ARMONK, N.Y.--(BUSINESS WIRE)--
MBIA Inc. (NYSE: MBI), the holding company for MBIA Insurance
Corporation, today reported that net income per share for the first
nine months of 2007 was $2.84, compared with $4.67 during the same
period of 2006. In the first nine months of 2007, net income was
$373.8 million, down 41 percent compared with $638.3 million in the
same period last year.
The decline was due to a pre-tax net loss of $352.4 million, or
$1.80 per share, that the Company recorded in the third quarter on
financial instruments at fair value ("marked-to-market") and foreign
exchange. The loss was a consequence of wider spreads affecting the
valuation of the Company's structured credit derivatives portfolio.
Compared with the previous quarter, spreads widened significantly on
Commercial Mortgage-Backed Securities (CMBS) collateral and on other
asset-backed collateral in the Company's structured credit derivatives
portfolio. The Company believes that the "mark-to-market" loss does
not reflect material credit impairment.
Operating income per share, a non-GAAP measure (which is defined
in the attached Explanation of Non-GAAP Financial Measures), for the
first nine months of 2007 was $4.57 compared with $4.50 in 2006.
After-tax operating income for the first nine months of 2007 was down
2 percent to $600.7 million from $614.5 million in the same period of
2006. Excluding accelerated income from refunded issues, operating
income per share was $4.09, up 4 percent in the first nine months of
the year from $3.94 in the same period of 2006.
For the third quarter of 2007, net loss per share was $0.29
compared with net income per share of $1.59 in the third quarter of
2006. Net loss for the third quarter of 2007 was $36.6 million
compared with net income of $217.9 million in the same period last
year.
Operating income per share was $1.52 for the third quarter of
2007, compared with $1.55 for the third quarter of 2006. After-tax
operating income for the third quarter of 2007 was down 9 percent to
$192.6 million from $212.4 million in the third quarter of 2006.
Excluding accelerated income from refunded issues, operating income
per share in the third quarter increased to $1.43 from the prior
year's third quarter at $1.37.
Diluted earnings per share information
----------------------------------------------------------------------
Three Months Nine Months
Ended September 30 Ended September 30
------------------ ------------------
2007 2006 2007 2006
--------- -------- --------- --------
Net income (loss) ($0.29) $ 1.59 $ 2.84 $ 4.67
Income from discontinued
operations 0.00 0.01 0.00 0.03
--------- -------- --------- --------
Net income (loss) from
continuing operations (0.29) 1.58 2.84 4.64
Net realized gains 0.00 0.03 0.13 0.10
Net gains (losses) on financial
instruments at fair value and
foreign exchange (1.80) 0.00 (1.86) 0.05
--------- -------- --------- --------
Operating income $ 1.52 $ 1.55 $ 4.57 $ 4.50
(Numbers may not add due to
rounding)
Gary Dunton, MBIA Chairman and Chief Executive Officer, said,
"Spreads widened significantly across the market in the third quarter
and caused our insured credit derivatives portfolio to generate a
large "mark-to-market" loss, which we do not believe accurately
reflects the economics of our business. The "mark-to-market" loss is
not an actual loss, nor is it indicative of future claims. We remain
comfortable that our insured credit derivatives portfolio will not
result in material credit losses. More important, wider spreads
contributed to a substantially better pricing environment for our
insurance and asset/liability management products. From an Adjusted
Direct Premium production standpoint, the third quarter was
outstanding - the Company's second best quarter ever and the best
quarter for our structured finance business. Pricing was strong across
many sectors, and the credit quality of our new business was very
high."
Insurance Operations
For the first nine months of 2007, Adjusted Direct Premium (ADP),
a non-GAAP measure (which is defined in the attached Explanation of
Non-GAAP Financial Measures), grew 103 percent to $1,234.5 million
from $609.6 million in the same period of 2006. For the third quarter,
ADP was $514.2 million, an increase of 145 percent compared with
$210.1 million in the third quarter of 2006.
Adjusted Direct Premiums
(dollars in millions)
----------------------------------------------------------------------
Three Months Nine Months
Ended September 30 Ended September 30
----------------------- -------------------------
2007 2006 % Change 2007 2006 % Change
------ ------ --------- -------- ------ ---------
Global Public
Finance
United States $109.6 $ 67.5 62% $ 259.1 $189.2 37%
Non-United States 66.9 31.6 112% 187.7 133.8 40%
------ ------ --------- -------- ------ ---------
Total 176.5 99.1 78% 446.8 323.0 38%
Global Structured
Finance
United States 291.0 73.8 294% 612.5 163.4 275%
Non-United States 46.7 37.2 26% 175.2 123.2 42%
------ ------ --------- -------- ------ ---------
Total 337.7 111.0 204% 787.7 286.6 175%
Total $514.2 $210.1 145% $1,234.5 $609.6 103%
For the first nine months of the year, MBIA's global public
finance production increased 38 percent over the same period in 2006.
U.S. public finance was up 37 percent compared with the same period in
2006, and non-U.S. public finance was up 40 percent.
For the third quarter of 2007, MBIA's global public finance ADP
was up 78 percent compared with the same period last year. U.S.
production and non-U.S. production were up 62 percent and 112 percent,
respectively. Transactions in the utilities and transportation sectors
made large contributions to the increase in global public finance
production during the third quarter. Financings for two French toll
roads, an electric utility in Australia and a second transaction for
Comision Federal de Electricidad, a government-owned electric company
in Mexico, as well as a large sales tax revenue transaction in Puerto
Rico, were among the highest ADP deals for global public finance in
the quarter.
MBIA's global structured finance ADP was up 175 percent for the
first nine months of the year. Third quarter production for MBIA's
global structured finance was the highest quarterly structured finance
ADP production in the Company's history, rising 204 percent compared
with the third quarter of 2006. Both volume and pricing contributed to
the increase.
In the third quarter, U.S. structured finance ADP increased 294
percent compared with 2006, and non-U.S. structured finance production
was up 26 percent. Several sectors contributed to the increase in
global structured finance production, with particularly strong
increases from CMBS pools, Collateralized Debt Obligations (CDOs) of
investment grade corporate credits, commercial mortgage-backed
securities pools and multi-sector CDOs, as well as a whole business
securitization, which generated the largest ADP for the quarter.
Total premiums earned, which include scheduled premiums earned and
refunding premiums earned, for the first nine months of the year were
essentially level with the same period of 2006, from $635.0 million in
2006 to $634.4 million in 2007. Total premiums earned in the third
quarter of 2007 decreased 4 percent to $203.2 million, down from
$212.3 million in the same period of 2006. Scheduled premiums earned
in the first nine months of 2007 increased 5 percent to $530.5 million
from $507.0 million for the first nine months of 2006; and increased
by 9 percent to $185.0 million in the third quarter of 2007 from
$170.1 million in the third quarter of 2006. Earned premiums from
refundings declined 19 percent in the first nine months of the year at
$103.9 million compared with $128.0 million in the same period of 2006
and were down 57 percent for the quarter at $18.2 million compared
with $42.2 million in the third quarter of 2006.
In the first nine months of 2007, pre-tax net investment income
decreased 2 percent to $437.7 million from $447.9 million in the same
period of 2006. Pre-tax net investment income was $145.5 million for
the third quarter of 2007, an 11 percent decline from last year's
third quarter. The decrease was due to lower average invested assets
resulting from $1.0 billion of dividends paid by the insurance company
to the holding company from December 2006 through April 2007. In
addition, last year's third quarter benefited from interest received
from the Northwest Airlines remediation, which contributed $13.4
million to net investment income in the third quarter of 2006.
MBIA's fees and reimbursements were down 33 percent for the first
nine months of 2007 to $19.7 million from $29.2 million during the
first nine months of 2006. Fees and reimbursements for the third
quarter of 2007 were $4.9 million, down 71 percent compared with $17.0
million for the third quarter of 2006. Last year's third quarter
benefited from two large expense reimbursements.
For the first nine months of the year, total insurance expenses
remained level with the same period of 2006, at $273.9 million
compared with $274.5 million in the same period of 2006. In the third
quarter of 2007, total insurance expenses decreased 9 percent to $88.3
million from $96.8 million in the third quarter of 2006, and is
primarily due to lower operating expenses.
Gross insurance expenses, which are prior to any expense
deferrals, were down 3 percent for the first nine months of the year
to $183.5 million from $189.0 million for the first nine months of
2006. Gross insurance expenses for the quarter were down 6 percent to
$59.4 million from $63.4 million for the same period last year.
The Company incurred $63.7 million in loss and loss adjustment
expenses (LAE) in the first nine months of 2007, a 5 percent increase
over the $60.8 million in last year's first nine months, which
corresponds to the growth in scheduled premiums earned. The Company
incurred $22.2 million in loss and LAE in the third quarter of 2007
compared with $20.4 million for the prior year's third quarter. Loss
and LAE incurred is based on the Company's formula of reserving 12
percent of scheduled premiums earned. During the third quarter of
2007, the net effect of MBIA's formula-based loss reserving combined
with its case loss reserve activity resulted in a $10.5 million
increase to its unallocated loss reserve. The Company's unallocated
loss reserve was $213.7 million at September 30, 2007, level with
$213.3 million at December 31, 2006.
The overall credit quality of the insured portfolio remained high
with 82 percent of the total book of business rated A or better as of
September 30, 2007. The percentage of the portfolio rated below
investment grade on an S&P priority basis decreased to 1.4 percent as
of September 30, 2007 from 2.2 percent as of September 30, 2006. The
largest reduction in the below-investment-grade rated portion of the
insured portfolio resulted from the retirement of MBIA's $1.6 billion
Eurotunnel exposure.
MBIA's pre-tax operating income from insurance operations for the
first nine months, which excludes the effects of net realized gains
and losses and net gains and losses on financial instruments at fair
value and foreign exchange, was 2 percent lower at $817.9 million
compared with $837.6 million in the same period of 2006. For the third
quarter of 2007, pre-tax operating income from insurance operations
decreased 11 percent to $265.2 million compared with $296.8 million in
the third quarter of 2006.
Investment Management Services
For the first nine months of 2007, pre-tax operating income for
Investment Management Services was up 8 percent, from $75.4 million to
$81.6 million. For the third quarter of 2007, pre-tax operating income
increased 20 percent to $30.7 million versus $25.6 million in 2006.
The growth in income was due to higher assets under management,
primarily attributable to strong growth in the asset/liability
products segment. The average market value of assets under management
for the first nine months of 2007, including conduit assets of $4.3
billion, was $66.5 billion, up 23 percent from $54.2 billion for same
period last year.
Ending assets under management at September 30, 2007 include $1.8
billion in a structured investment vehicle (SIV) named Hudson-Thames,
which MBIA manages in its Advisory Services segment. Hudson-Thames is
actively seeking alternative solutions to address its financing needs,
given the challenges in the structured finance and asset-backed
commercial paper markets. MBIA invested $15.8 million in the capital
notes of the Hudson-Thames SIV, which is 12% of the capital notes.
MBIA has no obligation to provide liquidity support or credit
guarantees to Hudson-Thames.
Corporate
For the first nine months of 2007, pre-tax operating losses
increased 3 percent to $63.2 million from $61.1 million for the
comparable period in 2006. For the third quarter of 2007, pre-tax
operating losses for the Corporate segment grew 17 percent to $26.0
million from $22.2 million in the third quarter of 2006. The increased
operating loss for the third quarter of 2007 reflects reduced
investment income due to a $3.0 million loss attributable to a holding
in the Company's alternative investment portfolio. It also reflects a
$1.8 million increase in Corporate expenses due to increases in
intercompany interest expense and costs allocated from the insurance
company to the holding company, partially offset by a reduction in
expenses related to the regulatory investigations. For the first nine
months of 2007, the Company received $6.4 million in insurance
recoveries. The insurance recoveries represent payments under the
Company's directors' and officers' insurance policies, which
reimbursed MBIA for a portion of the expenses it has incurred for the
regulatory investigations and related litigation.
Gains and Losses
In the first nine months of 2007, MBIA recorded net realized gains
of $27.3 million for all business operations, compared with net
realized gains of $20.5 million in the first nine months of 2006. For
the third quarter of 2007, MBIA recorded a net realized loss of $0.3
million compared with a net realized gain of $5.4 million for the
third quarter of 2006. The year-over-year change was primarily due to
customary activity associated with the management of the Company's
investment portfolio.
The Company recorded pre-tax net losses on financial instruments
at fair value and foreign exchange of $376.4 million for all business
operations in the first nine months of 2007, compared with pre-tax net
gains of $10.5 million in the first nine months of 2006. For the third
quarter of 2007, pre-tax net losses on financial instruments at fair
value and foreign exchange were $352.4 million compared with pre-tax
net gains of $1.0 million in the third quarter of 2006.
Most of the third quarter's $352.4 million loss is attributable to
MBIA's insured credit derivatives portfolio. When MBIA writes credit
protection in the form of a credit default swap, the Company accounts
for the transaction under the requirements of FAS 133, "Accounting for
Derivative Instruments and Hedging Activities." Under FAS 133, these
transactions must be "marked-to-market" and the change in fair value
recorded in the Company's income statement. The majority of these
credit default swaps provide guarantees for structured finance
transactions with underlying collateral of commercial real estate
securities (structured CMBS pools) and CDOs backed by various assets
including residential mortgage-backed securities (RMBS), other
asset-backed securities, corporate bonds and loans. These transactions
are usually underwritten at or beyond a Triple-A shadow rating level.
With the recent turbulence in the structured finance markets, MBIA's
third quarter "mark-to-market" of its structured credit derivatives
portfolio resulted in a $342.1 million pre-tax loss. The drivers were
significant increases in spreads on CMBS collateral and, to a lesser
extent, spread increases on other asset-backed and corporate
collateral including RMBS in multi-sector CDOs. The Company believes
there has been no material credit deterioration in this portfolio and,
therefore, the "mark-to-market" is not a good indication of future
claims. These derivative contracts have similar terms and conditions
to the Company's insurance contracts, and the Company is not required
to post collateral to a counterparty, thereby avoiding the liquidity
risks more typical of the standard derivative market. MBIA manages its
structured credit derivatives portfolio the way it manages its
insurance contracts, including the same monitoring process to detect
impairment, and would disclose any credit impairment recorded as part
of the "mark-to-market" on these positions. Since MBIA insures these
contracts to scheduled maturity and has experienced no material credit
deterioration, it expects that the current negative "mark-to-market"
will be reversed over time.
Operating Return On Equity
MBIA's operating return on equity, a non-GAAP measure (which is
defined in the attached Explanation of Non-GAAP Financial Measures),
was 11.8 percent at September 30, 2007 and 12.6 percent at September
30, 2006.
Book Value and Adjusted Book Value
MBIA's book value per share at the end of the first nine months of
2007 decreased to $52.09 from $53.43 at December 31, 2006, which
includes a $1.77 impact from the third quarter's "mark-to-market"
result from the Company's structured credit derivatives portfolio.
Adjusted book value (ABV) per share at September 30, 2007 rose 6
percent to $80.08 from $75.72 at December 31, 2006. ABV is a non-GAAP
measure (which is defined in the attached Explanation of Non-GAAP
Financial Measures).
Share Repurchase
During the third quarter of 2007, on a trade date basis, the
Company repurchased approximately 1.0 million shares at an average
price of $61.23. Approximately $340 million remains available under
the Company's $1 billion share buyback program, which was authorized
by the Company's board of directors in February 2007.
Conference Call
MBIA will host a conference call for investors today at 11 a.m.
EDT. The conference call will consist of brief comments by Mr. C.
Edward Chaplin, MBIA Chief Financial Officer, followed by a question
and answer session with Mr. Chaplin. The dial-in number for the call
is (877) 694-4769 in the U.S. and (973) 582-2849 from outside the U.S.
The conference call code is 9332992. A live broadcast of the
conference call will also be accessible via www.mbia.com. A replay of
the conference call will be available from 1:00 p.m. on October 25
until 5:00 p.m. on November 8 by dialing (877) 519-4471 in the U.S. or
(973) 341-3080 from outside the U.S. The replay call code is also
9332992. In addition, a recording of the call will be available on
MBIA's Web site approximately two hours after the completion of the
conference call.
MBIA Inc., through its subsidiaries, is a leading financial
guarantor and provider of specialized financial services. MBIA's
innovative and cost-effective products and services meet the credit
enhancement, financial and investment needs of its public and private
sector clients, domestically and internationally. MBIA Inc.'s
principal operating subsidiary, MBIA Insurance Corporation, has a
financial strength rating of Triple-A from Moody's Investors Service,
Standard & Poor's Ratings Services, Fitch Ratings, and Rating and
Investment Information, Inc. Please visit MBIA's Web site at
www.mbia.com.
This news release contains forward-looking statements. Important
factors such as general market conditions and the competitive
environment could cause actual results to differ materially from those
projected in these forward-looking statements. The Company undertakes
no obligation to revise or update any forward-looking statements to
reflect changes in events or expectations.
Explanation of Non-GAAP Financial Measures
The following are explanations of why MBIA believes that the
non-GAAP financial measures typically used in the Company's press
releases, which serve to supplement GAAP information, are meaningful
to investors.
Operating Income (Loss) and Operating Income (Loss) Per Share: The
Company believes operating income (loss) and operating income (loss)
per share are useful measurements of performance because they measure
income from operations, unaffected by investment portfolio realized
gains and losses, gains and losses on financial instruments at fair
value and foreign exchange and other non-operating items. Operating
income (loss) and operating income (loss) per share are also provided
to assist research analysts and investors who use this information in
their analysis of the Company.
Adjusted Direct Premiums (ADP): The Company believes adjusted
direct premiums are a meaningful measure of the total value of the
insurance business written during a reporting period since it
represents the present value of all premiums collected and expected to
be collected on policies closed during the period. As such, it gives
investors an opportunity to measure the value of new business
activities in a given period and compare it to new business activities
in other periods. Other measures, such as premiums written and
premiums earned, include the value of premiums resulting from business
closed in prior periods and do not provide the same information to
investors.
Operating Return on Equity (ROE): The Company believes operating
return on equity is a useful measurement of performance because it
measures return on equity based upon income from operations and
shareholders' equity, unaffected by investment portfolio realized
gains and losses, gains and losses on financial instruments at fair
value and foreign exchange, unrealized gains and losses, and
non-recurring items. Operating return on equity is also provided to
assist research analysts and investors who use this information in
their analysis of the Company.
Adjusted Book Value (ABV): The Company believes the presentation
of adjusted book value, which includes items that are expected to be
realized in future periods, provides additional information that gives
a comprehensive measure of the value of the Company. Since the Company
expects these items to affect future results and, in general, they do
not require any additional future performance obligation on the
Company's part, ABV provides an indication of the Company's value in
the absence of any new business activity. ABV is not a substitute for
GAAP book value but does provide investors with additional information
when viewed in conjunction with GAAP book value.
MBIA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
----------------------------------------------------------------------
(dollars in thousands)
September 30, December 31,
2007 2006
------------- -------------
Assets
------------------------------------------
Investments:
Fixed-maturity securities held as
available-for-sale, at fair value
(amortized cost $31,325,147 and
$27,327,315)(2007 includes hybrid
financial instruments at fair value
$736,881) $ 31,316,347 $ 27,755,667
Investments held-to-maturity, at
amortized cost (fair value $5,646,839
and $5,187,766) 5,666,153 5,213,464
Investment agreement portfolio pledged
as collateral, at fair value
(amortized cost $787,595 and $176,179) 785,676 175,834
Short-term investments, at amortized
cost (which approximates fair value) 3,552,769 2,960,646
Other investments 858,523 971,707
------------- -------------
Total investments 42,179,468 37,077,318
Cash and cash equivalents 365,829 269,277
Accrued investment income 614,712 526,468
Deferred acquisition costs 466,927 449,556
Prepaid reinsurance premiums 331,036 363,140
Reinsurance recoverable on unpaid losses 50,673 46,941
Goodwill 79,406 79,406
Property and equipment (net of
accumulated depreciation) 98,555 105,950
Receivable for investments sold 209,164 77,593
Derivative assets 749,779 521,278
Other assets 183,457 246,103
------------- -------------
Total assets $ 45,329,006 $ 39,763,030
============= =============
Liabilities and Shareholders' Equity
------------------------------------------
Liabilities:
Deferred premium revenue $ 3,117,699 $ 3,129,620
Loss and loss adjustment expense
reserves 545,079 537,037
Investment agreements 15,063,102 12,482,976
Commercial paper 848,353 745,996
Medium-term notes (2007 includes hybrid
financial instruments at fair value
$371,494) 13,643,860 10,951,378
Variable interest entity floating rate
notes 1,372,470 1,451,928
Securities sold under agreements to
repurchase 727,613 169,432
Short-term debt 13,383 40,898
Long-term debt 1,220,736 1,215,289
Current income taxes 11,268 6,970
Deferred income taxes, net 232,054 476,189
Deferred fee revenue 14,496 14,862
Payable for investments purchased 520,223 319,640
Derivative liabilities 922,104 400,318
Other liabilities 545,211 616,243
------------- -------------
Total liabilities 38,797,651 32,558,776
Shareholders' Equity:
Common stock 160,225 158,330
Additional paid-in capital 1,639,206 1,533,102
Retained earnings 6,640,072 6,399,333
Accumulated other comprehensive income 54,598 321,293
Treasury stock (1,962,746) (1,207,804)
------------- -------------
Total shareholders' equity 6,531,355 7,204,254
Total liabilities and shareholders'
equity $ 45,329,006 $ 39,763,030
============= =============
MBIA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
----------------------------------------------------------------------
(dollars in thousands except per share amounts)
Three Months Ended Nine Months Ended
September 30 September 30
------------------------- -------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
Insurance
operations
Revenues:
Gross premiums
written $249,535 $202,178 $714,723 $626,526
Ceded premiums (24,459) (26,461) (72,353) (77,532)
------------ ------------ ------------ ------------
Net premiums
written 225,076 175,717 642,370 548,994
Scheduled
premiums
earned 185,024 170,112 530,457 506,957
Refunding
premiums
earned 18,169 42,215 103,901 128,005
------------ ------------ ------------ ------------
Premiums
earned 203,193 212,327 634,358 634,962
Net investment
income 145,458 164,134 437,749 447,886
Fees and
reimbursements 4,879 17,046 19,681 29,239
Net realized
gains (losses) 6,411 4,195 38,455 12,566
Net gains
(losses) on
financial
instruments at
fair value and
foreign
exchange (335,317) (4,706) (347,528) 1,356
------------ ------------ ------------ ------------
Total
insurance
revenues 24,624 392,996 782,715 1,126,009
Expenses:
Losses and loss
adjustment 22,203 20,414 63,655 60,835
Amortization of
deferred
acquisition
costs 16,052 16,774 50,114 50,162
Operating 30,517 37,344 98,129 109,568
Interest
expense 19,514 22,225 61,961 53,929
------------ ------------ ------------ ------------
Total
insurance
expenses 88,286 96,757 273,859 274,494
------------ ------------ ------------ ------------
Insurance income
(loss) (63,662) 296,239 508,856 851,515
------------ ------------ ------------ ------------
Investment
management
services
Revenues 434,872 308,473 1,187,281 860,978
Net realized
gains (losses) (5,973) 361 (1,949) 5,594
Net gains
(losses) on
financial
instruments at
fair value and
foreign
exchange (17,407) 5,415 (29,024) 8,723
------------ ------------ ------------ ------------
Total
investment
management
services
revenues 411,492 314,249 1,156,308 875,295
Interest expense 378,787 263,804 1,034,796 730,472
Expenses 25,425 19,062 70,883 55,113
------------ ------------ ------------ ------------
Total
investment
management
services
expenses 404,212 282,866 1,105,679 785,585
------------ ------------ ------------ ------------
Investment
management
services income 7,280 31,383 50,629 89,710
------------ ------------ ------------ ------------
Corporate
Net investment
income 721 2,675 14,450 9,747
Insurance
recoveries - - 6,400 -
Net realized
gains (losses) (749) 866 (9,244) 2,333
Net gains
(losses) on
financial
instruments at
fair value and
foreign
exchange 317 297 151 435
Interest expense 20,186 20,195 60,547 60,496
Corporate
expenses 6,544 4,711 23,460 10,379
------------ ------------ ------------ ------------
Corporate loss (26,441) (21,068) (72,250) (58,360)
------------ ------------ ------------ ------------
Income (loss) from
continuing
operations before
income taxes (82,823) 306,554 487,235 882,865
Provision
(benefit) for
income taxes (46,183) 89,981 113,433 248,166
------------ ------------ ------------ ------------
Income (loss) from
continuing
operations (36,640) 216,573 373,802 634,699
Income (loss)
from
discontinued
operations, net
of tax - 1,374 - 3,604
------------ ------------ ------------ ------------
Net income (loss) ($36,640) $217,947 $373,802 $638,303
============ ============ ============ ============
Net income (loss)
per common share:
Basic ($0.30) $1.64 $2.93 $4.81
Diluted ($0.29) $1.59 $2.84 $4.67
Weighted-average
number of common
shares
outstanding:
Basic 123,705,544 132,794,395 127,658,105 132,759,336
Diluted 127,129,044 136,739,403 131,537,515 136,676,944
MBIA INC. AND SUBSIDIARIES
Reconciliation of Adjusted Direct Premiums to Gross Premiums Written
----------------------------------------------------------------------
(dollars in millions)
Three Months
Ended Nine Months Ended
September 30 September 30
--------------- -----------------
2007 2006 2007 2006
------- ------- --------- -------
Adjusted direct premiums (1) $514.2 $210.1 $1,234.5 $609.6
Adjusted assumed premiums 0.0 5.7 0.0 5.7
------- ------- --------- -------
Adjusted gross premiums 514.2 215.8 1,234.5 615.3
Present value of estimated
future installment premiums
(2) (414.9) (157.0) (943.4) (381.3)
------- ------- --------- -------
Gross upfront premiums written 99.3 58.8 291.1 234.0
Gross installment premiums
written 150.2 143.4 423.6 392.5
------- ------- --------- -------
Gross premiums written $249.5 $202.2 $714.7 $626.5
======= ======= ========= =======
(1) A non-GAAP measure.
(2) At September 30, 2007, June 30, 2007 and March 31, 2007 the
discount rate was 5.13%, 5.13% and 5.10%, respectively, and at
September 30, 2006, June 30, 2006 and March 31, 2006 the discount
rate was 5.03%, 5.00% and 5.02%, respectively.
Components of Net Income per Share
(1)
-----------------------------------
Three Months
Ended Nine Months Ended
September 30 September 30
---------------- -----------------
2007 2006 2007 2006
------- ------- --------- -------
Net income (loss) ($0.29) $1.59 $2.84 $4.67
Income (loss) from discontinued
operations 0.00 0.01 0.00 0.03
------- ------- --------- -------
Net income (loss) from continuing
operations (0.29) 1.58 2.84 4.64
Net realized gains (losses) 0.00 0.03 0.13 0.10
Net gains (losses) on financial
instruments at fair value and
foreign exchange (1.80) 0.00 (1.86) 0.05
------- ------- --------- -------
Operating income (2) $1.52 $1.55 $4.57 $4.50
======= ======= ========= =======
(1) May not add due to rounding.
(2) A non-GAAP measure.
MBIA INC. AND SUBSIDIARIES
Components of Adjusted Book Value per Share
-------------------------------------------------
September 30, 2007 December 31, 2006
---------------------- -------------------
Book value $52.09 $53.43
After-tax value of:
Deferred premium
revenue 16.16 15.09
Prepaid reinsurance
premiums (1.72) (1.75)
Deferred acquisition
costs (2.42) (2.17)
-------- --------
Net deferred premium
revenue 12.02 11.17
Present value of
installment premiums
(1) 13.58 11.13
Asset/liability
products adjustment 5.75 2.92
Loss provision (2) (3.36) (2.93)
-------------- -----------
Adjusted book value (3) $80.08 $75.72
============== ===========
(1) At September 30, 2007 and December 31, 2006 the discount rate was
5.13% and 5.10%, respectively.
(2) The loss provision is calculated by applying 12% to the following
items on an after-tax basis:
(a) deferred premium revenue; (b) prepaid reinsurance premiums;
and, (c) the present value of installment premiums.
(3) A non-GAAP measure.
CONSOLIDATED INSURANCE OPERATIONS
Selected Financial Data Computed on a Statutory Basis
----------------------------------------------------------------------
(dollars in millions)
September 30, 2007 December 31, 2006
---------------------- -------------------
Capital and surplus $4,190.6 $4,080.7
Contingency reserve 2,634.4 2,478.0
-------------- -----------
Capital base 6,825.0 6,558.7
Unearned premium
reserve 3,716.2 3,507.2
Present value of
installment premiums
(1) 2,618.8 2,309.5
-------------- -----------
Premium resources 6,335.0 5,816.7
Loss and loss
adjustment expense
reserves 165.2 100.6
Soft capital credit
facilities 850.0 850.0
-------------- -----------
Total claims-paying
resources $14,175.2 $13,326.0
============== ===========
Net debt service
outstanding $1,008,575.3 $939,969.0
Capital ratio (2) 148:1 143:1
Claims-paying ratio (3) 84:1 83:1
(1) At September 30, 2007 and December 31, 2006 the discount rate was
5.13% and 5.10%, respectively.
(2) Net debt service outstanding divided by the capital base.
(3) Net debt service outstanding divided by the sum of the capital
base, unearned premium reserve (after-tax), present value of
installment premiums (after-tax), loss and loss adjustment
expense reserves and soft capital credit facilities.
Source: MBIA Inc.
Contact: MBIA Inc.
Media:
Willard Hill, 914-765-3860
or
Investor:
Greg Diamond, 914-765-3190