Exhibit 3.1

                              CERTIFICATE OF MERGER
                                       OF
                                    PAJY INC.
                                      INTO
                   FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
                UNDER SECTION 904 OF THE BUSINESS CORPORATION LAW
                            OF THE STATE OF NEW YORK

            The Undersigned, Roger K. Taylor, being the President of Financial
Security Assurance Holdings Ltd. and James R. Miller being the President of PAJY
Inc., said corporations being domestic corporations organized and existing under
and by virtue of the laws of the State of New York, do hereby certify:

            FIRST: The Board of Directors of each of the constituent
corporations has duly adopted a plan of merger setting forth the terms and
conditions of the merger of said corporations.

            SECOND: The name of the constituent corporation which is to be the
surviving corporation is Financial Security Assurance Holdings Ltd. and the name
under which it was formed is American Financial Assurance Holdings Ltd. The date
upon which its certificate of incorporation was filed by the Department of State
is April 20, 1984. A restated certificate of incorporation of filed by the
Department of State on May 18, 1999 and an amendment to the certificate of
incorporation was filed by the Department of State on June 30, 2000.

            THIRD: The name of the other constituent corporation which is being
merged into the surviving corporation is PAJY Inc. The date upon which its
certificate of incorporation was filed by the Department of State is March 14,
2000.

            FOURTH: As to each constituent corporation, the designation and
number of outstanding shares of each class and series and the voting rights
thereof are as follows:

                        Designation and     Class or series   Shares entitled
                        number of shares       of shares          to vote
                       in each class or        entitled          as a class
Name of Corporation    series outstanding       to vote          or series
-------------------    ------------------   ---------------   ---------------

Financial Security    Common Stock ($.01     Common Stock     Series A
Assurance Holdings    par value)/                             Convertible
Ltd.                  33,517,995 shares                       Redeemable
                                                              Preferred Stock
                      Series A Convertible   Series A
                      Redeemable Preferred   Convertible
                      Stock ($.01 par        Redeemable
                      value)/ 2,000,000      Preferred Stock
                      shares

PAJY Inc.             Common Stock (no par   Common Stock     N/A
                      value)/ 1 share

                                                                          Page 2


            FIFTH: The merger was authorized with respect to Financial Security
Assurance Holdings Ltd. in the following manner: An agreement and plan of merger
(the "Merger Agreement") was adopted by the board of Financial Security
Assurance Holdings Ltd., at a meeting on March 13, 2000 by unanimous vote of the
directors present at the time of the vote, all directors being present at the
time. The board thereupon submitted the Merger Agreement to a vote of
shareholders. Notice of meeting was given to each shareholder of record as of
April 14, 2000, a record date fixed pursuant to section 604 of the Business
Corporation Law, whether or not entitled to vote. A copy of the Merger Agreement
accompanied the notice. The Merger Agreement was adopted at a meeting of
shareholders on May 18, 2000, by affirmative vote of the holders of at least two
thirds of all outstanding shares entitled to vote thereon and affirming vote of
the holders of at least two thirds of all outstanding shares of Financial
Security Assurance Holdings Ltd.'s Series A Convertible Redeemable Preferred
Stock, voting separately as a class.

            The merger was authorized with respect to PAJY Inc. in the following
manner: The Merger Agreement was adopted on March 14, 2000 by the board of
directors of PAJY Inc. without a meeting by the consent in writing of the sole
member of the board. The resolution and written consent thereto by the sole
board member were filed with the minutes of the proceedings of the board. The
Merger Agreement was adopted on March 14, 2000, by the unanimous written consent
of Credit local de France S.A., the sole shareholder of PAJY Inc.

            SIXTH: The Restated Certificate of Incorporation of Financial
Security Assurance Holdings Ltd. shall continue in full force as the Certificate
of Incorporation of the surviving corporation, until its due alteration or
amendment in accordance with its provisions and with applicable law.

            SEVENTH: The effective date of the merger shall be July 5, 2000.

                                                                          Page 3


            IN WITNESS WHEREOF, we have signed this certificate on the 5th day
of July, 2000 and we affirm the statements contained herein as true under
penalties of perjury.

                                    Financial Security Assurance  Holdings Ltd.

                                    By: /s/ Roger K. Taylor
                                        -------------------------
                                        Name: Roger K. Taylor
                                        Title: President


                                    PAJY INC.

                                    By: /s/ James R. Miller
                                        -------------------------
                                        Name: James R. Miller
                                        Title: President