Exhibit 99.3


                                       6


<PAGE>


                      FINANCIAL GUARANTY INSURANCE COMPANY

                              Financial Statements

                           December 31, 2002 and 2001

                   (With Independent Auditors' Report Thereon)


                                       7


<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>

                      FINANCIAL GUARANTY INSURANCE COMPANY

                                 Balance Sheets

                           December 31, 2002 and 2001

                (Dollars in thousands, except per share amounts)


<TABLE>
<CAPTION>

                                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>

                      FINANCIAL GUARANTY INSURANCE COMPANY

                              Statements of Income

                  Years ended December 31, 2002, 2001, and 2000

                             (Dollars in thousands)


<TABLE>
<CAPTION>
                                                                  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
                                                           ===================   ====================   ====================
</TABLE>

See accompanying notes to financial statements.


                                       3
<PAGE>

                      FINANCIAL GUARANTY INSURANCE COMPANY

                       Statements of Stockholder's Equity

                  Years ended December 31, 2002, 2001, and 2000

                             (Dollars in thousands)



<TABLE>
<CAPTION>
                                                                                                        Additional paid-in
                                                                                     Common stock            capital
                                                                                   -----------------    ------------------
<S>                                                                                <C>                  <C>

Balance at December 31, 1999                                                       $          15,000              383,511
Net income                                                                                        --                   --
Other comprehensive income:
  Change in fixed maturity securities available-for-sale, net of tax of $37,126                   --                   --
  Change in foreign currency translation adjustment, net of tax of $464                           --                   --

              Total comprehensive income                                                          --                   --

Dividend declared                                                                                 --                   --
                                                                                   -----------------   ------------------
Balance at December 31, 2000                                                                  15,000              383,511
Net income                                                                                        --                   --
Other comprehensive income:
  Change in fixed maturity securities available-for-sale, net
    of tax benefit of $19,890                                                                     --                   --
  Change in foreign currency translation adjustment, net of tax
    benefit of $599                                                                               --                   --

              Total comprehensive income                                                          --                   --

Dividend declared                                                                                 --                   --
                                                                                   -----------------   ------------------
Balance at December 31, 2001                                                                  15,000              383,511
Net income                                                                                        --                   --
Other comprehensive income:
  Change in fixed maturity securities available-for-sale, net of tax of $36,138                   --                   --
  Change in foreign currency translation adjustment, net of tax benefit of $1,445                 --                   --

              Total comprehensive income                                                          --                   --

Dividend declared                                                                                 --                   --
                                                                                   -----------------   ------------------
Balance at December 31, 2002                                                       $          15,000              383,511
                                                                                   =================   ==================

<CAPTION>

                                                                                     Accumulated
                                                                                       other
                                                                                    comprehensive
                                                                                 income (loss), net
                                                                                       of tax             Retained earning
                                                                                 ------------------       ----------------
<S>                                                                              <C>                      <C>

Balance at December 31, 1999                                                               (46,687)              1,687,291
Net income                                                                                                         170,740
Other comprehensive income:
  Change in fixed maturity securities available-for-sale, net of tax of $37,126              68,946                     --
  Change in foreign currency translation adjustment, net of tax of $464                         861                     --

              Total comprehensive income                                                         --                     --

Dividend declared                                                                                --              (250,000)
                                                                                  -----------------      ------------------
Balance at December 31, 2000                                                                 23,120              1,608,031
Net income                                                                                       --                215,268
Other comprehensive income:
  Change in fixed maturity securities available-for-sale, net
    of tax benefit of $19,890                                                              (36,940)                     --
  Change in foreign currency translation adjustment, net of tax
    benefit of $599                                                                         (1,112)                     --
                                                                                                 --                     --
              Total comprehensive income                                                         --                     --

Dividend declared                                                                                --              (200,000)
                                                                                  -----------------      ------------------
Balance at December 31, 2001                                                               (14,932)               1,623,299
Net income                                                                                       --                 217,586
Other comprehensive income:
  Change in fixed maturity securities available-for-sale, net of tax of $36,138              67,113                      --
  Change in foreign currency translation adjustment, net of tax benefit of $1,445           (2,682)                      --

              Total comprehensive income                                                        --                       --

Dividend declared                                                                               --                (100,000)
                                                                                 -----------------       ------------------
Balance at December 31, 2002                                                                49,499                1,740,885
                                                                                 =================       ==================

<CAPTION>
                                                                                               Total
                                                                                          --------------
<S>                                                                                       <C>

Balance at December 31, 1999                                                                   2,039,115
Net income                                                                                       170,740
Other comprehensive income:
  Change in fixed maturity securities available-for-sale, net of tax of $37,126                   68,946
  Change in foreign currency translation adjustment, net of tax of $464                              861
                                                                                          --------------

              Total comprehensive income                                                         240,547
                                                                                          --------------
Dividend declared                                                                              (250,000)
                                                                                          --------------

Balance at December 31, 2000                                                                   2,029,662
Net income                                                                                       215,268
Other comprehensive income:
  Change in fixed maturity securities available-for-sale, net
    of tax benefit of $19,890                                                                   (36,940)
  Change in foreign currency translation adjustment, net of tax
    benefit of $599                                                                              (1,112)
                                                                                          --------------
              Total comprehensive income                                                         177,216
                                                                                          --------------
Dividend declared                                                                              (200,000)
                                                                                          --------------
Balance at December 31, 2001                                                                   2,006,878
Net income                                                                                       217,586
Other comprehensive income:
  Change in fixed maturity securities available-for-sale, net of tax of $36,138                   67,113
  Change in foreign currency translation adjustment, net of tax benefit of $1,445                (2,682)
                                                                                          --------------
              Total comprehensive income                                                         282,017
                                                                                          --------------
Dividend declared                                                                              (100,000)
                                                                                          --------------
Balance at December 31, 2002                                                                   2,188,895
                                                                                          ==============
</TABLE>


See accompanying notes to financial statements.

                                       4
<PAGE>


                      FINANCIAL GUARANTY INSURANCE COMPANY

                            Statements of Cash Flows

                  Years ended December 31, 2002, 2001, and 2000

                             (Dollars in thousands)


<TABLE>
<CAPTION>

                                                                 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
                                                          ===================   ====================   ====================
</TABLE>


See accompanying notes to financial statements.


                                       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.


                                       6                        (Continued)
<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.

                                       7                          (Continued)
<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


                                       8                        (Continued)
<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.

                                       9                        (Continued)
<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
                                              ================  ================  ================   ================

<CAPTION>
                                                                     Gross             Gross
                                                 Amortized        unrealized        unrealized
                                                   cost           holding gains     holding losses     Fair value
                                              ----------------  ----------------  ------------------  ---------------
<S>                                           <C>               <C>                 <C>                <C>

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.

<TABLE>
<CAPTION>

                                                       Amortized cost         Fair value
                                                       ---------------       -----------
     <S>                                            <C>                          <C>
     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
                                                       ===============       ===========
</TABLE>


     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:


              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
                                                        ===============


                                       19                       (Continued)
<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)
                                                    ===============   ===============   ===============
</TABLE>


<TABLE>
<CAPTION>
                                                                          2000
                                                    ---------------------------------------------------
                                                        Before                              Net of
                                                      tax amount           Tax             tax amount
                                                    ---------------   ---------------   ---------------
<S>                                                <C>                        <C>               <C>
     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>