Press Release Details

Highlights

• MBIA Inc.’s adjusted pre-tax income, a non-GAAP measure, was $25 million in the first quarter of 2011 compared with an adjusted pre-tax loss of $90 million in the first quarter of 2010.
• An improved market perception of MBIA Insurance Corp.’s (MBIA Corp.) credit quality led to a net loss on the fair value of insured credit derivatives, driving a net loss to common shareholders of $1.1 billion, or $5.68 per share, for the first quarter of 2011 compared with a net loss of $1.5 billion, or $7.22 per share, in the first quarter of 2010.
• MBIA Inc.’s Adjusted Book Value (ABV), a non-GAAP measure, was $35.57 per share at March 31, 2011 compared with $36.81 per share at December 31, 2010.

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 $35.57 as of March 31, 2011, compared with $36.81 as of December 31, 2010. Book value per share was $8.81 as of March 31, 2011.

The net loss to common shareholders for the first quarter of 2011 was $1.1 billion, or $5.68 per share, compared with a net loss of $1.5 billion, or $7.22 per share, in the first quarter of 2010. The net loss in the first quarter of 2011 was driven primarily by a $1.3 billion pre-tax unrealized net loss on the fair value of insured derivatives resulting primarily from an improved market perception of MBIA Corp.’s credit quality. The Company is required to adjust the values of its derivative liabilities for the market's perception of its non-performance risk. The increase in the value of the derivative liabilities is reflected as a pre-tax loss on the income statement.

Adjusted pre-tax income, a non-GAAP measure (defined in the attached Explanation of Non-GAAP Financial Measures), for the first quarter of 2011 was $25 million compared with an adjusted pre-tax loss of $90 million in the first quarter of 2010. ABV per share declined despite positive adjusted pre-tax income in the quarter due to a combination of the tax provision for the quarter and changes to balance sheet values not reflected in adjusted pretax income. ABV and adjusted pre-tax income provide investors with additional views of the Company’s operating results that management finds useful in measuring financial performance.

“The trend toward higher loss severities in our RMBS and ABS CDO exposures continued to moderate this quarter,” said MBIA Inc. President and Chief Financial Officer Chuck Chaplin. “That, combined with substantial commutations of insured credit derivatives in the fourth quarter of 2010 and first quarter of 2011, continues to reduce the potential volatility of loss in future periods. In addition, while the potential for volatility in our CMBS exposures remains, the gradual re-opening of that market and improvement in the commercial real estate environment suggest a moderating trend.”

First Quarter 2011 Segment Results

The following is a summary of pre-tax results by segment for the first quarter:

$ in millions			U.S. Public Finance				Structured Finance and International					Advisory Services					Corporate					Wind-down					Consolidated
1Q 2011 Pre-tax Income			$	111			$	(1,614	)			$	(1	)			$	5				$	(73	)			$	(1,556	)
1Q 2010 Pre-tax Income			$	132			$	(2,288	)			$	3				$	(42	)			$	(66	)			$	(2,259	)
1Q 2011 Adj. Pre-tax Income			$	111			$	(20	)			$	(1	)			$	5				$	(73	)			$	25
1Q 2010 Adj. Pre-tax Income			$	132			$	(113	)			$	3				$	(42	)			$	(66	)			$	(90	)

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 $111 million of adjusted pre-tax income in the first quarter of 2011 compared with $132 million of adjusted pre-tax income in the first quarter of 2010. Lower adjusted pre-tax income in the first quarter of 2011 resulted from a decline in premiums earned, lower fees and reimbursements and an increase in operating expenses, partially offset by lower loss and loss adjustment expenses.

National's insured portfolio generated total premiums earned of $89 million in the first quarter of 2011 compared with $114 million in total premiums earned in the first quarter of 2010. The decline in total premiums earned resulted from lower refunding activity in the quarter.

Net investment income for National declined 6 percent to $58 million in the first quarter of 2011 from $62 million in the comparable period of 2010 due to lower average yields. Over the same period, National’s investment portfolio increased in size by 2 percent, from $5.3 billion at March 31, 2010 to $5.4 billion at March 31, 2011.

Fees and reimbursements were $1.6 million in the first quarter of 2011 compared with $14.6 million in the first quarter of 2010. Fees and reimbursements in the first quarter of 2010 included $13.4 million in one-time payments from a reinsurer related to the commutation of a reinsurance agreement.

National’s loss and loss adjustment expenses totaled $3 million in the first quarter of 2011 compared with $26 million in the first quarter of 2010.

Operating expenses were $19 million in the first quarter of 2011, up 43 percent from $13 million in the comparable period of 2010. The increase in operating expenses was driven by higher legal, allocated overhead and facilities-related expenses.

As of March 31, 2011, National’s statutory capital was $2.5 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.

The adjusted pre-tax loss for the Structured Finance and International Insurance segment for the first quarter of 2011 was $20 million compared with an adjusted pre-tax loss of $113 million in the first quarter of 2010. Premiums earned, net investment income, fees and reimbursements, and premiums and fees on insured derivatives totaled $180 million in the first quarter of 2011. Losses, credit impairments (a non-GAAP measure defined in the attached Explanation of Non-GAAP Financial Measures) and loss-related expenses on insured exposures totaled $147 million in the first quarter while all other line items in the aggregate had a net $53 million negative impact on the adjusted pre-tax loss.

The following is a summary of all insured portfolio economic loss activity in the first quarter. Economic losses for a reporting period represent the change in the Company’s estimate of the present value of expected net future claims payments without regard to the manner in which they are presented in the Company’s financial statements.

1Q 2011 Economic Loss Activity
($ in thousands)				RMBS					ABS CDOs					CMBS				Other					Total
Change in Expected Payments				$	79,898				$	71,044				$	134,783			$	16,160				$	301,885
Change in Expected Salvage					(152,898	)				(1,922	)			-					(154	)				(154,974	)
Total Economic Losses					($73,000	)			$	69,122				$	134,783			$	16,006				$	146,911

In the first quarter, the Company increased its expectations of future claims payments on RMBS exposures by $80 million as voluntary prepayments increased in the underlying mortgage pools during the quarter. The increase in voluntary prepayments resulted in a reduction in estimated cash flow for the insured RMBS transactions in future periods. However, the increase in expected future claims payments was more than offset by additional expected recoveries of $153 million, primarily from contractual claims related to ineligible mortgages. The Company’s estimates for expected recoveries related to “putbacks” of ineligible mortgages totaled $2.7 billion as of March 31, 2011. However, based on the Company’s assessment of the strength of its contract claims, the Company continues to believe it is entitled to collect the full amount of its cumulative incurred losses, which totaled $4.6 billion as of March 31, 2011, from those securitization sponsors against whom it is pursuing litigation.

First quarter economic losses on multi-sector ABS CDOs totaled $69 million, driven primarily by deterioration in subprime and Alt-A mortgage-backed assets underlying the transactions.

In the first quarter of 2011, the Company estimated $135 million of incremental economic losses on certain insured transactions backed by pools of commercial mortgage-backed securities (CMBS). While the Company observed evidence of improving trends in its insured CMBS transactions, including a deceleration in delinquencies, an increase in material loan modifications and continued low levels of property liquidations, these positive factors were offset by some deductible erosion and projected deterioration in a few select insured transactions.

Certain losses are on policies subject to insurance accounting while other categories of loss relate to insured VIEs or insured credit derivatives for which GAAP specifies alternative accounting. The following is a summary of the $147 million in first quarter economic losses based on those categories:

1Q 2011 Economic Losses
$ in thousands
Change in Expected Payments		$	67,175
Change in Insurance Recoveries			(106,673	)
Loss & LAE Expense on Policies Subject to Insurance Accounting			(39,498	)
Credit Impairments on Insured VIEs			1,770
Credit Impairments on Insured Credit Derivatives			177,659
LAE on Insured Credit Derivatives			6,980
Credit Impairments and LAE on Insured Credit Derivatives			184,639
Total Economic Losses		$	146,911

In the first quarter of 2011, MBIA Corp. paid a total of $243 million in net claims in connection with its residential mortgage exposures compared to $290 million in the fourth quarter of 2010. Net claims on insured RMBS have been trending downward each quarter since peaking at $636 million in the second quarter of 2009.

As previously disclosed, in the first quarter of 2011, MBIA Corp. reached an agreement for the commutation of $3.3 billion of gross insured exposure, primarily comprising structured CMBS pools. The cost of this early settlement was consistent with the statutory loss reserves the Company had previously established for the commuted exposure.

The Company’s net derivative liability (the cumulative negative mark-to-market) with respect to insured credit derivatives was $5.7 billion as of March 31, 2011, excluding uninsured derivative contracts of consolidated VIEs. The Company currently has approximately $2.2 billion in statutory loss reserves in connection with these insured credit derivatives. The Company expects the $3.5 billion unimpaired portion of the unrealized net loss in fair value (mark-to-market) to be reversed prior to or upon the maturities of the insured credit derivatives.

As of March 31, 2011, MBIA Corp.’s statutory balance sheet reflected $2.8 billion in cash and invested assets including $526 million of cash and short-term investments. Cash, short-term investments and other highly liquid investments available to meet liquidity demands totaled $926 million as of March 31, 2011, excluding 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 $2.7 billion and claims-paying resources totaling $4.7 billion at March 31, 2011.

Advisory Services

The Company’s Advisory Services business is primarily conducted in its Cutwater Asset Management subsidiaries. Cutwater recorded a pre-tax loss of $1 million in the first quarter of 2011 driven by expenses associated with infrastructure enhancements to support its growth plans.

Cutwater’s average assets under management in the first quarter were $41.0 billion, down 1 percent from $41.6 billion in the fourth quarter of 2010 reflecting lower balances managed for MBIA Inc. and its subsidiaries. Average assets under management in the first quarter comprised $26.2 billion from third-party clients and $14.8 billion managed for MBIA Inc. and its subsidiaries. Third-party average assets under management increased 3 percent from the fourth quarter of 2010 and 1 percent from the first quarter of 2010. Included in the first quarter increase in third-party assets were approximately $600 million in assets from new clients.

Corporate Segment

The Corporate segment comprises MBIA Inc.’s holding company activities and certain subsidiaries, including Optinuity Alliance Resources Corp.

Pre-tax income for the Corporate segment was $5 million in the first quarter of 2011 compared with a pre-tax loss of $42 million in the first quarter of 2010. The pre-tax income in the first quarter of 2011 and the pre-tax loss in the first quarter of 2010 were each driven primarily by marks-to-market on outstanding warrants issued on MBIA Inc. common stock.

As of March 31, 2011, the corporate activities of MBIA Inc. had $300 million of cash and highly liquid assets available for general corporate liquidity purposes.

The Company did not repurchase any of its common stock during the first quarter.

Wind-Down Operations

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

Wind-Down Operations recorded a pre-tax loss of $73 million in the first quarter of 2011 compared with a pre-tax loss of $66 million in the first quarter of 2010. The pre-tax loss in the first quarter of 2011 was driven by an $83 million net loss on financial instruments at fair value and foreign exchange resulting largely from increased values of liabilities denominated in foreign currencies.

This segment repurchased $122 million par amount of medium-term notes at discounts during the first quarter, resulting in net gains on the extinguishment of debt that totaled $23 million.

During the first quarter, the segment repaid an additional $175 million of its original $2.0 billion secured loan from MBIA Corp. The remaining outstanding balance of the secured loan was $800 million as of March 31, 2011.

Conference Call

The Company will host a webcast and conference call for investors tomorrow, Wednesday, May 11, 2011 at 8:00 AM (EDT) to discuss its first quarter 2011 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 61399832. 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 May 11 until 11:59 p.m. on May 25 by dialing (800) 642-1687 in the U.S. or (706) 645-9291 from outside the U.S. The replay call code is also 61399832. 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 the estimated amount of the insurance loss recoveries arising from its contractual claims related to ineligible mortgages, 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 litigation claims against the Company; 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, 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, as well as related reinsurance, advisory and portfolio services, for the public and structured finance markets, and asset management advisory 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 website 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), a non-GAAP measure, is used by the Company to supplement its analysis of GAAP book value. The Company uses ABV as a measure of fundamental value and considers the change in ABV an important measure of periodic financial performance. ABV adjusts GAAP book value to remove the impact of certain items which the Company believes will reverse over time, as well as to add in the impact of certain items which the Company believes will be realized in GAAP book value in future periods. The Company has limited such adjustments to those items that it deems to be important to fundamental value and performance and which the likelihood and amount can be reasonably estimated. ABV assumes no new business activity. The Company has presented ABV to allow investors and analysts to evaluate the Company using the same measure that MBIA’s management regularly uses to measure financial performance. ABV is not a substitute for and should not be viewed in isolation from 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 actual payments for the period plus 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, plus loss adjustment expenses. 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 and loss adjustment expenses 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 the effects of consolidating insured VIEs and gains and losses related to fair valuing insured credit derivatives, which the Company believes will reverse over time, and adds in changes in the present value of insurance claims the Company expects to pay on insured credit derivatives based on its ongoing insurance loss monitoring and loss adjustment expenses.

MBIA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands)
Assets				March 31, 2011				December 31, 2010
	Investments:
		Fixed-maturity securities held as available-for-sale, at fair value (amortized cost
		$8,775,689 and $9,597,732)		$	8,285,128			$	9,020,928
		Fixed-maturity securities at fair value			28,984				25,041
		Investments pledged as collateral, at fair value (amortized cost $514,476 and $547,800)			524,666				551,688
		Short-term investments held as available-for-sale, at fair value (amortized
		cost $2,272,151 and $2,072,955)			2,251,532				2,070,320
		Other investments (includes investments at fair value of $248,199 and $256,820)			250,213				258,981
		Total investments			11,340,523				11,926,958
	Cash and cash equivalents				277,283				365,841
	Accrued investment income				94,104				95,320
	Premiums receivable				1,569,851				1,589,005
	Deferred acquisition costs				396,717				412,001
	Prepaid reinsurance premiums				94,731				97,270
	Insurance loss recoverable				2,637,589				2,531,494
	Reinsurance recoverable on paid and unpaid losses				15,259				15,111
	Goodwill				31,371				31,371
	Property and equipment, at cost (less accumulated depreciation of $134,311 and $135,127)				70,814				71,385
	Receivable for investments sold				60,769				7,948
	Derivative assets				2,257				3,780
	Current income taxes				-				41,388
	Deferred income taxes, net				1,292,699				907,531
	Other assets				46,743				45,195
	Assets of consolidated VIEs:
		Cash			710,209				763,891
		Investments held-to-maturity, at amortized cost (fair value $3,783,866 and $3,908,991)			3,995,418				4,187,644
		Fixed-maturity securities held as available-for-sale, at fair value
		(amortized cost $324,775 and $188,937)			326,281				189,554
		Fixed-maturity securities at fair value			5,453,580				5,240,742
		Loans receivable at fair value			2,327,126				2,183,364
		Loan repurchase commitments			866,572				835,047
		Derivative assets			524,539				699,072
		Other assets			38,627				38,099
		Total assets		$	32,173,062			$	32,279,011
Liabilities and Equity
	Liabilities:
		Unearned premium revenue		$	4,033,328			$	4,145,234
		Loss and loss adjustment expense reserves			1,009,971				1,129,358
		Reinsurance premiums payable			69,288				71,151
		Investment agreements			1,911,393				2,005,326
		Medium-term notes (includes financial instruments carried at
		fair value $162,949 and $116,310)			1,704,079				1,739,507
		Securities sold under agreements to repurchase			470,444				470,570
		Short-term debt			-				64,768
		Long-term debt			1,844,255				1,850,532
		Current income taxes			6,362				-
		Deferred fee revenue			9,824				9,995
		Payable for investments purchased			36,977				2,173
		Derivative liabilities			5,926,690				4,616,509
		Other liabilities			205,812				272,391
		Liabilities of consolidated VIEs:
		Variable interest entity notes (includes financial instruments carried
		at fair value $6,989,037 and $6,679,982)			10,899,079				10,589,989
		Long-term debt			360,000				360,000
		Derivative liabilities			1,910,065				2,104,242
		Other liabilities			2,687				968
		Total liabilities			30,400,254				29,432,713
	Equity:
		Common stock			274,844				274,720
		Additional paid-in capital			3,063,717				3,063,914
		Retained earnings			986,806				2,123,566
		Accumulated other comprehensive loss			(340,781	)			(405,484	)
		Treasury stock			(2,225,496	)			(2,224,577	)
		Total shareholders' equity of MBIA Inc.			1,759,090				2,832,139
		Preferred stock of subsidiary			13,718				14,159
		Total equity			1,772,808				2,846,298
		Total liabilities and equity		$	32,173,062			$	32,279,011

MBIA INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS (Unaudited)
(in thousands)
										Structured
						U.S.				Finance and
Three Months Ended March 31, 2011						Public Finance				International				Advisory								Wind-down								Intercompany
						Insurance				Insurance				Services				Corporate				Operations				Subtotal				Eliminations				Consolidated
Revenues:
		Premiums earned:
			Scheduled premiums earned			$	76,490			$	67,160			$	-			$	-			$	-			$	143,650			$	(15,895	)		$	127,755
			Refunding premiums earned				12,486				62				-				-				-				12,548				(3,105	)			9,443
				Total premiums earned			88,976				67,222				-				-				-				156,198				(19,000	)			137,198
		Net investment income					58,042				31,425				18				265				21,157				110,907				3,424				114,331
		Fees and reimbursements					1,610				27,348				14,756				23,082				-				66,796				(52,845	)			13,951
		Change in fair value of insured derivatives:
			Realized gains (losses) and other settlements on
				insured derivatives			122				(354,509	)			-				-				-				(354,387	)			(4	)			(354,391	)
			Unrealized losses on insured derivatives				(81	)			(1,322,924	)			-				-				-				(1,323,005	)			-				(1,323,005	)
				Net change in fair value of insured derivatives			41				(1,677,433	)			-				-				-				(1,677,392	)			(4	)			(1,677,396	)
		Net gains (losses) on financial instruments at fair value
			and foreign exchange				3,586				32,778				19				22,942				(82,853	)			(23,528	)			-				(23,528	)
		Investment losses related to other-than-temporary impairments:
			Investment losses related to other-than-temporary
				impairments			-				(205	)			-				-				(7,350	)			(7,555	)			-				(7,555	)
			Other-than-temporary impairments recognized in
				accumulated other comprehensive loss			-				(2,029	)			-				-				(3,764	)			(5,793	)			-				(5,793	)
				Net investment losses related to other-than-temporary
				impairments			-				(2,234	)			-				-				(11,114	)			(13,348	)			-				(13,348	)
		Net gains (losses) on extinguishment of debt					-				-				-				(15	)			23,484				23,469				2,422				25,891
		Other net realized gains					-				951				-				-				3,659				4,610				-				4,610
		Revenues of consolidated VIEs:
			Net investment income				-				13,141				-				-				3,818				16,959				-				16,959
			Net gains (losses) on financial instruments at fair value
				and foreign exchange			-				(22,724	)			-				-				10,743				(11,981	)			13,045				1,064
			Total revenues				152,255				(1,529,526	)			14,793				46,274				(31,106	)			(1,347,310	)			(52,958	)			(1,400,268	)
Expenses:
		Losses and loss adjustment					3,345				(39,498	)			-				-				-				(36,153	)			-				(36,153	)
		Amortization of deferred acquisition costs					19,482				33,063				-				-				-				52,545				(36,033	)			16,512
		Operating					18,502				36,640				16,269				25,732				3,143				100,286				(25,054	)			75,232
		Interest					-				33,528				-				15,068				32,844				81,440				(6,544	)			74,896
		Expenses of consolidated VIEs:
			Operating				-				10,395				-				-				731				11,126				(1,417	)			9,709
			Interest				-				10,524				-				-				4,809				15,333				-				15,333
			Total expenses				41,329				84,652				16,269				40,800				41,527				224,577				(69,048	)			155,529
Pre-tax income (loss)						$	110,926			$	(1,614,178	)		$	(1,476	)		$	5,474			$	(72,633	)		$	(1,571,887	)		$	16,090				(1,555,797	)
		Benefit for income taxes																																	(419,037	)
Net loss																																		$	(1,136,760	)

MBIA INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS (Unaudited)
(in thousands)
									Structured
					U.S.				Finance and
Three Months Ended March 31, 2010					Public Finance				International				Advisory								Wind-down								Intercompany
					Insurance				Insurance				Services				Corporate				Operations				Subtotal				Eliminations				Consolidated
Revenues:
	Premiums earned:
		Scheduled premiums earned			$	87,538			$	67,063			$	-			$	-			$	-			$	154,601			$	(22,299	)		$	132,302
		Refunding premiums earned				26,753				4,241				-				-				-				30,994				(6,479	)			24,515
		Total premiums earned				114,291				71,304				-				-				-				185,595				(28,778	)			156,817
	Net investment income					61,741				34,049				(189	)			5,255				26,488				127,344				(5,420	)			121,924
	Fees and reimbursements					14,612				124,308				16,106				23,487				-				178,513				(56,534	)			121,979
	Change in fair value of insured derivatives:
		Realized gains (losses) and other settlements on
		insured derivatives				102				(34,232	)			-				-				-				(34,130	)			-				(34,130	)
		Unrealized losses on insured derivatives				(84	)			(2,211,341	)			-				-				-				(2,211,425	)			-				(2,211,425	)
		Net change in fair value of insured derivatives				18				(2,245,573	)			-				-				-				(2,245,555	)			-				(2,245,555	)
	Net gains (losses) on financial instruments at fair value
		and foreign exchange				2,562				2,350				924				(26,434	)			(25,208	)			(45,806	)			-				(45,806	)
	Investment losses related to other-than-temporary
		impairments:
		Investment losses related to other-than-temporary
		impairments				-				(191	)			-				-				(165,219	)			(165,410	)			-				(165,410	)
		Other-than-temporary impairments recognized in
		accumulated other comprehensive loss				-				(2,337	)			-				-				138,015				135,678				-				135,678
		Net investment losses related to other-than-temporary
		impairments				-				(2,528	)			-				-				(27,204	)			(29,732	)			-				(29,732	)
	Net losses on extinguishment of debt					-				-				-				-				(2	)			(2	)			-				(2	)
	Other net realized gains (losses)					(89	)			1				-				-				233				145				-				145
	Revenues of consolidated VIEs:
		Net investment income				-				10,380				-				-				4,790				15,170				-				15,170
		Net gains on financial instruments at fair value
		and foreign exchange				-				106,092				-				-				10,153				116,245				6,690				122,935
		Other net realized losses				-				(74,244	)			-				-				-				(74,244	)			-				(74,244	)
		Total revenues				193,135				(1,973,861	)			16,841				2,308				(10,750	)			(1,772,327	)			(84,042	)			(1,856,369	)
Expenses:
	Losses and loss adjustment					25,895				188,504				-				-				-				214,399				-				214,399
	Amortization of deferred acquisition costs					22,419				48,422				-				-				-				70,841				(48,093	)			22,748
	Operating					12,949				26,013				13,705				27,017				3,646				83,330				(20,832	)			62,498
	Interest					-				34,737				-				16,881				47,908				99,526				(15,200	)			84,326
	Expenses of consolidated VIEs:
		Operating				-				6,197				-				-				534				6,731				(1,308	)			5,423
		Interest				-				10,380				-				-				3,283				13,663				-				13,663
		Total expenses				61,263				314,253				13,705				43,898				55,371				488,490				(85,433	)			403,057
Pre-tax income (loss)					$	131,872			$	(2,288,114	)		$	3,136			$	(41,590	)		$	(66,121	)		$	(2,260,817	)		$	1,391				(2,259,426	)
	Benefit for income taxes																																	(779,190	)
Net loss																																	$	(1,480,236	)

MBIA INC. AND SUBSIDIARIES
ADJUSTED PRE-TAX INCOME
MARCH QTD
(in thousands)
												Structured
								U.S. Public				Finance and
								Finance				International				Advisory								Wind-down				Intercompany
Three months ended March 31, 2011								Insurance				Insurance				Services				Corporate				Operations				Eliminations				Consolidated
Revenues:
	Net premiums earned							$	88,976			$	71,913			$	-			$	-			$	-			$	(19,000	)		$	141,889
	Net investment income								58,042				48,272				18				265				21,157				3,686				131,440
	Fees and reimbursements								1,610				27,348				14,756				23,082				-				(52,572	)			14,224
	Premiums and fees on insured derivatives								122				32,083				-				-				-				(4	)			32,201
	Net gains (losses) on financial instruments at
	fair value and foreign exchange								3,586				36,401				19				22,942				(82,853	)			-				(19,905	)
	Net investment losses related to other-than-
	temporary impairments								-				(2,234	)			-				-				(11,114	)			-				(13,348	)
	Net gains (losses) on extinguishment of debt								-				-				-				(15	)			23,484				2,422				25,891
	Other net realized gains								-				951				-				-				3,659				-				4,610
	VIE revenues								-				-				-				-				14,561				-				14,561
		Total revenues							152,336				214,734				14,793				46,274				(31,106	)			(65,468	)			331,563
Expenses:
	Loss and LAE incurred								3,345				(37,728	)			-				-				-				-				(34,383	)
	Insured credit derivative impairments and LAE								-				184,639				-				-				-				-				184,639
	Amortization of deferred acquisition costs								19,482				27,910				-				-				-				(36,033	)			11,359
	Operating								18,502				26,508				16,269				25,732				3,143				(25,054	)			65,100
	Interest								-				33,528				-				15,068				32,844				(6,544	)			74,896
	VIE expenses								-				-				-				-				5,540				(259	)			5,281
		Total expenses							41,329				234,857				16,269				40,800				41,527				(67,890	)			306,892
Adjusted pre-tax income (loss)								$	111,007			$	(20,123	)		$	(1,476	)		$	5,474			$	(72,633	)		$	2,422			$	24,671
Additions to adjusted pre-tax income (loss):
	Impact of consolidating certain VIEs								-				1,247				-				-				-				13,668				14,915
	Mark-to-market on insured credit derivatives								(81	)			(1,383,440	)			-				-				-				-				(1,383,521	)
Subtractions from adjusted pre-tax income (loss):
	Impairments and LAE on insured credit derivatives								-				211,862				-				-				-				-				211,862
GAAP pre-tax income (loss)								$	110,926			$	(1,614,178	)		$	(1,476	)		$	5,474			$	(72,633	)		$	16,090			$	(1,555,797	)

MBIA INC. AND SUBSIDIARIES
ADJUSTED PRE-TAX INCOME
MARCH QTD
(in thousands)
												Structured
								U.S. Public				Finance and
								Finance				International				Advisory								Wind-down				Intercompany
Three months ended March 31, 2010								Insurance				Insurance				Services				Corporate				Operations				Eliminations				Consolidated
Revenues:
	Net premiums earned							$	114,291			$	76,933			$	-			$	-			$	-			$	(28,778	)		$	162,446
	Net investment income								61,741				55,096				(189	)			5,255				26,488				(5,038	)			143,353
	Fees and reimbursements								14,612				124,309				16,106				23,487				-				(55,266	)			123,248
	Premiums and fees on insured derivatives								102				29,083				-				-				-				-				29,185
	Net gains (losses) on financial instruments at
	fair value and foreign exchange								2,562				2,349				924				(26,434	)			(25,207	)			-				(45,806	)
	Net investment losses related to other-than-
	temporary impairments								-				(2,528	)			-				-				(27,204	)			-				(29,732	)
	Net gains on extinguishment of debt								-				-				-				-				(2	)			-				(2	)
	Other net realized gains (losses)								(89	)			-				-				-				233				-				144
	VIE revenues								-				-				-				-				14,943				-				14,943
		Total revenues							193,219				285,242				16,841				2,308				(10,749	)			(89,082	)			397,779
Expenses:
	Loss and LAE incurred								25,895				82,013				-				-				-				-				107,908
	Insured credit derivative impairments and LAE								-				206,291				-				-				-				-				206,291
	Amortization of deferred acquisition costs								22,419				49,379				-				-				-				(48,093	)			23,705
	Operating								12,949				26,013				13,705				27,017				4,125				(21,311	)			62,498
	Interest								-				34,736				-				16,881				47,908				(15,200	)			84,325
	VIE expenses								-				-				-				-				3,339				-				3,339
		Total expenses							61,263				398,432				13,705				43,898				55,372				(84,604	)			488,066
Adjusted pre-tax income (loss)								$	131,956			$	(113,190	)		$	3,136			$	(41,590	)		$	(66,121	)		$	(4,478	)		$	(90,287	)
Additions to adjusted pre-tax income (loss):
	Impact of consolidating certain VIEs								-				(82,251	)			-				-				-				5,869				(76,382	)
	Mark-to-market on insured credit derivatives								(84	)			(2,235,795	)			-				-				-				-				(2,235,879	)
Subtractions from adjusted pre-tax income (loss):
	Impairments and LAE on insured credit derivatives								-				(143,122	)			-				-				-				-				(143,122	)
GAAP pre-tax income (loss)								$	131,872			$	(2,288,114	)		$	3,136			$	(41,590	)		$	(66,121	)		$	1,391			$	(2,259,426	)

MBIA INC. AND SUBSIDIARIES
Components of Adjusted Book Value per Share
				March 31, 2011			December 31, 2010			Change
Reported Book Value				$8.81			$14.18			($5.37	)
Plus:		Cumulative unrealized loss on insured
		credit derivatives, after tax		19.08			14.58			$4.50
Less:		Cumulative impairments on insured
		credit derivatives, after tax (1)		(8.05	)		(8.69	)		$0.64
Reverse:		Unrealized (gains) losses included in OCI		1.53			2.27			($0.74	)
Reverse:		Impact of consolidating certain VIEs (2)		0.69			0.50			$0.19
Plus:		Net unearned premium revenue, after tax (1) (3)		13.51			13.97			($0.46	)
Adjusted Book Value (4)				$35.57			$36.81			($1.24	)

(1)		As of March 31, 2011 and December 31, 2010 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 and impairments.
(2)		Represents the impact on consolidated total equity of VIEs that are not considered business enterprises of the Company.
(3)		The amounts consist of installment and upfront Financial Guarantee premiums, Insured Derivative revenue and deferred commitment/structuring fees, net of deferred acquisition costs.
(4)		A non-GAAP measure.

Net Loss per Common Share:
							Three Months Ended
							March 31
							2011			2010
				Basic			($5.68	)		($7.22	)
				Diluted			($5.68	)		($7.22	)
Weighted-Average Number of Common Shares Outstanding:
				Basic			199,972,759			204,938,455
				Diluted			199,972,759			204,938,455

INSURANCE OPERATIONS
Selected Financial Data Computed on a Statutory Basis
(dollars in millions)
National Public Finance Guarantee Corporation
					March 31, 2011					December 31, 2010
Policyholders' surplus					$ 963.8					$ 907.7
Contingency reserve					1,494.5					1,473.5
Statutory capital					2,458.3					2,381.2
Unearned premium reserve					2,814.1					2,872.6
Present value of installment premiums (1)					275.1					282.1
Premium resources (2)					3,089.2					3,154.7
Loss and loss adjustment expense reserves (1)					79.2					95.9
Total claims-paying resources					$ 5,626.7					$ 5,631.8
Net debt service outstanding					$737,024.0					$752,420.0
Capital ratio (3)					300:1					316:1
Claims-paying ratio (4)					162:1					166:1
MBIA Insurance Corporation
					March 31, 2011					December 31, 2010
Policyholders' surplus					$ 968.6					$ 1,074.7
Contingency reserve					1,718.3					1,655.7
Statutory capital					2,686.9					2,730.4
Unearned premium reserve					697.5					703.1
Present value of installment premiums (5)					1,610.5					1,655.0
Premium resources (2)					2,308.0					2,358.1
Loss and loss adjustment expense reserves (5)					(261.6	)				155.3
Total claims-paying resources					$ 4,733.3					$ 5,243.8
Net debt service outstanding					$239,340.9					$244,548.5
Capital ratio (3)					89:1					90:1
Claims-paying ratio (4)					61:1					55:1

(1)		As of March 31, 2011 and December 31, 2010 the discount rate was 4.19%.
(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)		As of March 31, 2011 and December 31, 2010 the discount rate was 5.93%.

 

Source: MBIA Inc.