PURCHASE, N.Y.--(BUSINESS WIRE)--
MBIA Inc. (NYSE:MBI) (the Company) today reported a consolidated GAAP
net loss of $27 million, or $0.20 per diluted share, for the second
quarter of 2016 compared with consolidated net income of $64 million, or
$0.36 per diluted share, for the second quarter of 2015. The $91 million
adverse change in the financial result versus the year-ago quarter was
primarily due to adverse variances on certain fair value effects and an
increase in loss and loss adjustment expenses (LAE), partially offset by
favorable tax effects.
Book Value (BV) per share was $26.88 as of June 30, 2016 compared with
$24.61 as of December 31, 2015. The increases in BV per share since
year-end 2015 was primarily due to share repurchases that decreased
common shares outstanding. During the first half of 2016, the Company
repurchased 16.6 million shares of its common stock.
The Company also reported Combined Operating Income (a non-GAAP measure
defined in the attached Explanation of Non-GAAP Financial Measures) of
$15 million or $0.12 per diluted share for the second quarter of 2016
compared with Combined Operating Income of $19 million or $0.11 per
diluted share for the second quarter of 2015. The decline in Combined
Operating Income for the second quarter of 2016 compared to the same
period of 2015 was primarily driven by lower premiums earned. The
Company’s share repurchases was the primary driver for 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 $32.42 as of
June 30, 2016 compared with $29.69 as of December 31, 2015. The increase
in ABV per share since year-end 2015 was primarily driven by the
repurchase of 16.6 million shares during the first six months of 2016.
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.
Statements from Company Representative
Bill Fallon, MBIA’s President and Chief Operating Officer notes, “Focus
inside and outside the Company remains on National’s Puerto Rico’s
exposures. Since last quarter, PROMESA has become law and the PREPA
Restructuring Support Agreement was extended into December of this year.
On July 1, Puerto Rico defaulted on some of its debt service obligations
and National paid $173 million of claims – primarily on the General
Obligation bonds. Despite Puerto Rico’s misguided decision to violate
its constitution and the seniority of payments on its debts, we are
pleased by the positive reactions of our insured bondholders and
analysts who are increasingly recognizing the value bond insurance
provides, and we remain confident that insurance penetration in the
market will benefit as a result.”
Mr. Fallon added, “Further, now that PROMESA has become law, we
anticipate better progress in reaching resolutions on each of our
insured Puerto Rico credits. In the meantime, National’s new business
efforts continue to make headway, despite the ongoing challenges of the
low interest rate environment.”
Year-to-Date Results
The Company recorded a consolidated GAAP net loss of $105 million, or
$0.78 per diluted common share for the six months ended June 30, 2016,
compared with consolidated net income of $133 million, or $0.72 per
diluted common share, for the first six months of 2015. The $238 million
adverse variance was primarily driven by a $130 million unfavorable
variance on net gains (losses) on financial instruments at fair value
and foreign exchange and a $124 million unfavorable net change in the
fair value of insured derivatives.
The Company’s Combined Operating Income for the six months ended June
30, 2016 was $31 million or $0.24 per diluted share compared with
Combined Operating Income of $53 million or $0.30 per diluted share for
the first six months of 2015. The $22 million decrease in the Combined
Operating Income for the first six months of 2016 was primarily due to a
$29 million decrease in premiums earned from refunded exposures.
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 GAAP net income of $50 million for the second
quarter of 2016 versus $37 million for the second quarter of 2015. The
$13 million increase in net income was primarily driven by a $25 million
increase in net gains (losses) on financial instruments due to the sale
of investments.
National also recorded $34 million of Operating Income in the second
quarter of 2016 compared with $40 million of Operating Income for the
second quarter of 2015. The $6 million decrease in Operating Income was
primarily due to an $11 million decrease in premiums earned from
refunded exposures.
Net premiums earned in the U.S. Public Finance Insurance segment were
$56 million in the second quarter of 2016, down 23 percent from $73
million of net premiums earned in the second quarter of 2015, which
comprised a 28 percent decrease in refunded premiums earned and a 17
percent decrease in scheduled premiums earned.
National insured $209 million of new business gross par exposure during
the second quarter of 2016, up from $158 million during the first
quarter of 2016. The expansion of our new business activity continues to
be constrained by low interest rates and competitive insurance pricing,
which limit the opportunities to achieve attractive returns on our new
business production.
Net investment income for the U.S. Public Finance Insurance segment was
$30 million for the second quarter of 2016 compared with $28 million for
the prior year’s second quarter.
The U.S. Public Finance Insurance segment’s losses and LAE were $9
million in the second quarter of 2016 compared with $8 million in the
second quarter of 2015. In addition, National paid $173 million of
insurance claims on the Puerto Rico bonds it insures with respect to
their July 1, 2016 debt service amounts. Also, during the second
quarter, certain PREPA creditors, including National, purchased new
bonds issued by PREPA to replenish PREPA’s working capital and to
enhance its liquidity.
For the second quarter of 2016, the amortization of deferred acquisition
costs totaled $12 million versus $16 million for the second quarter of
2015, reflecting the reduction in premiums earned. Operating expenses
were $15 million and $14 million for the second quarters of 2016 and
2015, respectively.
National had statutory capital of $3.5 billion and claims-paying
resources totaling $4.7 billion as of June 30, 2016. National’s insured
portfolio declined by $12 billion during the quarter, ending the quarter
with $138 billion of gross par outstanding. National ended the quarter
with a leverage ratio of gross par to statutory capital of 40 to 1, down
from 48 to 1 at year-end 2015.
During the second quarter of 2016, Kroll Bond Rating Agency, Moody’s
Investors Service and Standard and Poor’s Corporation each affirmed the
credit ratings and outlooks assigned to National, which are AA+, stable;
A3, negative; and AA-, stable, respectively.
Corporate Results
The corporate segment includes general corporate activities, as well as
the support services provided to the Company’s other operating
businesses and asset and capital management activities. The corporate
segment recorded a GAAP net loss of $20 million for the second quarter
of 2016 versus net income of $23 million for the second quarter of 2015.
The $43 million adverse variance was primarily driven by a $75 million
negative variance on the fair value of interest rate swaps. The $23
million net income for the second quarter of 2015 included $48 million
of positive change in the fair value of interest rate swaps.
The corporate segment recorded an Operating Loss of $19 million in the
second quarter of 2016 compared with an Operating Loss of $21 million in
the second quarter of 2015. The improvement in the corporate segment's
Operating Loss was primarily driven by a reduction in operating expenses.
As of June 30, 2016, MBIA Inc. held cash and liquid assets of $295
million, which excludes assets in its tax escrow account that totaled
$273 million at quarter-end.
The Company’s consolidated net operating loss carryforward for income
tax purposes as of June 30, 2016 was approximately $2.7 billion.
During the second quarter of 2016, the Company and its subsidiaries
repurchased 1.7 million of its common shares at an average price of
$7.02 per share. As of June 30, 2016, there was $88 million remaining
under the Company’s current share repurchase authorization. As of August
2, 2016, 136 million of the Company’s common shares were outstanding.
International and Structured Finance Insurance Results
The Company’s 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.
MBIA Insurance Corporation’s statutory net loss was $49 million in the
second quarter of 2016, compared with a net loss of $47 million in the
second quarter of 2015. Statutory net losses and LAE incurred for the
second quarter of 2016 were $60 million compared with net losses and LAE
incurred of $69 million in the comparable quarter of the prior year. The
statutory capital of MBIA Insurance Corporation as of June 30, 2016 was
$755 million and claims-paying resources totaled $2.2 billion.
As of June 30, 2016, MBIA Insurance Corporation’s liquidity position
(excluding resources from its subsidiaries and branches) totaled $288
million consisting of cash and liquid invested assets.
During the second quarter of 2016, Moody’s Investors Service and
Standard and Poor’s Corporation downgraded the credit rating assigned to
MBIA Insurance Corp.; Moody's downgraded it from B3 to Caa1 and S&P
downgraded it from B to CCC. Both Moody’s and S&P maintained a negative
outlook on MBIA Insurance Corp.
Conference Call
The Company will host a webcast and conference call for investors
tomorrow, Tuesday, August 9, 2016 at 8:00 AM (ET) to discuss its second
quarter 2016 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 48759834. 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 August 9 and will remain available
until 11:59 p.m. on August 23 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 48759834. 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 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: The sum of Operating Income of the
U.S. public finance insurance (National) and corporate segments net of
eliminations. See “Operating Income” definition.
Operating Income/Loss: Operating Income/Loss is a useful
measurement of performance because it measures income/loss 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/loss of the Company’s non-core operating segments. The Company’s
non-core segment includes the activities of its international and
structured finance insurance segment. 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/loss 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/loss.
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, 2016
|
|
December 31, 2015
|
|
Assets
|
|
|
|
|
|
|
Investments:
|
|
|
|
|
|
|
Fixed-maturity securities held as available-for-sale, at fair value
(amortized cost $5,145 and $5,155)
|
$
|
5,334
|
|
|
$
|
5,145
|
|
|
Investments carried at fair value
|
|
68
|
|
|
|
177
|
|
|
Investments pledged as collateral, at fair value (amortized cost
$216 and $322)
|
|
210
|
|
|
|
291
|
|
|
Short-term investments held as available-for-sale, at fair value
(amortized cost $632 and $720)
|
|
632
|
|
|
|
721
|
|
|
Other investments (includes investments at fair value of $6 and $13)
|
|
10
|
|
|
|
16
|
|
|
Total investments
|
|
6,254
|
|
|
|
6,350
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
568
|
|
|
|
464
|
|
|
Premiums receivable
|
|
716
|
|
|
|
792
|
|
|
Deferred acquisition costs
|
|
147
|
|
|
|
168
|
|
|
Insurance loss recoverable
|
|
365
|
|
|
|
577
|
|
|
Deferred income taxes, net
|
|
966
|
|
|
|
951
|
|
|
Other assets
|
|
231
|
|
|
|
156
|
|
|
Assets of consolidated variable interest entities:
|
|
|
|
|
|
|
Cash
|
|
37
|
|
|
|
58
|
|
|
Investments held-to-maturity, at amortized cost (fair value $509 and
$2,401)
|
|
890
|
|
|
|
2,689
|
|
|
Fixed-maturity securities at fair value
|
|
281
|
|
|
|
932
|
|
|
Loans receivable at fair value
|
|
1,192
|
|
|
|
1,292
|
|
|
Loan repurchase commitments
|
|
401
|
|
|
|
396
|
|
|
Other assets
|
|
16
|
|
|
|
11
|
|
|
Total assets
|
$
|
12,064
|
|
|
$
|
14,836
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
Unearned premium revenue
|
$
|
1,418
|
|
|
$
|
1,591
|
|
|
Loss and loss adjustment expense reserves
|
|
546
|
|
|
|
516
|
|
|
Long-term debt
|
|
1,945
|
|
|
|
1,889
|
|
|
Medium-term notes (includes financial instruments carried at fair
value of $161 and $161)
|
|
991
|
|
|
|
1,016
|
|
|
Investment agreements
|
|
424
|
|
|
|
462
|
|
|
Derivative liabilities
|
|
378
|
|
|
|
314
|
|
|
Other liabilities
|
|
311
|
|
|
|
211
|
|
|
Liabilities of consolidated variable interest entities:
|
|
|
|
|
|
|
Variable interest entity notes (includes financial instruments
carried at fair value of $1,503 and $2,362)
|
|
2,393
|
|
|
|
5,051
|
|
|
Derivative liabilities
|
|
-
|
|
|
|
45
|
|
|
Total liabilities
|
|
8,406
|
|
|
|
11,095
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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--283,487,936
|
|
|
|
|
|
|
and 281,833,618
|
|
284
|
|
|
|
282
|
|
|
Additional paid-in capital
|
|
3,150
|
|
|
|
3,138
|
|
|
Retained earnings
|
|
2,933
|
|
|
|
3,038
|
|
|
Accumulated other comprehensive income (loss), net of tax of $15 and
$51
|
|
58
|
|
|
|
(61
|
)
|
|
Treasury stock, at cost--147,844,413 and 130,303,241 shares
|
|
(2,779
|
)
|
|
|
(2,668
|
)
|
|
Total shareholders' equity of MBIA Inc.
|
|
3,646
|
|
|
|
3,729
|
|
|
Preferred stock of subsidiary
|
|
12
|
|
|
|
12
|
|
|
Total equity
|
|
3,658
|
|
|
|
3,741
|
|
|
Total liabilities and equity
|
$
|
12,064
|
|
|
$
|
14,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scheduled premiums earned
|
|
$
|
44
|
|
|
$
|
51
|
|
|
$
|
89
|
|
|
$
|
106
|
|
|
Refunding premiums earned
|
|
|
29
|
|
|
|
40
|
|
|
|
59
|
|
|
|
86
|
|
|
Premiums earned (net of ceded premiums
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of $2, $2, $3 and $5)
|
73
|
|
|
|
91
|
|
|
|
148
|
|
|
|
192
|
|
|
Net investment income
|
|
|
37
|
|
|
|
37
|
|
|
|
76
|
|
|
|
74
|
|
|
Fees and reimbursements
|
|
|
1
|
|
|
|
2
|
|
|
|
2
|
|
|
|
3
|
|
|
Change in fair value of insured derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized gains (losses) and other settlements on insured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
derivatives
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
(16
|
)
|
|
|
(12
|
)
|
|
Unrealized gains (losses) on insured derivatives
|
|
|
(6
|
)
|
|
|
63
|
|
|
|
(20
|
)
|
|
|
100
|
|
|
Net change in fair value of insured derivatives
|
|
|
(8
|
)
|
|
|
60
|
|
|
|
(36
|
)
|
|
|
88
|
|
|
Net gains (losses) on financial instruments at fair value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
foreign exchange
|
|
|
14
|
|
|
|
45
|
|
|
|
(55
|
)
|
|
|
75
|
|
|
Investment losses related to other-than-temporary impairments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment losses related to other-than-temporary impairments
|
|
|
-
|
|
|
|
(9
|
)
|
|
|
(1
|
)
|
|
|
(9
|
)
|
|
Other-than-temporary impairments recognized in accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other comprehensive income (loss)
|
|
|
-
|
|
|
|
2
|
|
|
|
-
|
|
|
|
2
|
|
|
Net investment losses related to other-than-temporary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
impairments
|
|
|
-
|
|
|
|
(7
|
)
|
|
|
(1
|
)
|
|
|
(7
|
)
|
|
Net gains (losses) on extinguishment of debt
|
|
|
3
|
|
|
|
(1
|
)
|
|
|
5
|
|
|
|
(1
|
)
|
|
Other net realized gains (losses)
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
19
|
|
|
Revenues of consolidated variable interest entities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
5
|
|
|
|
13
|
|
|
|
20
|
|
|
|
25
|
|
|
Net gains (losses) on financial instruments at fair value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
foreign exchange
|
|
|
(7
|
)
|
|
|
6
|
|
|
|
(8
|
)
|
|
|
(4
|
)
|
|
Total revenues
|
|
|
118
|
|
|
|
245
|
|
|
|
150
|
|
|
|
464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses and loss adjustment
|
|
|
77
|
|
|
|
46
|
|
|
|
99
|
|
|
|
40
|
|
|
Amortization of deferred acquisition costs
|
|
|
10
|
|
|
|
13
|
|
|
|
20
|
|
|
|
26
|
|
|
Operating
|
|
|
30
|
|
|
|
32
|
|
|
|
65
|
|
|
|
67
|
|
|
Interest
|
|
|
49
|
|
|
|
50
|
|
|
|
99
|
|
|
|
100
|
|
|
Expenses of consolidated variable interest entities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
|
|
|
3
|
|
|
|
3
|
|
|
|
7
|
|
|
|
7
|
|
|
Interest
|
|
|
4
|
|
|
|
9
|
|
|
|
16
|
|
|
|
19
|
|
|
Total expenses
|
|
|
173
|
|
|
|
153
|
|
|
|
306
|
|
|
|
259
|
|
|
Income (loss) before income taxes
|
|
|
(55
|
)
|
|
|
92
|
|
|
|
(156
|
)
|
|
|
205
|
|
|
Provision (benefit) for income taxes
|
|
|
(28
|
)
|
|
|
28
|
|
|
|
(51
|
)
|
|
|
72
|
|
|
Net income (loss)
|
|
$
|
(27
|
)
|
|
$
|
64
|
|
|
$
|
(105
|
)
|
|
$
|
133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.20
|
)
|
|
$
|
0.36
|
|
|
$
|
(0.78
|
)
|
|
$
|
0.73
|
|
|
Diluted
|
|
$
|
(0.20
|
)
|
|
$
|
0.36
|
|
|
$
|
(0.78
|
)
|
|
$
|
0.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
132,677,066
|
|
|
|
172,146,651
|
|
|
|
134,245,952
|
|
|
|
176,914,777
|
|
|
Diluted
|
|
|
132,677,066
|
|
|
|
173,154,319
|
|
|
|
134,245,952
|
|
|
|
177,918,958
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMBINED
|
|
OPERATING INCOME (LOSS) RECONCILIATION(4)
|
|
(In millions)
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Net income (loss)
|
|
$
|
(27
|
)
|
|
$
|
64
|
|
|
$
|
(105
|
)
|
|
$
|
133
|
|
|
Less: operating income adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes of the international and structured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
finance insurance segment and eliminations
|
|
|
(92
|
)
|
|
|
5
|
|
|
|
(148
|
)
|
|
|
-
|
|
|
Adjustments to income before income taxes of the U.S. public finance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
insurance and corporate segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark-to-market gains (losses) on financial instruments(1)
|
|
|
(11
|
)
|
|
|
79
|
|
|
|
(59
|
)
|
|
|
55
|
|
|
Foreign exchange gains (losses)(1)
|
|
|
10
|
|
|
|
(21
|
)
|
|
|
(18
|
)
|
|
|
44
|
|
|
Net gains (losses) on sales of investments(1)
|
|
|
13
|
|
|
|
7
|
|
|
|
19
|
|
|
|
7
|
|
|
Net investment losses related to OTTI
|
|
|
-
|
|
|
|
(7
|
)
|
|
|
(1
|
)
|
|
|
(7
|
)
|
|
Net gains (losses) on extinguishment of debt
|
|
|
3
|
|
|
|
(1
|
)
|
|
|
5
|
|
|
|
(1
|
)
|
|
Other net realized gains (losses)(2)
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
23
|
|
|
Operating income adjustment to the (provision) benefit for income tax(3)
|
|
|
36
|
|
|
|
(17
|
)
|
|
|
68
|
|
|
|
(41
|
)
|
|
Operating income (loss)
|
|
$
|
15
|
|
|
$
|
19
|
|
|
$
|
31
|
|
|
$
|
53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. PUBLIC FINANCE INSURANCE (NATIONAL)
|
|
OPERATING INCOME (LOSS) RECONCILIATION(4)
|
|
(In millions)
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Net income (loss)
|
|
$
|
50
|
|
|
$
|
37
|
|
|
$
|
91
|
|
|
$
|
94
|
|
|
Less: operating income adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) on sales of investments(1)
|
|
|
24
|
|
|
|
2
|
|
|
|
30
|
|
|
|
3
|
|
|
Net investment losses related to OTTI
|
|
|
-
|
|
|
|
(6
|
)
|
|
|
-
|
|
|
|
(6
|
)
|
|
Operating income adjustment to the (provision) benefit for income tax(3)
|
|
|
(8
|
)
|
|
|
1
|
|
|
|
(10
|
)
|
|
|
1
|
|
|
Operating income (loss)
|
|
$
|
34
|
|
|
$
|
40
|
|
|
$
|
71
|
|
|
$
|
96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CORPORATE
|
|
OPERATING INCOME (LOSS) RECONCILIATION(4)
|
|
(In millions)
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Net income (loss)
|
|
$
|
(20
|
)
|
|
$
|
23
|
|
|
$
|
(104
|
)
|
|
$
|
37
|
|
|
Less: operating income adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark-to-market gains (losses) on financial instruments(1)
|
|
|
(11
|
)
|
|
|
79
|
|
|
|
(59
|
)
|
|
|
55
|
|
|
Foreign exchange gains (losses)(1)
|
|
|
10
|
|
|
|
(21
|
)
|
|
|
(18
|
)
|
|
|
44
|
|
|
Net gains (losses) on sales of investments(1)
|
|
|
(11
|
)
|
|
|
5
|
|
|
|
(11
|
)
|
|
|
4
|
|
|
Net investment losses related to OTTI
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
Net gains (losses) on extinguishment of debt
|
|
|
3
|
|
|
|
(1
|
)
|
|
|
5
|
|
|
|
(1
|
)
|
|
Other net realized gains (losses)(2)
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
23
|
|
|
Operating income adjustment to the (provision) benefit for income tax(3)
|
|
|
9
|
|
|
|
(17
|
)
|
|
|
22
|
|
|
|
(44
|
)
|
|
Operating income (loss)
|
|
$
|
(19
|
)
|
|
$
|
(21
|
)
|
|
$
|
(40
|
)
|
|
$
|
(43
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Gross amounts are reported within "Net gains (losses) on financial
instruments at fair value and foreign exchange" on the Company's
|
|
|
|
consolidated statements of operations.
|
|
(2)
|
|
Primarily relates to 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: (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
June 30, 2016
|
|
As of
December 31, 2015
|
|
|
|
|
|
Reported Book Value per Share
|
|
$
|
26.88
|
|
|
$
|
24.61
|
|
|
|
|
|
|
|
|
|
|
Reverse book value of international and structured finance insurance
segment (1)
|
|
|
3.12
|
|
|
|
1.61
|
|
|
|
|
|
|
|
|
|
|
Reverse net unrealized (gains) losses included in other
comprehensive income (loss)
|
|
|
(1.21
|
)
|
|
|
0.34
|
|
|
|
|
|
|
|
|
|
|
Add net unearned premium revenue (2)
|
|
|
4.97
|
|
|
|
5.02
|
|
|
|
|
|
|
|
|
|
|
Add tax impact effect on unrealized (gains) losses and unearned
premium revenue
|
|
|
(1.34
|
)
|
|
|
(1.89
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total adjustments per share
|
|
|
5.54
|
|
|
|
5.08
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Book Value per Share
|
|
$
|
32.42
|
|
|
$
|
29.69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The book value for 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. The discount rate on financial guarantee
installment premiums was the risk-free rate as defined by the
accounting principles for financial guarantee insurance contracts.
|
|
(3)
|
|
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, 2016
|
|
December 31, 2015
|
|
Policyholders' surplus
|
|
$
|
2,652
|
|
|
$
|
2,478
|
|
|
Contingency reserves
|
|
|
845
|
|
|
|
910
|
|
|
Statutory capital
|
|
|
3,497
|
|
|
|
3,388
|
|
|
|
|
|
|
|
|
|
|
Unearned premium reserve
|
|
|
924
|
|
|
|
1,042
|
|
|
Present value of installment premiums (1)
|
|
|
194
|
|
|
|
197
|
|
|
Premium resources (2)
|
|
|
1,118
|
|
|
|
1,239
|
|
|
|
|
|
|
|
|
|
|
Net loss and loss adjustment expense reserves (1)
|
|
|
21
|
|
|
|
(30
|
)
|
|
Salvage reserves
|
|
|
101
|
|
|
|
102
|
|
|
Gross loss and loss adjustment expense reserves
|
|
|
122
|
|
|
|
72
|
|
|
Total claims-paying resources
|
|
$
|
4,737
|
|
|
$
|
4,699
|
|
|
|
|
|
|
|
|
|
|
Net debt service outstanding
|
|
$
|
225,511
|
|
|
$
|
259,436
|
|
|
|
|
|
|
|
|
|
|
Capital ratio (3)
|
|
|
64:1
|
|
|
|
77:1
|
|
|
|
|
|
|
|
|
|
|
Claims-paying ratio (4)
|
|
|
52:1
|
|
|
|
61:1
|
|
|
|
|
|
|
|
|
|
|
MBIA Insurance Corporation (5)
|
|
|
|
|
|
|
|
|
|
June 30, 2016
|
|
December 31, 2015
|
|
Policyholders’ surplus
|
|
$
|
490
|
|
|
$
|
609
|
|
|
Contingency reserves
|
|
|
265
|
|
|
|
276
|
|
|
Statutory capital
|
|
|
755
|
|
|
|
885
|
|
|
|
|
|
|
|
|
|
|
Unearned premium reserve
|
|
|
347
|
|
|
|
356
|
|
|
Present value of installment premiums (6) (8)
|
|
|
461
|
|
|
|
520
|
|
|
Premium resources (2)
|
|
|
808
|
|
|
|
876
|
|
|
|
|
|
|
|
|
|
|
Net loss and loss adjustment expense reserves (6)
|
|
|
(246
|
)
|
|
|
(332
|
)
|
|
Salvage reserves (7)
|
|
|
930
|
|
|
|
994
|
|
|
Gross loss and loss adjustment expense reserves
|
|
|
684
|
|
|
|
662
|
|
|
Total claims-paying resources
|
|
$
|
2,247
|
|
|
$
|
2,423
|
|
|
|
|
|
|
|
|
|
|
Net debt service outstanding
|
|
$
|
48,899
|
|
|
$
|
57,682
|
|
|
|
|
|
|
|
|
|
|
Capital ratio (3)
|
|
|
65:1
|
|
|
|
65:1
|
|
|
|
|
|
|
|
|
|
|
Claims-paying ratio (4)
|
|
|
25:1
|
|
|
|
27:1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Calculated using a discount rate of 3.04% as of June 30, 2016 and
December 31, 2015.
|
|
(2)
|
|
Includes financial guarantee and insured credit derivative related
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)
|
|
Calculated using a discount rate of 5.18% as of June 30, 2016 and
December 31, 2015.
|
|
(7)
|
|
This amount primarily consists of expected recoveries related to the
Company's excess spread and put-backs.
|
|
(8)
|
|
Based on the Company's estimate of the remaining life for its
insured exposures.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160808006129/en/
MBIA Inc.
Greg Diamond, 914-765-3190
Investor and Media
Relations
greg.diamond@mbia.com
Source: MBIA Inc.