ARMONK, N.Y.--(BUSINESS WIRE)--
MBIA Inc. (NYSE: MBI) (the Company) today reported Combined Operating
Income (a non-GAAP measure defined in the attached Explanation of
Non-GAAP Financial Measures) of $19 million or $0.11 per diluted share
for the second quarter of 2015 compared with Combined Operating Income
of $2 million or $0.01 per diluted share for the second quarter of 2014.
The improvement in Combined Operating Income for the three months ended
June 30, 2015 compared with the same period of 2014 was driven primarily
by a lower tax provision, as the 2014 quarter had a higher effective tax
rate due to a tax reserve increase. In addition, higher refunding
premiums earned and lower expenses, including a 53 percent reduction of
loss and loss adjustment expenses, contributed to the improved 2015
results. The Company’s share repurchases further contributed to the
increase in Combined Operating Income per share.
Adjusted Book Value (ABV) per share (a non-GAAP measure defined in the
attached Explanation of Non-GAAP Financial Measures) was $27.00 as of
June 30, 2015 compared with $25.78 as of March 31, 2015 and $24.87 as of
December 31, 2014. The increases in ABV per share since year-end 2014
have primarily been driven by decreases in common shares outstanding.
During the first and second quarters of 2015, the Company repurchased
8.6 million and 11.6 million, respectively, of its common shares.
Operating Income and ABV per share provide investors with two
perspectives of the Company’s financial results that management uses in
measuring financial performance. Reconciliations of ABV per share to
book value per share, and Operating Income to net income, calculated in
accordance with GAAP, are attached.
Consolidated GAAP net income was $64 million, or $0.36 per diluted
share, for the second quarter of 2015 compared with consolidated net
income of $120 million, or $0.45 per diluted share, for the second
quarter of 2014. The decrease in consolidated net income for the second
quarter of 2015 as compared to the year-ago quarter was primarily due to
a tax valuation allowance release during the second quarter of 2014.
“Developments around our Puerto Rico exposure commanded much attention
this quarter,” said MBIA Inc. President and Chief Financial Officer
Chuck Chaplin. “All debt service payments due July 1 were made by the
Puerto Rico entities. Excluding National’s commitment to purchase a $45
million short-term note from PREPA, its total Puerto Rico gross par
exposure declined by $250 million as a result of the July 1 principal
payments. We continue to work with PREPA, local government officials and
other creditors toward a consensual solution that addresses Puerto
Rico’s significant fiscal and operational difficulties while respecting
the rights of creditors.”
“While new business production in National continued to ramp up slowly,
we added key players to our sales and marketing team that will better
position us to originate new business and to provide a high level of
service to the municipal finance market,” Mr. Chaplin continued. “We
believe that the superior performance of insured bonds as compared to
uninsured bonds of stressed muni issuers and projected higher interest
rates will provide solid growth prospects in the medium term. We also
continued to repurchase our common shares, which we believe will add
value to MBIA shareholders in the future.”
Year-to-Date Results
The Company’s Combined Operating Income for the six months ended June
30, 2015 was $53 million or $0.30 per diluted share compared with
Combined Operating Income of $42 million or $0.22 per diluted share for
the first six months of 2014. The increase in the Combined Operating
Income for the first six months of 2015 was primarily due to a lower
provision for income taxes.
The Company recorded consolidated GAAP net income of $133 million, or
$0.72 per diluted common share for the six months ended June 30, 2015,
compared with consolidated net income of $376 million, or $1.83 per
diluted common share, for the first six months of 2014. The decrease in
consolidated GAAP net income was primarily driven by a 39 percent
reduction in total revenues, as net gains on insured derivatives
declined by $334 million as the reversal of unrealized losses from
commutations substantially increased the amount for the first six months
of 2014. The first six months of 2014 consolidated GAAP net income also
benefitted from an 18 percent effective tax rate primarily due to a tax
valuation allowance release.
U.S. Public Finance Insurance Results
The Company’s U.S. public finance insurance business is primarily
conducted through National Public Finance Guarantee Corporation
(“National”), its primary operating subsidiary. The U.S. Public Finance
Insurance segment recorded $40 million of Operating Income in the second
quarter of 2015 compared with $34 million of Operating Income for the
second quarter of 2014.
Net premiums earned in the U.S. Public Finance Insurance segment were
$73 million in the second quarter of 2015, up 9 percent from $67 million
of net premiums earned in the second quarter of 2014, reflecting a 44
percent increase in refunded premiums earned and an 18 percent decrease
in scheduled premiums earned.
National closed $272 million of additional primary new business par
exposure during the second quarter of 2015. Low interest rates, narrow
credit spreads and competitive insurance pricing continue to adversely
impact the opportunity to achieve attractive returns on new business
production.
Net investment income for the U.S. Public Finance Insurance segment was
$28 million and net gains/losses on financial instruments at fair value
and foreign exchange as reported for Operating Income was a loss of $2
million in the second quarter of 2015. These amounts were relatively
comparable to the second quarter 2014 amounts.
The U.S. Public Finance Insurance segment’s losses and loss adjustment
expenses (LAE) were $8 million in the second quarter of 2015 compared
with $17 million in the second quarter of 2014.
For the second quarter of 2015, the amortization of deferred acquisition
costs totaled $16 million and operating expenses were $14 million. These
amounts were relatively unchanged from the second quarter of 2014.
National had qualified statutory capital of $3.3 billion and
claims-paying resources totaling $4.9 billion as of June 30, 2015.
During the second quarter of 2015, Kroll Bond Rating Agency, Moody’s
Investors Service and Standard and Poor’s Corporation each affirmed
their credit ratings and outlooks on National. On May 24, 2015, Kroll
affirmed its AA+ insurance financial strength rating with a Stable
Outlook on National. On May 29, 2015, Moody's affirmed National’s
insurance financial strength rating at A3 and maintained its Negative
Outlook. On June 29, 2015, S&P affirmed its AA- financial strength
rating and Stable Outlook on National.
Corporate Results
The corporate segment includes general corporate activities, as well as
providing support services to MBIA’s other operating businesses and
asset and capital management.
The corporate segment recorded an Operating Loss of $21 million in the
second quarter of 2015 compared with an Operating Loss of $31 million in
the second quarter of 2014. The improvement in the corporate segment's
Operating Loss was primarily driven by a lower tax provision for income
taxes and lower operating and interest expenses, partially offset by
lower revenues from fees and reimbursements and net losses on financial
instruments at fair value and foreign exchange.
As of June 30, 2015, MBIA Inc. held cash and liquid assets of $497
million, excluding $252 million of assets in its tax escrow account.
The Company’s consolidated net operating loss carryforward for income
tax purposes as of June 30, 2015 was approximately $3.1 billion.
During the second quarter of 2015, the Company repurchased 11.6 million
of its common shares at an average price of $8.76 per share. The second
quarter share repurchase included 8 million shares that were purchased
by National under separate authorizations. As stated in the Company’s
July 29 press release, the Company’s Board of Directors authorized a new
$100 million share repurchase authorization, which supersedes and
terminates the prior authorization. As of July 29, 2015, 169 million of
the Company’s common shares were outstanding.
International and Structured Finance Insurance Results
The International and Structured Finance Insurance business is primarily
conducted through MBIA Corp. Unless otherwise indicated or the context
otherwise requires, references to “MBIA Corp.” are to MBIA Insurance
Corporation, together with its subsidiaries, MBIA UK Insurance Limited
and MBIA Mexico S.A. de C.V.
The Company does not measure Operating Income of this segment. MBIA
Insurance Corporation’s statutory net loss was $47 million in the second
quarter of 2015, compared with a net loss of $29 million in the second
quarter of 2014. The statutory capital of MBIA Insurance Corporation as
of June 30, 2015 was $805 million and claims-paying resources totaled
$2.5 billion. Statutory net losses and LAE incurred for the second
quarter of 2015 were $69 million compared with net losses and LAE
incurred of $54 million in the comparable quarter of the prior year.
As of June 30, 2015, MBIA Insurance Corporation’s liquidity position
(excluding its subsidiaries and branches) totaled $412 million
consisting of cash and liquid invested assets, down from $415 million as
of March 31, 2015.
Conference Call
The Company will host a webcast and conference call for investors
tomorrow, Wednesday, August 5, 2015 at 8:00 AM (EDT) to discuss its
second quarter 2015 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 83467094. A
live webcast of the conference call will also be accessible on www.mbia.com.
A replay of the conference call will become available approximately two
hours after the end of the call on and will remain available until 11:59
p.m. on August 19 by dialing (800) 585-8367 in the U.S. or (404)
537-3406 from outside the U.S. The code for the replay of the call is
also 83467094. In addition, a recorded replay of the call will become
available on the Company's website approximately two hours after the
completion of the call.
Forward-Looking Statements
The information contained in this press release should be read in
conjunction with our filings made with the Securities and Exchange
Commission. 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,”
“estimate,” “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 and uncertainties, the possibility that the Company will
experience increased credit losses or impairments on public finance
obligations we insure issued by state, local and territorial governments
and finance authorities that are experiencing fiscal stress, the
possibility that MBIA Corp. will have inadequate liquidity to pay
expected claims as a result of increased losses on certain structured
finance transactions, in particular residential mortgage-backed
securities transactions that include a substantial number of ineligible
mortgage loans, or a delay or failure in collecting expected recoveries,
the possibility that loss reserve estimates are not adequate to cover
potential claims, a disruption in the cash flow from our subsidiaries or
an inability to access capital and our exposure to significant
fluctuations in liquidity and asset values within the global credit
markets as a result of collateral posting requirements, our ability to
fully implement our strategic plan, including our ability to maintain
high stable ratings for National and generate investor demand for our
financial guarantees, deterioration in the economic environment and
financial markets in the United States or abroad, and adverse
developments in European sovereign credit performance, real estate
market performance, credit spreads, interest rates and foreign currency
levels, the effects of governmental regulation, including insurance
laws, securities laws, tax laws, legal precedents and accounting rules;
and uncertainties that have not been identified at this time. 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 Purchase, New York is a holding company
whose subsidiaries provide financial guarantee insurance for the public
and structured finance markets. Please visit MBIA's website at www.mbia.com.
Explanation of Non-GAAP Financial Measures
The following are explanations of why the Company 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 by removing the GAAP book value
amounts for items that are not expected to impact shareholder value and
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 per share represents that amount of ABV allocated to each common
share outstanding at the measurement date.
Claims-paying Resources (CPR): CPR is a key measure of the
resources available to National and MBIA Corp. to pay claims under their
respective insurance policies. CPR consists of total financial resources
and reserves calculated on a statutory basis. CPR has been a common
measure used by financial guarantee insurance companies to report and
compare resources and continues to be used by MBIA’s management to
evaluate changes in such resources. The Company has provided CPR to
allow investors and analysts to evaluate National and MBIA Corp. using
the same measure that MBIA’s management uses to evaluate their resources
to pay claims under their respective insurance policies. There is no
directly comparable GAAP measure.
Combined Operating Income (Loss): The sum of Operating Income
(Loss) of the U.S. public finance insurance (National) and corporate
segments net of eliminations. See “Operating Income (Loss)” definition.
Operating Income (Loss): Operating Income (Loss) is a useful
measurement of performance because it measures income from the Company’s
core operating segments, unaffected by investment portfolio realized
gains and losses, gains and losses on financial instruments at fair
value and foreign exchange, and realized gains and losses on
extinguishment of debt. Operating Income (Loss) also excludes net income
of the Company’s non-core operating segments. The Company’s non-core
segments include the activities of its international and structured
finance insurance, advisory services and conduit segments. Trends in the
underlying profitability of the Company’s businesses can be more clearly
identified without the fluctuating effects of the excluded items noted
above. Operating Income (Loss) is disclosed on an after-tax basis and
adjustments to net income are typically tax-effected at 35% unless a
specific adjustment, or component thereof, is not taxable. Operating
Income (Loss) as defined by the Company does not include all revenues
and expenses required by GAAP. Operating Income (Loss) is not a
substitute for and should not be viewed in isolation from GAAP net
income.
Operating Income (Loss) per share represents that amount of Operating
Income (Loss) allocated to each fully diluted weighted-average common
share outstanding for the measurement period.
|
MBIA INC. AND SUBSIDIARIES
|
|
CONSOLIDATED BALANCE SHEETS (Unaudited)
|
|
(In millions except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
|
December 31, 2014
|
|
Assets
|
|
|
|
|
|
|
|
Investments:
|
|
|
|
|
|
|
|
Fixed-maturity securities held as available-for-sale, at fair value
(amortized cost $5,096 and $5,036)
|
|
$
|
5,099
|
|
|
$
|
5,129
|
|
|
Investments carried at fair value
|
|
|
204
|
|
|
|
207
|
|
|
Investments pledged as collateral, at fair value (amortized cost
$273 and $441)
|
|
|
247
|
|
|
|
408
|
|
|
Short-term investments held as available-for-sale, at fair value
(amortized cost $1,106 and $1,069)
|
|
|
1,109
|
|
|
|
1,069
|
|
|
Other investments (includes investments at fair value of $13 and $13)
|
|
|
16
|
|
|
|
17
|
|
|
Total investments
|
|
|
6,675
|
|
|
|
6,830
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
501
|
|
|
|
729
|
|
|
Premiums receivable
|
|
|
828
|
|
|
|
875
|
|
|
Deferred acquisition costs
|
|
|
193
|
|
|
|
217
|
|
|
Insurance loss recoverable
|
|
|
483
|
|
|
|
533
|
|
|
Assets held for sale
|
|
|
-
|
|
|
|
802
|
|
|
Deferred income taxes, net
|
|
|
992
|
|
|
|
1,028
|
|
|
Other assets
|
|
|
226
|
|
|
|
229
|
|
|
Assets of consolidated variable interest entities:
|
|
|
|
|
|
|
|
Cash
|
|
|
66
|
|
|
|
53
|
|
|
Investments held-to-maturity, at amortized cost (fair value $2,580
and $2,632)
|
|
|
2,724
|
|
|
|
2,757
|
|
|
Fixed-maturity securities at fair value
|
|
|
1,005
|
|
|
|
421
|
|
|
Loans receivable at fair value
|
|
|
1,426
|
|
|
|
1,431
|
|
|
Loan repurchase commitments
|
|
|
388
|
|
|
|
379
|
|
|
Derivative assets
|
|
|
3
|
|
|
|
-
|
|
|
Total assets
|
|
$
|
15,510
|
|
|
$
|
16,284
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
Unearned premium revenue
|
|
$
|
1,800
|
|
|
$
|
1,986
|
|
|
Loss and loss adjustment expense reserves
|
|
|
500
|
|
|
|
506
|
|
|
Long-term debt
|
|
|
1,854
|
|
|
|
1,810
|
|
|
Medium-term notes (includes financial instruments carried at fair
value of $166 and $197)
|
|
|
1,079
|
|
|
|
1,201
|
|
|
Investment agreements
|
|
|
513
|
|
|
|
547
|
|
|
Derivative liabilities
|
|
|
340
|
|
|
|
437
|
|
|
Liabilities held for sale
|
|
|
-
|
|
|
|
772
|
|
|
Other liabilities
|
|
|
213
|
|
|
|
271
|
|
|
Liabilities of consolidated variable interest entities:
|
|
|
|
|
|
|
|
Variable interest entity notes (includes financial instruments
carried at fair value of $2,581 and $2,047)
|
|
|
5,305
|
|
|
|
4,804
|
|
|
Derivative liabilities
|
|
|
65
|
|
|
|
-
|
|
|
Total liabilities
|
|
|
11,669
|
|
|
|
12,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
Preferred stock, par value $1 per share; authorized
shares--10,000,000; issued and outstanding--none
|
|
|
-
|
|
|
|
-
|
|
|
Common stock, par value $1 per share; authorized
shares--400,000,000; issued shares--281,744,542
|
|
|
|
|
|
|
|
and 281,352,782
|
|
|
282
|
|
|
|
281
|
|
|
Additional paid-in capital
|
|
|
3,129
|
|
|
|
3,128
|
|
|
Retained earnings
|
|
|
2,991
|
|
|
|
2,858
|
|
|
Accumulated other comprehensive income (loss), net of tax of $39 and
$7
|
|
|
(36
|
)
|
|
|
21
|
|
|
Treasury stock, at cost--109,765,833 and 89,409,887 shares
|
|
|
(2,537
|
)
|
|
|
(2,359
|
)
|
|
Total shareholders' equity of MBIA Inc.
|
|
|
3,829
|
|
|
|
3,929
|
|
|
Preferred stock of subsidiary and noncontrolling interest
|
|
|
12
|
|
|
|
21
|
|
|
Total equity
|
|
|
3,841
|
|
|
|
3,950
|
|
|
Total liabilities and equity
|
|
$
|
15,510
|
|
|
$
|
16,284
|
|
|
|
|
|
|
|
|
|
|
|
|
MBIA INC. AND SUBSIDIARIES
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
|
|
(In millions except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scheduled premiums earned
|
|
$
|
51
|
|
|
$
|
63
|
|
|
$
|
106
|
|
|
$
|
132
|
|
|
Refunding premiums earned
|
|
|
40
|
|
|
|
26
|
|
|
|
86
|
|
|
|
45
|
|
|
Premiums earned (net of ceded premiums
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of $2, $2, $5 and $5)
|
|
|
91
|
|
|
|
89
|
|
|
|
192
|
|
|
|
177
|
|
|
Net investment income
|
|
|
37
|
|
|
|
42
|
|
|
|
74
|
|
|
|
92
|
|
|
Fees and reimbursements
|
|
|
2
|
|
|
|
4
|
|
|
|
3
|
|
|
|
8
|
|
|
Change in fair value of insured derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized gains (losses) and other settlements on insured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
derivatives
|
|
|
(3
|
)
|
|
|
(24
|
)
|
|
|
(12
|
)
|
|
|
(393
|
)
|
|
Unrealized gains (losses) on insured derivatives
|
|
|
63
|
|
|
|
(23
|
)
|
|
|
100
|
|
|
|
815
|
|
|
Net change in fair value of insured derivatives
|
|
|
60
|
|
|
|
(47
|
)
|
|
|
88
|
|
|
|
422
|
|
|
Net gains (losses) on financial instruments at fair value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
foreign exchange
|
|
|
45
|
|
|
|
61
|
|
|
|
75
|
|
|
|
6
|
|
|
Investment losses related to other-than-temporary impairments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment losses related to other-than-temporary impairments
|
|
|
(9
|
)
|
|
|
-
|
|
|
|
(9
|
)
|
|
|
-
|
|
|
Other-than-temporary impairments recognized in accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other comprehensive income (loss)
|
|
|
2
|
|
|
|
-
|
|
|
|
2
|
|
|
|
-
|
|
|
Net investment losses related to other-than-temporary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
impairments
|
|
|
(7
|
)
|
|
|
-
|
|
|
|
(7
|
)
|
|
|
-
|
|
|
Net gains (losses) on extinguishment of debt
|
|
|
(1
|
)
|
|
|
2
|
|
|
|
(1
|
)
|
|
|
3
|
|
|
Other net realized gains (losses)
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
19
|
|
|
|
1
|
|
|
Revenues of consolidated variable interest entities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
13
|
|
|
|
13
|
|
|
|
25
|
|
|
|
25
|
|
|
Net gains (losses) on financial instruments at fair value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
foreign exchange
|
|
|
6
|
|
|
|
23
|
|
|
|
(4
|
)
|
|
|
26
|
|
|
Net gains (losses) on extinguishment of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4
|
|
|
Total revenues
|
|
|
245
|
|
|
|
187
|
|
|
|
464
|
|
|
|
764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses and loss adjustment
|
|
|
46
|
|
|
|
12
|
|
|
|
40
|
|
|
|
62
|
|
|
Amortization of deferred acquisition costs
|
|
|
13
|
|
|
|
8
|
|
|
|
26
|
|
|
|
18
|
|
|
Operating
|
|
|
32
|
|
|
|
49
|
|
|
|
67
|
|
|
|
95
|
|
|
Interest
|
|
|
50
|
|
|
|
52
|
|
|
|
100
|
|
|
|
106
|
|
|
Expenses of consolidated variable interest entities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
|
|
|
3
|
|
|
|
1
|
|
|
|
7
|
|
|
|
4
|
|
|
Interest
|
|
|
9
|
|
|
|
10
|
|
|
|
19
|
|
|
|
20
|
|
|
Total expenses
|
|
|
153
|
|
|
|
132
|
|
|
|
259
|
|
|
|
305
|
|
|
Income (loss) before income taxes
|
|
|
92
|
|
|
|
55
|
|
|
|
205
|
|
|
|
459
|
|
|
Provision (benefit) for income taxes
|
|
|
28
|
|
|
|
(65
|
)
|
|
|
72
|
|
|
|
83
|
|
|
Net income (loss)
|
|
$
|
64
|
|
|
$
|
120
|
|
|
$
|
133
|
|
|
$
|
376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.36
|
|
|
$
|
0.61
|
|
|
$
|
0.73
|
|
|
$
|
1.93
|
|
|
Diluted
|
|
$
|
0.36
|
|
|
$
|
0.45
|
|
|
$
|
0.72
|
|
|
$
|
1.83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
172,146,651
|
|
|
|
189,169,042
|
|
|
|
176,914,777
|
|
|
|
189,101,884
|
|
|
Diluted
|
|
|
173,154,319
|
|
|
|
192,906,871
|
|
|
|
177,918,958
|
|
|
|
193,051,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMBINED
|
|
OPERATING INCOME (LOSS) RECONCILIATION(4)
|
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Net income (loss)
|
|
$
|
64
|
|
|
$
|
120
|
|
|
$
|
133
|
|
|
$
|
376
|
|
|
Less: net income of Non-Core Segments, including eliminations
|
|
|
4
|
|
|
|
(18
|
)
|
|
|
2
|
|
|
|
234
|
|
|
Less: after-tax adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark-to-market gains (losses) on financial instruments(1)
|
|
|
55
|
|
|
|
22
|
|
|
|
37
|
|
|
|
(13
|
)
|
|
|
|
Foreign exchange gains (losses)(1)
|
|
|
(14
|
)
|
|
|
3
|
|
|
|
28
|
|
|
|
-
|
|
|
|
|
Net gains (losses) on sales of investments(1)
|
|
|
4
|
|
|
|
22
|
|
|
|
4
|
|
|
|
24
|
|
|
|
|
Net investment losses related to OTTI
|
|
|
(4
|
)
|
|
|
-
|
|
|
|
(4
|
)
|
|
|
-
|
|
|
|
|
Net gains (losses) on extinguishment of debt
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
2
|
|
|
|
|
Other net realized gains (losses)(2)
|
|
|
-
|
|
|
|
-
|
|
|
|
13
|
|
|
|
-
|
|
|
|
|
Tax valuation allowance on adjustments(3)
|
|
|
-
|
|
|
|
88
|
|
|
|
-
|
|
|
|
87
|
|
|
Operating income (loss)
|
|
$
|
19
|
|
|
$
|
2
|
|
|
$
|
53
|
|
|
$
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. PUBLIC FINANCE INSURANCE (NATIONAL)
|
|
OPERATING INCOME (LOSS) RECONCILIATION(4)
|
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Net income (loss)
|
|
$
|
37
|
|
|
$
|
41
|
|
|
$
|
94
|
|
|
$
|
102
|
|
|
Less: after-tax adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) on sales of investments(1)
|
|
|
1
|
|
|
|
7
|
|
|
|
2
|
|
|
|
7
|
|
|
|
|
Net investment losses related to OTTI
|
|
|
(4
|
)
|
|
|
-
|
|
|
|
(4
|
)
|
|
|
-
|
|
|
Operating income (loss)
|
|
$
|
40
|
|
|
$
|
34
|
|
|
$
|
96
|
|
|
$
|
95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CORPORATE
|
|
OPERATING INCOME (LOSS) RECONCILIATION(4)
|
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Net income (loss)
|
|
$
|
23
|
|
|
$
|
97
|
|
|
$
|
37
|
|
|
$
|
40
|
|
|
Less: after-tax adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark-to-market gains (losses) on financial instruments(1)
|
|
|
55
|
|
|
|
22
|
|
|
|
37
|
|
|
|
(13
|
)
|
|
|
|
Foreign exchange gains (losses)(1)
|
|
|
(14
|
)
|
|
|
3
|
|
|
|
28
|
|
|
|
-
|
|
|
|
|
Net gains (losses) on sales of investments(1)
|
|
|
3
|
|
|
|
14
|
|
|
|
2
|
|
|
|
16
|
|
|
|
|
Net gains (losses) on extinguishment of debt
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
2
|
|
|
|
|
Other net realized gains (losses)(2)
|
|
|
-
|
|
|
|
-
|
|
|
|
13
|
|
|
|
-
|
|
|
|
|
Tax valuation allowance on adjustments(3)
|
|
|
-
|
|
|
|
88
|
|
|
|
-
|
|
|
|
87
|
|
|
Operating income (loss)
|
|
$
|
(21
|
)
|
|
$
|
(31
|
)
|
|
$
|
(43
|
)
|
|
$
|
(52
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Gross amounts are reported within "Net gains (losses) on financial
instruments at fair value and foreign exchange" and the corresponding
|
|
|
|
tax effects are reported within "Provision (benefit) for income
taxes" on the Company's consolidated statements of operations.
|
|
(2)
|
|
Relates to the after-tax gain on the sale of Cutwater.
|
|
(3)
|
|
Reported within "Provision (benefit) for income taxes" on the
Company's consolidated statements of operations.
|
|
(4)
|
|
A non-GAAP measure; please see Explanation of Non-GAAP Financial
Measures.
|
|
|
|
|
|
MBIA INC. AND SUBSIDIARIES
|
|
|
|
Components of Adjusted Book Value per
Share: (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
June 30, 2015
|
|
As of
December 31, 2014
|
|
|
|
|
|
|
|
Reported Book Value per Share
|
|
$
|
22.26
|
|
$
|
20.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reverse book value of Non-Core Segments (after-tax) (1)
|
|
|
1.27
|
|
|
1.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reverse net unrealized (gains) losses included in other
comprehensive income (after-tax)
|
|
|
0.16
|
|
|
(0.15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add net unearned premium revenue (after-tax) (2) (3)
|
|
|
3.31
|
|
|
3.39
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Book Value per Share
|
|
$
|
27.00
|
|
$
|
24.87
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The book value for Non-Core Segments, primarily the international
and structured finance insurance segment, does not provide
significant economic or shareholder value to MBIA Inc. Amounts are
net of any deferred taxes available to MBIA Inc.
|
|
(2)
|
|
Consists of financial guarantee premiums, net of deferred
acquisition costs.
|
|
(3)
|
|
The discount rate on financial guarantee installment premiums was
the risk-free rate as defined by the accounting principles for
financial guarantee insurance contracts.
|
|
(4)
|
|
A non-GAAP measure; please see Explanation of Non-GAAP Financial
Measures.
|
|
|
|
|
|
INSURANCE OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Financial Data Computed on a
Statutory Basis
|
|
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
National Public Finance Guarantee
Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
|
December 31, 2014
|
|
|
Policyholders' surplus
|
|
$
|
2,328
|
|
|
$
|
2,190
|
|
|
|
Contingency reserves
|
|
|
1,013
|
|
|
|
1,076
|
|
|
|
|
|
Statutory capital
|
|
|
3,341
|
|
|
|
3,266
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned premium reserve
|
|
|
1,219
|
|
|
1,375
|
|
|
|
Present value of installment premiums (1)
|
|
|
207
|
|
|
|
216
|
|
|
|
|
|
Premium resources (2)
|
|
|
1,426
|
|
|
|
1,591
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss and loss adjustment expense reserves (1)
|
|
|
(16
|
)
|
|
|
(13
|
)
|
|
|
Salvage reserves
|
|
|
100
|
|
|
|
106
|
|
|
|
|
|
Gross loss and loss adjustment expense reserves
|
|
|
84
|
|
|
|
93
|
|
|
|
Total claims-paying resources
|
|
$
|
4,851
|
|
|
$
|
4,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt service outstanding
|
|
$
|
308,134
|
|
|
$
|
352,033
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital ratio (3)
|
|
|
92:1
|
|
|
|
108:1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claims-paying ratio (4)
|
|
|
71:1
|
|
|
|
80:1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MBIA Insurance Corporation
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
|
December 31, 2014
|
|
|
Policyholders’ surplus
|
|
$
|
492
|
|
|
$
|
542
|
|
|
|
Contingency reserves
|
|
|
313
|
|
|
|
317
|
|
|
|
|
|
Statutory capital
|
|
|
805
|
|
|
|
859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned premium reserve
|
|
|
418
|
|
|
434
|
|
|
|
Present value of installment premiums (6)
|
|
|
606
|
|
|
|
662
|
|
|
|
|
|
Premium resources (2)
|
|
|
1,024
|
|
|
|
1,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss and loss adjustment expense reserves (6)
|
|
|
(195
|
)
|
|
|
(237
|
)
|
|
|
Salvage reserves
|
|
|
892
|
|
|
|
938
|
|
|
|
|
|
Gross loss and loss adjustment expense reserves
|
|
|
697
|
|
|
|
701
|
|
|
|
Total claims-paying resources
|
|
$
|
2,526
|
|
|
$
|
2,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt service outstanding
|
|
$
|
69,388
|
|
|
$
|
74,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital ratio (3)
|
|
|
86:1
|
|
|
|
87:1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claims-paying ratio (4)
|
|
|
32:1
|
|
|
|
33:1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
As of June 30, 2015 and December 31, 2014, the discount rate was
2.90%.
|
|
|
(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), net loss and loss
adjustment expense reserves and salvage reserves.
|
|
|
(5)
|
|
The table reflects MBIA Insurance Corporation including its
subsidiary MBIA UK Limited.
|
|
|
(6)
|
|
As of June 30, 2015 and December 31, 2014, the discount rate was
5.17%.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20150804006818/en/
MBIA Inc.
Media and Investor Relations
Greg
Diamond, +1-914-765-3190
Source: MBIA Inc.