999 and
is obligated to contribute an additional $6.5 million in cash to Sherman as and
when needed by Sherman. In addition, Enhance is obligated to contribute the
equity in the subsidiaries of Alegis Group Inc. to Sherman after certain
regulatory requirements have been satisfied. The Company expects that it will
provide additional funding to Sherman from time to time. In May 1999, Enhance
Financial guaranteed repayment of up to 50% of the amount outstanding under a
$50 million revolving credit facility that Sherman obtained from a major
commercial bank. As of September 30, 1999,

<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


the outstanding principal balance under the facility was approximately $38.2
million, with Enhance Financial guaranteeing $19.1 million of such amount.

         In the first nine months of 1999, Enhance Financial declared cash
dividends of $.18 per share, aggregating $6.8 million.

YEAR 2000

         As the Year 2000 approaches, Enhance Financial, including its insurance
subsidiaries, Enhance Reinsurance Company and Asset Guaranty Insurance Company,
is assessing the Company's potential exposure to the so called "millenium bug"
and the effects the century date change may have on its electronic systems and
those of its significant business partners. Since certain computer programs were
written using two digits rather than four to define the applicable year,
computing devices and systems may recognize a date using the two digits "00" as
1900 rather than the year 2000. Those that do not recognize a date correctly
could generate erroneous data and/or cause systems to fail.

         As part of its firm-wide Year 2000 Project, the Company has established
a Year 2000 Task Force consisting of senior management of the Company, led by
the Chief Information Officer and the General Counsel. It has also retained an
independent information technology consulting firm and outside legal counsel to
provide assistance with Year 2000 readiness and has adequate staff to administer
the Project. The progress of the Company's Year 2000 Project is being monitored
by the Audit Committee of the board of directors.

         The Year 2000 Project covers both computer systems and infrastructure
("IT systems") as well as other systems and equipment which utilize embedded
microchips ("non-IT systems"). It also considers the readiness of significant
third parties on which the Company depends, such as clients, vendors and service
providers. The Year 2000 Project has several interrelated phases. The status of
each phase is as follows. PROJECT DEVELOPMENT AND RESOURCE MOBILIZATION is
complete. ASSESSMENT of internal IT systems and non-IT systems and exposure to
third party risks is substantially complete. As part of its third-party due
diligence, the Company has assessed the Year 2000 readiness of all major
products and services purchased from vendors and service providers of IT and
non-IT components and systems. REMEDIATION AND TESTING of IT systems and non-IT
systems are in progress, and a separate IT test environment has been established
for selected applications deemed critical by management. Based on the assessment
of its major IT systems and non-IT systems, Enhance Financial expects that all
necessary remediation and testing will be completed to insure Year 2000
readiness in all material respects. CONTINGENCY PLANNING, including disaster
recovery planning is in progress and will continue throughout 1999.
IMPLEMENTATION of contingency plans will be made as and when needed.

         Since 1997, Enhance Financial has invested in a major initiative to
replace and upgrade its technology. This ongoing project addresses, among other
matters, many of the Year 2000 issues of the Company's internal IT systems. The
Company has expended approximately $2.0 million on this project, which,
accordingly, includes a portion of the cost of Year 2000 readiness. Additional
expenditures for Year 2000 readiness, which will be funded through operating
cash flow, are expected to total approximately $1.5 million. These cost
estimates are based upon currently available information and may change as the
Year 2000 Project proceeds. However, the cost of Year 2000 readiness is not
expected to affect materially the financial condition of the Company.

         The failure of IT systems and non-IT systems associated with cash
management, servicing, communications and building facilities would in varying
degrees have a material adverse effect on the Company. Such failures could
disrupt the Company's ability to conduct normal business operations, including
financial transactions such as payment of claims or debts, collecting or funding
of receivables and selling of commercial paper. The consequences of such
failures could include business interruption, lost revenue and illiquidity. The
magnitude of the financial impact of such potential failures is not known. The
Company is continuing to consider its reasonably likely worst case Year 2000
scenarios and their potential financial impact.

                                       16
<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


         The Company has communicated with third parties with which it has
material dealings to determine the status of their Year 2000 readiness and it is
in the process of assessing its exposure to potential third party Year 2000
failures. Management has determined that the following consequences to the
Company could result from the failure of such third parties to successfully
address their Year 2000 issues: OBLIGORS OF INSURED ISSUES (see also next
paragraph) - increased credit risk, claims, loss of premiums and renewals;
PRIMARIES AND REINSURERS - increased credit risk, uncollected claims, premium
loss, impaired liquidity; COUNTERPARTIES AND ISSUERS OF OBLIGATIONS - investment
portfolio downgrade, loss of income and/or principal; FINANCIAL INSTITUTIONS AND
LENDERS - impaired liquidity, loss of income and/or principal; VENDORS AND
SERVICE PROVIDERS - interrupted power, building access, telecommunications, flow
of goods, security and professional and technical services.

         The policies of insurance and reinsurance issued by the insurance
subsidiaries of Enhance Financial, their primary insurers and their reinsurers
do not contain specific exclusions for Year 2000-related defaults. Accordingly,
these policies would generally cover a default by an obligor of this type.
Although the insurers would expect eventually to recover the amounts paid in
claims for Year 2000-related defaults by obligors, the coincidence of several
such unanticipated claims could result in short-term liquidity risk for the
insurers. Failure of a trustee or paying agent for a given insured obligation to
make payment on that obligation as a result of a Year 2000-related event (or
otherwise) would generally not be covered by the insurance or reinsurance
policy, and no such claims are expected.

         In addition to other risks in connection with the Year 2000, general
uncertainty among market participants could cause a decline in business activity
and revenue in 1999 and 2000, as companies address their Year 2000 issues.
Enhance Financial cannot predict the magnitude of this possible decline or the
impact that it may have on its financial results for those years. However,
Enhance Financial has undertaken a thorough review of third-party risks inherent
in Year 2000 issues, and it is working with the industry group allied with its
core business to identify and address credit and other business issues related
to Year 2000. Enhance Financial is also assessing potential effects of
unexpected failures in local, national or international systems, including
power, communication and transportation systems, on which the normal conduct of
business depends, and it will establish contingency plans to deal with such
failures, although there can be no assurance that such plans can be effective in
such circumstances, especially in the case of widespread economic disruption.

         Management believes, based upon its investigation to date, that Enhance
Financial is substantially Year 2000 ready. However, there can be no assurance,
due to the uncertain nature of potential Year 2000 problems and Enhance
Financial's lack of control over some of them, especially the readiness of third
parties, that all Year 2000 issues will be foreseen and corrected in a timely
fashion. Failure of the efforts by Enhance Financial or certain third parties to
be Year 2000 ready could result in the disruption of the Company's normal
business activities or in unanticipated claims upon the Company, either of which
could have a material adverse effect. Management is in the process of arranging
additional liquidity, from various sources, in order to meet unanticipated
demand for the claim payments.

         Since January 1999, Enhance has strengthened several information
technology facilities and administrative contingency plan components. Such items
include improved data backup and recovery procedures, the outsourcing of
selected back-office processes to Year 2000-compliant providers, contingent
methods of staff remote network access and voice communication, rapid response
teams for mission-critical systems recovery, and formal contractual agreements
with a national provider of disaster recovery and business continuity services.
Taking into consideration these and other operational risk management measures,
management believes that the Company has adequate contingent emergency
preparedness capabilities in-place to support business continuity.


                                       17
<PAGE>

PART II: OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits.

         Exhibit 4.2.5.    Fourth Amendment to the Credit Agreement,
                           dated as of September 29, 1999, among the registrant,
                           Fleet National Bank as lender, swingline bank and
                           agent for the Banks; and The Bank of New York; Bank
                           One, NA (Main Office Chicago) (formerly known as The
                           First National Bank of Chicago); and Deutsche Bank
                           AG, New York and/or Cayman Island Branches, as
                           lenders.

         Exhibit 27.       Financial data schedules.


         (b)      Reports on Form 8-K.

                  None.



                                    SIGNATURE

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


Date: November 15, 1999         ENHANCE FINANCIAL SERVICES GROUP INC.

                                By: /s/ Richard J. Dunn
                                    --------------------------------------
                                    Richard J. Dunn
                                    Executive Vice President
                                    (duly authorized officer and
                                    Principal  Financial Officer)



                                       18