PURCHASE, N.Y.--(BUSINESS WIRE)--
MBIA Inc. (NYSE:MBI) (the Company) today reported a consolidated GAAP
net loss of $72 million, or $(0.55) per share, for the first quarter of
2017 compared to a consolidated GAAP net loss of $78 million, or $(0.58)
per share, for the first quarter of 2016. The reduction in
year-over-year consolidated GAAP net loss was primarily due to fair
value gains associated with interest rate swaps and common stock
warrants and lower foreign exchange losses, largely offset by greater
loss and loss adjustment expenses, primarily at MBIA Insurance
Corporation, and lower net premiums earned.
Book value per share was $24.73 as of March 31, 2017 compared with
$23.87 as of December 31, 2016. The increase in book value per share was
primarily due to a reduction in shares outstanding due to the repurchase
of 4.8 million MBIA common shares during the first quarter of 2017.
Combined Operating Income (a non-GAAP measure defined in the attached
Explanation of Non-GAAP Financial Measures) was $9 million for the three
months ended March 31, 2017 compared with Combined Operating Income of
$16 million in the same period of 2016. The $7 million decline in
quarter-over-quarter Combined Operating Income was primarily due to a
$17 million decrease in net premiums earned.
Adjusted Book Value (ABV) per share (a non-GAAP measure defined in the
attached Explanation of Non-GAAP Financial Measures) increased to $33.69
as of March 31, 2017 from $31.88 as of December 31, 2016. The increase
in ABV per share was driven primarily by a decrease in common shares
outstanding resulting from the above-referenced share repurchases during
the first quarter of 2017.
Operating Income and ABV per share provide investors with views of the
Company’s operating 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
“National continues to execute on a disciplined and measured expansion
of its business activities,” said Bill Fallon, MBIA’s Chief Operating
Officer. “Since re-entering the market in 2014, National has now insured
business in 27 states, having insured transactions in 5 new states in
2016 and in another 7 new states in the first quarter of 2017.
National’s business production in the first quarter of 2017 was its
second-highest quarter by policies issued since it re-entered the
market.” Mr. Fallon added, “More significantly, National’s capital
position continues to strengthen, driven by an $8 billion net reduction
of insured exposure during the quarter, which further improves its
capacity for its first special dividend payment.”
U.S. Public Finance Insurance Segment Results
The Company’s U.S. public finance insurance business is conducted
through National Public Finance Guarantee Corporation (National).
The U.S. Public Finance Insurance segment recorded GAAP net income of
$27 million for the first quarter of 2017 versus $41 million for the
first quarter of 2016. The decline in GAAP net income was primarily due
to a $17 million decline in net premiums earned.
The U.S. Public Finance Insurance segment recorded $25 million of
Operating Income in the first quarter of 2017 compared with $37 million
of Operating Income in the same period of 2016. The decline in Operating
Income was also primarily due to the decline in net premiums earned.
Total net premiums earned in the U.S. Public Finance Insurance segment
were $41 million in the first quarter of 2017, down 29 percent from $58
million of total premiums earned in the same period of 2016. Premiums
earned from refunded transactions decreased 35 percent and scheduled
premiums earned declined by 20 percent. The decline in scheduled
premiums earned resulted from the continued decrease of National’s
insured portfolio.
National wrote $252 million gross par of new insurance during the first
quarter of 2017, up from $158 million written during the first quarter
of 2016. National wrote $1.7 billion of gross par for the four quarters
ending March 31, 2017 versus $0.7 billion for the four quarters ending
March 31, 2016.
Net investment income for the U.S. Public Finance Insurance segment was
$31 million in the first quarters of 2017 and 2016 on average assets of
$4.2 billion and $4.4 billion, for the respective quarters.
The U.S. Public Finance Insurance segment recorded loss and loss
adjustment expenses of $11 million in the first quarter of 2017 compared
to $9 million in the first quarter of 2016. The increase in losses and
loss adjustment expenses was primarily due to additions for certain
Puerto Rico credits in the first quarter of 2017.
The amortization of deferred acquisition costs totaled $8 million in the
first quarter of 2017 compared with $12 million in the same period of
2016. The decrease in the amortization of deferred acquisition costs
corresponds to lower premiums earned.
National’s operating expenses were $17 million in the first quarter of
2017 versus $15 million in the same period of 2016.
National had statutory capital of $3.5 billion and claims-paying
resources totaling $4.6 billion as of March 31, 2017. National’s insured
portfolio declined by $8 billion during the quarter, ending the quarter
with $102 billion of gross par outstanding. National ended the quarter
with a leverage ratio of gross par outstanding to statutory capital of
29 to 1, down from 32 to 1 as of year-end 2016.
Corporate Segment Results
The corporate segment includes general corporate activities and also
provides support services, including asset and capital management
services, to MBIA’s other operating businesses.
The corporate segment recorded GAAP net income of $10 million in the
first quarter of 2017 versus a net loss of $84 million in the first
quarter of 2016. The favorable variance was primarily due to fair value
gains on interest rate swaps and common stock warrants, as well as lower
foreign exchange losses.
The corporate segment recorded an Operating Loss of $16 million in the
first quarter of 2017 compared with an Operating Loss of $21 million in
the same period of 2016.
As of March 31, 2017, MBIA Inc. held cash and liquid assets of $340
million. In addition, there were assets with a market value of $216
million held in its tax escrow account as of March 31, 2017. During the
first quarter of 2017, National’s 2014 tax payment of $94 million was
released to MBIA Inc. from the tax escrow account in accordance with the
Company’s tax sharing agreement.
The Company’s consolidated net operating loss carryforward for income
tax purposes as of March 31, 2017 was approximately $2.6 billion.
During the first quarter of 2017, the Company repurchased 4.8 million of
its common shares at an average price of $8.31 per share. Subsequent to
March 31, 2017 through May 4, 2017, the Company has repurchased an
additional 522 thousand shares. As of May 4, 2017, there was $44 million
of remaining authorized capacity under the Company’s current share
repurchase program and there were 129 million of the Company’s common
shares outstanding. During the first quarter of 2017, the Company also
retired $74 million par value of MBIA Global Funding MTNs through debt
repurchases and maturity payments.
International and Structured Finance Insurance Segment Results
The international and structured finance insurance business is conducted
primarily through MBIA Corp. and includes the results of MBIA Insurance
Corporation, the New York-regulated insurer on a stand-alone basis, and
its subsidiary, MBIA Mexico S.A. de C.V.
The Company uses statutory accounting to measure the financial
performance of MBIA Insurance Corporation, which had statutory net
income of $178 million for the first quarter of 2017 and a statutory net
loss of $55 million for the first quarter of 2016. The favorable
variance is primarily due to $263 million of net gains associated with
the completed sale of MBIA UK, partially offset by greater loss and loss
adjustment expense incurred. The sale of MBIA UK increased MBIA
Insurance Corporation’s statutory capital by $133 million for the first
quarter of 2017. The net impact of the sale of MBIA UK, after giving
full effect in MBIA Insurance Corporation’s statutory financial
statements over the last two quarters, resulted in a net increase of $32
million to MBIA Insurance Corporation’s statutory capital. As of March
31, 2017, the statutory capital of MBIA Insurance Corporation was $524
million and claims-paying resources totaled $1.6 billion.
As of March 31, 2017, the liquidity position of MBIA Insurance
Corporation (excluding its subsidiaries and branch) totaled $111 million
consisting of cash and invested assets.
Conference Call
The Company will host a webcast and conference call for investors
tomorrow, Thursday, May 11, 2017 at 8:00 AM (EDT) to discuss its first
quarter 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 11362727. 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) 585-8367 in the U.S. or (404) 537-3406 from outside the U.S. The
replay call code is also 11362727. 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
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 (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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
December 31, 2016
|
|
Assets
|
|
|
|
|
|
|
|
Investments:
|
|
|
|
|
|
|
|
|
Fixed-maturity securities held as available-for-sale, at fair value
(amortized cost $4,723 and $4,713)
|
|
$
|
4,701
|
|
|
$
|
4,694
|
|
|
|
Investments carried at fair value
|
|
|
150
|
|
|
|
146
|
|
|
|
Investments pledged as collateral, at fair value (amortized cost
$136 and $234)
|
|
|
137
|
|
|
|
233
|
|
|
|
Short-term investments held as available-for-sale, at fair value
(amortized cost $398 and $552)
|
|
|
398
|
|
|
|
552
|
|
|
|
Other investments (includes investments at fair value of $4 and $5)
|
|
|
6
|
|
|
|
8
|
|
|
|
|
Total investments
|
|
|
5,392
|
|
|
|
5,633
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
112
|
|
|
|
163
|
|
|
Premiums receivable
|
|
|
408
|
|
|
|
409
|
|
|
Deferred acquisition costs
|
|
|
112
|
|
|
|
118
|
|
|
Insurance loss recoverable
|
|
|
486
|
|
|
|
504
|
|
|
Assets held for sale
|
|
|
-
|
|
|
|
555
|
|
|
Deferred income taxes, net
|
|
|
1,019
|
|
|
|
970
|
|
|
Other assets
|
|
|
157
|
|
|
|
113
|
|
|
Assets of consolidated variable interest entities:
|
|
|
|
|
|
|
|
|
Cash
|
|
|
40
|
|
|
|
24
|
|
|
|
Investments held-to-maturity, at amortized cost (fair value $879 and
$876)
|
|
|
890
|
|
|
|
890
|
|
|
|
Investments carried at fair value
|
|
|
246
|
|
|
|
255
|
|
|
|
Loans receivable at fair value
|
|
|
1,716
|
|
|
|
1,066
|
|
|
|
Loan repurchase commitments
|
|
|
409
|
|
|
|
404
|
|
|
|
Other assets
|
|
|
30
|
|
|
|
33
|
|
|
|
|
Total assets
|
|
$
|
11,017
|
|
|
$
|
11,137
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Unearned premium revenue
|
|
$
|
913
|
|
|
$
|
958
|
|
|
|
Loss and loss adjustment expense reserves
|
|
|
559
|
|
|
|
541
|
|
|
|
Long-term debt
|
|
|
2,034
|
|
|
|
1,986
|
|
|
|
Medium-term notes (includes financial instruments carried at fair
value of $104 and $101)
|
|
|
830
|
|
|
|
895
|
|
|
|
Investment agreements
|
|
|
390
|
|
|
|
399
|
|
|
|
Derivative liabilities
|
|
|
313
|
|
|
|
299
|
|
|
|
Liabilities held for sale
|
|
|
-
|
|
|
|
346
|
|
|
|
Other liabilities
|
|
|
235
|
|
|
|
233
|
|
|
|
Liabilities of consolidated variable interest entities:
|
|
|
|
|
|
|
|
|
|
Variable interest entity notes (includes financial instruments
carried at fair value of $1,306
|
|
|
|
|
|
|
|
|
|
and $1,351)
|
|
|
2,517
|
|
|
|
2,241
|
|
|
|
|
Total liabilities
|
|
|
7,791
|
|
|
|
7,898
|
|
|
|
|
|
|
|
|
|
|
|
|
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--283,905,896
|
|
|
|
|
|
|
|
|
|
and 283,989,999
|
|
|
284
|
|
|
|
284
|
|
|
|
Additional paid-in capital
|
|
|
3,166
|
|
|
|
3,160
|
|
|
|
Retained earnings
|
|
|
2,628
|
|
|
|
2,700
|
|
|
|
Accumulated other comprehensive income (loss), net of tax of $17 and
$37
|
|
|
(31
|
)
|
|
|
(128
|
)
|
|
|
Treasury stock, at cost--153,946,569 and 148,789,168 shares
|
|
|
(2,833
|
)
|
|
|
(2,789
|
)
|
|
|
|
Total shareholders' equity of MBIA Inc.
|
|
|
3,214
|
|
|
|
3,227
|
|
|
|
Preferred stock of subsidiary
|
|
|
12
|
|
|
|
12
|
|
|
|
|
Total equity
|
|
|
3,226
|
|
|
|
3,239
|
|
|
|
|
Total liabilities and equity
|
|
$
|
11,017
|
|
|
$
|
11,137
|
|
|
MBIA INC. AND SUBSIDIARIES
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
|
|
(In millions except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Premiums earned:
|
|
|
|
|
|
|
|
|
|
Scheduled premiums earned
|
|
$
|
28
|
|
|
$
|
45
|
|
|
|
|
Refunding premiums earned
|
|
|
21
|
|
|
|
30
|
|
|
|
|
Premiums earned (net of ceded premiums of $1 and $2)
|
|
|
49
|
|
|
|
75
|
|
|
|
Net investment income
|
|
|
52
|
|
|
|
39
|
|
|
|
Fees and reimbursements
|
|
|
2
|
|
|
|
1
|
|
|
|
Change in fair value of insured derivatives:
|
|
|
|
|
|
|
|
|
|
Realized gains (losses) and other settlements on insured derivatives
|
|
|
(31
|
)
|
|
|
(14
|
)
|
|
|
|
Unrealized gains (losses) on insured derivatives
|
|
|
(22
|
)
|
|
|
(14
|
)
|
|
|
|
Net change in fair value of insured derivatives
|
|
|
(53
|
)
|
|
|
(28
|
)
|
|
|
Net gains (losses) on financial instruments at fair value and
foreign exchange
|
|
|
17
|
|
|
|
(69
|
)
|
|
|
Net investment losses related to other-than-temporary impairments:
|
|
|
|
|
|
|
|
|
|
Investment losses related to other-than-temporary impairments
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
|
Other-than-temporary impairments recognized in accumulated other
comprehensive income (loss)
|
|
|
(2
|
)
|
|
|
-
|
|
|
|
|
Net investment losses related to other-than-temporary impairments
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
Net gains (losses) on extinguishment of debt
|
|
|
8
|
|
|
|
2
|
|
|
|
Other net realized gains (losses)
|
|
|
3
|
|
|
|
(1
|
)
|
|
|
Revenues of consolidated variable interest entities:
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
6
|
|
|
|
15
|
|
|
|
|
Net gains (losses) on financial instruments at fair value and
foreign exchange
|
|
|
(33
|
)
|
|
|
(1
|
)
|
|
|
|
Other net realized gains (losses)
|
|
|
28
|
|
|
|
-
|
|
|
|
|
Total revenues
|
|
|
77
|
|
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Losses and loss adjustment
|
|
|
94
|
|
|
|
22
|
|
|
|
Amortization of deferred acquisition costs
|
|
|
7
|
|
|
|
10
|
|
|
|
Operating
|
|
|
29
|
|
|
|
35
|
|
|
|
Interest
|
|
|
48
|
|
|
|
50
|
|
|
|
Expenses of consolidated variable interest entities:
|
|
|
|
|
|
|
|
|
|
Operating
|
|
|
2
|
|
|
|
4
|
|
|
|
|
Interest
|
|
|
17
|
|
|
|
12
|
|
|
|
|
Total expenses
|
|
|
197
|
|
|
|
133
|
|
|
Income (loss) before income taxes
|
|
|
(120
|
)
|
|
|
(101
|
)
|
|
Provision (benefit) for income taxes
|
|
|
(48
|
)
|
|
|
(23
|
)
|
|
Net income (loss)
|
|
$
|
(72
|
)
|
|
$
|
(78
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.55
|
)
|
|
$
|
(0.58
|
)
|
|
|
Diluted
|
|
$
|
(0.55
|
)
|
|
$
|
(0.58
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
131,402,465
|
|
|
|
135,814,835
|
|
|
|
Diluted
|
|
|
131,402,465
|
|
|
|
135,814,835
|
|
|
COMBINED
|
|
OPERATING INCOME (LOSS) RECONCILIATION(5)
|
|
(In millions except share and per share amounts)
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
Net income (loss)
|
|
$
|
(72
|
)
|
|
|
$
|
(78
|
)
|
|
|
Less: operating income adjustments:
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes of the international and structured
|
|
|
|
|
|
|
|
|
|
|
finance insurance segment and eliminations
|
|
|
(165
|
)
|
|
|
|
(56
|
)
|
|
|
|
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)
|
|
|
32
|
|
|
|
|
(48
|
)
|
|
|
|
Foreign exchange gains (losses)(1)
|
|
|
(7
|
)
|
|
|
|
(28
|
)
|
|
|
|
Net gains (losses) on sales of investments(1)
|
|
|
2
|
|
|
|
|
6
|
|
|
|
|
Net investment losses related to other-than-temporary impairments
|
|
|
(2
|
)
|
|
|
|
(1
|
)
|
|
|
|
Net gains (losses) on extinguishment of debt
|
|
|
8
|
|
|
|
|
2
|
|
|
|
|
Other net realized gains (losses)
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
|
|
Operating income adjustment to the (provision) benefit for income tax(2)
|
|
|
52
|
|
|
|
|
32
|
|
|
|
Operating income (loss)
|
|
$
|
9
|
|
|
|
$
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) per diluted common share
|
|
|
0.07 (3)
|
|
|
|
|
0.12 (4)
|
|
|
U.S. PUBLIC FINANCE INSURANCE (NATIONAL)
|
|
OPERATING INCOME (LOSS) RECONCILIATION(5)
|
|
(In millions)
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
2017
|
|
2016
|
|
|
Net income (loss)
|
|
|
$
|
27
|
|
|
$
|
41
|
|
|
|
Less: operating income adjustments:
|
|
|
|
|
|
|
|
|
|
|
Mark-to-market gains (losses) on financial instruments(1)
|
|
|
|
2
|
|
|
|
-
|
|
|
|
|
Net gains (losses) on sales of investments(1)
|
|
|
|
2
|
|
|
|
6
|
|
|
|
|
Net investment losses related to other-than-temporary impairments
|
|
|
|
(2
|
)
|
|
|
-
|
|
|
|
|
Operating income adjustment to the (provision) benefit for income tax(2)
|
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
Operating income (loss)
|
|
|
$
|
25
|
|
|
$
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CORPORATE
|
|
OPERATING INCOME (LOSS) RECONCILIATION(5)
|
|
(In millions)
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
2017
|
|
2016
|
|
|
Net income (loss)
|
|
|
$
|
10
|
|
|
$
|
(84
|
)
|
|
|
Less: operating income adjustments:
|
|
|
|
|
|
|
|
|
|
|
Mark-to-market gains (losses) on financial instruments(1)
|
|
|
|
30
|
|
|
|
(48
|
)
|
|
|
|
Foreign exchange gains (losses)(1)
|
|
|
|
(7
|
)
|
|
|
(28
|
)
|
|
|
|
Net investment losses related to other-than-temporary impairments
|
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
|
Net gains (losses) on extinguishment of debt
|
|
|
|
8
|
|
|
|
2
|
|
|
|
|
Other net realized gains (losses)
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
|
Operating income adjustment to the (provision) benefit for income tax(2)
|
|
|
|
(4
|
)
|
|
|
13
|
|
|
|
Operating income (loss)
|
|
|
$
|
(16
|
)
|
|
$
|
(21
|
)
|
|
(1)
|
|
Reported within "Net gains (losses) on financial instruments at fair
value and foreign exchange" on the Company's consolidated statements
of operations.
|
|
(2)
|
|
Reported within "Provision (benefit) for income taxes" on the
Company's consolidated statements of operations.
|
|
(3)
|
|
Operating income (loss) per diluted common share is calculated by
taking operating income (loss) divided by the weighted average
number of diluted common shares
|
|
|
|
outstanding, which includes GAAP diluted weighted average number of
common shares of 131,402,465 and the diluted effect of common stock
equivalents of 617,622 shares.
|
|
(4)
|
|
Operating income (loss) per diluted common share is calculated by
taking operating income (loss) divided by the weighted average
number of diluted common shares
|
|
|
|
outstanding, which includes GAAP diluted weighted average number of
common shares of 135,814,835 and the dilutive effect of common stock
equivalents of 630,484 shares.
|
|
(5)
|
|
A non-GAAP measure; please see Explanation of Non-GAAP Financial
Measures.
|
|
MBIA INC. AND SUBSIDIARIES
|
|
|
|
Components of Adjusted Book Value per
Share:(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
March 31, 2017
|
|
As of
December 31, 2016
|
|
|
|
|
|
|
|
Reported Book Value per Share
|
|
$
|
24.73
|
|
|
$
|
23.87
|
|
|
|
Reverse book value of the MBIA Corp. legal entity (2)
|
|
|
6.07
|
|
|
|
5.07
|
|
|
|
|
Book value after MBIA Corp. legal entity adjustment
|
|
|
30.80
|
|
|
|
28.94
|
|
|
|
Other book value adjustments:
|
|
|
|
|
|
|
|
|
|
Reverse net unrealized (gains) losses included in other
comprehensive income (loss)
|
|
|
0.25
|
|
|
|
0.24
|
|
|
|
|
Add net unearned premium revenue (3)
|
|
|
4.24
|
|
|
|
4.31
|
|
|
|
|
Add tax effect on unrealized (gains) losses and unearned premium
revenue
|
|
|
(1.60
|
)
|
|
|
(1.61
|
)
|
|
|
|
Total other book value adjustments per share
|
|
|
2.89
|
|
|
|
2.94
|
|
|
Adjusted book value per share
|
|
$
|
33.69
|
|
|
$
|
31.88
|
|
|
(1)
|
|
A non-GAAP measure; please see Explanation of Non-GAAP Financial
Measures.
|
|
|
|
|
|
(2)
|
|
The book value of the MBIA Corp. legal entity does not provide
significant economic or shareholder value to MBIA Inc. The amount
being reversed excludes deferred taxes available to MBIA Inc.
|
|
|
|
|
|
(3)
|
|
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.
|
|
INSURANCE OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
Selected Financial Data Computed on a
Statutory Basis
|
|
|
|
|
|
|
|
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
National Public Finance Guarantee
Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
December 31, 2016
|
|
|
Policyholders' surplus
|
|
$
|
2,788
|
|
|
$
|
2,731
|
|
|
|
Contingency reserves
|
|
|
717
|
|
|
|
745
|
|
|
|
|
Statutory capital
|
|
|
3,505
|
|
|
|
3,476
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned premiums
|
|
|
741
|
|
|
786
|
|
|
|
Present value of installment premiums (1)
|
|
|
186
|
|
|
|
187
|
|
|
|
|
Premium resources (2)
|
|
|
927
|
|
|
|
973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss and loss adjustment expense reserves (1)
|
|
|
(106
|
)
|
|
|
(98
|
)
|
|
|
Salvage reserves
|
|
|
279
|
|
|
|
256
|
|
|
|
|
Gross loss and loss adjustment expense reserves
|
|
|
173
|
|
|
|
158
|
|
|
|
Total claims-paying resources
|
|
$
|
4,605
|
|
|
$
|
4,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt service outstanding
|
|
$
|
172,947
|
|
|
$
|
185,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital ratio (3)
|
|
|
49:1
|
|
|
|
53:1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claims-paying ratio (4)
|
|
|
40:1
|
|
|
|
43:1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MBIA Insurance Corporation
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
December 31, 2016
|
|
|
Policyholders’ surplus
|
|
$
|
286
|
|
|
$
|
238
|
|
|
|
Contingency reserves
|
|
|
238
|
|
|
|
254
|
|
|
|
|
Statutory capital
|
|
|
524
|
|
|
|
492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned premiums
|
|
|
212
|
|
|
319
|
|
|
|
Present value of installment premiums (6) (8)
|
|
|
213
|
|
|
|
424
|
|
|
|
|
Premium resources (2)
|
|
|
425
|
|
|
|
743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss and loss adjustment expense reserves (6)
|
|
|
(892
|
)
|
|
|
(207
|
)
|
|
|
Salvage reserves (7)
|
|
|
1,534
|
|
|
|
917
|
|
|
|
|
Gross loss and loss adjustment expense reserves
|
|
|
642
|
|
|
|
710
|
|
|
|
Total claims-paying resources
|
|
$
|
1,591
|
|
|
$
|
1,945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt service outstanding
|
|
$
|
24,525
|
|
|
$
|
43,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital ratio (3)
|
|
|
47:1
|
|
|
|
88:1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claims-paying ratio (4)
|
|
|
17:1
|
|
|
|
26:1
|
|
|
(1)
|
|
Calculated using a discount rate of 3.18% as of March 31, 2017 and
December 31, 2016.
|
|
(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 Insurance Limited for December 31, 2016 only.
|
|
(6)
|
|
Calculated using a discount rate of 5.15% as of March 31, 2017 and
December 31, 2016.
|
|
(7)
|
|
This amount primarily consists of expected recoveries related to the
Company's excess spread, put-backs and CDOs.
|
|
(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/20170510006455/en/
MBIA Inc.
Greg Diamond, 914-765-3190
Investor and Media
Relations
greg.diamond@mbia.com
Source: MBIA Inc.