ARMONK, N.Y.--(BUSINESS WIRE)--
MBIA Inc. (NYSE: MBI):
Summary
-- Adjusted Book Value (ABV) per share, a non-GAAP measure, increased to
$40.06 at December 31, 2008 from $37.55 at September 30, 2008 and
declined from $77.89 at December 31, 2007.
-- The Company recorded a net loss of $2.7 billion, or $12.29 per share,
for the full year 2008, compared with a net loss of $1.9 billion, or
$15.17 per share, for the full year 2007.
-- The Company recorded a net loss of $1.2 billion, or $5.30 per share, for
the fourth quarter of 2008 compared with a net loss of $2.3 billion, or
$18.55 per share, for the same period of 2007.
-- The Company successfully commuted or restructured its exposure to four
impaired multi-sector CDOs in the fourth quarter, reducing its exposure
to these transactions by approximately $2.7 billion in exchange for
payments totaling $558 million, net of reinsurance and salvage. The
Company had already recognized $483 million in credit impairments on
these exposures.
-- The Company increased by $642 million in the fourth quarter its
expectations for pre-tax credit impairments, a non-GAAP measure, on
insured credit derivatives referencing selected multi-sector CDOs.
-- Net premiums written were $1.5 billion and $261 million for the full
year and fourth quarter of 2008, up 66 percent and 10 percent,
respectively, from $892 million and $238 million in the comparable
periods of 2007. The growth in net premiums written was primarily driven
by MBIA Insurance Corporation's reinsurance of a portfolio of U.S.
public finance bonds originally insured by Financial Guaranty Insurance
Company (FGIC).
-- Subsequent to the fourth quarter, the Company consummated a series of
transactions that resulted in the establishment of a separate domestic
public finance bond insurance company and the reinsurance of all $554
billion of MBIA Insurance Corp.'s domestic public finance policies by
that company, which is expected to be renamed National Public Finance
Guarantee Corporation (National). As a result of these transactions,
which took place on February 17, 2009, MBIA Insurance Corporation and
National are separately capitalized and managed entities, each with
adequate capital to meet its expected obligations to policyholders. Both
are wholly-owned subsidiaries of MBIA Inc. The transaction is intended
to establish a U.S. public finance-only insurance company with strong
capital, a public finance-only book of business and high, stable ratings
to respond to investor demand. The Book Value and Adjusted Book Value of
MBIA Inc.'s operations have been calculated as follows:
(all amounts per share) National MBIA Corp. ALM Corporate Total
Book Value $10.97 $5.16 ($10.53) ($0.82) $4.78
Adjusted Book Value* $17.99 $26.13 ($3.26) ($0.80) $40.06
*A non-GAAP calculation adjusted for items that are expected to impact
stockholders' equity in future periods, providing a comprehensive measure
of the value of the Company.
Liquidity
-- As of December 31, 2008, MBIA Insurance Corporation held approximately
$2.5 billion in cash and short-term investments. Its investment
portfolio remains well diversified, liquid and of average Double-A-rated
credit quality, as evidenced by only a single asset impairment of less
than $9 million in 2008.
-- As of December 31, 2008, the Corporate segment of MBIA Inc. had $416
million in cash and short-term investments, after deploying $600 million
to enhance the liquidity of the Asset Liability Management (ALM)
portfolio in the Investment Management segment in November. Total cash
and investments in the Corporate segment at December 31, 2008 were $452
million.
-- As of December 31, 2008, the ALM business had $3.8 billion in cash and
short-term investments versus $2.4 billion in terminable liabilities.
The Company has enhanced the liquidity of the ALM business throughout
2008 by selling assets, accessing cash and liquidity resources of the
Corporate segment of MBIA Inc. and establishing an intercompany
repurchase agreement facility with MBIA Insurance Corporation.
Consequently, the Company believes that it has adequate resources to
cover all cash outflows and collateral posting requirements on the ALM
portfolio under current conditions and irrespective of ratings.
-- During the fourth quarter, the Company repurchased 22.8 million shares
of its common stock at an average price of $5.74. The Company
repurchased a total of 30.5 million shares in 2008 at an average price
of $7.25.
-- For the full year 2008, on a consolidated basis, the Company recorded
$410 million in pre-tax net gains on the extinguishment of approximately
$2.0 billion of debt. In addition, in the fourth quarter MBIA
repurchased perpetual preferred stock of MBIA Insurance Corporation at a
substantial discount.
MBIA Inc. (NYSE: MBI) today reported a net loss of $2.7 billion, or
$12.29 per share, for the full year 2008, compared with a net loss of
$1.9 billion, or $15.17 per share, for the full year 2007. For the
fourth quarter of 2008, the net loss was $1.2 billion, or $5.30 per
share, compared with a net loss of $2.3 billion, or $18.55 per share,
for the same period of 2007. The $1.2 billion net loss in the fourth
quarter was primarily driven by a $1.7 billion pre-tax unrealized net
loss (mark-to-market) on insured derivatives and a $534 million pre-tax
net realized loss on insured derivatives. Partially offsetting the
realized and unrealized losses in the fourth quarter were $267 million
in premiums earned, $264 million in pre-tax net investment income, $198
million in pre-tax net unrealized gains on financial instruments at fair
value and foreign exchange, and $91 million in pre-tax net gains on the
extinguishment of debt.
"The worst credit crisis since the Great Depression has stressed and
bruised our Company, and cost our shareholders dearly over the past 18
months as reflected in both our financial statements and our stock
price," said Jay Brown, MBIA CEO. "Despite the significant additional
loss impairments that we recognized in the quarter, we were able to
increase our embedded value through careful use of available liquidity.
We moved aggressively and successfully to raise liquidity to support the
de-leveraging of our asset liability business, commute and restructure
some of our most seriously impaired multi-sector CDO contracts and meet
expected claim payments on our second lien mortgage exposures. After
those actions, we still have adequate levels of liquidity in our
operating segments and at our holding company. Most importantly, we have
now recapitalized National to protect all of our current U.S. public
finance policyholders and we intend to raise additional capital, which
will result in increased embedded value to our shareholders as it
accelerates our reentry into the domestic municipal bond insurance
market."
Insurance Operations
As previously announced, MBIA Insurance Corporation reinsured a
portfolio of U.S. public finance bonds insured by FGIC with total net
par outstanding of $181 billion. The net premiums written associated
with the reinsurance transaction totaled $105 million in the fourth
quarter and $916 million for the third and fourth quarters combined. The
Company also reassumed approximately $11 billion in previously ceded par
from five reinsurers during the fourth quarter, which contributed $43
million to net premiums written. As a result of the FGIC transaction and
the reinsurance reassumptions, in the fourth quarter of 2008 net
premiums written increased by 10 percent to $261 million from $238
million in the fourth quarter of 2007. Other than these transactions,
MBIA wrote minimal new business in 2008. For the full year 2008, net
premiums written totaled $1.5 billion, up 66 percent from $892 million
in 2007. The FGIC transaction had a positive impact on the Company's
income statement as well, as the $43 million in premiums earned that it
contributed in the fourth quarter resulted in a 27 percent increase in
total premiums earned, to $267 million, from $209 million in the fourth
quarter of 2007. For the full year 2008, premiums earned increased 19
percent, to $1.0 billion from $856 million for the full year 2007.
Pre-tax net investment income in the insurance segment declined 7
percent in the fourth quarter of 2008 to $137 million from $147 million
in the fourth quarter of 2007. A 17 percent increase in average invested
assets was more than offset by lower average yields resulting from the
Company's shift toward a greater proportion of cash and short-term
investments.
The Company incurred $26 million in loss and loss adjustment expenses in
the fourth quarter as a result of its normal formula-based approach to
loss reserving. At December 31, 2008, the Company's unallocated loss
reserve totaled $232 million. In compliance with FAS 163, effective
January 1, 2009 the Company will no longer maintain an unallocated loss
reserve.
As part of the ongoing review of the performance expectations for the
Company's insured portfolio, the Company monitors and discloses a
non-GAAP measure, credit impairments. Credit impairments are the present
value of future expected loss payments on insured credit derivatives. In
the fourth quarter of 2008, the Company recognized $642 million in such
credit impairments. Although MBIA's income statement includes the change
in fair value of insured credit derivatives, the Company regards the
changes in credit impairment estimates as critical information for
investors since the credit impairment estimates reflect the present
value of amounts the Company expects to pay in claims. Other than the
credit impairments, the Company expects the unrealized gains and losses
in fair value (marks-to-market) over time to be reversed upon the
maturities of the transactions. While the Company believes that its
current estimates for loss reserves and credit impairments on insured
credit derivatives for its housing-related exposures will adequately
address potential losses, it will continue to monitor the performance of
the collateral underlying these exposures and adjust its loss reserves
and credit impairment estimates in future periods should actual
performance deviate from current expectations.
The net par outstanding of MBIA's insured portfolio totaled $787 billion
at December 31, 2008, compared to $679 billion at December 31, 2007.
Excluding the FGIC reinsurance transaction, MBIA's insured portfolio
decreased by $73 billion during 2008 through maturities, amortization
and refundings of insured exposure, partially offset by the reassumption
of previously ceded exposure from five reinsurers.
The Company successfully commuted or restructured its exposure to four
impaired multi-sector CDOs in the fourth quarter. In exchange for
payments totaling $558 million, net of reinsurance and salvage, MBIA
reduced its exposure to these transactions by approximately $2.7
billion. Credit impairments for these commuted multi-sector CDOs had
already been $483 million as of September 30, 2008. The commutations and
restructurings are expected to reduce future volatility in MBIA's
insured portfolio and are accretive to its capital position under rating
agency models since the payment amounts were considerably lower than the
rating agencies' stress case loss assumptions.
In the fourth quarter, MBIA reassumed approximately $11 billion in
previously ceded par value exposure from five reinsurers and received
$43 million in related unearned premium from the reinsurers. In
addition, the Company received $127 million from the reinsurers
reflecting the case loss reserves and other amounts on the reassumed
business in consideration of its agreement to reassume these exposures.
The Company also terminated an agreement covering approximately $3.5
billion in exposure under which it was entitled to reimbursement for
losses. The agreement was accounted for under deposit accounting. The
total payment received by the Company in connection with the termination
of this transaction was $30 million, and the Company recorded a related
$29 million pre-tax gain on the extinguishment of this agreement. The
total increase to cash from these transactions was $200 million.
During 2008, MBIA paid a total of $1.4 billion in claims associated with
its second lien residential mortgage exposures, including $483 million
net of reinsurance in the fourth quarter. Based upon a thorough analysis
of the claims paid, MBIA has found that these claims largely resulted
from defaulted mortgages that were ineligible assets in the
securitizations the Company insured. The Company has commenced
litigation against the two largest seller/servicers for reimbursement of
these amounts, and while such reimbursements could be considerable,
MBIA's loss estimates do not yet include the benefit of potential
recoveries. In addition, as noted above, MBIA paid a total of $558
million on its insured credit derivative exposures in the fourth
quarter, net of reinsurance and salvage, in connection with commutations
and restructurings of four transactions.
MBIA Insurance Corporation's operating cash flow during 2008 was $20
million while financing and investing flows were $926 million, driven by
maturities, redemptions and net sales of invested assets, as well as the
proceeds of the issuance of surplus notes and equity offerings in the
first quarter. For 2007, operating cash flow was $977 million and
financing and investing flows were negative $1.0 billion. The cash and
cash equivalents balance as of December 31, 2008 was $1.1 billion, an
increase of $946 million from year-end 2007. Total cash and short-term
investments at year-end was $2.5 billion.
Gross insurance operating expenses (prior to deferrals or the
amortization of previously deferred amounts) declined 14 percent in the
fourth quarter of 2008, to $55 million from $65 million in the fourth
quarter of 2007. A 41 percent decline in compensation related expenses
was partially offset by increased consulting and legal expenses related
to the FGIC transaction and to the Company's efforts to realign its
business operations for the future. For the full year, gross insurance
operating expenses declined 20 percent to $198 million from $248 million
in 2007. As was the case for the fourth quarter, lower compensation
expenses were partially offset by increases in consulting and legal
expenses. While the Company has achieved substantial expense reductions,
insurance operating expenses recognized on the Company's income
statement increased by 63 percent and 56 percent for the fourth quarter
and full year 2008, respectively, due to a substantial decrease in
deferred expenses resulting from reduced new business activities.
The Company recognized a $1.7 billion pre-tax unrealized net loss
(mark-to-market) on insured derivatives in the fourth quarter and a $1.8
billion pre-tax unrealized net loss for the full year 2008. The table
below estimates the sources of the fourth quarter unrealized net loss on
insured credit derivatives.
Spread Credit Collateral Time to Change Non-Performance Reinsurer
Changes Migration Erosion Maturity in Risk Collectability Other Total
Libor
$
millions
Multi-sector (161) (83) (1,982) 34 (336) 1,127 (109) 1,271 (239)
CDO
Multi-sector (76) (35) (2) 21 (228) 134 (28) 284 70
CDO-squared
Commercial
Real (818) (7) (11) (1,191) (478) 1,859 (54) 336 (364)
Estate/CMBS
Corp/Other (3,425) (397) (76) 105 (666) 2,991 (97) 423 (1,142)
Total (4,480) (522) (2,071) (1,031) (1,708) 6,111 (288) 2,314 (1,675)
Spreads on collateral in the Company's insured CDOs widened in the
quarter, subordination was eroded in the insured multi-sector CDOs, the
expected life of the Company's commercial real estate exposures was
extended to reflect a reduced probability of early calls prior to
maturity, and the LIBOR-based discount rate used in the Company's
mark-to-market calculations declined, which increased the loss. In
particular, increases on spreads on corporate bonds combined with
certain levered deal structures in Corporate CDOs increased the loss.
Substantially offsetting these effects was an adjustment for the
market's perception of MBIA's and its reinsurers' creditworthiness to
all theoretical cash outflows in the fair value models. The "Other"
category above includes the reversal of the mark-to-market on commuted
transactions as well as eliminations.
As noted earlier, in the fourth quarter the Company recognized $642
million in credit impairments associated with its exposure to certain
multi-sector CDOs. Credit impairments represent the present value of
future expected cash payments on the transactions. The total impairment
for MBIA's insured credit derivatives was $1.2 billion at year-end 2008.
As of December 31, 2008, the Company carried a net derivative liability
of $5.5 billion for all insured credit derivatives. While the net
derivative liability reflects an adjustment for the market's perception
of MBIA's and its reinsurers' creditworthiness, the present value of
expected future cash payments does not.
In addition to the pre-tax unrealized net loss on insured derivatives,
the Company incurred a $534 million pre-tax realized loss on insured
derivatives for the fourth quarter and full year 2008 to reflect losses
paid on insured derivatives, net of reinsurance, salvage and $23 million
received in connection with reinsurance commutations.
Pre-tax net realized losses on investments in the insurance segment
totaled $103 million in the fourth quarter and $35 million for the full
year 2008. The pre-tax net realized losses in both the quarter and full
year were primarily driven by liquidity management activities. The
Company sold assets to enhance its cash position to pay claims on its
insured exposures, to provide a cushion against future loss payments and
to support the ALM business.
Investment Management Services
Average assets under management in the Investment Management Services
(IMS) segment for the full year 2008 were $56.8 billion, down 14 percent
from $66.0 billion in 2007. Ending assets under management at December
31, 2008 were $43.6 billion, down 31 percent from $63.3 billion at
December 31, 2007. The decline is primarily attributable to maturities,
terminations and repurchases in the ALM and conduit segments. Assets
under management in the Advisory Services business declined by 3 percent
in the twelve months ended December 31, 2008 to $31.9 billion from $32.8
billion at December 31, 2007. While assets under management fell
primarily as a result of market value declines, the Company had strong
investment performance in its third party advisory business and
continued to add new accounts in this business line.
The pre-tax net loss for the IMS segment was $51 million in the fourth
quarter and $1.4 billion for the full year 2008. The fourth quarter
results were primarily driven by lower ALM contract balances, lower net
interest spread resulting from sales of assets and reinvestment in cash
to meet potential termination payments as well as the additional cost of
liquidity borrowings from external and intercompany sources. Pre-tax net
gains on the extinguishment of debt totaling $56 million and a pre-tax
net gain of $40 million on financial instruments at fair value and
foreign exchange in the fourth quarter were offset by $97 million in
pre-tax net realized losses primarily related to the ALM business. The
net realized losses resulted from the recognition of
other-than-temporary impairments to securities offset by gains on asset
sales and terminated total return swaps used as hedges.
The full year results for the IMS segment were driven by lower net
interest spread and higher liquidity costs, as well as by pre-tax net
realized losses of $1.2 billion primarily related to asset sales and
other-than-temporary impairments on investments, and $483 million in
pre-tax net losses on financial instruments at fair value and foreign
exchange (marks-to-market). Partially offsetting the losses were $341
million in pre-tax net gains on the extinguishment of debt, primarily
resulting from repurchases of medium term notes at discounts.
The Company estimates that approximately $774 million of the IMS
segment's net realized losses of $1.2 billion for the year resulted from
asset sales in the ALM portfolio to meet ratings-triggered collateral
posting and termination payment requirements. The losses on investments
were partially offset by a cumulative $427 million in gains on credit
derivatives that economically hedged the change in value of a portion of
the investments sold. Changes in the value of credit derivatives had
been recorded on the Company's income statements over time.
Holding Company Activities
Pre-tax net income from the Corporate segment totaled $100 million in
the fourth quarter primarily driven by a $105 million pre-tax gain
resulting from a positive mark on the Company's outstanding common stock
warrants due to a decrease in MBIA's stock price as of quarter-end and
greater volatility in its stock price over the quarter.
During the fourth quarter of 2008, the Company repurchased approximately
22.8 million shares of its common stock at an average price of $5.74 for
a total of 30.5 million shares repurchased in 2008. Approximately $119
million of repurchase authorization remains available under the
Company's $1 billion share buyback program, which was reinstated by the
Company's board of directors in the third quarter of 2008. As of
December 31, 2008, the Company had 207,920,897 shares outstanding. The
Company also repurchased approximately $127 million par amount of its
outstanding corporate debt in 2008, resulting in a net gain of $30
million for the year, including $6 million in the fourth quarter.
Liquidity and Capitalization
As of December 31, 2008, MBIA Insurance Corporation held approximately
$1.1 billion in cash and cash equivalents and an additional $1.4 billion
of short-term investments. Its investment portfolio remains well
diversified, liquid and of average Double-A-rated credit quality. As of
the same date, the Corporate segment of MBIA Inc. had $95 million in
cash and cash equivalents and an additional $321 million of short-term
investments after deploying $600 million to enhance the liquidity of the
ALM portfolio in November. The total is approximately equal to holding
company debt service requirements for the next five years.
The Company enhanced the liquidity of the ALM business throughout 2008
by selling assets, accessing cash and liquidity resources of the
Corporate segment of the holding company, MBIA Inc., and establishing an
intercompany repurchase agreement facility with MBIA Insurance
Corporation under which MBIA Inc. can transfer ALM assets to MBIA
Insurance Corporation for up to $2 billion in cash. As a result of these
actions, the Company believes that its resources, along with cash flows
generated from the ALM assets will adequately provide for the cash
outflows and collateral posting requirements of the business,
irrespective of ratings.
As a result of the ALM asset portfolio rebalancing activities that took
place in the second and third quarters of 2008 and other steps taken to
enhance the liquidity of the ALM program, the Company was well
positioned to absorb the impact of Moody's downgrade of MBIA Insurance
Corporation to Baa1 on November 7, 2008. Following the downgrade, $5.5
billion of Guaranteed Investment Contract (GIC) liabilities were
terminated in accordance with their terms. As of December 31, 2008, MBIA
had $12.0 billion in remaining outstanding liabilities related to its
ALM business, of which $2.4 billion were terminable GICs and $2.6
billion were intercompany and inter-segment liabilities. The $2.4
billion in terminable GICs were eligible to be terminated by the GIC
holders, but the GIC holders did not exercise their option to do so.
Assets totaled $11.4 billion at December 31, 2008, excluding unrealized
losses. Cash and short-term investments in the ALM portfolio totaled
$3.8 billion at December 31, 2008, an amount sufficient to fund all
potential GIC terminations. The remaining $9.6 billion in ALM
liabilities consists of medium-term notes (MTNs) issued by MBIA Global
Funding, LLC, (GFL), intercompany and inter-segment liabilities, term
repurchase agreements and GICs that are not subject to termination
provisions or collateralization upon a further downgrade.
In the fourth quarter, MBIA exercised its put option on its Committed
Preferred Custodial Trust facility and sold to the related trusts $400
million of the perpetual preferred stock of MBIA Insurance Corporation.
On December 22, 2008, the trusts distributed their assets to their
investors and were dissolved. MBIA subsequently paid $12 million to
repurchase perpetual preferred stock with a liquidation preference of
$125 million. MBIA Insurance Corporation's claims-paying resources
totaled $15.0 billion at December 31, 2008 up $414 million from December
31, 2007, reflecting proceeds received from surplus notes and equity
offerings offset by claims on insured second lien RMBS and the
commutation of certain insured credit derivatives.
MBIA Inc. maintained a $500 million revolving credit line with a group
of highly rated banks which was scheduled to expire in May 2011. The
facility contained certain covenants related to the Company's net worth
and leverage whose calculation were affected by the Company's
mark-to-market adjustments on insured derivatives, among other things.
The Company had been seeking to amend the terms of the facility to
exclude mark-to-market adjustments on insured credit derivatives from
the definition of net worth. After consideration of the terms and
conditions required to obtain such an amendment, MBIA elected to
terminate the facility effective February 27, 2009. There were no
outstanding borrowings under the credit line, and there were no early
termination fees or premiums paid as a result of MBIA's decision to
terminate the facility.
Subsequent Event
On February 17, 2009, the Company consummated a series of transactions
that resulted in the establishment of a separate domestic public finance
bond insurance company and the reinsurance of all $554 billion of MBIA
Insurance Corp.'s domestic public finance policies into that company,
which is expected to be renamed National Public Finance Guarantee
Corporation (National). As a result of these transactions, MBIA
Insurance Corporation and National are separately capitalized and
managed entities, each with adequate capital to meet its expected
obligations to policyholders. Both are wholly-owned subsidiaries of MBIA
Inc. The transaction is intended to establish a U.S. public finance-only
insurance company with strong capital, a public finance-only book of
business and high, stable ratings to respond to investor demand.
Book Value
MBIA's Book Value per share as of December 31, 2008 was $4.78 compared
with $11.37 at September 30, 2008 and $29.16 at December 31, 2007. The
reduction in the fourth quarter is primarily attributable to a net
change in the fair value of insured derivatives (mark-to-market). The
year-to-date reduction also includes increases in loss reserves and the
impact of dilution from MBIA's February 2008 equity offering.
Adjusted Book Value (ABV) per share, a non-GAAP measure, declined to
$40.06 at the end of the fourth quarter from $77.89 at December 31,
2007, and increased from $37.55 at September 30, 2008. The full year
decline in ABV per share was primarily due to the impact of dilution
from MBIA's February 2008 equity offering, increases in loss reserves,
credit impairments and net realized losses as well as a reduction in
expected future income from projected spread in the ALM business. These
amounts were partially offset by an increase in after-tax net deferred
premium revenue resulting from the FGIC reinsurance transaction and by
share repurchases. The fourth quarter increase in ABV per share was
primarily driven by share repurchases during the quarter.
The Company has calculated its ABV for four business activities:
National Public Finance Guarantee Corporation, MBIA Insurance
Corporation, MBIA's ALM business, and MBIA Inc. (holding company
activities). MBIA Insurance Corporation guarantees the principal
liabilities of MBIA Asset Management. Other than that arrangement, the
operating units have legal as well as business separation.
On a pro forma basis to reflect the series of transactions referenced in
the Subsequent Event section above, the Book Value and Adjusted Book
Value of MBIA Inc's operations as of December 31, 2008 have been
calculated as follows:
(all amounts per share) National MBIA Corp. ALM Corporate Total
Book Value $10.97 $5.16 ($10.53) ($0.82) $4.78
Adjusted Book Value* $17.99 $26.13 ($3.26) ($0.80) $40.06
*A non-GAAP calculation adjusted for items that are expected to
impact stockholders' equity in future periods, providing a
comprehensive measure of the value of the Company.
Deferred Tax Asset
As of December 31, 2008, MBIA carried a net deferred tax asset of $2.4
billion on its balance sheet. The amount of the deferred tax asset,
which can be used to offset future income, is driven by cumulative
mark-to-market losses of $4.8 billion (excluding credit impairments) and
unrealized losses recorded on the Company's derivative and investment
portfolios. Capital losses, which generated a portion of the deferred
tax asset primarily associated with the rebalancing of the ALM
portfolio, can only be used to offset available realized capital gains.
Consequently, the Company has increased its previously established
valuation allowance by $59 million in the fourth quarter to a total of
$351 million against the portion of the deferred tax asset related to
realized capital losses expected to be carried forward. As such, no net
deferred tax asset is recorded for the Company's realized capital losses
on the sale and impairment of the investment portfolio. The Company
believes that the income expected in the future will be sufficient to
allow it to realize the full value of the remaining net deferred tax
asset. However, the Company's valuation allowance may increase or
decrease in the future depending on the nature and amount of future
realized capital gains and losses.
Implementation of FAS 163 Accounting Standard
In May 2008, the FASB issued FAS 163, "Accounting for Financial
Guarantee Insurance Contracts - an interpretation of FASB Statement No.
60." FAS 163 requires financial guarantee insurers to recognize and
measure premium revenue based on the amount of insurance protection
provided and the period in which it is provided and to recognize and
measure claim liabilities based on the present value of expected net
cash outflows to be paid, using a risk-free rate, in excess of the
unearned premium revenue. FAS 163 does not apply to financial guarantee
insurance contracts accounted for as derivative instruments within the
scope of FAS 133. FAS 163 is effective for the Company prospectively as
of January 1, 2009, except for the presentation and disclosure
requirements related to claim liabilities which was implemented by the
Company as of September 30, 2008. The cumulative effect of initially
applying FAS 163 is required to be recognized as an adjustment to the
opening balance of retained earnings for the fiscal year beginning
January 1, 2009. The Company expects the adoption of FAS 163 to have a
material impact on its consolidated balance sheets and results of
operations. However, the amount is not known or reasonably estimable at
this time as the Company is currently evaluating the required changes to
its accounting processes and systems, which are significant.
Conference Call
MBIA will host a webcast and conference call for investors tomorrow,
Tuesday, March 3, 2009 at 8:00 AM (EST) to discuss its fourth quarter
and full year 2008 financial results and other matters relating to the
Company. The dial-in number for the call is (877) 694-4769 in the U.S.
and (404) 665-9935 from outside the U.S. The conference call code is
83859333. A live webcast of the conference call will also be accessible
on www.mbia.com.
The webcast and conference call will consist of prepared remarks
followed by a question and answer session. Questions for the event may
be submitted in advance to ConferenceCallQuestions@mbia.com.
A replay of the call will be available approximately two hours after the
completion of the call on March 3 until 5:00 p.m. on March 17 by dialing
(800) 642-1687 in the U.S. or (706) 645-9291 from outside the U.S. The
replay call code is also 83859333. In addition, a recording of the call
will be available on MBIA's Web site approximately two hours after the
completion of the call.
Forward-Looking Statements
This release contains statements about future results that may
constitute "forward-looking statements" within the meaning of the safe
harbor provisions of the Private Securities Litigation Reform Act of
1995. Readers are cautioned that these statements are not guarantees of
future performance. There are a variety of factors, many of which are
beyond MBIA's control, which affect the operations, performance,
business strategy and results and could cause its actual results to
differ materially from the expectations and objectives expressed in any
forward-looking statements. Accordingly, readers are cautioned not to
place undue reliance on forward-looking statements which speak only as
of the date they are made. MBIA does not undertake to update
forward-looking statements to reflect the impact of circumstances or
events that arise after the date the forward-looking statements are
made. The reader should, however, consult any further disclosures MBIA
may make in its future filings of its reports on Form 10-K, Form 10-Q
and Form 8-K.
MBIA Inc., headquartered in Armonk, New York is a holding company whose
subsidiaries provide financial guarantee insurance, fixed-income asset
management, and other specialized financial services. The Company
services its clients around the globe, with offices in New York, Denver,
San Francisco, Paris, London, Madrid, Mexico City, Sydney and Tokyo.
Please visit MBIA's Web site at www.mbia.com.
Explanation of Non-GAAP Financial Measures
The following are explanations of why MBIA believes that the non-GAAP
financial measures used in this press release, which serve to supplement
GAAP information, are meaningful to investors.
Adjusted Book Value ("ABV"): The Company believes the
presentation of ABV, which includes items that are expected to impact
shareholders' equity in future periods and, in general, do not require
any additional future performance obligation on the Company's part and
excludes gains and losses due to market value changes that have not been
realized through sales or impairments of assets or extinguishment of
liabilities, provides additional information that gives a comprehensive
measure of the value of the Company. ABV is not a substitute for GAAP
book value but does provide investors with additional information when
viewed in conjunction with GAAP book value.
Credit Impairments: Although MBIA's income statement includes the
change in fair value of insured credit derivatives, the Company believes
the estimation of credit impairments, which are the present value of
future expected loss and loss adjustment expense payments on insured
credit derivatives, provides additional important information for
investors. Other than the impairments, the Company expects the gains and
losses in fair value of insured credit derivatives to reverse over time.
MBIA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
December 31, 2008 December 31, 2007
Assets
Investments:
Fixed-Maturity Securities Held as
Available-For-Sale, at Fair Value
(Amortized Cost $13,245,574 and
$30,199,471) (Includes Hybrid
$11,223,716 $29,589,098
Financial Instruments at Fair Value
$25,498 and $596,537)
Investments Held-To-Maturity, at Amortized
Cost
(Fair Value $3,109,248 and $5,036,465) 3,156,969 5,053,987
Investments Pledged as Collateral, at Fair
Value
(Amortized Cost $1,101,929 and $1,243,245) 845,887 1,227,153
Short-Term Investments Held as
Available-For-Sale, at Fair Value
(Amortized Cost $4,728,090 and $4,915,581) 4,693,283 4,915,581
Short-Term Investments Held-To-Maturity,
at Amortized Cost (Fair Value $485,857 and 498,865 549,127
$545,769)
Other Investments 220,412 730,711
Total Investments 20,639,132 42,065,657
Cash and Cash Equivalents 2,279,783 263,732
Accrued Investment Income 253,589 590,060
Deferred Acquisition Costs 560,632 472,516
Prepaid Reinsurance Premiums 216,609 318,740
Reinsurance Recoverable on Paid and Unpaid 173,548 82,041
Losses
Goodwill 76,938 79,406
Property and Equipment (Net of Accumulated 105,364 104,036
Depreciation)
Receivable for Investments Sold 77,464 111,130
Derivative Assets 1,419,707 1,722,696
Current Income Taxes 240,871 142,763
Deferred Income Taxes, Net 2,374,164 1,173,658
Other Assets 1,239,273 288,639
Total Assets $29,657,074 $47,415,074
Liabilities and Shareholders' Equity
Liabilities:
Deferred Premium Revenue $ 3,424,402 $ 3,107,833
Loss and Loss Adjustment Expense Reserves 1,557,884 1,346,423
Investment Agreements 4,666,944 16,107,909
Commercial Paper - 850,315
Medium-Term Notes (Includes Hybrid
Financial Instruments at Fair Value 6,339,527 12,830,777
$176,261 and $399,061)
Variable Interest Entity Notes 1,791,597 1,355,792
Securities Sold Under Agreements to 802,938 1,163,899
Repurchase
Short-Term Debt - 13,383
Long-Term Debt 2,396,059 1,225,280
Deferred Fee Revenue 44,989 15,059
Payable for Investments Purchased 239 41,359
Derivative Liabilities 7,045,598 5,037,112
Other Liabilities 564,879 664,128
Total Liabilities 28,635,056 43,759,269
Minority Interest in Consolidated 27,598 -
Subsidiaries
Shareholders' Equity:
Common Stock 273,200 160,245
Additional Paid-in Capital 3,050,506 1,649,511
Retained Earnings 1,629,187 4,301,880
Accumulated Other Comprehensive Loss (1,775,954 ) (490,829 )
Treasury Stock (2,182,519 ) (1,965,002 )
Total Shareholders' Equity 994,420 3,655,805
Total Liabilities, Minority Interest and $29,657,074 $47,415,074
Shareholders' Equity
MBIA INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(dollars in thousands)
Three Months Ended December 31, 2008
Investment Eliminations Derivative
Insurance Management Corporate Subtotal (1) Reclassification Consolidated
Services (2)
Gross Premiums $ 237,022 $ - $ - $ 237,022 $ (5,666 ) $ (39,266 ) $ 192,090
Written
Ceded Premiums 24,041 - - 24,041 137 6,622 30,800
Net Premiums 261,063 - - 261,063 (5,529 ) (32,644 ) 222,890
Written
Revenues:
Premiums 266,656 - - 266,656 (5,529 ) (34,137 ) 226,990
Earned
Net Investment 137,001 117,754 8,826 263,581 (10,827 ) 11,598 264,352
Income
Fees and 4,082 10,531 - 14,613 (3,403 ) (523 ) 10,687
Reimbursements
Realized Gains
(Losses) and
Other (534,355 ) - - (534,355 ) - 34,660 (499,695 )
Settlements on
Insured
Derivatives
Unrealized
Losses on (1,674,707 ) - - (1,674,707 ) - - (1,674,707 )
Insured
Derivatives
Net Change in
Fair Value of (2,209,062 ) - - (2,209,062 ) - 34,660 (2,174,402 )
Insured
Derivatives
Net Realized (103,244 ) (97,302 ) 5,446 (195,100 ) - (144,177 ) (339,277 )
Gains (Losses)
Net Gains on
Financial
Instruments at 53,280 39,759 105,110 198,149 - 133,570 331,719
Fair Value and
Foreign
Exchange
Net Gains on
Extinguishment 28,947 56,454 5,829 91,230 - - 91,230
of Debt
Total Revenues (1,822,340 ) 127,196 125,211 (1,569,933 ) (19,759 ) 991 (1,588,701 )
Expenses:
Losses and
Loss 25,535 - - 25,535 - - 25,535
Adjustment
Amortization
of Deferred 11,658 - - 11,658 - - 11,658
Acquisition
Costs
Operating 57,102 18,242 8,556 83,900 (2,492 ) - 81,408
Interest 48,727 160,361 16,203 225,291 (17,267 ) 991 209,015
Total Expenses 143,022 178,603 24,759 346,384 (19,759 ) 991 327,616
Income (Loss)
before Income $ (1,965,362 ) $ (51,407 ) $ 100,452 $ (1,916,317 ) $ - $ - (1,916,317 )
Taxes
Benefit for (756,474 )
Income Taxes
Net Loss $ (1,159,843 )
Three Months Ended December 31, 2007
Investment Eliminations Derivative
Insurance Management Corporate Subtotal (1) Reclassification Consolidated
Services (2)
Gross Premiums $ 267,480 $ - $ - $ 267,480 $ (10,618 ) $ (39,855 ) $ 217,007
Written
Ceded Premiums (29,239 ) - - (29,239 ) 1,473 7,225 (20,541 )
Net Premiums 238,241 - - 238,241 (9,145 ) (32,630 ) 196,466
Written
Revenues:
Premiums 209,488 - - 209,488 (9,145 ) (32,211 ) 168,132
Earned
Net Investment 146,815 424,530 (238 ) 571,107 4,049 3,933 579,089
Income
Fees and 1,151 11,011 - 12,162 (2,853 ) (44 ) 9,265
Reimbursements
Realized Gains
and Other
Settlements on - - - - - 32,255 32,255
Insured
Derivatives
Unrealized
Losses on (3,369,010 ) - - (3,369,010 ) - - (3,369,010 )
Insured
Derivatives
Net Change in
Fair Value of (3,369,010 ) - - (3,369,010 ) - 32,255 (3,336,755 )
Insured
Derivatives
Net Realized 17,189 2,617 4,256 24,062 - 209 24,271
Gains
Net Gains
(Losses) on
Financial
Instruments at 110,921 228,589 925 340,435 - (4,398 ) 336,037
Fair Value and
Foreign
Exchange
Total Revenues (2,883,446 ) 666,747 4,943 (2,211,756 ) (7,949 ) (256 ) (2,219,961 )
Expenses:
Losses and
Loss 836,690 - - 836,690 - - 836,690
Adjustment
Amortization
of Deferred 16,759 - - 16,759 - - 16,759
Acquisition
Costs
Operating 35,130 26,997 5,405 67,532 (7,725 ) - 59,807
Interest 19,849 380,148 20,193 420,190 (224 ) (256 ) 419,710
Total Expenses 908,428 407,145 25,598 1,341,171 (7,949 ) (256 ) 1,332,966
Income (Loss)
before Income $ (3,791,874 ) $ 259,602 $ (20,655 ) $ (3,552,927 ) $ - $ - (3,552,927 )
Taxes
Benefit for (1,257,177 )
Income Taxes
Net Loss $ (2,295,750 )
(1) Eliminations include:
(a) Elimination of intercompany premium income and expense.
(b) Elimination of intercompany asset management fees and expenses.
(c) Elimination of intercompany interest income and expense pertaining to intercompany receivables and payables.
(2) Reclassification of derivative revenue and expense.
MBIA INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(dollars in thousands)
Twelve Months Ended December 31, 2008
Investment Eliminations Derivative
Insurance Management Corporate Subtotal (1) Reclassification Consolidated
Services (2)
Gross Premiums $ 1,533,155 $ - $ - $ 1,533,155 $ (33,282 ) $ (162,701 ) $ 1,337,172
Written
Ceded Premiums (55,035 ) - - (55,035 ) 3,540 29,925 (21,570 )
Net Premiums 1,478,120 - - 1,478,120 (29,742 ) (132,776 ) 1,315,602
Written
Revenues:
Premiums 1,016,083 - - 1,016,083 (29,742 ) (135,897 ) 850,444
Earned
Net Investment 584,388 951,257 31,141 1,566,786 4,006 (19,896 ) 1,550,896
Income
Fees and 10,558 47,056 - 57,614 (13,587 ) (1,087 ) 42,940
Reimbursements
Realized Gains
(Losses) and
Other (534,355 ) - - (534,355 ) - 136,984 (397,371 )
Settlements on
Insured
Derivatives
Unrealized
Losses on (1,822,679 ) - - (1,822,679 ) - - (1,822,679 )
Insured
Derivatives
Net Change in
Fair Value of (2,357,034 ) - - (2,357,034 ) - 136,984 (2,220,050 )
Insured
Derivatives
Net Realized (35,138 ) (1,203,040 ) 2,477 (1,235,701 ) - (516,344 ) (1,752,045 )
Gains (Losses)
Net Gains
(Losses) on
Financial
Instruments at 208,519 (483,478 ) (3,047 ) (278,006 ) - 538,873 260,867
Fair Value and
Foreign
Exchange
Net Gains on
Extinguishment 38,927 341,065 30,353 410,345 - - 410,345
of Debt
Total Revenues (533,697 ) (347,140 ) 60,924 (819,913 ) (39,323 ) 2,633 (856,603 )
Expenses:
Losses and
Loss 1,318,001 - - 1,318,001 - - 1,318,001
Adjustment
Amortization
of Deferred 74,805 - - 74,805 - - 74,805
Acquisition
Costs
Operating 207,609 84,337 31,406 323,352 (17,155 ) - 306,197
Interest 190,222 926,315 74,781 1,191,318 (22,168 ) 2,633 1,171,783
Total Expenses 1,790,637 1,010,652 106,187 2,907,476 (39,323 ) 2,633 2,870,786
Loss before $ (2,324,334 ) $ (1,357,792 ) $ (45,263 ) $ (3,727,389 ) $ - $ - (3,727,389 )
Income Taxes
Benefit for (1,054,696 )
Income Taxes
Net Loss $ (2,672,693 )
Twelve Months Ended December 31, 2007
Investment Eliminations Derivative
Insurance Management Corporate Subtotal (1) Reclassification Consolidated
Services (2)
Gross Premiums $ 998,863 $ - $ - $ 998,863 $ (37,963 ) $ (141,693 ) $ 819,207
Written
Ceded Premiums (106,474 ) - - (106,474 ) 6,355 25,107 (75,012 )
Net Premiums 892,389 - - 892,389 (31,608 ) (116,586 ) 744,195
Written
Revenues:
Premiums 855,624 - - 855,624 (31,608 ) (115,750 ) 708,266
Earned
Net Investment 572,786 1,582,287 14,212 2,169,285 14,554 16,514 2,200,353
Income
Fees and 20,832 48,004 - 68,836 (11,994 ) (446 ) 56,396
Reimbursements
Realized Gains
and Other
Settlements on - - - - - 116,196 116,196
Insured
Derivatives
Unrealized
Losses on (3,726,782 ) - - (3,726,782 ) - - (3,726,782 )
Insured
Derivatives
Net Change in
Fair Value of (3,726,782 ) - - (3,726,782 ) - 116,196 (3,610,586 )
Insured
Derivatives
Net Realized 55,644 668 (4,988 ) 51,324 - 2,785 54,109
Gains (Losses)
Net Gains
(Losses) on
Financial
Instruments at 121,165 199,565 1,076 321,806 - (20,606 ) 301,200
Fair Value and
Foreign
Exchange
Insurance - - 6,400 6,400 - - 6,400
Recoveries
Total Revenues (2,100,731 ) 1,830,524 16,700 (253,507 ) (29,048 ) (1,307 ) (283,862 )
Expenses:
Losses and
Loss 900,345 - - 900,345 - - 900,345
Adjustment
Amortization
of Deferred 66,873 - - 66,873 - - 66,873
Acquisition
Costs
Operating 133,259 105,349 28,865 267,473 (28,601 ) - 238,872
Interest 81,810 1,414,944 80,740 1,577,494 (447 ) (1,307 ) 1,575,740
Total Expenses 1,182,287 1,520,293 109,605 2,812,185 (29,048 ) (1,307 ) 2,781,830
Income (Loss)
before Income $ (3,283,018 ) $ 310,231 $ (92,905 ) $ (3,065,692 ) $ - $ - (3,065,692 )
Taxes
Benefit for (1,143,744 )
Income Taxes
Net Loss $ (1,921,948 )
(1) Eliminations include:
(a) Elimination of intercompany premium income and expense.
(b) Elimination of intercompany asset management fees and expenses.
(c) Elimination of intercompany interest income and expense pertaining to intercompany receivables and payables.
(2) Reclassification of derivative revenue and expense.
MBIA INC. AND SUBSIDIARIES
Reconciliation of Adjusted Direct Premiums to Gross Premiums Written(1)
(dollars in millions)
Three Months Ended Twelve Months Ended
December 31 December 31
2008 2007 2008 2007
Adjusted Direct $1.6 $262.4 $75.3 $1,496.9
Premiums(2)
Adjusted Assumed 104.5 - 916.0 -
Premiums
Adjusted Gross 106.1 262.4 991.3 1,496.9
Premiums
Present Value of
Estimated Future - (161.4 ) (23.3 ) (1,104.8 )
Installment Premiums
(3)
Gross Upfront 106.1 101.0 968.0 392.1
Premiums Written
Gross Installment 130.9 166.5 565.1 606.8
Premiums Written
Gross Premiums $237.0 $267.5 $1,533.1 $998.9
Written
(1) The amounts consist of Financial Guarantee premiums and Insured Derivative
premiums.
(2) A non-GAAP measure.
At December 31, 2008, September 30, 2008, June 30, 2008 and March 31, 2008
the discount rate was 5.03%, 4.50%, 4.67% and 4.98%,
(3) respectively, and at December 31, 2007, September 30, 2007, June 30, 2007
and March 31, 2007
the discount rate was 5.06%, 5.13%, 5.13% and 5.10%, respectively.
Net Income (Loss) per Common Share
Three Months Ended Twelve Months Ended
December 31 December 31
2008 2007 2008 2007
Basic ($5.30 ) ($18.55 ) ($12.29 ) ($15.17 )
Diluted ($5.30 ) ($18.55 ) ($12.29 ) ($15.17 )
Weighted-Average
Number of Common
Shares Outstanding:
Basic 218,807,551 123,739,225 217,521,063 126,670,332
Diluted 218,807,551 123,739,225 217,521,063 126,670,332
MBIA INC. AND SUBSIDIARIES
Components of Adjusted Book Value per Share
December 31, 2008 December 31, 2007
National MBIA Corp. ALM Corporate MBIA Inc. MBIA Inc.
Book Value $ 10.97 $ 5.16 ($10.53 ) ($0.82 ) $ 4.78 $ 29.16
After-tax Value
of:
Cumulative
Unrealized Loss
on Insured
Credit 0.00 16.93 0.00 0.00 16.93 18.83
Derivatives
Cumulative
Impairments on
Insured
Credit 0.00 (3.78 ) 0.00 0.00 (3.78 ) (1.04 )
Derivatives
Unrealized
Losses Included 0.00 1.15 7.85 0.02 9.02 4.35
in OCI
Deferred
Premium Revenue 8.86 1.92 0.00 0.00 10.78 16.27
(1)
Prepaid
Reinsurance (0.35 ) (0.34 ) 0.00 0.00 (0.69 ) (1.69 )
Premiums(1)
Deferred
Acquisition (1.23 ) (0.52 ) 0.00 0.00 (1.75 ) (2.45 )
Costs
Net Deferred 7.28 1.06 0.00 0.00 8.34 12.13
Premium Revenue
Present Value
of Installment 0.93 6.53 0.00 0.00 7.46 13.68
Premiums(1) (2)
Asset/Liability
Products 0.00 0.00 (0.58 ) 0.00 (0.58 ) 4.17
Adjustment
Loss Provision (1.19 ) (0.92 ) 0.00 0.00 (2.11 ) (3.39 )
(3)
Adjusted Book $ 17.99 $ 26.13 ($3.26 ) ($0.80 ) $ 40.06 $ 77.89
Value (4)
(1)The amounts consist of Financial Guarantee premiums and Insured Derivative premiums.
(2)At December 31, 2008 and December 31, 2007 the discount rate was 5.03% and 5.06%, respectively.
(3)The loss provision is calculated by applying 14.5% to the following items (excluding premiums related to derivatives)
on an after-tax basis:
(a) deferred premium revenue; (b) prepaid reinsurance premiums; and, (c) the present value of installment premiums.
(4)A non-GAAP measure.
CONSOLIDATED INSURANCE OPERATIONS
Selected Financial Data Computed on a Statutory Basis
(dollars in millions)
December 31, 2008 December 31, 2007
Capital and Surplus $ 3,502.4 $ 3,663.1
Contingency Reserve 2,594.9 2,718.9
Capital Base 6,097.3 6,382.0
Unearned Premium Reserve 4,170.2 3,762.8
Present Value of Installment Premiums (1) 2,386.3 2,638.6
Premium Resources(2) 6,556.5 6,401.4
Loss and Loss Adjustment Expense Reserves 1,870.6 926.1
Soft Capital Credit Facilities 450.0 850.0
Total Claims-paying Resources $ 14,974.4 $ 14,559.5
Net Debt Service Outstanding(3) $ 1,198,348.1 $ 1,021,925.2
Capital Ratio(4) 197:1 160:1
Claims-paying Ratio(5) 95:1 83:1
(1) At December 31, 2008 and December 31, 2007 the discount rate was 5.03% and
5.06%, respectively.
(2) The amounts consist of Financial Guarantee premiums and Insured Derivative
premiums.
(3) Includes debt service of $291.5 billion assumed via reinsurance of FGIC
insured credits in 2008.
(4) Net debt service outstanding divided by the capital base.
Net debt service outstanding divided by the sum of the capital base,
(5) unearned premium reserve (after-tax), present value of installment premiums
(after-tax), loss and loss adjustment expense reserves and soft capital
credit facilities.
PROFORMA STATUTORY-BASIS STATEMENTS OF
ADMITTED ASSETS, LIABILITIES and CAPITAL and
SURPLUS
(Dollars in millions)
December 31, 2008
Actual Proforma
MBIA Insurance MBIA Insurance MBIA Illinois
Corporation Corporation
Investments:
Investments (1) $ 9,615 4,449 5,166
Securities borrowed 3,344 2,000 1,344
Total cash and 12,959 6,449 6,510
investments
Other assets 574 307 267
Total admitted assets $ 13,533 6,756 6,777
Liabilities:
Deferred premium $ 4,006 527 3,479
revenue
Loss and loss
adjustment expense 1,871 1,692 179
reserves
Contingency reserve 2,595 1,238 1,357
Securities sold under
agreements to 1,344 -- 1,344
repurchase
Other liabilities 214 212 2
Total liabilities 10,030 3,669 6,361
Total capital and 3,503 3,087 416
surplus
Total liabilities, $ 13,533 6,756 6,777
capital and surplus
(1)Investments include bonds, cash, short-term investments, investments in
subsidiaries and accrued investment income.
Claim Paying Resources:
Capital and Surplus $ 3,503 3,087 416
Contingency Reserve 2,595 1,238 1,357
Capital base 6,098 4,325 1,773
Unearned Premium 4,170 691 3,479
Reserve
Present Value of
Installment Premiums 2,386 2,088 298
(2)
Premium Resources (2) 6,556 2,779 3,777
Loss and LAE Reserves 1,871 1,692 179
Soft Capital Credit 450 0 (3) 0
Facilities
Total Claims-Paying $ 14,975 8,796 5,729
Resources
Net Debt Service 1,198,348 290,261 908,087
Outstanding
Capital Ratio (4) 197:1 67:1 512:1
Claims-Paying Ratio (5) 95:1 37:1 206:1
(2) The amounts consist of Financial Guarantee premiums and Insured Derivative
premiums.
(3) Does not include $450 million soft capital facility covering net insured
losses on U.S. public finance policies which remains with MBIA Corp.
(4) Net debt service outstanding divided by the capital base.
Net debt service outstanding divided by the sum of the capital base,
(5) unearned premium reserve (after-tax), present value of installment premiums
(after-tax), loss and LAE reserves, and soft capital credit facilities.
PROFORMA STATUTORY-BASIS STATEMENTS OF
ADMITTED ASSETS, LIABILITIES and CAPITAL and
SURPLUS
(Dollars in millions)
September 30, 2008
Actual Proforma
MBIA Insurance MBIA Insurance MBIA Illinois
Corporation Corporation
Investments:
Investments (1) $ 12,295 7,177 5,118
Securities borrowed 722 0 722
Total cash and 13,017 7,177 5,840
investments
Other assets 612 345 267
Total admitted assets $ 13,629 7,522 6,107
Liabilities:
Deferred premium $ 3,999 559 3,440
revenue
Loss and loss
adjustment expense 2,374 2,207 167
reserves
Contingency reserve 2,981 1,993 988
Securities sold under
agreements to 722 -- 722
repurchase
Other liabilities 238 233 5
Total liabilities 10,314 4,992 5,322
Total capital and 3,315 2,530 785
surplus
Total liabilities, $ 13,629 7,522 6,107
capital and surplus
(1)Investments include bonds, cash, short-term investments and
investments in subsidiaries.
Claim Paying Resources:
Capital and Surplus $ 3,315 2,530 785
Contingency Reserve 2,981 1,993 988
Capital base 6,296 4,523 1,773
Unearned Premium 4,238 798 3,440
Reserve
Present Value of
Installment Premiums 2,458 2,147 311
(2)
Premium Resources (2) 6,696 2,945 3,751
Loss and LAE Reserves 2,374 2,207 167
Soft Capital Credit 850 400 (3) 0
Facilities
Total Claims-Paying $ 16,216 10,075 5,691
Resources
Net Debt Service 1,184,131 309,817 874,314
Outstanding
Capital Ratio (4) 188:1 68:1 493:1
Claims-Paying Ratio (5) 85:1 34:1 200:1
(2) The amounts consist of Financial Guarantee premiums and Insured Derivative
premiums.
(3) Does not include $450 million soft capital facility covering net insured
losses on U.S. public finance policies which remains with MBIA Corp.
(4) Net debt service outstanding divided by the capital base.
Net debt service outstanding divided by the sum of the capital base,
(5) unearned premium reserve (after-tax), present value of installment premiums
(after-tax), loss and LAE reserves, and soft capital credit facilities.
Source: MBIA Inc.
Contact: MBIA, Media:
Kevin Brown, +1-914-765-3648
or
MBIA, Media:
Elizabeth James, +1-914-765-3889
or
MBIA, Investor Relations:
Greg Diamond +1-914-765-3190