PURCHASE, N.Y.--(BUSINESS WIRE)--
MBIA Inc. (NYSE:MBI) (the Company) today reported a Consolidated GAAP
net loss of $338 million or $(2.54) per diluted share for the year ended
December 31, 2016 compared to net income of $180 million or $1.06 per
diluted share for the prior year. The unfavorable variance in the
financial results versus the prior year was primarily due to a pretax
impairment of $278 million on the carrying value of MBIA UK Insurance
Limited (MBIA UK) associated with its sale in the first quarter of 2017
and a $148 million reduction of net gains of insured credit derivatives.
Book value per share was $23.87 as of December 31, 2016 compared with
$24.61 as of December 31, 2015. The decrease in book value per share
since year-end 2015 was primarily due to the $324 million or $2.40 per
share after-tax impairment recorded during the fourth quarter of 2016
associated with the sale of MBIA UK, partially offset by share
repurchases that decreased common shares outstanding.
Combined Operating Income (a non-GAAP measure defined in the attached
Explanation of Non-GAAP Financial Measures) for the full year 2016 was
$30 million or $0.23 per diluted share compared to $87 million or $0.52
per diluted share for the full year 2015. The decline in Combined
Operating Income for 2016 compared to 2015 was driven primarily by $69
million of higher loss and loss adjustment expenses and a $68 million
reduction of net premiums earned, partially offset by a favorable
variance in the provision for income taxes.
The calculation of Adjusted Book Value (ABV) per share (a non-GAAP
measure defined in the attached Explanation of Non-GAAP Financial
Measures) was refined in the fourth quarter of 2016 to exclude MBIA
Insurance Corporation as a separate stand-alone legal entity.
(Previously, the calculation of ABV excluded the international and
structured finance insurance segment, which is not the same as the legal
entity MBIA Insurance Corporation.) As of December 31, 2016, ABV was
$31.88 compared to $28.98 as of December 31, 2015 (which was revised
from the amount previously reported due to the subsequent change of the
calculation of ABV). The largest factor contributing to the increase in
ABV per share since year-end 2015 was the decrease in common shares
outstanding due to share repurchases. During 2016, the Company
repurchased 16.6 million shares of its common stock, which reduced its
common shares outstanding to 135 million as of year-end 2016.
Combined Operating Income and ABV per share provide investors with two
perspectives of the Company’s financial results that management uses in
measuring the Company’s financial performance. Reconciliations of ABV
per share to book value per share, and Combined Operating Income to net
income, calculated in accordance with GAAP, are attached.
Statements from Company Representative
Bill Fallon, MBIA Inc.’s President and Chief Operating Officer said, “We
are pleased with the growing acceptance of National as its new business
production nearly tripled for 2016 versus last year.” Bill added,
“Regarding our financial results, while the sale of MBIA UK adversely
impacted our consolidated GAAP results, it had no impact on our Combined
Operating Income. The reduction in Combined Operating Income was
primarily due to additions to our loss reserves and lower premium
earnings that resulted from lower refunding activity and our decreasing
unearned premiums at National.”
Fourth Quarter Results
The Company reported a Consolidated GAAP net loss of $265 million, or
$(2.01) per diluted share, for the fourth quarter of 2016 compared to
consolidated net income of $82 million, or $0.54 per diluted share, for
the fourth quarter of 2015. The unfavorable change in the financial
result was primarily due to a $278 million pretax carrying value
impairment of MBIA UK.
The Combined Operating Loss for the fourth quarter of 2016 was $6
million or $(0.05) per diluted share compared to Combined Operating
Income of $10 million or $0.07 per diluted share for the fourth quarter
of 2015. The unfavorable change in the financial result was driven
primarily by an $18 million increase in loss and loss adjustment
expenses and a $16 million reduction in net premiums earned, partially
offset by a favorable variance in the provision for income taxes.
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), its
primary operating subsidiary. The U.S. Public Finance Insurance segment
recorded GAAP net income of $41 million for the fourth quarter of 2016
versus $51 million for the fourth quarter of 2015. The decline in GAAP
net income was primarily due to an $18 million increase in loss and loss
adjustment expenses and a $16 million decrease in net premiums earned,
partially offset by a $27 million favorable variance in the provision
for income taxes. The favorable variance of the tax provision was
primarily due to a tax basis balance sheet adjustment associated with
the reversal of a deferred tax liability in the fourth quarter of 2016.
The U.S. Public Finance Insurance segment’s Operating Income was $25
million in the fourth quarter of 2016 compared to $44 million for the
fourth quarter of 2015. The decline was primarily due to an increase in
loss and loss adjustment expenses and a decrease in net premiums earned,
partially offset by a favorable variance in the provision for income
taxes.
Net premiums earned were $62 million in the fourth quarter of 2016, down
21 percent from $78 million in the fourth quarter of 2015. The decline
resulted from a 24 percent decrease in scheduled premiums earned and a
19 percent decrease in refunding premiums earned.
National insured $871 million of par value in the primary and secondary
markets, combined, during the fourth quarter of 2016 and $1.6 billion of
par value for the full year, compared to $158 million for the fourth
quarter of 2015 and $597 million for the full year 2015.
Net investment income for the segment was $29 million for the fourth
quarter of 2016 and $30 million for the fourth quarter of 2015,
primarily resulting from a 4 percent decline in average invested assets
for the respective quarters.
The U.S. Public Finance Insurance segment’s losses and loss adjustment
expenses were $28 million for the fourth quarter of 2016 compared to $10
million for the fourth quarter of 2015. The increase in loss and loss
adjustment expenses was primarily due to higher risk-free interest rates
used for discounting loss and recovery estimates, where the impact of
discounting longer tenor recoveries outweighed the discounting impact on
losses.
For the fourth quarter of 2016, the amortization of deferred acquisition
costs totaled $13 million versus $16 million for the fourth quarter of
2015, reflecting the reduction in premiums earned. Operating expenses
were $15 million for the fourth quarters of 2016 and 2015.
National had statutory capital of $3.5 billion and claims-paying
resources totaling $4.6 billion as of December 31, 2016. National’s
insured portfolio declined by $15 billion during the quarter, ending the
quarter with $110 billion of gross par outstanding. National ended the
quarter with a leverage ratio of gross par to statutory capital of 32 to
1, down from 48 to 1 as of year-end 2015.
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 $26 million in the
fourth quarter of 2016 versus a net loss of $15 million in the fourth
quarter of 2015. The favorable variance of the financial result was
primarily due to increased net gains on interest rate swaps and foreign
exchange.
The corporate segment’s Operating Loss was $31 million and $34 million
for the fourth quarters of 2016 and 2015, respectively. The reduction in
the Operating Loss was primarily due to reduced interest expenses,
partially offset by increased operating expenses.
As of December 31, 2016, MBIA Inc. held cash and liquid assets of $403
million. In addition, there were assets with a market value of $329
million in its tax escrow account as of year-end 2016. Subsequent to
December 31, 2016, National’s 2014 tax payment of $94 million was
released from the tax escrow account to MBIA Inc.
The Company’s consolidated net operating loss carryforward for income
tax purposes as of December 31, 2016 was $2.7 billion.
During the fourth quarter of 2016, the Company and its subsidiaries did
not repurchase any of its common shares. As of December 31, 2016, there
was $88 million remaining capacity under the Company’s current share
repurchase authorization. As of February 23, 2017, 135 million of the
Company’s common shares were outstanding. During 2016, the Company also
retired a combined $129 million par value of MBIA Inc. debt and Global
Funding MTNs through debt repurchases and maturity payments.
On January 10, 2017, the Company lent $38 million of subordinated
financing to MZ Funding LLC (MZ Funding), a newly formed wholly-owned
subsidiary of the Company and MZ Funding, in turn, lent the proceeds of
the financing to MBIA Insurance Corporation. MBIA Inc. has agreed to
provide an additional $50 million of subordinated financing to MZ
Funding under certain conditions, which MZ Funding would then lend to
MBIA Insurance Corporation.
International and Structured Finance Insurance Segment Results
The International and Structured Finance Insurance segment business is
primarily conducted through MBIA Insurance Corporation and its
subsidiaries (MBIA Corp.). Unless otherwise indicated or the context
otherwise requires, references to MBIA Corp. are (i) for any references
relating to the period ended January 10, 2017, to MBIA Insurance
Corporation, together with its subsidiaries, MBIA UK Insurance Limited
(MBIA UK), and MBIA Mexico S.A. de C.V (MBIA Mexico) and (ii) for any
references relating to the period after January 10, 2017, to MBIA
Insurance Corporation together with MBIA Mexico.
The Company uses statutory accounting to measure the financial
performance of this segment. MBIA Insurance Corporation had a statutory
net loss of $179 million for the fourth quarter of 2016 and a statutory
net loss of $323 million for the year 2016. In 2015, MBIA Insurance
Corporation had statutory net income of $79 million and $25 million for
the fourth quarter and full year, respectively. The 2016 results
included a $114 million impairment of a net asset based on the sale of
MBIA UK. In addition, statutory losses and loss adjustment expenses
incurred for full year 2016 were $265 million compared to $105 million
for 2015. As of December 31, 2016, the statutory capital of MBIA
Insurance Corporation was $492 million and claims-paying resources
totaled $1.9 billion. As the sale of MBIA UK was completed in the first
quarter of 2017, there will be additional accounting adjustments
associated with its sale in the first quarter of 2017, which will result
in a $130 million increase to MBIA Insurance Corporation’s statutory
capital. The impact of the sale of MBIA UK, after giving full effect in
MBIA Insurance Corporation’s statutory financial statements over the two
quarters, will result in a net increase of $29 million to MBIA Insurance
Corporation’s statutory capital.
As of December 31, 2016, MBIA Insurance Corporation’s liquidity position
(excluding its subsidiaries and branches) totaled $201 million
consisting of cash and liquid invested assets. On January 20, 2017, MBIA
Insurance Corporation satisfied its insurance obligations related to the
maturity of $770 million of outstanding principal on the Zohar II 2005-1
CDO. To facilitate its ability to satisfy its insurance obligations on
the Zohar II notes, MBIA Insurance Corporation received $347 million of
Zohar II notes from its wholly-owned subsidiary, MBIA UK (Holdings)
Limited, which the latter had received in exchange for the sale of MBIA
UK, and borrowed $363 million under the MZ Funding lending facility that
was established during the first quarter of 2017.
Conference Call
The Company will host a webcast and conference call for investors
tomorrow, Thursday, March 2, 2017 at 8:00 AM (ET) to discuss its fourth
quarter and full year 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 60602763. 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. (ET) on March 15 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
60602763. 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 (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
|
|
(In millions except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
|
Assets
|
|
|
|
|
|
|
|
Investments:
|
|
|
|
|
|
|
|
|
Fixed-maturity securities held as available-for-sale, at fair value
(amortized cost $4,713 and $5,483)
|
|
$
|
4,694
|
|
|
$
|
5,474
|
|
|
|
Investments carried at fair value
|
|
|
146
|
|
|
|
177
|
|
|
|
Investments pledged as collateral, at fair value (amortized cost
$234 and $322)
|
|
|
233
|
|
|
|
291
|
|
|
|
Short-term investments held as available-for-sale, at fair value
(amortized cost $552 and $392)
|
|
|
552
|
|
|
|
392
|
|
|
|
Other investments (includes investments at fair value of $5 and $13)
|
|
|
8
|
|
|
|
16
|
|
|
|
|
|
Total investments
|
|
|
5,633
|
|
|
|
6,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
163
|
|
|
|
464
|
|
|
Premiums receivable
|
|
|
409
|
|
|
|
792
|
|
|
Deferred acquisition costs
|
|
|
118
|
|
|
|
168
|
|
|
Insurance loss recoverable
|
|
|
504
|
|
|
|
577
|
|
|
Assets held for sale
|
|
|
555
|
|
|
|
-
|
|
|
Deferred income taxes, net
|
|
|
970
|
|
|
|
951
|
|
|
Other assets
|
|
|
113
|
|
|
|
156
|
|
|
Assets of consolidated variable interest entities:
|
|
|
|
|
|
|
|
|
Cash
|
|
|
24
|
|
|
|
58
|
|
|
|
Investments held-to-maturity, at amortized cost (fair value $876 and
$2,401)
|
|
|
890
|
|
|
|
2,689
|
|
|
|
Fixed-maturity securities at fair value
|
|
|
255
|
|
|
|
932
|
|
|
|
Loans receivable at fair value
|
|
|
1,066
|
|
|
|
1,292
|
|
|
|
Loan repurchase commitments
|
|
|
404
|
|
|
|
396
|
|
|
|
Other assets
|
|
|
33
|
|
|
|
11
|
|
|
|
|
|
Total assets
|
|
$
|
11,137
|
|
|
$
|
14,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Unearned premium revenue
|
|
$
|
958
|
|
|
$
|
1,591
|
|
|
|
Loss and loss adjustment expense reserves
|
|
|
541
|
|
|
|
516
|
|
|
|
Long-term debt
|
|
|
1,986
|
|
|
|
1,889
|
|
|
|
Medium-term notes (includes financial instruments carried at fair
value of $101 and $161)
|
|
|
895
|
|
|
|
1,016
|
|
|
|
Investment agreements
|
|
|
399
|
|
|
|
462
|
|
|
|
Derivative liabilities
|
|
|
299
|
|
|
|
314
|
|
|
|
Liabilities held for sale
|
|
|
346
|
|
|
|
-
|
|
|
|
Other liabilities
|
|
|
233
|
|
|
|
211
|
|
|
|
Liabilities of consolidated variable interest entities:
|
|
|
|
|
|
|
|
|
|
Variable interest entity notes (includes financial instruments
carried at fair value of $1,351 and $2,362)
|
|
|
2,241
|
|
|
|
5,051
|
|
|
|
|
Derivative liabilities
|
|
|
-
|
|
|
|
45
|
|
|
|
|
|
Total liabilities
|
|
|
7,898
|
|
|
|
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--283,989,999 and 281,833,618
|
|
|
284
|
|
|
|
282
|
|
|
|
Additional paid-in capital
|
|
|
3,160
|
|
|
|
3,138
|
|
|
|
Retained earnings
|
|
|
2,700
|
|
|
|
3,038
|
|
|
|
Accumulated other comprehensive income (loss), net of tax of $37 and
$51
|
|
|
(128
|
)
|
|
|
(61
|
)
|
|
|
Treasury stock, at cost--148,789,168 and 130,303,241 shares
|
|
|
(2,789
|
)
|
|
|
(2,668
|
)
|
|
|
|
|
Total shareholders' equity of MBIA Inc.
|
|
|
3,227
|
|
|
|
3,729
|
|
|
|
Preferred stock of subsidiary
|
|
|
12
|
|
|
|
12
|
|
|
|
|
|
Total equity
|
|
|
3,239
|
|
|
|
3,741
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
11,137
|
|
|
$
|
14,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MBIA INC. AND SUBSIDIARIES
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(In millions except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
Twelve Months Ended December 31,
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scheduled premiums earned
|
|
$
|
37
|
|
|
$
|
46
|
|
|
$
|
168
|
|
|
$
|
199
|
|
|
|
|
Refunding premiums earned
|
|
|
38
|
|
|
|
50
|
|
|
|
132
|
|
|
|
173
|
|
|
|
|
|
Premiums earned (net of ceded premiums of $2, $2, $7 and $9)
|
75
|
|
|
|
96
|
|
|
|
300
|
|
|
|
372
|
|
|
|
Net investment income
|
|
|
37
|
|
|
|
40
|
|
|
|
152
|
|
|
|
152
|
|
|
|
Fees and reimbursements
|
|
|
4
|
|
|
|
2
|
|
|
|
28
|
|
|
|
6
|
|
|
|
Change in fair value of insured derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized gains (losses) and other settlements on insured
derivatives
|
|
|
(20
|
)
|
|
|
2
|
|
|
|
(40
|
)
|
|
|
(28
|
)
|
|
|
|
Unrealized gains (losses) on insured derivatives
|
|
|
21
|
|
|
|
36
|
|
|
|
21
|
|
|
|
157
|
|
|
|
|
|
Net change in fair value of insured derivatives
|
|
|
1
|
|
|
|
38
|
|
|
|
(19
|
)
|
|
|
129
|
|
|
|
Net gains (losses) on financial instruments at fair value and
foreign exchange
|
|
|
101
|
|
|
|
43
|
|
|
|
84
|
|
|
|
63
|
|
|
|
Net investment losses related to other-than-temporary impairments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment losses related to other-than-temporary impairments
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
(12
|
)
|
|
|
|
Other-than-temporary impairments recognized in accumulated other
comprehensive income (loss)
|
|
|
(4
|
)
|
|
|
(1
|
)
|
|
|
(4
|
)
|
|
|
(1
|
)
|
|
|
|
|
Net investment losses related to other-than-temporary impairments
|
|
|
(4
|
)
|
|
|
(3
|
)
|
|
|
(5
|
)
|
|
|
(13
|
)
|
|
|
Net gains (losses) on extinguishment of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
5
|
|
|
|
(1
|
)
|
|
|
Other net realized gains (losses)
|
|
|
(279
|
)
|
|
|
(1
|
)
|
|
|
(282
|
)
|
|
|
17
|
|
|
|
Revenues of consolidated variable interest entities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
6
|
|
|
|
49
|
|
|
|
31
|
|
|
|
86
|
|
|
|
|
Net gains (losses) on financial instruments at fair value and
foreign exchange
|
|
|
-
|
|
|
|
33
|
|
|
|
-
|
|
|
|
42
|
|
|
|
|
|
|
Total revenues
|
|
|
(59
|
)
|
|
|
297
|
|
|
|
294
|
|
|
|
853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses and loss adjustment
|
|
|
71
|
|
|
|
44
|
|
|
|
220
|
|
|
|
123
|
|
|
|
Amortization of deferred acquisition costs
|
|
|
10
|
|
|
|
13
|
|
|
|
40
|
|
|
|
50
|
|
|
|
Operating
|
|
|
40
|
|
|
|
38
|
|
|
|
137
|
|
|
|
140
|
|
|
|
Interest
|
|
|
49
|
|
|
|
50
|
|
|
|
197
|
|
|
|
199
|
|
|
|
Expenses of consolidated variable interest entities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
|
|
|
4
|
|
|
|
3
|
|
|
|
14
|
|
|
|
13
|
|
|
|
|
Interest
|
|
|
5
|
|
|
|
10
|
|
|
|
25
|
|
|
|
39
|
|
|
|
|
|
|
Total expenses
|
|
|
179
|
|
|
|
158
|
|
|
|
633
|
|
|
|
564
|
|
|
Income (loss) before income taxes
|
|
|
(238
|
)
|
|
|
139
|
|
|
|
(339
|
)
|
|
|
289
|
|
|
Provision (benefit) for income taxes
|
|
|
27
|
|
|
|
57
|
|
|
|
(1
|
)
|
|
|
109
|
|
|
Net income (loss)
|
|
$
|
(265
|
)
|
|
$
|
82
|
|
|
$
|
(338
|
)
|
|
$
|
180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(2.01
|
)
|
|
$
|
0.54
|
|
|
$
|
(2.54
|
)
|
|
$
|
1.06
|
|
|
|
Diluted
|
|
$
|
(2.01
|
)
|
|
$
|
0.54
|
|
|
$
|
(2.54
|
)
|
|
$
|
1.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
131,906,086
|
|
|
|
147,099,167
|
|
|
|
133,001,088
|
|
|
|
163,936,318
|
|
|
|
Diluted
|
|
|
131,906,086
|
|
|
|
147,955,862
|
|
|
|
133,001,088
|
|
|
|
164,869,788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMBINED
|
|
OPERATING INCOME (LOSS) RECONCILIATION(4)
|
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Net income (loss)
|
|
$
|
(265
|
)
|
|
$
|
82
|
|
|
$
|
(338
|
)
|
|
$
|
180
|
|
|
Less: operating income adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes of the Non-Core Segments and
eliminations
|
|
|
(339
|
)
|
|
|
70
|
|
|
|
(475
|
)
|
|
|
12
|
|
|
|
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)
|
|
|
62
|
|
|
|
16
|
|
|
|
12
|
|
|
|
39
|
|
|
|
|
|
Foreign exchange gains (losses)(1)
|
|
|
34
|
|
|
|
15
|
|
|
|
11
|
|
|
|
60
|
|
|
|
|
|
Net gains (losses) on sales of investments(1)
|
|
|
9
|
|
|
|
13
|
|
|
|
60
|
|
|
|
20
|
|
|
|
|
|
Net investment losses related to OTTI
|
|
|
(4
|
)
|
|
|
(3
|
)
|
|
|
(5
|
)
|
|
|
(13
|
)
|
|
|
|
|
Net gains (losses) on extinguishment of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
5
|
|
|
|
(1
|
)
|
|
|
|
|
Other net realized gains (losses)(2)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(5
|
)
|
|
|
21
|
|
|
|
Operating income adjustment to the (provision) benefit for income tax(3)
|
|
|
(20
|
)
|
|
|
(38
|
)
|
|
|
29
|
|
|
|
(45
|
)
|
|
Operating income (loss)
|
|
$
|
(6
|
)
|
|
$
|
10
|
|
|
$
|
30
|
|
|
$
|
87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. PUBLIC FINANCE INSURANCE (NATIONAL)
|
|
OPERATING INCOME (LOSS) RECONCILIATION(4)
|
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Net income (loss)
|
|
$
|
41
|
|
|
$
|
51
|
|
|
$
|
176
|
|
|
$
|
191
|
|
|
Less: operating income adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) on sales of investments(1)
|
|
|
7
|
|
|
|
11
|
|
|
|
68
|
|
|
|
14
|
|
|
|
Net investment losses related to OTTI
|
|
|
(4
|
)
|
|
|
(1
|
)
|
|
|
(4
|
)
|
|
|
(10
|
)
|
|
|
Operating income adjustment to the (provision) benefit for income tax(3)
|
|
|
13
|
|
|
|
(3
|
)
|
|
|
(8
|
)
|
|
|
(1
|
)
|
|
Operating income (loss)
|
|
$
|
25
|
|
|
$
|
44
|
|
|
$
|
120
|
|
|
$
|
188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CORPORATE
|
|
OPERATING INCOME (LOSS) RECONCILIATION(4)
|
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Net income (loss)
|
|
$
|
26
|
|
|
$
|
(15
|
)
|
|
$
|
(93
|
)
|
|
$
|
(21
|
)
|
|
Less: operating income adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark-to-market gains (losses) on financial instruments(1)
|
|
|
62
|
|
|
|
16
|
|
|
|
12
|
|
|
|
39
|
|
|
|
Foreign exchange gains (losses)(1)
|
|
|
34
|
|
|
|
15
|
|
|
|
11
|
|
|
|
60
|
|
|
|
Net gains (losses) on sales of investments(1)
|
|
|
2
|
|
|
|
2
|
|
|
|
(8
|
)
|
|
|
6
|
|
|
|
Net investment losses related to OTTI
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
(3
|
)
|
|
|
Net gains (losses) on extinguishment of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
5
|
|
|
|
(1
|
)
|
|
|
Other net realized gains (losses)(2)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(5
|
)
|
|
|
21
|
|
|
|
Operating income adjustment to the (provision) benefit for income tax(3)
|
|
|
(40
|
)
|
|
|
(11
|
)
|
|
|
(17
|
)
|
|
|
(42
|
)
|
|
Operating income (loss)
|
|
$
|
(31
|
)
|
|
$
|
(34
|
)
|
|
$
|
(90
|
)
|
|
$
|
(101
|
)
|
|
(1)
|
|
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 results from 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: (1) (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
December 31, 2016
|
|
As of
December 31, 2015
|
|
|
|
|
|
|
|
Reported Book Value per Share
|
|
$
|
23.87
|
|
|
$
|
24.61
|
|
|
|
Reverse book value of the MBIA Corp. legal entity (3)
|
|
|
5.07
|
|
|
|
0.86
|
|
|
|
|
Book value after MBIA Corp. legal entity adjustment
|
|
|
28.94
|
|
|
|
25.47
|
|
|
|
Other book value adjustments:
|
|
|
|
|
|
|
|
|
|
Reverse net unrealized (gains) losses included in other
comprehensive income (loss)
|
|
|
0.24
|
|
|
|
0.40
|
|
|
|
|
Add net unearned premium revenue (4)
|
|
|
4.31
|
|
|
|
5.02
|
|
|
|
|
Add tax effect on unrealized (gains) losses and unearned premium
revenue
|
|
|
(1.61
|
)
|
|
|
(1.91
|
)
|
|
|
|
Total other book value adjustments per share
|
|
|
2.94
|
|
|
|
3.51
|
|
|
Adjusted book value per share
|
|
$
|
31.88
|
|
|
$
|
28.98
|
|
|
(1)
|
|
A non-GAAP measure; please see Explanation of Non-GAAP Financial
Measures.
|
|
(2)
|
|
We have refined our calculation of ABV as of December 31, 2016 and
have conformed the prior year's calculation to the current
presentation. ABV now adjusts GAAP book value to remove the legal
entity book value of MBIA Corp., but continues to include all
deferred taxes available to the Company. Previously, ABV adjusted
GAAP book value to remove the book value of the international and
structured finance insurance segment, and included all deferred
income taxes available to the Company.
|
|
(3)
|
|
The book value of the MBIA Corp. legal entity does not provide
significant economic or shareholder value to MBIA Inc. The amounts
being reversed exclude all deferred taxes available to MBIA Inc.
|
|
(4)
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
|
|
Policyholders' surplus
|
|
$
|
2,731
|
|
|
$
|
2,478
|
|
|
|
Contingency reserves
|
|
|
745
|
|
|
|
910
|
|
|
|
|
Statutory capital
|
|
|
3,476
|
|
|
|
3,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned premium reserve
|
|
|
786
|
|
|
1,042
|
|
|
|
Present value of installment premiums (1)
|
|
|
187
|
|
|
|
197
|
|
|
|
|
Premium resources (2)
|
|
|
973
|
|
|
|
1,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss and loss adjustment expense reserves (1)
|
|
|
(98
|
)
|
|
|
(30
|
)
|
|
|
Salvage reserves
|
|
|
256
|
|
|
|
102
|
|
|
|
|
Gross loss and loss adjustment expense reserves
|
|
|
158
|
|
|
|
72
|
|
|
|
Total claims-paying resources
|
|
$
|
4,607
|
|
|
$
|
4,699
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt service outstanding
|
|
$
|
185,099
|
|
|
$
|
259,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital ratio (3)
|
|
|
53:1
|
|
|
|
77:1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claims-paying ratio (4)
|
|
|
43:1
|
|
|
|
61:1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MBIA Insurance Corporation
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
|
|
Policyholders’ surplus
|
|
$
|
238
|
|
|
$
|
609
|
|
|
|
Contingency reserves
|
|
|
254
|
|
|
|
276
|
|
|
|
|
Statutory capital
|
|
|
492
|
|
|
|
885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned premium reserve
|
|
|
319
|
|
|
356
|
|
|
|
Present value of installment premiums (6) (8)
|
|
|
424
|
|
|
|
520
|
|
|
|
|
Premium resources (2)
|
|
|
743
|
|
|
|
876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss and loss adjustment expense reserves (6)
|
|
|
(207
|
)
|
|
|
(332
|
)
|
|
|
Salvage reserves (7)
|
|
|
917
|
|
|
|
994
|
|
|
|
|
Gross loss and loss adjustment expense reserves
|
|
|
710
|
|
|
|
662
|
|
|
|
Total claims-paying resources
|
|
$
|
1,945
|
|
|
$
|
2,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt service outstanding
|
|
$
|
43,215
|
|
|
$
|
57,682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital ratio (3)
|
|
|
88:1
|
|
|
|
65:1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claims-paying ratio (4)
|
|
|
26:1
|
|
|
|
27:1
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Calculated using a discount rate of 3.18% and 3.04% as of December
31, 2016 and 2015, respectively.
|
|
(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.
|
|
(6)
|
|
Calculated using a discount rate of 5.15% and 5.18% as of December
31, 2016 and 2015, respectively.
|
|
(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/20170301006411/en/
MBIA Inc.
Greg Diamond, 914-765-3190
Investor and Media
Relations
greg.diamond@mbia.com
Source: MBIA Inc.