Enterprising Investor
11 months ago
MBIA Inc. Declares Extraordinary Cash Dividend on MBIA Inc. Common Stock and Dividends from National Public Finance Guarantee Corporation (12/07/23)
PURCHASE, N.Y.--(BUSINESS WIRE)--MBIA Inc. (NYSE:MBI) today announced that its Board of Directors declared an extraordinary cash dividend on MBIA common stock of $8.00 per share to shareholders of record as of December 18 to be paid on December 22, which totals approximately $409 million, based on 51.1 million shares outstanding. The information is also available in the Current Report on Form 8-K dated December 7, 2023 available at sec.gov.
The Company also announced on December 7, 2023, the New York Department of Financial Services ("NYDFS") approved a $550 million extraordinary dividend to be paid to MBIA by its wholly-owned subsidiary National Public Finance Guarantee Corporation ("National"), and separately, on November 20, 2023 the Corporation received a $97.245 million as of right dividend from National.
The remainder of the dividends from National are being retained by MBIA and are intended to be used for general corporate purposes including, but not limited to, future operating expenses and debt service obligations.
Bill Fallon, MBIA Inc. CEO, said, "We are pleased to provide this extraordinary distribution of shareholder value to our shareholders and significantly improve MBIA's liquidity for its stakeholders. We will continue to pursue additional measures to enhance shareholder value as we take steps to achieve the ultimate resolution of the Company."
MBIA expects that National will continue to seek approval to pay additional extraordinary dividends to MBIA in future years. However, there can be no assurance whether or when NYDFS will approve such requests and, if the NYDFS does approve such dividends, in what amounts. Furthermore, any future dividend payments by MBIA to shareholders are within the absolute discretion of our board of directors and will depend on, among other things, the receipt of additional extraordinary dividends from National, our results of operations, working capital requirements, capital expenditure requirements, financial condition, level of indebtedness, contractual restrictions with respect to the payment of dividends, business opportunities, anticipated cash needs, provisions of applicable law and other factors that our board of directors may deem relevant.
For U.S. federal income tax purposes, distributions made by MBIA to a U.S. shareholder, other than with respect to holders of unvested restricted shares, generally will constitute dividends solely to the extent of our current and accumulated earnings and profits (“E&P”). Through September 30, 2023 we do not have current and accumulated E&P and based on our current analysis, we do not expect to have any current or accumulated E&P through December 31, 2023. Thus, we expect that the dividend will be treated as a tax-free return of investment up to an investor’s adjusted cost basis in its shares, and that if an investor’s adjusted cost basis is reduced to zero, any remaining portion of the dividend will be taxed as capital gains. Future dividends, if any, may or may not receive similar tax treatment.
The process of determining current and accumulated E&P requires a final determination of our financial results for the year and a review of certain other factors that will be announced with our full year 2023 financial results on February 28, 2024. To the extent that we do in fact have current or accumulated E&P in 2023, the dividend will be taxed as a dividend to the extent of such current or accumulated E&P. The amount of the dividend payable to holders of unvested restricted shares will be taxed as ordinary income. Shareholders should consult their own tax professionals regarding their receipt of this dividend.
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.
https://www.businesswire.com/news/home/20231207181065/en/MBIA-Inc.-Declares-Extraordinary-Cash-Dividend-on-MBIA-Inc.-Common-Stock-and-Dividends-from-National-Public-Finance-Guarantee-Corporation
Enterprising Investor
6 years ago
MBIA Inc. Reports Second Quarter 2018 Financial Results (8/08/18)
PURCHASE, N.Y.--(BUSINESS WIRE)--MBIA Inc. (NYSE:MBI) (the Company) today reported a consolidated GAAP net loss of $146 million, or $(1.64) per share, for the second quarter of 2018 compared to a consolidated GAAP net loss of $1.2 billion, or $(9.78) per share, for the second quarter of 2017. The net loss for the second quarter of 2018 was driven by the losses associated with the deconsolidation of certain variable interest entities (VIEs) and the additional losses and loss adjustment expenses related to our Puerto Rico exposures. The decrease in year-over-year consolidated GAAP net loss was primarily due to the full valuation allowance on the Company’s deferred tax asset for the second quarter of 2017. On a pretax basis, net losses were lower by $64 million, primarily due to lower loss and loss adjustment expenses, favorable gains for the fair value of interest rate swaps as a result of higher interest rates in 2018 and foreign exchange gains in 2018 versus foreign exchange losses in 2017, partially offset by losses associated with the deconsolidation of certain VIEs.
Book value per share was $12.16 as of June 30, 2018 compared with $15.44 as of December 31, 2017. The decrease in book value per share since year-end 2017 was primarily due to the year-to-date net loss and unrealized losses on investments and debt carried at fair value that is included in accumulated other comprehensive loss.
The Company also reported Adjusted Net Loss (a non-GAAP measure defined in the attached Explanation of Non-GAAP Financial Measures) of $51 million or $(0.58) per diluted share for the second quarter of 2018 compared with Adjusted Net Loss of $139 million or $(1.12) per diluted share for the second quarter of 2017. The reduced Adjusted Net Loss for the second quarter of 2018 versus the second quarter of 2017 was primarily due to lower losses and loss adjustment expenses at National, primarily related 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 $27.24 compared with $28.77 as of December 31, 2017. Those amounts reflect an adjustment made in the second quarter of 2018 to remove the unearned premium revenue that is netted from GAAP loss reserves. (The previously reported ABV as of December 31, 2017 of $29.32 has been revised to conform to the current presentation.) The decrease in ABV per share since year-end 2017 was primarily due to additional loss and loss adjustment expense reserves at National that are primarily related to its Puerto Rico exposures.
Adjusted Net Income (Loss) 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 Adjusted Net Income (Loss) to net income, calculated in accordance with GAAP, are attached.
Statement from Company Representative
Bill Fallon, MBIA’s Chief Executive Officer noted, “This quarter’s increase of National’s loss and loss adjustment expenses associated with its Puerto Rico exposures contributed significantly to the Adjusted Net Loss for the quarter.” Mr. Fallon added, “While resolving our Puerto Rico exposures is our most significant corporate objective, we have also made progress on other objectives, such as reducing our consolidated operating expenses, which are down 37% for the six months of this year compared to last year’s first six months.”
Year-to-Date Results
The Company recorded a consolidated GAAP net loss of $244 million, or $(2.75) per diluted common share, for the six months ended June 30, 2018 compared with a consolidated net loss of $1.3 billion, or $(10.13) per diluted common share, for the first six months of 2017. The lower loss this year was primarily driven by the valuation allowance established on the Company’s deferred tax asset for the second quarter of 2017.
The Company’s non-GAAP Adjusted Net Loss for the six months ended June 30, 2018 was $112 million or $(1.27) per diluted share compared with Adjusted Net Loss of $130 million or $(1.02) per diluted share for the first six months of 2017. The reduced adjusted net loss for the first six months of 2018 was primarily due to lower losses and loss adjustment expenses at National and lower operating expenses for National and the Corporate segment, partially offset by lower premium earnings at National.
MBIA Inc.
As of June 30, 2018, MBIA Inc.’s liquidity position totaled $389 million, down $30 million from March 31, 2018, consisting primarily of cash and cash equivalents and other liquid invested assets. The decrease in liquidity primarily relates to MBIA Inc. debt service payments and operating expenses.
There were no purchases of MBIA Inc. shares during the second quarter of 2018. As of August 2, 2018, there was $236 million remaining under the Company’s $250 million share repurchase authorization that was approved on November 3, 2017 and 90.7 million of the Company’s common shares were outstanding. During the second quarter, MBIA Inc. issued 1.3 million shares of MBIA common shares, which includes 1.2 million shares that were issued in April and 0.1 million shares that were issued in June, in accordance with the net settlement exercise provisions of warrants related to 11.9 million of MBIA common shares. As of June 30, 2018, no warrants related to MBIA Inc. shares remained outstanding.
National Public Guarantee Financial Corporation
National had statutory capital of $2.7 billion and claims-paying resources totaling $4.1 billion as of June 30, 2018. National’s total fixed income investments plus cash and cash equivalents had a book/adjusted carrying value of $3.4 billion as of June 30, 2018. National’s insured portfolio declined by $3 billion during the quarter, ending the quarter with $64 billion of gross par outstanding. National ended the quarter with a leverage ratio of gross par to statutory capital of 24 to 1, down from 26 to 1 as of year-end 2017.
MBIA Insurance Corporation
The statutory capital of MBIA Insurance Corporation as of June 30, 2018 was $489 million and claims-paying resources totaled $1.4 billion. As of June 30, 2018, MBIA Insurance Corporation’s liquidity position (excluding resources from its subsidiaries and branches) totaled $105 million consisting primarily of cash and cash equivalents and other liquid invested assets. In May 2018, a settlement agreement was entered into regarding the bankruptcy of the Zohar CDOs that outlines processes and procedures for monetizing the assets of the Zohar CDOs.
Conference Call
The Company will host a webcast and conference call for investors tomorrow, Thursday, August 9, 2018 at 8:00 AM (ET) to discuss its second quarter 2018 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 2777679. A live webcast of the conference call will also be accessible on www.mbia.com.
A replay of the conference call will become available approximately two hours after the end of the call on August 9 and will remain available until 11:59 p.m. on August 23 by dialing (800) 585-8367 in the U.S. or (404) 537-3406 from outside the U.S. The code for the replay of the call is also 2777679. 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 and Quarterly Report on Form 10-Q, 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.
https://www.businesswire.com/news/home/20180808005667/en/MBIA-Reports-Quarter-2018-Financial-Results
Enterprising Investor
7 years ago
MBIA Inc. Reports Third Quarter 2017 Financial Results (11/07/17)
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.
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http://www.businesswire.com/news/home/20171107006574/en/MBIA-Reports-Quarter-2017-Financial-Results
Enterprising Investor
7 years ago
MBIA Inc. Responds to S&P Placing National’s Rating on CreditWatch Negative (6/06/07)
PURCHASE, N.Y.--(BUSINESS WIRE)--MBIA Inc. (NYSE:MBI) (the Company) announced its response to today’s Research Update from Standard & Poor’s Global Ratings, in which it placed the ratings of the Company and National Public Finance Guarantee Corporation (National) on CreditWatch Negative.
Bill Fallon, MBIA’s Chief Operating Officer and National’s Chief Executive Officer said, “We are disappointed by S&P’s announcement and do not believe that a rating downgrade of National is warranted. National’s financial strength is evidenced by $1.7 billion of excess capital above our estimate of S&P’s AAA requirement. National has also, in a relatively short period of time, significantly increased its new business activity, as measured both by insured par amount and transaction count, as well as the number of intermediaries who have recommended purchase of National’s guarantees. This market acceptance has been growing despite an environment where S&P’s rating on National has been one notch lower than its competitors. The strong trading value of National’s wrap further attests to the success of National’s disciplined re-entry into the municipal bond market.” Mr. Fallon added, “We will continue to work with S&P during its ongoing review to do everything in our power to maintain National’s AA- credit rating.”
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.
http://www.businesswire.com/news/home/20170606006692/en/MBIA-Responds-SP-Placing-National%E2%80%99s-Rating-CreditWatch
Enterprising Investor
8 years ago
MBIA Inc. Reports First Quarter 2017 Financial Results (5/10/17)
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.
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.
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http://www.businesswire.com/news/home/20170510006455/en/MBIA-Reports-Quarter-2017-Financial-Results
Enterprising Investor
8 years ago
Upside in Puerto Rico Municipal Bonds (11/26/16)
Puerto Rico’s new governor is intent on restructuring the island’s debt.
The recent election of a new governor in Puerto Rico, and the formation of a powerful federal financial control board this summer, have resulted in some optimism about a bondholder-friendly restructuring of much of the island’s $70 billion of debt.
The situation is still unsettled, but the new governor, Ricardo Rosselló, is viewed on Wall Street as a serious leader who wants to put the island on a stronger financial footing, bolster a weak economy, and work out a reasonable agreement with bondholders. Rosselló contrasts with the more combative outgoing governor, Alejandro García Padilla, who clashed with bondholder groups and then opted to default on $1 billion of debt-service payments on July 1.
Rosselló’s election came after midyear, when President Barack Obama signed the Puerto Rico Oversight, Management, and Economic Stability Act, which created a seven-member control board with broad fiscal and debt-restructuring authority.
The benchmark Puerto Rico 8% general-obligation bond due in 2035 rallied after the Rosselló win, to about 72 cents on the dollar from 69 cents, but has since slipped back to about 69 cents. The market for Puerto Rico’s senior sales-tax revenue bonds, known by their Spanish acronym Cofina, has been stronger, with long-term senior debt trading up to the low $70s from the high $60s in the summer, as Puerto Rico has continued to make payments to that debt.
Barron’s was among the first to warn about Puerto Rico’s growing financial troubles in a cover story more than three years ago (“Troubling Winds,” Aug. 26, 2013).
http://www.barrons.com/articles/SB50001424052748704719204579022892632785548
Key future developments will be a new fiscal proposal from the incoming governor and recommendations from a task force about steps the U.S. government can take to ease Puerto Rico’s financial burden.
Things should heat up in early 2017 because a stay on bondholder lawsuits ends in February—with a potential extension to around May 1. This means that a bond restructuring plan probably needs to be in place by then. There is apt to be considerable wrangling among different bondholder groups, and there is overall risk given Puerto Rico’s fiscal, economic, and pension problems.
Against that backdrop, the general-obligation bonds, trading at less than 70 cents on the dollar, look like the best way to bet on a bondholder-friendly deal that could give GO holders a package worth 85 cents to 90 cents on the dollar.
—Andrew Bary
http://www.barrons.com/articles/upside-in-puerto-rico-municipal-bonds-1480137155
Enterprising Investor
8 years ago
Form 8-K (11/28/16)
Financing Commitment for MBIA Insurance Corp.
MBIA Inc. (the “Company”) today announced that its wholly-owned subsidiary, MBIA Insurance Corp. (“MBIA Corp.”), has accepted a binding commitment letter dated November 25, 2016, with certain holders (the “Holders”) of 14% Fixed-to-Floating Rate Surplus Notes of MBIA Corp., and with the Company, pursuant to which the Holders or their affiliates (collectively, the “Senior Lenders”) have agreed to provide senior financing and the Company has agreed to provide subordinated financing (the Senior Lenders and the Company being referred to herein as, the “Lenders”) in the amounts and on the terms described below to MBIA Corp. MBIA Corp. will use the net proceeds of the financing to pay an anticipated claim (the “Zohar II Claim”) on its insurance policy (the “Zohar II Policy”) insuring certain notes (the “Zohar II Notes”) issued by Zohar II 2005-1 Limited and Zohar II 2005-1 Corp. (“Zohar II”) on January 20, 2017 (the “Zohar Maturity Date”). The closing of the financing is subject to, among other things as described below, MBIA Corp. acquiring Zohar II Notes with an outstanding principal amount of $347 million from Assured Guaranty (such Zohar II Notes, the “Assured Zohar II Notes”) pursuant to the Share Purchase Agreement dated as of September 29, 2016 (the “SPA”) by and between MBIA UK (Holdings) Limited (“MBIA UK Holdings”) and Assured Guaranty Corporation (“Assured”). Under the SPA, MBIA UK Holdings agreed to exchange its shares of MBIA UK Insurance Limited (“MBIA UK”) plus $23 million in cash for the Assured Zohar II Notes (the “Sale Transaction”). The Sale Transaction is subject to certain closing conditions, including the receipt of regulatory approvals from the Prudential Regulation Authority, the Financial Conduct Authority of the United Kingdom, the New York State Department of Financial Services (“NYSDFS”) and the Maryland Insurance Administration.
In connection with the financing, a bankruptcy remote special purpose entity (“NewCo”) will be organized to act as the direct borrower from the Senior Lenders and from the Company. The Senior Lenders will purchase senior notes issued by (or make senior loans to) NewCo (the “Insured Senior Notes”) with an aggregate principal amount of up to $325 million, and the Company will purchase subordinated notes issued by (or make subordinated loans to) NewCo (the “Insured Subordinated Notes” and together with the Insured Senior Notes, the “NewCo Notes”) with an aggregate principal amount of $38 million. The NewCo Notes and the MBIA Corp. Policies (defined below) will not be subject to any transfer restrictions. The Company will also commit to purchase up to an additional $50 million principal amount of Insured Subordinated Notes from NewCo (the “Additional Subordinated Notes” ), if needed by MBIA Corp. to provide additional liquidity to MBIA Corp. to pay claims or for other purposes. The Company currently owns Zohar II Notes with an outstanding principal amount of $38 million, which the Company expects to be paid on the Zohar Maturity Date, subject to the consummation of the financing contemplated under the Facility (as defined below).
NewCo will enter into a loan agreement with MBIA Corp. (the “MBIA Loan Agreement”; and the loans thereunder, the “MBIA Loans”) pursuant to which it will immediately lend the proceeds of any NewCo Notes to MBIA Corp. MBIA Corp. will issue financial guaranty insurance policies (the “MBIA Corp. Policies”) insuring scheduled payments on the Insured Senior Notes and Insured Subordinated Notes. The NewCo Notes and the MBIA Loans are referred to herein as the “Facility.”
MBIA Corp. will use the net proceeds of the loans made under the MBIA Loan Agreement on the closing date of the Facility, together with approximately $60 million from its own resources (the “MBIA Corp. Payment”), to pay the Zohar II Claim on the Zohar Maturity Date. The MBIA Corp. Payment and the amount of the Insured Senior Notes will be reduced by any cash proceeds received by MBIA Corp. prior to the closing of the Facility from the auction of the assets owned by Zohar CDO 2003-1, Limited (“Zohar I”), which is scheduled to be completed by December 3, 2016. There is no assurance that such auction will be completed by such date or that MBIA Corp. will receive any cash proceeds from the auction.
The Facility will be secured by a first priority security interest in all of MBIA Corp.’s right, title and interest in (1) MBIA Corp.’s rights to reimbursement, recovery, salvage or subrogation with respect to the claim it paid under its policy insuring the class A-1 and A-2 notes (the “Zohar I Notes”) issued by Zohar I, (2) MBIA Corp.’s Zohar I Notes and related subrogation rights, (3) MBIA Corp.’s rights to reimbursement, recovery, salvage or subrogation with respect to any claim paid by MBIA Corp. under its policy insuring the Zohar II Notes, (4) MBIA Corp.’s Assured Zohar II Notes and related subrogation rights, (5) MBIA Corp.’s rights as a party to, or third-party beneficiary under, any Zohar I or Zohar II indenture, supplemental indenture, insurance and indemnity agreement or other legal documentation, (6) any other rights or remedies inuring to the benefit of MBIA Corp. in connection with Zohar I or Zohar II, whether arising under contract or tort, and (7) with respect to (1)-(6) above, any recoveries MBIA Corp. acquires from any source in connection with such rights (collectively, including any proceeds thereof, the “Collateral”).
The Insured Senior Notes will have a first lien on the Collateral, and the Insured Subordinated Notes will have a second lien on the Collateral. Any amounts due the Company in respect of the Insured Subordinated Notes or from the MBIA Corp. Policies insuring the Insured Subordinated Notes will be subordinated to payment in full of the Insured Senior Notes until the amounts owed to the Senior Lenders in respect of the Insured Senior Notes have been paid in full.
The NewCo Notes and the MBIA Loans will mature on January 20, 2020 and will bear interest at 14% per annum, payable quarterly in arrears. Interest on the NewCo Notes will be payable in cash, but may be payable in kind at the option of MBIA Corp. to the extent that recoveries on the Collateral and the Cash Sweep (referred to below) is less than the accrued but unpaid interest.
If at the end of any fiscal quarter, MBIA’s “Available Liquidity” (as defined in the Facility) exceeds $150 million and MBIA Corp.’s “Statutory Surplus” (as defined in the Facility) exceeds $250 million, MBIA Corp. will make a payment on the MBIA Loans in the amount by which the Available Liquidity exceeds $150 million, except that during the first 18 months after the closing of MBIA Loans, the payment will be limited to the amount of the accrued but unpaid interest. This payment, which is referred to as the “Cash Sweep,” will be subject to approval, or non-disapproval, of the NYSDFS. Also, MBIA Corp. will be required to apply any recoveries in respect of the Collateral to the repayment of the MBIA Loans, except that during the first 18 months after closing of the MBIA Loans, MBIA Corp. may elect to place the amount of any recovery in excess of accrued interest in an interest bearing account subject to the liens in favor of the Senior Lenders in lieu of the payment of principal on the MBIA Loans. Any repayment of principal on the MBIA Loans during the first 18 months will be subject to a declining make-whole payment, calculated as a percentage of the principal amount being repaid. At any time that the MBIA Loans are repaid, NewCo is required to apply the repayment first to the payment of interest and principal on the Insured Senior Notes and, after the Insured Senior Notes are paid in full, to the payment of the Insured Subordinated Notes, subject to certain reimbursements payable to MBIA Corp.
The issuance of the NewCo Notes will be subject to satisfaction of certain conditions including, but not limited to, (i) consummation of the Sale Transaction; (ii) receipt of any required regulatory approvals; (iii) that neither the Company nor MBIA Corp. has entered into a bankruptcy or rehabilitation or similar proceeding; (iv) no new information shall have been obtained by or made reasonably available to the Senior Lenders, and no fact, condition or event shall occur or exist, that would, individually or in the aggregate, reasonably be expected to (a) result in, or constitute, a material adverse effect on MBIA Corp., Zohar I or Zohar II or the Collateral or (b) indicate that the Collateral would reasonably be expected to be inadequate to secure the repayment of the Facility; (v) no new evidence of intentional fraud of Zohar I or Zohar II, or of related persons in respect thereof; (vi) if the sale of Zohar I assets is completed before funding, the sum of all accepted credit bids by MBIA and successful cash bids must equal or exceed the size of MBIA’s claim against Zohar I; (vii) execution of final documentation; and (viii) closing of the transaction no later than January 20, 2017.
The Facility will contain customary and other representations and warranties and affirmative, negative and financial covenants and events of default.
MBIA Corp. has agreed to pay a commitment fee to the Senior Lenders, a portion of which may be financed by the issuance of additional Insured Senior Notes. MBIA Corp. has also agreed to pay a termination fee to the Senior Lenders in the event the amount of the Insured Senior Notes issued is less than $325 million, or if the commitment of the Senior Lenders is terminated, including for failure of the parties to agree on definitive documentation after good faith negotiations. Closing of the Facility is expected to occur no earlier than January 1, 2017 and no later than January 20, 2017.
Management of the Company and MBIA Corp. believe that the closing of the Facility and the Sale Transaction, together with the MBIA Corp. Payment, will enable MBIA Corp. to successfully address its insurance obligations relating to the Zohar II Policy. There is no assurance, however, that closing of the Facility or the Sale Transaction will be consummated. If the closing of the Facility and the Sale Transaction are not consummated, MBIA Corp. will not have sufficient liquid assets to pay the Zohar II Claim. If the NYSDFS concludes at any time that the closing of the Facility or the Sale Transaction will not be consummated and that MBIA Corp. will not be able to restructure or otherwise satisfy its obligations under the Zohar II Notes on terms satisfactory to the NYSDFS, while maintaining sufficient assets to readily pay other policyholder claims, the NYSDFS would likely put MBIA Corp. into a rehabilitation or liquidation proceeding under Article 74 of the New York Insurance Law (“NYIL”) and/or take such other actions as the NYSDFS may deem necessary to protect the interests of MBIA Corp.’s policyholders. The determination to commence such a proceeding or take other such actions is within the exclusive control of the NYSDFS. The NYSDFS enjoys broad discretion in this regard, and any determination they may make would not be limited to consideration of the matters described above. No assurance is given as to what action, if any, the NYSDFS may take.
MBIA Corp. is engaged in preliminary contingency planning discussions with the NYSDFS with respect to a potential rehabilitation proceeding in the event that the closing of the Facility and the Sale Transaction cannot be consummated or if it cannot otherwise restructure the Zohar II Notes.
Given the separation of the Company and MBIA Corp. as distinct legal entities, the absence of any material intercompany lending agreements or cross defaults between the entities, and the lack of reliance by the Company on MBIA Corp. for the receipt of dividends, neither the Facility nor the Sale Transaction are expected to have a material impact on the Company’s financial position and results of operations. The Company concluded, however, that from an investment perspective the return and risk profile of the subordinated financing to be provided by the Company were acceptable, taking into account the economic terms of and substantial level of collateral that will secure the subordinated financing provided by the Company and the expected payment at maturity of the Zohar II notes owned by the Company, and that it was in the Company’s interest to purchase the Insured Subordinated Notes and, if needed, the Additional Subordinated Notes for the purposes described above. There is no assurance that the Company will provide any financing to MBIA Corp. in addition to the financing that Company has agreed to provide under the Facility, and no such additional financing is contemplated. Any evaluation by the Company whether to provide any additional financing to MBIA Corp. in the future will depend on the circumstances at the time and an analysis by the management and board of directors of the Company whether any such additional financing is in the best interest of the Company and its stockholders.
Promptly following the maturity of the Zohar II Notes, MBIA Corp. will evaluate strategic options and potential transactions that would maximize present value creation for the holders of its Surplus Notes. MBIA Corp. would seek to implement any such option that it deems reasonably appropriate in a timely manner while continuing to meet its obligations to all of its policyholders. There can be no assurance MBIA Corp. will engage in any such transaction.
A copy of the press release issued by the Company, dated November 28, 2016, is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
In connection with their evaluation of the Facility, the Senior Lenders were provided with a presentation containing certain information about MBIA Corp. and the Collateral, which is attached hereto as Exhibit 99.2 and is incorporated herein by reference.
https://www.sec.gov/Archives/edgar/data/814585/000119312516777405/d293729d8k.htm
Enterprising Investor
8 years ago
MBIA Inc. Announces Financing Commitment for MBIA Insurance Corporation (11/28/16)
PURCHASE, N.Y.--(BUSINESS WIRE)--MBIA Inc. (NYSE:MBI) (the Company) today announced that its wholly-owned subsidiary, MBIA Insurance Corp. (MBIA Corp.), has accepted a binding commitment letter dated November 25, 2016, from certain holders of 14% Fixed-to-Floating Rate Surplus Notes of MBIA Corp., and from the Company, pursuant to which the surplus noteholders or their affiliates have agreed, subject to the satisfaction of certain closing conditions, to provide senior financing of up to $325 million and the Company has agreed to provide subordinated financing of $38 million to MBIA Corp. (the Facility). MBIA Corp. will use the proceeds of the Facility, together with approximately $60 million from its own resources, to pay an anticipated claim on its insurance policy insuring certain notes (Zohar II Notes) issued by Zohar II 2005-1, Limited and Zohar II 2005-1 Corp. (Zohar II), which mature on January 20, 2017. In addition to the $38 million of subordinated financing to be provided by the Company described above, the Company has agreed to provide up to an additional $50 million of subordinated financing to MBIA Corp. under the Facility, if needed, to provide additional liquidity to MBIA Corp. The Facility will be secured by MBIA Corp.’s rights to reimbursement and recovery with respect to the claim it paid under its policy insuring the class A-1 and A-2 notes issued by Zohar CDO 2003-1, Limited Zohar I, and its rights to reimbursement and recovery with respect to any claim paid under its policy insuring the Zohar II Notes.
Anthony McKiernan, MBIA Corp.’s President and Chief Financial Officer noted, “This financing, together with MBIA Corp.’s acquisition of the Zohar II Notes from Assured and the use of its own resources, will enable MBIA Corp. to satisfy its obligations on the Zohar II Notes on January 20, 2017. The Zohar I Notes defaulted in November 2015 and the Zohar II Notes are expected to default in January, which represents approximately $1.3 billion in defaulted Zohar notes. We remain prepared to work with Patriarch Partners and the collateral manager of the Zohar entities to institute a transparent and comprehensive plan to sell or refinance the assets owned by the Zohar entities in an orderly manner to ensure that their obligations are fully satisfied. While we believe that a consensual approach is preferable and in the interest of all parties, in the absence of the implementation of a good faith plan, we will continue to aggressively seek to enforce our rights to the full reimbursement of the insurance claims we paid.”
The Company currently owns Zohar II Notes with an outstanding principal amount of $38 million, and expects those notes to be paid in full on the maturity date, subject to consummation of the Facility. The Company concluded that, from an investment perspective, the return and risk profile of the subordinated financing it has agreed to provide were acceptable, taking into account the economic terms of the financing, the substantial level of collateral that will secure the financing and the expected payment at maturity of the Zohar II Notes it owns, and that it was in the Company’s interest to provide the subordinated financing described above in order to enable MBIA Corp. to pay its obligations under the Zohar II Notes insurance policy and to provide additional liquidity to MBIA Corp.
The closing of the Facility and of the sale of MBIA UK Insurance Limited (MBIA UK) are expected to enable MBIA Corp. to successfully address its insurance obligations relating to its insurance policy insuring the Zohar II Notes. The closing of the Facility is subject to specified conditions, including, but not limited to, MBIA Corp. acquiring the Zohar II Notes with an outstanding principal amount of approximately $347 million from Assured Guaranty Corp. in connection with the sale of MBIA UK, as previously disclosed; receipt of any required regulatory approvals from the New York State Department of Financial Services; and the execution of final documentation. The closing of the Facility is expected to occur no later than January 20, 2017. There is no assurance, however, that the conditions precedent to the closing of the Facility or to the sale of MBIA UK will be satisfied and that such transactions will be consummated.
The material terms of the Facility and the potential consequences of the failure to consummate the closing of the Facility or the sale of MBIA UK are described in the Form 8-K filed by the Company today with the Securities Exchange Commission and which is also available on the Company’s web site at www.mbia.com.
http://www.businesswire.com/news/home/20161128005287/en/MBIA-Announces-Financing-Commitment-MBIA-Insurance-Corporation
Enterprising Investor
8 years ago
MBIA Inc. Reports Third Quarter 2016 Financial Results (11/08/16)
PURCHASE, N.Y.--(BUSINESS WIRE)--MBIA Inc. (NYSE:MBI) (the Company) today reported consolidated GAAP net income of $31 million, or $0.23 per diluted share, for the third quarter of 2016 compared with a consolidated net loss of $35 million, or $(0.23) per diluted share, for the third quarter of 2015. The $66 million favorable change in the financial result versus the year-ago quarter was primarily due to a favorable variance in the fair value of interest rate swaps and net gains on the sale of investments.
Book value per share was $26.95 as of September 30, 2016 compared with $24.61 as of December 31, 2015. The increase in book value per share since year-end 2015 was primarily due to share repurchases that decreased common shares outstanding. During the first nine months of 2016, the Company repurchased 16.6 million shares of its common stock.
The Company also reported Combined Operating Income (a non-GAAP measure defined in the attached Explanation of Non-GAAP Financial Measures) of $5 million or $0.04 per diluted share for the third quarter of 2016 compared with Combined Operating Income of $24 million or $0.15 per diluted share for the third quarter of 2015. The decline in Combined Operating Income for the third quarter of 2016 compared to the same period of 2015 was primarily driven by higher losses and loss adjustment expenses.
Adjusted Book Value (ABV) per share (a non-GAAP measure defined in the attached Explanation of Non-GAAP Financial Measures) was $32.39 as of September 30, 2016 compared with $29.69 as of December 31, 2015. The increase in ABV per share since year-end 2015 was primarily driven by the repurchase of 16.6 million shares during the first nine months of 2016.
Operating Income and ABV per share provide investors with two perspectives of the Company’s financial results that management uses in measuring financial performance. Reconciliations of ABV per share to book value per share, and Operating Income to net income, calculated in accordance with GAAP, are attached.
Statements from Company Representative
Bill Fallon, MBIA Inc.’s President and Chief Operating Officer stated, “This quarter, we continued to lay the groundwork for our future success, as we further expanded our network of new business relationships, pursued favorable resolutions for our stressed insured credits and strengthened our financial foundation by further reducing leverage and trimming expenses.”
Mr. Fallon added, “In particular, the market’s expanding acceptance of National in this challenging low interest rate environment is encouraging. More counterparties are seeking bond insurance from National and National’s trading differential with its competitors continues to narrow.”
Year-to-Date Results
The Company recorded a consolidated GAAP net loss of $73 million, or $(0.55) per diluted common share for the nine months ended September 30, 2016, compared with consolidated net income of $98 million, or $0.55 per diluted common share, for the first nine months of 2015. The $171 million adverse variance was primarily driven by a $111 million unfavorable variance in the fair value of insured derivatives and a $70 million increase in losses and loss adjustment expenses.
The Company’s Combined Operating Income for the nine months ended September 30, 2016 was $36 million or $0.28 per diluted share compared with Combined Operating Income of $77 million or $0.45 per diluted share for the first nine months of 2015. The $41 million decrease in the Combined Operating Income for the first nine months of 2016 was primarily due to lower premiums earned and an adverse variance in losses and loss adjustment expenses.
U.S. Public Finance Insurance Results
The Company’s U.S. public finance insurance business is primarily conducted through National Public Finance Guarantee Corporation (“National”), its primary operating subsidiary. The U.S. Public Finance Insurance segment recorded GAAP net income of $44 million for the third quarter of 2016 versus $46 million for the third quarter of 2015.
National also recorded $24 million of Operating Income in the third quarter of 2016 compared with $48 million of Operating Income for the third quarter of 2015. The $24 million decrease in Operating Income was primarily due to a $35 million adverse variance in losses and loss adjustment expenses.
Net premiums earned in the U.S. Public Finance Insurance segment were $60 million in the third quarter of 2016, down 12 percent from $68 million of net premiums earned in the third quarter of 2015, which comprised a 16 percent decrease in scheduled premiums earned and a 9 percent decrease in refunded premiums earned.
National insured $339 million of new business gross par exposure during the third quarter of 2016, up from $129 million during the third quarter of 2015.
Net investment income for the U.S. Public Finance Insurance segment was $29 million for both the third quarter of 2016 and the prior year’s third quarter.
Net gains on financial instruments at fair value and foreign exchange was $31 million for the third quarter of 2016 versus $1 million for the third quarter of 2015. The change was primarily related to net gains on the sale of investments.
The U.S. Public Finance Insurance segment’s losses and loss adjustment expenses were $28 million in the third quarter of 2016, primarily related to its insured Puerto Rico bonds, versus a benefit of $7 million in the third quarter of 2015.
For the third quarter of 2016, the amortization of deferred acquisition costs totaled $12 million versus $15 million for the third quarter of 2015, reflecting the reduction in premiums earned. Operating expenses were $15 million and $17 million for the third quarters of 2016 and 2015, respectively.
National had statutory capital of $3.5 billion and claims-paying resources totaling $4.7 billion as of September 30, 2016. National’s insured portfolio declined by $13 billion during the quarter, ending the quarter with $125 billion of gross par outstanding. National ended the quarter with a leverage ratio of gross par to statutory capital of 35 to 1, down from 48 to 1 at year-end 2015.
Corporate Results
The corporate segment includes general corporate activities, as well as the support services provided to the Company’s other operating businesses and asset and capital management activities. The corporate segment recorded a GAAP net loss of $15 million for the third quarter of 2016 versus a net loss of $43 million for the third quarter of 2015. The $28 million favorable variance was primarily driven by a $43 million reduction of net losses on financial instruments at fair value and foreign exchange, which largely resulted from a favorable change in the fair value of interest rate swaps.
The corporate segment recorded an Operating Loss of $19 million in the third quarter of 2016 compared with an Operating Loss of $24 million in the third quarter of 2015. The $5 million improvement in the corporate segment's Operating Loss was primarily driven by a favorable variance in investment related activity included in the Operating Loss.
As of September 30, 2016, MBIA Inc. held cash and liquid assets of $237 million, which excludes assets in its tax escrow account that totaled $295 million at quarter-end.
The Company’s consolidated net operating loss carryforward for income tax purposes as of September 30, 2016 was approximately $2.7 billion.
During the third quarter of 2016, the Company and its subsidiaries did not repurchase any of its common shares. As of September 30, 2016, there was $88 million remaining capacity under the Company’s current share repurchase authorization. As of November 2, 2016, 136 million of the Company’s common shares were outstanding.
International and Structured Finance Insurance Results
The Company’s international and structured finance insurance business is primarily conducted through MBIA Corp. Unless otherwise indicated or the context otherwise requires, references to “MBIA Corp.” are to MBIA Insurance Corporation, together with its subsidiaries, MBIA UK Insurance Limited and MBIA Mexico S.A. de C.V.
MBIA Insurance Corporation’s statutory net loss was $40 million in the third quarter of 2016, compared with a net loss of $12 million in the third quarter of 2015. Statutory net losses and loss adjustment expenses incurred for the third quarter of 2016 were $74 million compared with net losses and loss adjustment expenses incurred of $50 million in the comparable quarter of the prior year. The statutory capital of MBIA Insurance Corporation as of September 30, 2016 was $674 million and claims-paying resources totaled $2.1 billion.
As of September 30, 2016, MBIA Insurance Corporation’s liquidity position (excluding resources from its subsidiaries and branches) totaled $238 million consisting of cash and liquid invested assets.
During the third quarter of 2016, MBIA Insurance Corporation announced that its wholly owned subsidiary, MBIA UK (Holdings) Ltd., had reached an agreement to sell its operating subsidiary, MBIA UK Insurance Limited (MBIA UK), subject to satisfying closing conditions and securing several regulatory approvals. The potential sale of MBIA UK is an element of MBIA Insurance Corporation’s strategy to satisfy its claims payment obligations on the Zohar II 2005-1 CLO (Zohar II Notes) it insures. The Zohar II Notes had $770 million of gross par outstanding as of September 30, 2016 and are currently scheduled to mature on January 20, 2017.
Conference Call
The Company will host a webcast and conference call for investors tomorrow, Wednesday, November 9, 2016 at 8:00 AM (ET) to discuss its third quarter 2016 financial results and other matters relating to the Company. The webcast and conference call will consist of brief remarks followed by a question and answer session.
The dial-in number for the call is (877) 694-4769 in the U.S. and (404) 665-9935 from outside the U.S. The conference call code is 99802609. 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 November 9 and will remain available until 11:59 p.m. on November 23 by dialing (800) 585-8367 in the U.S. or (404) 537-3406 from outside the U.S. The code for the replay of the call is also 99802609. 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.
http://www.businesswire.com/news/home/20161108006149/en/MBIA-Reports-Quarter-2016-Financial-Results
Enterprising Investor
8 years ago
MBIA Insurance Corporation Announces Agreement to Sell Subsidiary (9/29/16)
PURCHASE, N.Y.--(BUSINESS WIRE)--MBIA Insurance Corporation (MBIA Corp.) today announced that its wholly owned subsidiary, MBIA UK (Holdings) Limited (MBIA UK Holdings), has entered into an agreement to sell MBIA UK Insurance Limited (MBIA UK) to Assured Guaranty Corp. (Assured), a subsidiary of Assured Guaranty Ltd. (NYSE: AGO). The purchase price consists of the transfer to MBIA UK Holdings of notes issued by Zohar II 2005-1 CLO (Zohar II Notes) with an aggregate outstanding principal amount of approximately $347 million (Assured Zohar II Notes) and a cash payment by MBIA UK Holdings to Assured of $23 million. The transaction is subject to certain closing conditions including the receipt of regulatory approvals from the Prudential Regulation Authority of the United Kingdom, the New York State Department of Financial Services (NYSDFS) and the Maryland Insurance Administration. The sale of MBIA UK, effectively in exchange for the Assured Zohar II Notes, is part of MBIA Corp.’s strategy to address the maturity of the Zohar II Notes on January 20, 2017, which had approximately $772 million of gross par outstanding as of June 30, 2016. MBIA Corp. does not currently expect that the Zohar II CLO will have sufficient cash flow to repay all of the Zohar II Notes at maturity. There is no assurance that the transaction will be completed or that MBIA Corp.’s strategies will be successful. The transaction is scheduled to close in early January of 2017.
Anthony McKiernan, Chief Financial Officer and President of MBIA Insurance Corp., noted, “As we have previously stated, the sale of MBIA UK is one of the elements of our plan to enable MBIA Corp. to address its insurance obligations regarding the Zohar II Notes. The acquisition of the Assured Zohar II Notes reduces MBIA Corp.’s liability under its Zohar II policy and may facilitate our ability to address the remaining Zohar II Notes on or before their maturity.” He added, “While the sale of MBIA UK, if completed, will be an important and meaningful accomplishment, MBIA Corp. still has substantially more to do.”
MBIA Corp. is in the process of exploring a variety of additional strategies to address its obligations with respect to the Zohar II Notes. These strategies may involve the restructuring or repurchase of certain Zohar II Notes that may require substantial third party financing, which MBIA Corp. is seeking to arrange. Its ability to do so, however, is constrained and there is no assurance that it will be able to secure a financing on acceptable terms. If, notwithstanding the transaction announced today, MBIA Corp. is unable to successfully implement its strategies for restructuring or otherwise satisfying its obligations under the Zohar II Notes, it does not expect to have a sufficient amount of liquid assets to pay all claims in respect to the Zohar II Notes at maturity (irrespective of whether the sale of MBIA UK is completed). MBIA Corp. anticipates that the approval by the NYSDFS of the sale of MBIA UK, if granted, would be based on (among other things) the NYSDFS concluding that MBIA Corp. will successfully execute its strategies to meet and/or restructure its obligations on the Zohar II Notes in a manner acceptable to the NYSDFS.
MBIA Corp. believes that if the NYSDFS concludes at any time that MBIA Corp. will not be able to restructure or otherwise satisfy its obligations under the Zohar II Notes on terms satisfactory to the NYSDFS, while maintaining sufficient assets to readily pay other policyholder claims, the NYSDFS would likely put MBIA Corp. into a rehabilitation or liquidation proceeding under Article 74 of the New York Insurance Law and/or take such other actions as the NYSDFS may deem necessary to protect the interests of MBIA Corp.’s policyholders. The determination to commence such a proceeding or take other such actions is within the exclusive control of the NYSDFS. The NYSDFS enjoys broad discretion in this regard, and any determination they may make would not be limited to consideration of the matters described above. No assurance is given as to what action, if any, the NYSDFS may take.
Barclays Capital is acting as financial advisor, and Debevoise & Plimpton LLP is acting as legal advisor, on the sale of MBIA UK.
MBIA Insurance Corporation is a wholly owned subsidiary of MBIA Inc., which is headquartered in Purchase, New York. MBIA Inc. 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.
http://www.businesswire.com/news/home/20160929005391/en/MBIA-Insurance-Corporation-Announces-Agreement-Sell-Subsidiary
Enterprising Investor
8 years ago
MBIA Inc. Reports Second Quarter 2016 Financial Results (8/08/16)
PURCHASE, N.Y.--(BUSINESS WIRE)--MBIA Inc. (NYSE:MBI) (the Company) today reported a consolidated GAAP net loss of $27 million, or $0.20 per diluted share, for the second quarter of 2016 compared with consolidated net income of $64 million, or $0.36 per diluted share, for the second quarter of 2015. The $91 million adverse change in the financial result versus the year-ago quarter was primarily due to adverse variances on certain fair value effects and an increase in loss and loss adjustment expenses (LAE), partially offset by favorable tax effects.
Book Value (BV) per share was $26.88 as of June 30, 2016 compared with $24.61 as of December 31, 2015. The increases in BV per share since year-end 2015 was primarily due to share repurchases that decreased common shares outstanding. During the first half of 2016, the Company repurchased 16.6 million shares of its common stock.
The Company also reported Combined Operating Income (a non-GAAP measure defined in the attached Explanation of Non-GAAP Financial Measures) of $15 million or $0.12 per diluted share for the second quarter of 2016 compared with Combined Operating Income of $19 million or $0.11 per diluted share for the second quarter of 2015. The decline in Combined Operating Income for the second quarter of 2016 compared to the same period of 2015 was primarily driven by lower premiums earned. The Company’s share repurchases was the primary driver for the increase in Combined Operating Income per share.
Adjusted Book Value (ABV) per share (a non-GAAP measure defined in the attached Explanation of Non-GAAP Financial Measures) was $32.42 as of June 30, 2016 compared with $29.69 as of December 31, 2015. The increase in ABV per share since year-end 2015 was primarily driven by the repurchase of 16.6 million shares during the first six months of 2016.
Operating Income and ABV per share provide investors with two perspectives of the Company’s financial results that management uses in measuring financial performance. Reconciliations of ABV per share to book value per share, and Operating Income to net income, calculated in accordance with GAAP, are attached.
Statements from Company Representative
Bill Fallon, MBIA’s President and Chief Operating Officer notes, “Focus inside and outside the Company remains on National’s Puerto Rico’s exposures. Since last quarter, PROMESA has become law and the PREPA Restructuring Support Agreement was extended into December of this year. On July 1, Puerto Rico defaulted on some of its debt service obligations and National paid $173 million of claims – primarily on the General Obligation bonds. Despite Puerto Rico’s misguided decision to violate its constitution and the seniority of payments on its debts, we are pleased by the positive reactions of our insured bondholders and analysts who are increasingly recognizing the value bond insurance provides, and we remain confident that insurance penetration in the market will benefit as a result.”
Mr. Fallon added, “Further, now that PROMESA has become law, we anticipate better progress in reaching resolutions on each of our insured Puerto Rico credits. In the meantime, National’s new business efforts continue to make headway, despite the ongoing challenges of the low interest rate environment.”
Year-to-Date Results
The Company recorded a consolidated GAAP net loss of $105 million, or $0.78 per diluted common share for the six months ended June 30, 2016, compared with consolidated net income of $133 million, or $0.72 per diluted common share, for the first six months of 2015. The $238 million adverse variance was primarily driven by a $130 million unfavorable variance on net gains (losses) on financial instruments at fair value and foreign exchange and a $124 million unfavorable net change in the fair value of insured derivatives.
The Company’s Combined Operating Income for the six months ended June 30, 2016 was $31 million or $0.24 per diluted share compared with Combined Operating Income of $53 million or $0.30 per diluted share for the first six months of 2015. The $22 million decrease in the Combined Operating Income for the first six months of 2016 was primarily due to a $29 million decrease in premiums earned from refunded exposures.
U.S. Public Finance Insurance Results
The Company’s U.S. public finance insurance business is primarily conducted through National Public Finance Guarantee Corporation (“National”), its primary operating subsidiary. The U.S. Public Finance Insurance segment recorded GAAP net income of $50 million for the second quarter of 2016 versus $37 million for the second quarter of 2015. The $13 million increase in net income was primarily driven by a $25 million increase in net gains (losses) on financial instruments due to the sale of investments.
National also recorded $34 million of Operating Income in the second quarter of 2016 compared with $40 million of Operating Income for the second quarter of 2015. The $6 million decrease in Operating Income was primarily due to an $11 million decrease in premiums earned from refunded exposures.
Net premiums earned in the U.S. Public Finance Insurance segment were $56 million in the second quarter of 2016, down 23 percent from $73 million of net premiums earned in the second quarter of 2015, which comprised a 28 percent decrease in refunded premiums earned and a 17 percent decrease in scheduled premiums earned.
National insured $209 million of new business gross par exposure during the second quarter of 2016, up from $158 million during the first quarter of 2016. The expansion of our new business activity continues to be constrained by low interest rates and competitive insurance pricing, which limit the opportunities to achieve attractive returns on our new business production.
Net investment income for the U.S. Public Finance Insurance segment was $30 million for the second quarter of 2016 compared with $28 million for the prior year’s second quarter.
The U.S. Public Finance Insurance segment’s losses and LAE were $9 million in the second quarter of 2016 compared with $8 million in the second quarter of 2015. In addition, National paid $173 million of insurance claims on the Puerto Rico bonds it insures with respect to their July 1, 2016 debt service amounts. Also, during the second quarter, certain PREPA creditors, including National, purchased new bonds issued by PREPA to replenish PREPA’s working capital and to enhance its liquidity.
For the second quarter of 2016, the amortization of deferred acquisition costs totaled $12 million versus $16 million for the second quarter of 2015, reflecting the reduction in premiums earned. Operating expenses were $15 million and $14 million for the second quarters of 2016 and 2015, respectively.
National had statutory capital of $3.5 billion and claims-paying resources totaling $4.7 billion as of June 30, 2016. National’s insured portfolio declined by $12 billion during the quarter, ending the quarter with $138 billion of gross par outstanding. National ended the quarter with a leverage ratio of gross par to statutory capital of 40 to 1, down from 48 to 1 at year-end 2015.
During the second quarter of 2016, Kroll Bond Rating Agency, Moody’s Investors Service and Standard and Poor’s Corporation each affirmed the credit ratings and outlooks assigned to National, which are AA+, stable; A3, negative; and AA-, stable, respectively.
Corporate Results
The corporate segment includes general corporate activities, as well as the support services provided to the Company’s other operating businesses and asset and capital management activities. The corporate segment recorded a GAAP net loss of $20 million for the second quarter of 2016 versus net income of $23 million for the second quarter of 2015. The $43 million adverse variance was primarily driven by a $75 million negative variance on the fair value of interest rate swaps. The $23 million net income for the second quarter of 2015 included $48 million of positive change in the fair value of interest rate swaps.
The corporate segment recorded an Operating Loss of $19 million in the second quarter of 2016 compared with an Operating Loss of $21 million in the second quarter of 2015. The improvement in the corporate segment's Operating Loss was primarily driven by a reduction in operating expenses.
As of June 30, 2016, MBIA Inc. held cash and liquid assets of $295 million, which excludes assets in its tax escrow account that totaled $273 million at quarter-end.
The Company’s consolidated net operating loss carryforward for income tax purposes as of June 30, 2016 was approximately $2.7 billion.
During the second quarter of 2016, the Company and its subsidiaries repurchased 1.7 million of its common shares at an average price of $7.02 per share. As of June 30, 2016, there was $88 million remaining under the Company’s current share repurchase authorization. As of August 2, 2016, 136 million of the Company’s common shares were outstanding.
International and Structured Finance Insurance Results
The Company’s international and structured finance insurance business is primarily conducted through MBIA Corp. Unless otherwise indicated or the context otherwise requires, references to “MBIA Corp.” are to MBIA Insurance Corporation, together with its subsidiaries, MBIA UK Insurance Limited and MBIA Mexico S.A. de C.V.
MBIA Insurance Corporation’s statutory net loss was $49 million in the second quarter of 2016, compared with a net loss of $47 million in the second quarter of 2015. Statutory net losses and LAE incurred for the second quarter of 2016 were $60 million compared with net losses and LAE incurred of $69 million in the comparable quarter of the prior year. The statutory capital of MBIA Insurance Corporation as of June 30, 2016 was $755 million and claims-paying resources totaled $2.2 billion.
As of June 30, 2016, MBIA Insurance Corporation’s liquidity position (excluding resources from its subsidiaries and branches) totaled $288 million consisting of cash and liquid invested assets.
During the second quarter of 2016, Moody’s Investors Service and Standard and Poor’s Corporation downgraded the credit rating assigned to MBIA Insurance Corp.; Moody's downgraded it from B3 to Caa1 and S&P downgraded it from B to CCC. Both Moody’s and S&P maintained a negative outlook on MBIA Insurance Corp.
Conference Call
The Company will host a webcast and conference call for investors tomorrow, Tuesday, August 9, 2016 at 8:00 AM (ET) to discuss its second quarter 2016 financial results and other matters relating to the Company. The webcast and conference call will consist of brief remarks followed by a question and answer session.
The dial-in number for the call is (877) 694-4769 in the U.S. and (404) 665-9935 from outside the U.S. The conference call code is 48759834. A live webcast of the conference call will also be accessible on www.mbia.com.
A replay of the conference call will become available approximately two hours after the end of the call on August 9 and will remain available until 11:59 p.m. on August 23 by dialing (800) 585-8367 in the U.S. or (404) 537-3406 from outside the U.S. The code for the replay of the call is also 48759834. In addition, a recorded replay of the call will become available on the Company's website approximately two hours after the completion of the call.
Forward-Looking Statements
The information contained in this press release should be read in conjunction with our filings made with the Securities and Exchange Commission. This release includes statements that are not historical or current facts and are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words “believe,” “anticipate,” “project,” “plan,” “expect,” “estimate,” “intend,” “will likely result,” “looking forward” or “will continue,” and similar expressions identify forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected, including, among other risks and uncertainties, the possibility that the Company will experience increased credit losses or impairments on public finance obligations we insure issued by state, local and territorial governments and finance authorities that are experiencing fiscal stress, the possibility that MBIA Corp. will have inadequate liquidity to pay claims as a result of increased losses on certain structured finance transactions, in particular residential mortgage-backed securities transactions that include a substantial number of ineligible mortgage loans, or a delay or failure in collecting expected recoveries, the possibility that loss reserve estimates are not adequate to cover potential claims, a disruption in the cash flow from our subsidiaries or an inability to access capital and our exposure to significant fluctuations in liquidity and asset values within the global credit markets as a result of collateral posting requirements, our ability to fully implement our strategic plan, including our ability to maintain high stable ratings for National and generate investor demand for our financial guarantees, deterioration in the economic environment and financial markets in the United States or abroad, and adverse developments in European sovereign credit performance, real estate market performance, credit spreads, interest rates and foreign currency levels, the effects of governmental regulation, including insurance laws, securities laws, tax laws, legal precedents and accounting rules; and uncertainties that have not been identified at this time. These and other factors that could affect financial performance or could cause actual results to differ materially from estimates contained in or underlying the Company’s forward-looking statements are discussed under the “Risk Factors” section in MBIA Inc.’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, which may be updated or amended in the Company’s subsequent filings with the Securities and Exchange Commission. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only to their respective dates. The Company undertakes no obligation to publicly correct or update any forward-looking statement if it later becomes aware that such result is not likely to be achieved.
MBIA Inc., headquartered in Purchase, New York is a holding company whose subsidiaries provide financial guarantee insurance for the public and structured finance markets. Please visit MBIA's website at www.mbia.com.
http://www.businesswire.com/news/home/20160808006129/en/MBIA-Reports-Quarter-2016-Financial-Results
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