PURCHASE, N.Y.--(BUSINESS WIRE)--
MBIA Inc. (NYSE:MBI) (the Company) today reported a consolidated GAAP
net loss of $267 million, or $(2.17) per diluted common share, for the
third quarter of 2017 compared to consolidated GAAP net income of $31
million, or $0.23 per diluted common share, for the third quarter of
2016. The adverse year-over-year comparison was primarily due to
increased losses and loss adjustment expenses at National Public Finance
Guarantee Corporation (National) that were primarily associated with
Puerto Rico insured credits, and National’s investment portfolio credit
impairments that were primarily associated with uninsured Puerto Rico
debt.
Book value per share was $13.88 as of September 30, 2017 compared with
$23.87 as of December 31, 2016. The decrease in book value per share
since year-end 2016 was mainly due to the full valuation allowance on
the Company’s deferred tax asset that was established in the second
quarter of 2017 and additional loss and loss adjustment expense
reserves, partially offset by the reduction of shares outstanding
resulting from the repurchase of 11.7 million MBIA common shares during
the first nine months of 2017. Subsequent to quarter-end, the Company
exhausted its $250 million share repurchase authorization that was
approved in June 2017 by acquiring, through its subsidiary, National, an
additional 31.3 million of MBIA Inc. common shares at an average price
of $7.17 per share.
The Company also reported a Combined Operating Loss (a non-GAAP measure
defined in the attached Explanation of Non-GAAP Financial Measures) of
$113 million or $(0.91) per diluted share for the third quarter of 2017
compared with Combined Operating Income of $5 million or $0.04 per
diluted share for the third quarter of 2016. The negative result for the
third quarter of 2017 was primarily due to increased losses and loss
adjustment expenses at National, primarily due to its Puerto Rico
exposures.
Adjusted Book Value (ABV) per share (a non-GAAP measure defined in the
attached Explanation of Non-GAAP Financial Measures) was $24.81 as of
September 30, 2017 compared with $31.88 as of December 31, 2016. The
decrease in ABV per share since year-end 2016 was primarily due to the
full valuation allowance on the Company’s deferred tax asset that was
established in the second quarter of 2017 and additional loss and loss
adjustment expense reserves, partially offset by the reduction of shares
outstanding resulting from the repurchase of 11.7 million MBIA common
shares during the first nine months 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.
Statement from Company Representative
Bill Fallon, MBIA’s Chief Executive Officer noted, “The damage caused to
Puerto Rico’s infrastructure by Hurricane Maria will require significant
time and effort to repair and remediate, which led us to withdraw two of
our adversary complaints and further increase our Puerto Rico loss
reserves. The ultimate resolution of our Puerto Rico credits will depend
largely on the island’s economic activity over the many years to come.
In the meanwhile, we believe that lower MBIA stock prices provides the
Company with an opportunity to further enhance value to our shareholders
through our share repurchase activities.”
Year-to-Date Results
The Company recorded a consolidated GAAP net loss of $1.6 billion, or
$(12.38) per diluted common share, for the nine months ended September
30, 2017 compared with a consolidated net loss of $73 million, or
$(0.55) per diluted common share, for the first nine months of 2016. The
greater loss this year was primarily driven by the valuation allowance
established on the Company’s deferred tax asset during the second
quarter of 2017.
The Company’s Combined Operating Loss for the nine months ended
September 30, 2017 was $243 million or $(1.93) per diluted share
compared with Combined Operating Income of $36 million or $0.28 per
diluted share for the first nine months of 2016. The $279 million
adverse comparison for the year-to-date results for each year was
primarily due to National’s $264 million of greater losses and loss
adjustment expenses, primarily related to its insurance exposures on
Puerto Rico debt.
MBIA Inc.
As of September 30, 2017, MBIA Inc.’s liquidity position totaled $294
million consisting primarily of cash and cash equivalents and liquid
short-term invested assets. Subsequent to quarter end, MBIA Inc.’s
liquidity position was increased by a $118 million dividend paid by
National and National’s purchase from MBIA Inc. of approximately $130
million of MBIA Inc. 5.70% Senior Notes due 2034, which had previously
been repurchased by MBIA Inc., but not retired. This transaction had no
impact on MBIA Inc.’s consolidated outstanding debt obligations.
During the third quarter of 2017, National purchased 2.7 million of MBIA
Inc. common shares at an average price of $9.48 per share.
As of September 30, 2017, there was $225 million remaining under the
Company’s June 27, 2017 share repurchase authorization. Subsequent to
quarter end, the remaining authorization was fully exhausted by National
purchasing an additional 31.3 million shares at an average price of
$7.17 per share. As of November 3, 2017, 91.8 million of the Company’s
common shares were outstanding.
On November 3, 2017, the Company’s Board of Directors approved a new
share repurchase authorization for MBIA Inc. or National to repurchase
up to $250 million of the Company’s outstanding common shares.
National Public Guarantee Financial Corporation
National had statutory capital of $3.2 billion and claims-paying
resources totaling $4.5 billion as of September 30, 2017. National’s
total investment portfolio had a market value of $3.9 billion as of
September 30, 2017. National’s insured portfolio declined by $12 billion
during the quarter, ending the quarter with $82 billion of gross par
outstanding. National ended the quarter with a leverage ratio of gross
par to statutory capital of 26 to 1, down from 32 to 1 as of year-end
2016.
MBIA Insurance Corporation
The statutory capital of MBIA Insurance Corporation as of September 30,
2017 was $473 million and claims-paying resources totaled $1.5 billion.
As of September 30, 2017, MBIA Insurance Corporation’s liquidity
position (excluding resources from its subsidiaries and branches)
totaled $93 million consisting primarily of cash and cash equivalents
and liquid short-term invested assets.
Conference Call
The Company will host a webcast and conference call for investors
tomorrow, Wednesday, November 8, 2017 at 8:00 AM (ET) to discuss its
third quarter 2017 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 8779938. 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 completion of the call on November 8 and will remain
available until 11:59 p.m. on November 22 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 8779938. 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
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,” “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 factors, the possibility that MBIA Inc. or
National will experience increased credit losses or impairments on
public finance obligations issued by state, local and territorial
governments and finance authorities that are experiencing unprecedented
fiscal stress; the possibility that loss reserve estimates are not
adequate to cover potential claims; MBIA Inc.’s or National’s ability to
fully implement their strategic plan; and changes in general economic
and competitive conditions. These and other factors that could affect
financial performance or could cause actual results to differ materially
from estimates contained in or underlying MBIA Inc.’s or National’s
forward-looking statements are discussed under the “Risk Factors”
section in MBIA Inc.’s most recent Annual Report on Form 10-K, which may
be updated or amended in MBIA Inc.’s subsequent filings with the
Securities and Exchange Commission. MBIA Inc. and National caution
readers not to place undue reliance on any such forward-looking
statements, which speak only to their respective dates. National and
MBIA Inc. undertake 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 international and structured finance insurance. 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017
|
|
|
December 31, 2016
|
Assets
|
|
|
|
|
|
|
|
Investments:
|
|
|
|
|
|
|
|
Fixed-maturity securities held as available-for-sale, at fair value
(amortized cost $4,203 and $4,713)
|
|
|
|
$
|
4,234
|
|
|
|
$
|
4,694
|
|
Investments carried at fair value
|
|
|
|
|
164
|
|
|
|
|
146
|
|
Investments pledged as collateral, at fair value (amortized cost
$169 and $234)
|
|
|
|
|
170
|
|
|
|
|
233
|
|
Short-term investments held as available-for-sale, at fair value
(amortized cost $452 and $552)
|
|
|
|
|
452
|
|
|
|
|
552
|
|
Other investments (includes investments at fair value of $4 and $5)
|
|
|
|
|
6
|
|
|
|
|
8
|
|
Total investments
|
|
|
|
|
5,026
|
|
|
|
|
5,633
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
116
|
|
|
|
|
163
|
|
Premiums receivable
|
|
|
|
|
382
|
|
|
|
|
409
|
|
Deferred acquisition costs
|
|
|
|
|
96
|
|
|
|
|
118
|
|
Insurance loss recoverable
|
|
|
|
|
611
|
|
|
|
|
504
|
|
Assets held for sale
|
|
|
|
|
-
|
|
|
|
|
555
|
|
Deferred income taxes, net
|
|
|
|
|
-
|
|
|
|
|
970
|
|
Other assets
|
|
|
|
|
146
|
|
|
|
|
113
|
|
Assets of consolidated variable interest entities:
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
20
|
|
|
|
|
24
|
|
Investments held-to-maturity, at amortized cost (fair value $897 and
$876)
|
|
|
|
|
890
|
|
|
|
|
890
|
|
Investments carried at fair value
|
|
|
|
|
189
|
|
|
|
|
255
|
|
Loans receivable at fair value
|
|
|
|
|
1,632
|
|
|
|
|
1,066
|
|
Loan repurchase commitments
|
|
|
|
|
406
|
|
|
|
|
404
|
|
Other assets
|
|
|
|
|
30
|
|
|
|
|
33
|
|
Total assets
|
|
|
|
$
|
9,544
|
|
|
|
$
|
11,137
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
Unearned premium revenue
|
|
|
|
$
|
808
|
|
|
|
$
|
958
|
|
Loss and loss adjustment expense reserves
|
|
|
|
|
818
|
|
|
|
|
541
|
|
Long-term debt
|
|
|
|
|
2,093
|
|
|
|
|
1,986
|
|
Medium-term notes (includes financial instruments carried at fair
value of $127 and $101)
|
|
|
|
|
898
|
|
|
|
|
895
|
|
Investment agreements
|
|
|
|
|
350
|
|
|
|
|
399
|
|
Derivative liabilities
|
|
|
|
|
284
|
|
|
|
|
299
|
|
Liabilities held for sale
|
|
|
|
|
-
|
|
|
|
|
346
|
|
Other liabilities
|
|
|
|
|
221
|
|
|
|
|
233
|
|
Liabilities of consolidated variable interest entities:
|
|
|
|
|
|
|
|
Variable interest entity notes (includes financial instruments
carried at fair value of $1,140
|
|
|
|
|
|
|
|
and $1,351)
|
|
|
|
|
2,352
|
|
|
|
|
2,241
|
|
Total liabilities
|
|
|
|
|
7,824
|
|
|
|
|
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--283,967,973
|
|
|
|
|
|
|
|
and 283,989,999
|
|
|
|
|
284
|
|
|
|
|
284
|
|
Additional paid-in capital
|
|
|
|
|
3,170
|
|
|
|
|
3,160
|
|
Retained earnings
|
|
|
|
|
1,132
|
|
|
|
|
2,700
|
|
Accumulated other comprehensive income (loss), net of tax of $6 and
$37
|
|
|
|
|
15
|
|
|
|
|
(128
|
)
|
Treasury stock, at cost--160,858,509 and 148,789,168 shares
|
|
|
|
|
(2,893
|
)
|
|
|
|
(2,789
|
)
|
Total shareholders' equity of MBIA Inc.
|
|
|
|
|
1,708
|
|
|
|
|
3,227
|
|
Preferred stock of subsidiary
|
|
|
|
|
12
|
|
|
|
|
12
|
|
Total equity
|
|
|
|
|
1,720
|
|
|
|
|
3,239
|
|
Total liabilities and equity
|
|
|
|
$
|
9,544
|
|
|
|
$
|
11,137
|
|
|
|
|
|
|
|
|
|
|
MBIA INC. AND SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
|
(In millions except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scheduled premiums earned
|
|
|
|
$
|
26
|
|
|
|
$
|
42
|
|
|
|
$
|
82
|
|
|
|
$
|
131
|
|
Refunding premiums earned
|
|
|
|
|
27
|
|
|
|
|
35
|
|
|
|
|
64
|
|
|
|
|
94
|
|
Premiums earned (net of ceded premiums
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of $1, $2, $4 and $5)
|
|
|
|
|
53
|
|
|
|
|
77
|
|
|
|
|
146
|
|
|
|
|
225
|
|
Net investment income
|
|
|
|
|
33
|
|
|
|
|
39
|
|
|
|
|
122
|
|
|
|
|
115
|
|
Fees and reimbursements
|
|
|
|
|
1
|
|
|
|
|
22
|
|
|
|
|
9
|
|
|
|
|
24
|
|
Change in fair value of insured derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized gains (losses) and other settlements on insured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
derivatives
|
|
|
|
|
(7
|
)
|
|
|
|
(4
|
)
|
|
|
|
(41
|
)
|
|
|
|
(20
|
)
|
Unrealized gains (losses) on insured derivatives
|
|
|
|
|
6
|
|
|
|
|
20
|
|
|
|
|
(10
|
)
|
|
|
|
-
|
|
Net change in fair value of insured derivatives
|
|
|
|
|
(1
|
)
|
|
|
|
16
|
|
|
|
|
(51
|
)
|
|
|
|
(20
|
)
|
Net gains (losses) on financial instruments at fair value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
foreign exchange
|
|
|
|
|
(11
|
)
|
|
|
|
38
|
|
|
|
|
(55
|
)
|
|
|
|
(17
|
)
|
Net investment losses related to other-than-temporary impairments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment losses related to other-than-temporary impairments
|
|
|
|
|
(26
|
)
|
|
|
|
-
|
|
|
|
|
(80
|
)
|
|
|
|
(1
|
)
|
Other-than-temporary impairments recognized in accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other comprehensive income (loss)
|
|
|
|
|
(45
|
)
|
|
|
|
-
|
|
|
|
|
(4
|
)
|
|
|
|
-
|
|
Net investment losses related to other-than-temporary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
impairments
|
|
|
|
|
(71
|
)
|
|
|
|
-
|
|
|
|
|
(84
|
)
|
|
|
|
(1
|
)
|
Net gains (losses) on extinguishment of debt
|
|
|
|
|
1
|
|
|
|
|
-
|
|
|
|
|
9
|
|
|
|
|
5
|
|
Other net realized gains (losses)
|
|
|
|
|
(1
|
)
|
|
|
|
(2
|
)
|
|
|
|
36
|
|
|
|
|
(3
|
)
|
Revenues of consolidated variable interest entities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
|
|
8
|
|
|
|
|
5
|
|
|
|
|
20
|
|
|
|
|
25
|
|
Net gains (losses) on financial instruments at fair value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
foreign exchange
|
|
|
|
|
21
|
|
|
|
|
8
|
|
|
|
|
2
|
|
|
|
|
-
|
|
Other net realized gains (losses)
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
28
|
|
|
|
|
-
|
|
Total revenues
|
|
|
|
|
33
|
|
|
|
|
203
|
|
|
|
|
182
|
|
|
|
|
353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses and loss adjustment
|
|
|
|
|
205
|
|
|
|
|
50
|
|
|
|
|
469
|
|
|
|
|
149
|
|
Amortization of deferred acquisition costs
|
|
|
|
|
8
|
|
|
|
|
10
|
|
|
|
|
23
|
|
|
|
|
30
|
|
Operating
|
|
|
|
|
21
|
|
|
|
|
32
|
|
|
|
|
82
|
|
|
|
|
97
|
|
Interest
|
|
|
|
|
50
|
|
|
|
|
49
|
|
|
|
|
148
|
|
|
|
|
148
|
|
Expenses of consolidated variable interest entities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
|
|
|
|
|
3
|
|
|
|
|
3
|
|
|
|
|
8
|
|
|
|
|
10
|
|
Interest
|
|
|
|
|
19
|
|
|
|
|
4
|
|
|
|
|
55
|
|
|
|
|
20
|
|
Total expenses
|
|
|
|
|
306
|
|
|
|
|
148
|
|
|
|
|
785
|
|
|
|
|
454
|
|
Income (loss) before income taxes
|
|
|
|
|
(273
|
)
|
|
|
|
55
|
|
|
|
|
(603
|
)
|
|
|
|
(101
|
)
|
Provision (benefit) for income taxes
|
|
|
|
|
(6
|
)
|
|
|
|
24
|
|
|
|
|
965
|
|
|
|
|
(28
|
)
|
Net income (loss)
|
|
|
|
$
|
(267
|
)
|
|
|
$
|
31
|
|
|
|
$
|
(1,568
|
)
|
|
|
$
|
(73
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
(2.17
|
)
|
|
|
$
|
0.23
|
|
|
|
$
|
(12.38
|
)
|
|
|
$
|
(0.55
|
)
|
Diluted
|
|
|
|
$
|
(2.17
|
)
|
|
|
$
|
0.23
|
|
|
|
$
|
(12.38
|
)
|
|
|
$
|
(0.55
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
122,967,924
|
|
|
|
|
131,633,411
|
|
|
|
|
126,643,642
|
|
|
|
|
133,368,752
|
|
Diluted
|
|
|
|
|
122,967,924
|
|
|
|
|
132,042,067
|
|
|
|
|
126,643,642
|
|
|
|
|
133,368,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMBINED
|
OPERATING INCOME (LOSS) RECONCILIATION(1)
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
Net income (loss)
|
|
|
|
$
|
(267
|
)
|
|
|
$
|
31
|
|
|
|
$
|
(1,568
|
)
|
|
|
$
|
(73
|
)
|
Less: operating income adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes of the international and structured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
finance insurance segment and eliminations
|
|
|
|
|
(83
|
)
|
|
|
|
12
|
|
|
|
|
(268
|
)
|
|
|
|
(136
|
)
|
Adjustments to income before income taxes of the U.S. public finance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
insurance and corporate segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark-to-market gains (losses) on financial instruments(2)
|
|
|
|
|
13
|
|
|
|
|
10
|
|
|
|
|
29
|
|
|
|
|
(50
|
)
|
Foreign exchange gains (losses)(2)
|
|
|
|
|
(18
|
)
|
|
|
|
(6
|
)
|
|
|
|
(57
|
)
|
|
|
|
(24
|
)
|
Net gains (losses) on sales of investments(2)
|
|
|
|
|
(1
|
)
|
|
|
|
32
|
|
|
|
|
14
|
|
|
|
|
51
|
|
Net investment losses related to OTTI
|
|
|
|
|
(71
|
)
|
|
|
|
-
|
|
|
|
|
(84
|
)
|
|
|
|
(1
|
)
|
Net gains (losses) on extinguishment of debt
|
|
|
|
|
1
|
|
|
|
|
-
|
|
|
|
|
9
|
|
|
|
|
5
|
|
Other net realized gains (losses)
|
|
|
|
|
(1
|
)
|
|
|
|
(2
|
)
|
|
|
|
(3
|
)
|
|
|
|
(4
|
)
|
Operating income adjustment to the (provision) benefit for income tax(3)
|
|
|
|
|
6
|
|
|
|
|
(20
|
)
|
|
|
|
(965
|
)
|
|
|
|
50
|
|
Operating income (loss)
|
|
|
|
$
|
(113
|
)
|
|
|
$
|
5
|
|
|
|
$
|
(243
|
)
|
|
|
$
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
|
A non-GAAP measure; please see Explanation of Non-GAAP Financial
Measures.
|
(2)
|
|
|
|
Reported within "Net gains (losses) on financial instruments at fair
value and foreign exchange" on the Company's consolidated statements
of
|
|
|
|
|
|
|
operations.
|
(3)
|
|
|
|
Reported within "Provision (benefit) for income taxes" on the
Company's consolidated statements of operations.
|
|
|
|
|
|
|
COMPONENTS OF ADJUSTED BOOK VALUE PER
SHARE(1)
|
|
|
|
|
|
As of September 30, 2017
|
|
|
As of December 31, 2016
|
|
|
|
|
|
|
Reported Book Value per Share
|
|
|
|
$
|
13.88
|
|
|
|
$
|
23.87
|
|
Reverse book value of the MBIA Corp. legal entity (2)
|
|
|
|
|
7.21
|
|
|
|
|
5.07
|
|
Book value after MBIA Corp. legal entity adjustment
|
|
|
|
|
21.09
|
|
|
|
|
28.94
|
|
Other book value adjustments:
|
|
|
|
|
|
|
|
|
|
Reverse net unrealized (gains) losses included in other
comprehensive income (loss)
|
|
|
|
|
(0.16
|
)
|
|
|
|
0.24
|
|
Add net unearned premium revenue (3)
|
|
|
|
|
3.88
|
|
|
|
|
4.31
|
|
Add tax effect on unrealized (gains) losses and unearned premium
revenue (4)
|
|
|
|
|
-
|
|
|
|
|
(1.61
|
)
|
Total other book value adjustments per share
|
|
|
|
|
3.72
|
|
|
|
|
2.94
|
|
Adjusted book value per share
|
|
|
|
$
|
24.81
|
|
|
|
$
|
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.
|
(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.
|
(4)
|
|
|
|
As of September 30, 2017, ABV per share was adjusted by applying a
zero effective tax rate to the book value adjustments.
|
|
|
|
|
|
|
INSURANCE OPERATIONS
|
|
Selected Financial Data Computed on a
Statutory Basis
|
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
National Public Finance Guarantee
Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017
|
|
|
December 31, 2016
|
Policyholders' surplus
|
|
|
|
$
|
2,575
|
|
|
|
$
|
2,731
|
|
Contingency reserves
|
|
|
|
|
641
|
|
|
|
|
745
|
|
Statutory capital
|
|
|
|
|
3,216
|
|
|
|
|
3,476
|
|
|
|
|
|
|
|
|
|
Unearned premiums
|
|
|
|
|
643
|
|
|
|
|
786
|
|
Present value of installment premiums (1)
|
|
|
|
|
171
|
|
|
|
|
187
|
|
Premium resources (2)
|
|
|
|
|
814
|
|
|
|
|
973
|
|
|
|
|
|
|
|
|
|
Net loss and loss adjustment expense reserves (1)
|
|
|
|
|
61
|
|
|
|
|
(98
|
)
|
Salvage reserves
|
|
|
|
|
407
|
|
|
|
|
256
|
|
Gross loss and loss adjustment expense reserves
|
|
|
|
|
468
|
|
|
|
|
158
|
|
Total claims-paying resources
|
|
|
|
$
|
4,498
|
|
|
|
$
|
4,607
|
|
|
|
|
|
|
|
|
|
Net debt service outstanding
|
|
|
|
$
|
144,168
|
|
|
|
$
|
185,099
|
|
Capital ratio (3)
|
|
|
|
|
45:1
|
|
|
|
|
53:1
|
|
Claims-paying ratio (4)
|
|
|
|
|
34:1
|
|
|
|
|
43:1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MBIA Insurance Corporation
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017
|
|
|
December 31, 2016
|
Policyholders’ surplus
|
|
|
|
$
|
252
|
|
|
|
$
|
238
|
|
Contingency reserves
|
|
|
|
|
221
|
|
|
|
|
254
|
|
Statutory capital
|
|
|
|
|
473
|
|
|
|
|
492
|
|
|
|
|
|
|
|
|
|
Unearned premiums
|
|
|
|
|
213
|
|
|
|
|
319
|
|
Present value of installment premiums (6) (8)
|
|
|
|
|
201
|
|
|
|
|
424
|
|
Premium resources (2)
|
|
|
|
|
414
|
|
|
|
|
743
|
|
|
|
|
|
|
|
|
|
Net loss and loss adjustment expense reserves (6)
|
|
|
|
|
(864
|
)
|
|
|
|
(207
|
)
|
Salvage reserves (7)
|
|
|
|
|
1,498
|
|
|
|
|
917
|
|
Gross loss and loss adjustment expense reserves
|
|
|
|
|
634
|
|
|
|
|
710
|
|
Total claims-paying resources
|
|
|
|
$
|
1,521
|
|
|
|
$
|
1,945
|
|
|
|
|
|
|
|
|
|
Net debt service outstanding
|
|
|
|
$
|
22,325
|
|
|
|
$
|
43,215
|
|
Capital ratio (3)
|
|
|
|
|
47:1
|
|
|
|
|
88:1
|
|
Claims-paying ratio (4)
|
|
|
|
|
15:1
|
|
|
|
|
22:1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
|
Calculated using a discount rate of 3.18% as of September 30, 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 September 30, 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/20171107006574/en/
MBIA Inc.
Greg Diamond, 914-765-3190
Investor and Media
Relations
greg.diamond@mbia.com
Source: MBIA Inc.