Press Release Details

Highlights

• MBIA Inc.’s Adjusted Book Value (ABV), a non-GAAP measure, was $36.11 per share at September 30, 2010 compared with $35.76 per share at June 30, 2010.
• MBIA Inc. recorded a net loss to common shareholders of $213 million, or $1.06 per share, for the third quarter of 2010, compared with a net loss of $728 million, or $3.50 per share, in the third quarter of 2009.
• MBIA Inc.’s adjusted pre-tax loss, a non-GAAP measure, was $68 million in the third quarter of 2010 compared with an adjusted pre-tax loss of $446 million in the third quarter of 2009.

ARMONK, N.Y.--(BUSINESS WIRE)-- MBIA Inc. (NYSE: MBI) (the Company) today reported Adjusted Book Value (ABV) per share (a non-GAAP measure defined in the attached Explanation of Non-GAAP Financial Measures) of $36.11 as of September 30, 2010, compared with $35.76 as of June 30, 2010. Book value per share was $12.56 as of September 30, 2010.

The net loss to common shareholders for the third quarter of 2010 was $213 million, or $1.06 per share, compared with a net loss of $728 million, or $3.50 per share, in the third quarter of 2009. The net loss was driven primarily by a $492 million pre-tax net loss on the fair value of insured credit derivatives resulting primarily from increased market prices on recovery rate and credit default swap derivatives in the mark-to-market model, which decreases the non-performance risk components associated with MBIA Corp.

The adjusted pre-tax loss, a non-GAAP measure (defined in the attached Explanation of Non-GAAP Financial Measures), for the third quarter of 2010 was $68 million compared with an adjusted pre-tax loss of $446 million in the third quarter of 2009. The Company believes that ABV and adjusted pre-tax income provide investors with additional views of its operating performance in the quarter that management finds useful in measuring financial performance.

“Our third quarter financial results continued the trend toward lower volatility,” said MBIA Inc. President and Chief Financial Officer Chuck Chaplin. “MBIA Corp.’s insured losses continued to moderate in the third quarter compared to those of 2008 and 2009. The liquidity position in MBIA Corp. was significantly improved compared to earlier this year. The litigation that constrains our re-entry into the U.S. public finance insurance business continues, but our belief that the New York State Insurance Department made the right decision in February 2009 is borne out by the fact that we continue to pay all claims and obligations as they come due.”

Third Quarter 2010 Segment Results

The following is a summary of book value and ABV per share data as of September 30, 2010 and pre-tax results by segment for the third quarter:

$ in millions except per share					Structured				Advisory
data		U.S. Public			Finance and				Services
		Finance			International				(Cutwater)				Corporate				Wind-down				Consolidated
09/30/10 BV per share		$	15.80		$	4.97			$	0.15			$	(1.20	)		$	(7.16	)		$	12.56
06/30/10 BV per share		$	14.97		$	6.44			$	0.15			$	(1.26	)		$	(7.14	)		$	13.16
Change in BV per share		$	0.83		$	(1.47	)		$	0.00			$	0.06			$	(0.02	)		$	(0.60	)
09/30/10 ABV per share		$	22.12		$	19.15			$	0.15			$	(1.19	)		$	(4.12	)		$	36.11
06/30/10 ABV per share		$	21.43		$	19.42			$	0.15			$	(1.26	)		$	(3.98	)		$	35.76
Change in ABV per share		$	0.69		$	(0.27	)		$	0.00			$	0.07			$	(0.14	)		$	0.35
3Q 2010 Pre-tax Income		$	167		$	(343	)		$	(1	)		$	(80	)		$	(104	)		$	(357	)
3Q 2009 Pre-tax Income		$	132		$	(1,077	)		$	0			$	(58	)		$	(62	)		$	(1,066	)
3Q 2010 Adj. Pre-tax Income		$	167		$	(50	)		$	(1	)		$	(80	)		$	(104	)		$	(68	)
3Q 2009 Adj. Pre-tax Income		$	132		$	(457	)		$	0			$	(58	)		$	(62	)		$	(446	)

U.S. Public Finance Results

The Company’s U.S. public finance insurance business is conducted through its National Public Finance Guarantee Corp. (National) subsidiary. National recorded $167 million of adjusted pre-tax income in the third quarter of 2010 compared with $132 million of adjusted pre-tax income in the third quarter of 2009. Adjusted pre-tax income in the third quarter of 2010 was favorably affected by $45 million of realized capital gains in National’s investment portfolio.

National's existing book of business generated total premiums earned of $100 million in the third quarter of 2010 compared with $143 million in total premiums earned in the third quarter of 2009.

Net investment income for National declined 4 percent to $59 million in the third quarter of 2010 from $61 million in the comparable period of 2009 due to lower average yields. Over the same period, National’s investment portfolio increased in size by 4 percent, from $5.3 billion at September 30, 2009 to $5.5 billion at September 30, 2010. National’s investment portfolio remains liquid, averaging Double-A credit quality. National’s net gains on sales of investments totaled $45 million in the third quarter of 2010.

National’s loss and loss adjustment expenses totaled $6 million in the third quarter, compared with $29 million in the third quarter of 2009.

National’s amortization of deferred acquisition costs totaled $16 million in the third quarter of 2010, down 51 percent from $33 million in the third quarter of 2009, reflecting slower amortization and fewer refundings within its insured portfolio in the third quarter of 2010 compared with the third quarter of 2009. Operating expenses were $17 million in the third quarter of 2010, up 54 percent from $11 million in the comparable period of 2009. The increase resulted primarily from higher legal expenses, partially offset by lower compensation expenses.

As of September 30, 2010, National’s statutory capital was $2.3 billion and its claims-paying resources totaled $5.6 billion.

Structured Finance and International Insurance Results

The Structured Finance and International Insurance business is conducted through MBIA Corp. and its subsidiaries.

As previously announced, during the third quarter MBIA Corp. acquired the 83 percent of ChannelRe Holdings Ltd. and Channel Reinsurance Ltd. (Channel Re) that it did not previously own for $40 million. Channel Re was a financial guarantee reinsurer founded in 2004 which assumed business only from MBIA Corp. and its affiliates. The Company subsequently commuted all of its reinsurance with Channel Re and liquidated Channel Re and ChannelRe Holdings Ltd. As a result of the reinsurance commutations, MBIA Corp., National and MBIA UK Insurance Limited reassumed exposure of approximately $22 billion, $8 billion and $2 billion, respectively. While the transaction resulted in a $61 million reduction to GAAP earnings in the third quarter, it enhanced MBIA Corp.’s liquidity through the addition of $595 million of liquid assets and improved MBIA Corp.’s statutory capital position by approximately $132 million.

The adjusted pre-tax loss for the Structured Finance and International Insurance segment for the third quarter of 2010 was $50 million compared with an adjusted pre-tax loss of $457 million in the third quarter of 2009. Premiums earned, net investment income and fees and reimbursements totaled $113 million in the third quarter of 2010. Losses and credit impairments (a non-GAAP measure defined in the attached Explanation of Non-GAAP Financial Measures) on insured exposures totaled $299 million in the third quarter while operating expenses and all other line items in the aggregate had a net $136 million positive impact in the adjusted pre-tax loss calculation.

During the third quarter of 2010, the Company increased its expectations for losses on insured exposures in the Structured Finance and International Insurance segment. The following is a summary of all insured portfolio economic loss activity in the third quarter, without regard to how such losses are presented in the Company’s financial statements:

3Q 2010 Economic Loss Activity
($ in thousands)			RMBS				ABS CDOs				CMBS			Other				Total
Change in Expected Payments			$106,653				$163,218				$172,341			$152,828				$595,040
Change in Expected Salvage			(130,906	)			(3,830	)			-			(40,203	)			(174,939	)
FX Effect			-				-				-			(121,274	)			(121,274	)
Total Economic Losses			($24,253	)			$159,388				$172,341			($8,649	)			$298,827

In the third quarter, the Company reduced its expectations of future losses on RMBS exposures. The Company increased its expectations of future claims payments by $107 million due to slower declines in expected delinquencies than those observed in the second quarter of 2010. However, this increase was more than offset by additional expected recoveries of $131 million, primarily from contractual claims related to ineligible mortgages. The Company’s estimates for expected recoveries related to “putbacks” of ineligible mortgages totaled $2.2 billion as of September 30, 2010.

A substantial majority of the Company’s representation and warranty claims have been disputed by the loan seller/servicers and is currently subject to litigation. In addition, there is some risk that the seller/servicers or other responsible parties might not be able to satisfy their putback obligations. Alternatively, prevailing in litigation could result in recoveries that are substantially higher than the amounts currently recognized as recoveries. As a result, there is uncertainty regarding the Company’s ability to realize these expected putback recoveries.

Third quarter economic losses on multi-sector ABS CDOs totaled $159 million, driven primarily by deterioration in subprime and Alt-A mortgage-backed assets underlying the transactions.

In the third quarter of 2010, the Company estimated $172 million of incremental economic losses on certain insured transactions backed by pools of commercial mortgage-backed securities (CMBS). The Company observed deterioration in the performance of the assets underlying these insured transactions, and modeled losses increased, even though the Company has observed relatively few property liquidations that would erode the deductibles in the pools. Most of the increase in credit impairments is associated with a single CMBS pool.

The following is a summary of third quarter economic losses categorized on the basis of how they are reflected in the Company’s financial statements pursuant to GAAP:

3Q 2010 Economic Losses
$ in thousands
Change in Expected Payments		$57,432
Change in Insurance Recoveries		(82,529	)
Loss & LAE Expense on Policies Subject to Insurance Accounting		(25,097	)
Credit Impairments on Insured VIEs		198,287
Credit Impairments on Insured Credit Derivatives		245,391
LAE on Insured Credit Derivatives		1,520
Credit Impairments and LAE on Insured Credit Derivatives		246,911
Total Losses Excluding FX Effect		420,101
FX Effect		(121,274	)
Total Economic Losses		$298,827

The $245 million of credit impairments on insured credit derivatives estimated by the Company in the third quarter of 2010 consisted of the previously mentioned $172 million in losses on transactions backed by pools of commercial mortgage-backed securities and $73 million of the $159 million in total multi-sector ABS CDO losses.

During the third quarter, MBIA Corp. paid a total of $329 million in net claims in connection with its second-lien residential mortgage exposures. Net claims on insured RMBS have been trending downward each quarter since peaking at $636 million in the second quarter of 2009.

As of September 30, 2010, the Company’s net derivative liability (the cumulative negative mark-to-market) with respect to insured credit derivatives was $5.5 billion for all non-consolidated VIE insured credit derivatives. The Company considers approximately $2.7 billion of the $5.5 billion net derivative liability to be credit impaired. The Company expects the unimpaired portion of the unrealized gains and losses in fair value (marks-to-market) to be reversed prior to or upon the maturities of the insured credit derivatives.

MBIA Corp.’s liquidity position improved in the third quarter as cash and liquid asset balances increased and net claims payments continued their downward trend. As of September 30, 2010, MBIA Corp.’s statutory balance sheet reflected $4.3 billion in cash and invested assets including $2.0 billion of cash and short-term investments available to meet demands on its liquidity. Cash and invested assets totaled $3.7 billion at June 30, 2010 including $1.1 billion of cash and short-term investments. The cash and short-term investments exclude amounts held by subsidiaries. The Company believes that MBIA Corp.’s liquidity resources will adequately provide for anticipated cash outflows.

MBIA Corp. had statutory capital of $3.1 billion and claims-paying resources totaling $6.3 billion at September 30, 2010.

Advisory Services

The Company’s Advisory Services business is conducted in its Cutwater Asset Management subsidiary. Cutwater recorded an adjusted pre-tax loss of $0.6 million in the third quarter driven by expenses associated with infrastructure enhancements to support its growth plans.

Cutwater’s average assets under management in the third quarter were $43.2 billion, up 1 percent from $42.7 billion in the second quarter of 2010. Average assets under management in the third quarter comprised $26.4 billion of third-party assets and $16.8 billion of assets managed for MBIA Inc. and its subsidiaries. Third-party average assets under management increased 1 percent from the second quarter of 2010 and 6 percent from the third quarter of 2009.

Corporate Segment

The Corporate segment recorded an adjusted pre-tax loss of $80 million in the third quarter of 2010 compared with an adjusted pre-tax loss of $58 million in the third quarter of 2009. The adjusted pre-tax losses in the third quarters of 2010 and 2009 were driven by negative marks-to-market on outstanding warrants issued on MBIA Inc. common stock.

As of September 30, 2010, the Corporate segment of the holding company had $355 million in cash and short-term investments.

The Company repurchased approximately 1.6 million shares of its common stock at an average price of $7.15 during the third quarter. As of September 30, 2010, approximately $73 million of repurchase authorization remained available under the Company's $1.0 billion share buyback program.

Wind-Down Operations

Wind-Down Operations comprise the Company’s Asset Liability Management and Conduit businesses, both of which are in run-off.

The adjusted pre-tax loss for Wind-Down Operations was $104 million in the third quarter of 2010 compared with an adjusted pre-tax loss of $62 million in the third quarter of 2009. The adjusted pre-tax loss in the third quarter of 2010 was driven by a $118 million net loss on financial instruments at fair value and foreign exchange resulting primarily from increased values of liabilities denominated in foreign currencies.

This segment repurchased $26 million par amount of medium-term notes at discounts during the third quarter, resulting in net gains on the extinguishment of debt that totaled $10 million.

Conference Call

The Company will host a webcast and conference call for investors tomorrow, Wednesday, November 10, 2010 at 8:00 AM (EDT) to discuss its third quarter 2010 financial results and other matters relating to the Company. The webcast and conference call will consist of brief remarks followed by a question and answer session.

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 14798707. A live webcast of the conference call will also be accessible on www.mbia.com.

A replay of the call will be available approximately two hours after the completion of the call on November 10 until 11:59 p.m. on November 24 by dialing (800) 642-1687 in the U.S. or (706) 645-9291 from outside the U.S. The replay call code is also 14798707. In addition, a recording of the call will be available on the Company's website approximately two hours after the completion of the call.

Forward-Looking Statements

This release includes statements that are not historical or current facts and are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words “believe,” “anticipate,” “project,” “plan,” “expect,” “intend,” “will likely result,” “looking forward” or “will continue,” and similar expressions identify forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected, including, among other risks, the possibility that the Company will not realize insurance loss recoveries expected in disputes with sellers/servicers of RMBS transactions, the possibility that the Company will experience severe losses or liquidity needs due to increased deterioration in its insurance portfolios; the possibility that loss reserve estimates are not adequate to cover potential claims; the Company’s ability to fully implement its Strategic Plan as outlined in the Company’s most recent Annual Report on Form 10-K; the Company’s ability to favorably resolve regulatory proceedings and litigation claims against the Company and legal actions initiated by the Company in connection with potential insurance loss recoveries; an inability to achieve high, stable credit ratings; and changes in general economic and competitive conditions. These and other factors that could affect financial performance or could cause actual results to differ materially from estimates contained in or underlying the Company’s forward-looking statements are discussed under the “Risk Factors” section in MBIA Inc.’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, which may be updated or amended in the Company’s subsequent filings with the Securities and Exchange Commission. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only to their respective dates. The Company undertakes no obligation to publicly correct or update any forward-looking statement if it later becomes aware that such result is not likely to be achieved.

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 and Mexico City. 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: Adjusted Book Value (“ABV”) measures the value of the Company adjusted for items that are expected to impact stockholders’ equity in future periods. ABV includes the after-tax effects of deferred premium revenue less prepaid reinsurance premiums and deferred acquisition costs, the present value of insured derivative installment premiums, the present value of the net spread of asset/liability products and a provision for loss and loss adjustment expenses. The Company believes the presentation of ABV 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.

ABV is calculated on a consolidated basis and a segment basis. ABV by segment provides information about each segment’s contribution to consolidated ABV and is calculated using the same formula.

ABV per share represents that amount of ABV allocated to each common share outstanding at the measurement date.

Credit Impairments on Insured Derivatives: Credit impairments on insured derivatives represent the present value of the Company’s estimate of expected future claim payments for such transactions, using a discount rate required by statutory accounting principles. Since the Company’s insured credit derivatives have similar terms, conditions, risks, and economic profiles to its financial guarantee insurance policies, the Company evaluates them for impairment periodically in the same way that it estimates loss and LAE for its financial guarantee insurance policies. Credit impairments on insured derivatives are equal to the Company’s statutory losses for such contracts.

Credit impairments on insured derivatives may differ from the fair values recorded in the Company’s financial statements. The Company expects that the majority of its exposure written in derivative form will not be settled at fair value. The fair value of an insured derivative contract will be influenced by a variety of market and transaction-specific factors that may be unrelated to potential future claim payments. In the absence of credit impairments or the termination of derivatives at losses, the cumulative unrealized losses recorded from fair valuing insured derivatives should reverse before or at the maturity of the contracts. Contracts also may be settled prior to maturity at amounts that may be more or less than their recorded fair values. Those settlements can result in realized gains or losses, and the reversal of unrealized losses. For these reasons, the Company believes its disclosure of credit impairments on insured derivatives provides additional meaningful information to investors about potential realized losses on these contracts.

Adjusted Pre-tax Income: Adjusted pre-tax income, a non-GAAP measure, is used by the Company to supplement its analysis of GAAP pre-tax income. The Company uses adjusted pre-tax income as a measure of fundamental periodic financial performance. Adjusted pre-tax income adjusts GAAP pre-tax income to remove gains and losses related to fair valuing insured credit derivatives and financial assets and liabilities of consolidated VIEs, which the Company believes will reverse over time, as well as to add in changes in the present value of insurance claims the Company expects to pay related to these items based on its ongoing insurance loss monitoring.

MBIA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands)
						September 30, 2010						December 31, 2009
Assets
	Investments:
		Fixed-maturity securities held as available-for-sale, at fair value (amortized cost
			$9,593,126 and $10,366,737)(includes hybrid financial instruments at fair value $0 and $30,690)
							$	9,218,812					$	9,330,413
		Fixed-maturity securities at fair value						56,932						-
		Investments pledged as collateral, at fair value (amortized cost $569,228 and $587,648)						589,791						557,245
		Short-term investments held as available for sale, at fair value (amortized cost $2,657,009 and $2,696,724)
								2,657,622						2,688,208
		Other investments (includes investments at fair value of $280,895 and $252,608)						283,267						255,491
				Total investments				12,806,424						12,831,357
	Cash and cash equivalents							902,624						803,243
	Accrued investment income							103,397						94,821
	Premiums receivable							1,678,174						2,020,619
	Deferred acquisition costs							429,408						469,550
	Prepaid reinsurance premiums							100,788						357,773
	Insurance loss recoverable							2,200,872						2,444,754
	Reinsurance recoverable on paid and unpaid losses							18,689						61,996
	Goodwill							31,371						31,371
	Property and equipment, at cost (less accumulated depreciation of $134,626 and $139,076)							71,986						76,834
	Receivable for investments sold							172,252						18,088
	Derivative assets							23,041						865,708
	Current income taxes							30,625						545,883
	Deferred income taxes, net							944,438						716,615
	Other assets							46,356						50,448
	Assets of consolidated VIEs:
		Cash						513,655						-
		Investments held-to-maturity, at amortized cost (fair value $3,820,762 and $2,800,400)						4,235,544						3,131,765
		Fixed-maturity securities held as available-for-sale, at fair value (amortized cost $259,110 and $754,096)						259,368						516,369
		Fixed-maturity securities at fair value						5,459,127						128,112
		Loans receivable at fair value						1,942,676						481,622
		Loan repurchase commitments						794,381						-
		Derivative assets						441,527						-
		Other assets						65,493						53,844
				Total assets			$	33,272,216					$	25,700,772
Liabilities and Equity
	Liabilities:
		Unearned premium revenue					$	4,329,827					$	4,955,256
		Loss and loss adjustment expense reserves						935,722						1,580,021
		Reinsurance premiums payable						71,387						239,154
		Investment agreements						2,280,004						2,725,958
		Medium-term notes (includes financial instruments carried at fair value $110,076 and $109,768)
								1,851,661						2,285,047
		Securities sold under agreements to repurchase						470,715						501,871
		Short-term debt						72,426						18,112
		Long-term debt						1,851,983						2,223,536
		Deferred fee revenue						10,209						11,061
		Payable for investments purchased						158,603						15,780
		Derivative liabilities						5,812,256						4,593,760
		Other liabilities						296,119						304,066
		Liabilities of consolidated VIEs:
			Variable interest entity notes (includes financial instruments carried at fair value $6,468,103 and $0)
								10,403,123						3,179,712
			Long-term debt					427,794						433,132
			Derivative liabilities					1,763,680						9,104
			Other liabilities					12,380						18,326
				Total liabilities				30,747,889						23,093,896
	Equity:
		Common stock						274,730						274,827
		Additional paid-in capital						3,061,479						3,057,733
		Retained earnings						1,672,719						2,393,282
		Accumulated other comprehensive loss						(274,998	)					(940,871	)
		Treasury stock						(2,223,762	)					(2,194,873	)
				Total shareholders' equity of MBIA Inc.				2,510,168						2,590,098
		Preferred stock of subsidiary						14,159						16,778
				Total equity				2,524,327						2,606,876
				Total liabilities and equity			$	33,272,216					$	25,700,772

MBIA INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS (Unaudited)
(in thousands)
									Structured
					U.S.				Finance and
					Public Finance				International				Advisory
Three Months Ended September 30, 2010					Insurance				Insurance				Services								Wind-down								Intercompany
					(National)				(MBIA Corp.)				(Cutwater)				Corporate				Operations				Subtotal				Eliminations				Consolidated
Revenues:
	Premiums earned:
		Scheduled premiums earned			$	81,867			$	59,029			$	-			$	-			$	-			$	140,896			$	(17,912	)		$	122,984
		Refunding premiums earned				18,304				(453	)			-				-				-				17,851				(4,303	)			13,548
			Total premiums earned			100,171				58,576				-				-				-				158,747				(22,215	)			136,532
	Net investment income					58,595				30,547				370				4,213				20,557				114,282				(1,723	)			112,559
	Fees and reimbursements					2,282				23,392				16,640				20,685				-				62,999				(47,750	)			15,249
	Change in fair value of insured derivatives:
		Realized gains and other settlements on
			insured derivatives			155				552,086				-				-				-				552,241				-				552,241
		Unrealized losses on insured derivatives				(18	)			(1,043,821	)			-				-				-				(1,043,839	)			-				(1,043,839	)
			Net change in fair value of insured derivatives			137				(491,735	)			-				-				-				(491,598	)			-				(491,598	)
	Net gains (losses) on financial instruments at fair value and foreign exchange					44,875				144,883				1,160				(61,514	)			(117,561	)			11,843				-				11,843
	Net investment losses related to other-than-temporary impairments:
		Investment losses related to other-than-temporary impairments				-				(73	)			-				-				-				(73	)			-				(73	)
		Other-than-temporary impairments recognized in accumulated other comprehensive loss				-				3				-				-				(180	)			(177	)			-				(177	)
			Net investment losses related to other-than-temporary impairments			-				(70	)			-				-				(180	)			(250	)			-				(250	)
	Net gains (losses) on extinguishment of debt					-				-				-				(317	)			10,374				10,057				-				10,057
	Other net realized gains (losses)					-				(1,048	)			-				-				1				(1,047	)			-				(1,047	)
	Revenues of consolidated VIEs:
		Net investment income				-				11,116				-				-				9,382				20,498				-				20,498
		Net gains (losses) on financial instruments at fair value and foreign exchange				-				(34,414	)			-				-				10,787				(23,627	)			4,328				(19,299	)
		Net investment losses related to other-than-temporary impairments:
			Investment losses related to other-than-temporary impairments			-				-				-				-				-				-				-				-
			Other-than-temporary impairments recognized in accumulated other comprehensive loss			-				-				-				-				-				-				-				-
			Net investment losses related to other-than-temporary impairments			-				-				-				-				-				-				-				-
		Net gains on extinguishment of debt				-				-				-				-				14,155				14,155				-				14,155
		Other net realized gains (losses)				-				-				-				-				-				-				-				-
		Total revenues				206,060				(258,753	)			18,170				(36,933	)			(52,485	)			(123,941	)			(67,360	)			(191,301	)
Expenses:
	Losses and loss adjustment					5,586				(25,097	)			-				-				-				(19,511	)			-				(19,511	)
	Amortization of deferred acquisition costs					16,164				25,155				-				-				-				41,319				(35,635	)			5,684
	Operating					16,964				35,304				18,786				27,119				2,425				100,598				(22,724	)			77,874
	Interest					-				33,832				-				16,232				43,516				93,580				(12,605	)			80,975
	Expenses of consolidated VIEs:
		Operating				-				4,307				-				-				395				4,702				(449	)			4,253
		Interest				-				11,047				-				-				5,011				16,058				-				16,058
		Total expenses				38,714				84,548				18,786				43,351				51,347				236,746				(71,413	)			165,333
Pre-tax income (loss)					$	167,346			$	(343,301	)		$	(616	)		$	(80,284	)		$	(103,832	)		$	(360,687	)		$	4,053				(356,634	)
	Benefit for income taxes																																	(143,236	)
Net loss																																		(213,398	)
	Preferred stock dividends of subsidiary																																	-
Net loss available to common shareholders																																	$	(213,398	)

MBIA INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS (Unaudited)
(in thousands)
									Structured
					U.S.				Finance and
					Public Finance				International				Advisory
Three Months Ended September 30, 2009					Insurance				Insurance				Services							Wind-down								Intercompany
					(National)				(MBIA Corp.)				(Cutwater)			Corporate				Operations				Subtotal				Eliminations				Consolidated
Revenues:
	Premiums earned:
		Scheduled premiums earned			$	96,363			$	74,750			$	-		$	-			$	-			$	171,113			$	(26,699	)		$	144,414
		Refunding premiums earned				46,494				143				-			-				-				46,637				(9,803	)			36,834
			Total premiums earned			142,857				74,893				-			-				-				217,750				(36,502	)			181,248
	Net investment income					60,913				47,640				24			6,214				43,359				158,150				(21,521	)			136,629
	Fees and reimbursements					1,001				42,529				12,686			-				473				56,689				(42,398	)			14,291
	Change in fair value of insured derivatives:
		Realized gains (losses) and other settlements on insured derivatives				200				(30,482	)			-			-				-				(30,282	)			-				(30,282	)
		Unrealized losses on insured derivatives				(11	)			(810,178	)			-			-				-				(810,189	)			-				(810,189	)
			Net change in fair value of insured derivatives			189				(840,660	)			-			-				-				(840,471	)			-				(840,471	)
	Net gains (losses) on financial instruments at fair value and foreign exchange					(330	)			31,227				14			(42,591	)			(105,254	)			(116,934	)			-				(116,934	)
	Net investment losses related to other-than-temporary impairments:
		Investment losses related to other-than-temporary impairments				-				-				-			-				(52,386	)			(52,386	)			-				(52,386	)
		Other-than-temporary impairments recognized in accumulated other comprehensive loss				-				-				-			-				20,814				20,814				-				20,814
			Net investment losses related to other-than-temporary impairments			-				-				-			-				(31,572	)			(31,572	)			-				(31,572	)
	Net gains on extinguishment of debt					-				13,059				-			602				104,182				117,843				-				117,843
	Other net realized gains (losses)					-				(19,477	)			-			(1	)			4,502				(14,976	)			-				(14,976	)
	Revenues of consolidated VIEs:
		Net investment income				-				16,427				-			-				3,719				20,146				-				20,146
		Net gains (losses) on financial instruments at fair value and foreign exchange				-				10,841				-			-				(3,608	)			7,233				-				7,233
		Net investment losses related to other-than-temporary impairments:
			Investment losses related to other-than-temporary impairments			-				(135,402	)			-			-				(11,306	)			(146,708	)			-				(146,708	)
			Other-than-temporary impairments recognized in accumulated other comprehensive loss			-				85,000				-			-				-				85,000				-				85,000
			Net investment losses related to other-than-temporary impairments			-				(50,402	)			-			-				(11,306	)			(61,708	)			-				(61,708	)
		Net gains on extinguishment of debt				-				-				-			-				8,853				8,853				-				8,853
		Other net realized losses				-				(40,740	)			-			-				-				(40,740	)			-				(40,740	)
		Total revenues				204,630				(714,663	)			12,724			(35,776	)			13,348				(519,737	)			(100,421	)			(620,158	)
Expenses:
	Losses and loss adjustment					28,708				210,052				-			-				-				238,760				-				238,760
	Amortization of deferred acquisition costs					33,122				52,806				-			-				-				85,928				(66,032	)			19,896
	Operating					11,015				44,060				12,543			5,440				10,305				83,363				(6,338	)			77,025
	Interest					-				34,798				-			16,561				62,134				113,493				(25,335	)			88,158
	Expenses of consolidated VIEs:
		Operating				-				54				-			-				829				883				(795	)			88
		Interest				-				20,391				-			-				1,587				21,978				-				21,978
		Total expenses				72,845				362,161				12,543			22,001				74,855				544,405				(98,500	)			445,905
Pre-tax income (loss)					$	131,785			$	(1,076,824	)		$	181		$	(57,777	)		$	(61,507	)		$	(1,064,142	)		$	(1,921	)			(1,066,063	)
	Benefit for income taxes																																(341,530	)
Net loss																																	(724,533	)
	Preferred stock dividends of subsidiary																																3,271
Net loss available to common shareholders																																$	(727,804	)

MBIA INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS (Unaudited)
(in thousands)
									Structured
					U.S.				Finance and
					Public Finance				International				Advisory
Nine Months Ended September 30, 2010					Insurance				Insurance				Services								Wind-down								Intercompany
					(National)				(MBIA Corp.)				(Cutwater)				Corporate				Operations				Subtotal				Eliminations				Consolidated
Revenues:
	Premiums earned:
		Scheduled premiums earned			$	255,666			$	190,365			$	-			$	-			$	-			$	446,031			$	(59,926	)		$	386,105
		Refunding premiums earned				78,083				3,887				-				-				-				81,970				(18,401	)			63,569
			Total premiums earned			333,749				194,252				-				-				-				528,001				(78,327	)			449,674
	Net investment income					176,048				88,214				66				11,632				72,469				348,429				(6,518	)			341,911
	Fees and reimbursements					19,684				174,344				50,357				65,151				-				309,536				(161,203	)			148,333
	Change in fair value of insured derivatives:
		Realized gains and other settlements on insured derivatives				360				453,603				-				-				-				453,963				-				453,963
		Unrealized losses on insured derivatives				(56	)			(1,717,282	)			-				-				-				(1,717,338	)			-				(1,717,338	)
			Net change in fair value of insured derivatives			304				(1,263,679	)			-				-				-				(1,263,375	)			-				(1,263,375	)
	Net gains (losses) on financial instruments at fair value and foreign exchange					48,760				130,755				2,133				(79,434	)			(137,893	)			(35,679	)			-				(35,679	)
	Net investment losses related to other-than-temporary impairments:
		Investment losses related to other-than-temporary impairments				-				(358	)			-				-				(186,887	)			(187,245	)			-				(187,245	)
		Other-than-temporary impairments recognized in accumulated other comprehensive loss				-				(3,601	)			-				-				147,742				144,141				-				144,141
			Net investment losses related to other-than-temporary impairments			-				(3,959	)			-				-				(39,145	)			(43,104	)			-				(43,104	)
	Net gains (losses) on extinguishment of debt					-				-				-				(327	)			27,925				27,598				-				27,598
	Other net realized gains (losses)					(101	)			18,525				(137	)			(1	)			(22	)			18,264				-				18,264
	Revenues of consolidated VIEs:
		Net investment income				-				31,888				-				-				16,439				48,327				-				48,327
		Net gains on financial instruments at fair value and foreign exchange				-				335,823				-				-				41,855				377,678				16,824				394,502
		Net investment losses related to other-than-temporary impairments:
			Investment losses related to other-than-temporary impairments			-				-				-				-				-				-				-				-
			Other-than-temporary impairments recognized in accumulated other comprehensive loss			-				-				-				-				-				-				-				-
			Net investment losses related to other-than-temporary impairments			-				-				-				-				-				-				-				-
		Net gains on extinguishment of debt				-				-				-				-				17,685				17,685				-				17,685
		Other net realized losses				-				(74,244	)			-				-				-				(74,244	)			-				(74,244	)
		Total revenues				578,444				(368,081	)			52,419				(2,979	)			(687	)			259,116				(229,224	)			29,892
Expenses:
	Losses and loss adjustment					41,744				80,604				-				-				-				122,348				-				122,348
	Amortization of deferred acquisition costs					62,835				111,996				-				-				-				174,831				(132,369	)			42,462
	Operating					46,768				93,574				50,189				79,105				10,533				280,169				(71,292	)			208,877
	Interest					-				102,413				-				49,281				134,350				286,044				(39,848	)			246,196
	Expenses of consolidated VIEs:
		Operating				-				14,007				-				-				1,507				15,514				(1,610	)			13,904
		Interest				-				31,702				-				-				11,980				43,682				-				43,682
		Total expenses				151,347				434,296				50,189				128,386				158,370				922,588				(245,119	)			677,469
Pre-tax income (loss)					$	427,097			$	(802,377	)		$	2,230			$	(131,365	)		$	(159,057	)		$	(663,472	)		$	15,895				(647,577	)
	Benefit for income taxes																																	(249,259	)
Net loss																																		(398,318	)
	Preferred stock dividends of subsidiary																																	-
Net loss available to common shareholders																																	$	(398,318	)

MBIA INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS (Unaudited)
(in thousands)
									Structured
					U.S.				Finance and
					Public Finance				International				Advisory
Nine Months Ended September 30, 2009					Insurance				Insurance				Services								Wind-down								Intercompany
					(National)				(MBIA Corp.)				(Cutwater)				Corporate				Operations				Subtotal				Eliminations				Consolidated
Revenues:
	Premiums earned:
		Scheduled premiums earned			$	314,035			$	273,328			$	-			$	-			$	-			$	587,363			$	(94,848	)		$	492,515
		Refunding premiums earned				111,669				2,178				-				-				-				113,847				(18,497	)			95,350
			Total premiums earned			425,704				275,506				-				-				-				701,210				(113,345	)			587,865
	Net investment income					152,041				192,277				22				17,250				152,338				513,928				(69,099	)			444,829
	Fees and reimbursements					1,578				132,897				38,900				-				1,439				174,814				(119,497	)			55,317
	Change in fair value of insured derivatives:
		Realized gains and other settlements on insured derivatives				386				33,150				-				-				-				33,536				-				33,536
		Unrealized gains (losses) on insured derivatives				(178	)			1,222,939				-				-				-				1,222,761				-				1,222,761
			Net change in fair value of insured derivatives			208				1,256,089				-				-				-				1,256,297				-				1,256,297
	Net gains (losses) on financial instruments at fair value and foreign exchange					6,689				61,072				(526	)			(51,140	)			111,023				127,118				-				127,118
	Net investment losses related to other-than-temporary impairments:
		Investment losses related to other-than-temporary impairments				-				-				-				-				(514,063	)			(514,063	)			-				(514,063	)
		Other-than-temporary impairments recognized in accumulated other comprehensive loss				-				-				-				-				179,197				179,197				-				179,197
			Net investment losses related to other-than-temporary impairments			-				-				-				-				(334,866	)			(334,866	)			-				(334,866	)
	Net gains on extinguishment of debt					-				13,547				-				2,542				202,455				218,544				5,158				223,702
	Other net realized gains (losses)					-				(27,900	)			-				(1	)			4,502				(23,399	)			-				(23,399	)
	Revenues of consolidated VIEs:
		Net investment income				-				63,038				-				-				17,098				80,136				-				80,136
		Net gains (losses) on financial instruments at fair value and foreign exchange				-				10,841				-				-				(13,068	)			(2,227	)			-				(2,227	)
		Net investment losses related to other-than-temporary impairments:
			Investment losses related to other-than-temporary impairments			-				(261,132	)			-				-				(11,306	)			(272,438	)			-				(272,438	)
			Other-than-temporary impairments recognized in accumulated other comprehensive loss			-				170,369				-				-				-				170,369				-				170,369
			Net investment losses related to other-than-temporary impairments			-				(90,763	)			-				-				(11,306	)			(102,069	)			-				(102,069	)
		Net gains on extinguishment of debt				-				-				-				-				29,395				29,395				-				29,395
		Other net realized losses				-				(40,740	)			-				-				-				(40,740	)			-				(40,740	)
		Total revenues				586,220				1,845,864				38,396				(31,349	)			159,010				2,598,141				(296,783	)			2,301,358
Expenses:
	Losses and loss adjustment					91,706				111,468				-				-				-				203,174				-				203,174
	Amortization of deferred acquisition costs					89,855				168,827				-				-				-				258,682				(192,019	)			66,663
	Operating					39,379				148,732				33,430				20,985				28,616				271,142				(22,116	)			249,026
	Interest					-				102,100				-				52,135				217,142				371,377				(83,572	)			287,805
	Expenses of consolidated VIEs:
		Operating				-				241				-				-				2,942				3,183				(2,606	)			577
		Interest				-				61,061				-				-				11,023				72,084				-				72,084
		Total expenses				220,940				592,429				33,430				73,120				259,723				1,179,642				(300,313	)			879,329
Pre-tax income (loss)					$	365,280			$	1,253,435			$	4,966			$	(104,469	)		$	(100,713	)		$	1,418,499			$	3,530				1,422,029
	Provision for income taxes																																	547,900
Net income																																		874,129
	Preferred stock dividends of subsidiary																																	10,484
Net income available to common shareholders																																	$	863,645

MBIA INC. AND SUBSIDIARIES
Components of Adjusted Book Value per Share
				September 30, 2010
				National Public
				Finance				MBIA				Cutwater
				Guarantee				Insurance				Asset						Wind-down
				Corporation				Corporation				Management			Corporate			Operations			Consolidated
Reported Book Value				$	15.80			$	4.97			$	0.15		($1.20	)		($7.16	)		$	12.56
Plus:	Cumulative unrealized loss on insured
	credit derivatives, after tax				0.00				18.04				0.00		0.00			0.00				18.04
Less:	Cumulative impairments on insured
	credit derivatives, after tax (1)				0.00				(10.52	)			0.00		0.00			0.00				(10.52	)
Reverse:	Unrealized (gains) losses included in OCI				(0.48	)			(0.04	)			0.00		0.01			2.21				1.70
Reverse:	Impact of consolidating certain VIEs (2)				0.00				0.66				0.00		0.00			0.00				0.66
Analytic Book Value (3)					15.32				13.11				0.15		(1.19	)		(4.95	)			22.44
Plus:	Net unearned premium revenue, after tax (1) (4)				7.85				6.93				0.00		0.00			0.00				14.78
Plus:	Wind-down Operations future spread adjustment (1)				0.00				0.00				0.00		0.00			0.83				0.83
Plus:	Loss provision (5)				(1.05	)			(0.89	)			0.00		0.00			0.00				(1.94	)
Adjusted Book Value (3)				$	22.12			$	19.15			$	0.15		($1.19	)		($4.12	)		$	36.11
				December 31, 2009
				National Public
				Finance				MBIA				Cutwater
				Guarantee				Insurance				Asset						Wind-down
				Corporation				Corporation				Management			Corporate			Operations			Consolidated
Reported Book Value				$	13.52			$	7.75			$	0.37		($1.02	)		($7.96	)		$	12.66
Plus:	Cumulative unrealized loss on insured
	credit derivatives, after tax				0.00				12.09				0.00		0.00			0.00				12.09
Less:	Cumulative impairments on insured
	credit derivatives, after tax (1)				0.00				(5.89	)			0.00		0.00			0.00				(5.89	)
Reverse:	Unrealized (gains) losses included in OCI				(0.05	)			1.03				0.00		0.00			4.08				5.06
Analytic Book Value (3)					13.47				14.98				0.37		(1.02	)		(3.88	)			23.92
Plus:	Net unearned premium revenue, after tax (1) (4)				8.32				6.70				0.00		0.00			0.00				15.02
Plus:	Wind-down Operations future spread adjustment (1)				0.00				0.00				0.00		0.00			(0.61	)			(0.61	)
Plus:	Loss provision (5)				(1.09	)			(0.89	)			0.00		0.00			0.00				(1.98	)
Adjusted Book Value (3)				$	20.70			$	20.79			$	0.37		($1.02	)		($4.49	)		$	36.35

(1)		At September 30, 2010 and December 31, 2009 the discount rate on Financial Guarantee installment premiums was the risk free rate as defined by accounting principles for Financial Guarantee insurance contracts and the discount rate was 5.00% on Insured Derivative installment revenue, impairments and Wind-down Operations future spread adjustment.
(2)		Represents the impact on consolidated total equity of VIEs that are not considered a business enterprise of the Company.
(3)		A non-GAAP measure.
(4)		The amounts consist of Financial Guarantee premiums, Insured Derivative revenue and deferred commitment/structuring fees.
(5)		The loss provision is calculated by applying 12% to net unearned premiums and net unearned Insured Derivative revenue on an after-tax basis.

Net Income (Loss) per Common Share:
						Three Months Ended								Nine Months Ended
						September 30								September 30
						2010				2009				2010				2009
				Basic		($1.06)				($3.50)				($1.96)				$4.15
				Diluted		($1.06)				($3.50)				($1.96)				$4.15
Weighted-Average Number of Common Shares Outstanding:
				Basic		200,529,483				208,219,324				203,239,935				208,278,589
				Diluted		200,529,483				208,219,324				203,239,935				208,278,589

INSURANCE OPERATIONS
Selected Financial Data Computed on a Statutory Basis
(dollars in millions)
	National Public Finance Guarantee Corporation
						September 30, 2010					December 31, 2009 (6)
	Policyholders' surplus					$	837.0				$	591.2
	Contingency reserve						1,462.6					1,403.9
	Statutory capital						2,299.6					1,995.1
	Unearned premium reserve						2,959.1					3,125.5
	Present value of installment premiums (1)						260.7					270.3
	Premium resources (2)						3,219.8					3,395.8
	Loss and loss adjustment expense reserves (1)						82.3					136.0
	Total claims-paying resources					$	5,601.7				$	5,526.9
	Net debt service outstanding					$	773,607.5				$	821,687.6
	Capital ratio (3)						336:1					412:1
	Claims-paying ratio (4)						173:1					189:1
	MBIA Insurance Corporation
						September 30, 2010					December 31, 2009 (6)
	Policyholders' surplus					$	1,322.8				$	1,885.1
	Contingency reserve						1,744.1					1,447.7
	Statutory capital						3,066.9					3,332.8
	Unearned premium reserve						709.6					726.1
	Present value of installment premiums (5)						1,734.1					1,739.5
	Premium resources (2)						2,443.7					2,465.6
	Loss and loss adjustment expense reserves (5)						759.2					561.0
	Total claims-paying resources					$	6,269.8				$	6,359.4
	Net debt service outstanding					$	270,335.8				$	264,562.5
	Capital ratio (3)						88:1					79:1
	Claims-paying ratio (4)						50:1					48:1

(1)		At September 30, 2010 and December 31, 2009 the discount rate was 5.09%.
(2)		The amounts consist of Financial Guarantee premiums and Insured Derivative premiums.
(3)		Net debt service outstanding divided by statutory capital.
(4)		Net debt service outstanding divided by the sum of statutory capital, unearned premium reserve (after-tax), present value of installment premiums (after-tax) and loss and loss adjustment expense.
(5)		At September 30, 2010 and December 31, 2009 the discount rate was 6.51%.
(6)		Changed as a result of certain updates described in the Company’s Current Report on Form 8-K filed on June 4, 2010.

 

Source: MBIA Inc.