This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

MBIA Inc. Reports Third Quarter 2011 Financial Results

In the third quarter of 2011, the Company estimated $497 million of incremental economic losses on certain insured transactions backed by pools of commercial mortgage-backed securities (CMBS). The majority of the increase reflects the Company’s revised expectations for the costs of commuting such transactions. The balance was due to deterioration within some insured transactions during the quarter and an adjustment made to the Company’s loss expectations reflecting an increased probability of a recession. While loss severities on liquidated properties have trended lower from the highs seen a year ago, they remain in excess of historical norms, leading to deductible erosion in some of our insured transactions.

In the third quarter of 2011, the Company closed commutation agreements with four counterparties, three of which were announced in conjunction with the release of its second quarter 2011 financial results. The Company closed an additional commutation in the third quarter after the second quarter announcement. The total amount of insured exposure commuted in the third quarter was $8.5 billion, consisting of certain multi-sector CDO and investment grade corporate CDO transactions. After September 30, 2011, the Company agreed to commute transactions with additional counterparties. The transactions, comprising primarily commercial real estate, total $10.6 billion in insured exposure.

In the third quarter of 2011, the Company increased its expectations for incremental economic losses on certain first-lien RMBS transactions by $109 million, reflecting higher loss severities upon foreclosures within certain insured Alt-A mortgage loan securitizations.

Portions of the $631 million of total economic losses are on policies subject to insurance accounting while other amounts relate to losses on insured VIEs or insured credit derivatives for which GAAP specifies alternative accounting. The following is a summary of third quarter economic losses based on those categories:

     

3Q 2011 Economic Losses (Benefit)

$ in millions
 

Change in Expected Payments

$234
Change in Insurance Recoveries (54)
Loss & LAE Expense on Policies Subject to Insurance Accounting $180
 
Credit Impairments on Insured VIEs $35
 
Credit Impairments on Insured Credit Derivatives $422
LAE on Insured Credit Derivatives (6)
Credit Impairments and LAE on Insured Credit Derivatives $416
 
Total Economic Losses (Benefit) $631
 




5 of 12

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,156.85 +24.88 0.15%
S&P 500 2,001.57 +2.59 0.13%
NASDAQ 4,562.1890 +9.43 0.21%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs