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TheStreet Open House

MBIA Inc. Reports Fourth Quarter And Full Year 2011 Financial Results

Adjusted Pre-tax Income: Adjusted pre-tax income, a non-GAAP measure, is used by the Company to supplement its analysis of GAAP pre-tax income. The Company uses adjusted pre-tax income as a measure of fundamental periodic financial performance. Adjusted pre-tax income adjusts GAAP pre-tax income to remove the effects of consolidating insured VIEs and gains and losses related to fair valuing insured credit derivatives, which the Company believes will reverse over time, and adds in changes in the present value of insurance claims the Company expects to pay on insured credit derivatives based on its ongoing insurance loss monitoring and loss adjustment expenses. Adjusted pre-tax income is not a substitute for and should not be viewed in isolation from GAAP pre-tax income and the Company’s definition of adjusted pre-tax income may differ from that used by other companies.

Claims-paying Resources (CPR): CPR is a key measure of the resources available to National and MBIA Corp. to pay claims under their respective insurance policies. CPR consists of total financial resources and reserves calculated on a statutory basis. CPR has been a common measure used by financial guarantee insurance companies to report and compare resources and continues to be used by MBIA’s management to evaluate changes in such resources. The Company has provided CPR to allow investors and analysts to evaluate National and MBIA Corp. using the same measure that MBIA’s management uses to evaluate their resources to pay claims under their respective insurance policies. There is no directly comparable GAAP measure.

Credit Impairments on Insured Derivatives: Credit impairments on insured derivatives represent actual payments for the period plus the present value of the Company’s estimate of expected future claim payments for such transactions, using a discount rate required by statutory accounting principles, plus loss adjustment expenses. Since the Company’s insured credit derivatives have similar terms, conditions, risks, and economic profiles to its financial guarantee insurance policies, the Company evaluates them for impairment periodically in the same way that it estimates loss and LAE for its financial guarantee insurance policies. Credit impairments on insured derivatives are equal to the Company’s statutory losses and loss adjustment expenses for such contracts.

Credit impairments on insured derivatives may differ from the fair values recorded in the Company’s financial statements. The Company expects that the majority of its exposure written in derivative form will not be settled at fair value. The fair value of an insured derivative contract will be influenced by a variety of market and transaction-specific factors that may be unrelated to potential future claim payments. In the absence of credit impairments or the termination of derivatives at losses, the cumulative unrealized losses recorded from fair valuing insured derivatives should reverse before or at the maturity of the contracts. Contracts also may be settled prior to maturity at amounts that may be more or less than their recorded fair values. Those settlements can result in realized gains or losses, and the reversal of unrealized losses. For these reasons, the Company believes its disclosure of credit impairments on insured derivatives provides additional meaningful information to investors about potential realized losses on these contracts.

 
MBIA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
 
 

December 31, 2011

 

December 31, 2010

 
Assets
Investments:
Fixed-maturity securities held as available-for-sale, at fair value (amortized cost
$6,259 and $9,679) $ 6,177 $ 9,092
Fixed-maturity securities at fair value 295 25
Investments pledged as collateral, at fair value (amortized cost $642 and $548) 543 552
Short-term investments held as available-for-sale, at fair value (amortized
cost $1,577 and $2,073) 1,571 2,070
Other investments (includes investments at fair value of $96 and $185)   107     188  
Total 8,693 11,927
 
Cash and cash equivalents 473 366
Accrued investment income 63 95
Premiums receivable 1,360 1,589
Deferred acquisition costs 351 412
Prepaid reinsurance premiums 88 97
Insurance loss recoverable 3,046 2,531
Reinsurance recoverable on paid and unpaid losses 16 15
Goodwill - 31
Property and equipment, at cost (less accumulated depreciation of $139 and $135) 69 71
Receivable for investments sold 32 8
Derivative assets 2 4
Current income taxes - 41
Deferred income taxes, net 1,745 908
Other assets 42 46
Assets of consolidated variable interest entities:
Cash 160 764
Investments held-to-maturity, at amortized cost
(fair value $3,489 and $3,760) 3,843 4,039
Fixed-maturity securities held as available-for-sale, at fair value
(amortized cost $473 and $338) 432 339
Fixed-maturity securities at fair value 2,884 5,241
Loans receivable at fair value 2,046 2,183
Loan repurchase commitments 1,077 835
Derivative assets 450 699
Other assets   1     38  
Total assets $ 26,873   $ 32,279  
Liabilities and Equity
Liabilities:
Unearned premium revenue $ 3,515 $ 4,145
Loss and loss adjustment expense reserves 836 1,129
Reinsurance premiums payable 64 71
Investment agreements 1,578 2,005
Medium-term notes (includes financial instruments carried at
fair value $165 and $116) 1,656 1,740
Securities sold under agreements to repurchase 287 471
Short-term debt - 65
Long-term debt 1,840 1,851
Current income taxes 48 -
Deferred fee revenue 8 10
Payable for investments purchased 3 2
Derivative liabilities 5,164 4,617
Other liabilities 268 272
Liabilities of consolidated variable interest entities:
Variable interest entity notes (includes financial instruments carried
at fair value $4,754 and $6,680) 8,697 10,590
Long-term debt 360 360
Derivative liabilities 825 2,104
Other liabilities   1     1  
Total liabilities   25,150     29,433  
 
Equity:
Preferred stock, par value $1 per share; authorized shares─10,000,000;
issued and outstanding ─ none - -
Common stock, par value $1 per share; authorized shares─400,000,000;
issued shares ─ 274,896,162 and 274,719,578 275 275
Additional paid-in capital 3,072 3,064
Retained earnings 805 2,124
Accumulated other comprehensive loss, net of deferred
tax of $105 and $229 (176 ) (406 )
Treasury stock, at cost ─ 81,752,966 and 74,973,978 shares   (2,276 )   (2,225 )
Total shareholders' equity of MBIA Inc. 1,700 2,832
Preferred stock of subsidiary and noncontrolling interest   23     14  
Total equity   1,723     2,846  
Total liabilities and equity $ 26,873   $ 32,279  
 

 
MBIA INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(in millions)
               
Structured
U.S. Finance and
Public Finance International Advisory
Three months ended December 31, 2011 Insurance Insurance Services Wind-down
(National) (MBIA Corp.) (Cutwater) Corporate Operations Subtotal Eliminations Consolidated
Revenues:
Premiums earned:
Scheduled premiums earned $ 63 $ 49 $ - $ - $ - $ 112 $ (10 ) $ 102
Refunding premiums earned   50     -     -   -     -     50     (9 )   41  
Total premiums earned 113 49 - - - 162 (19 ) 143
Net investment income 51 12 - 2 19 84 - 84
Fees and reimbursements 3 26 21 87 - 137 (128 ) 9
Change in fair value of insured derivatives:
Realized gains (losses) and other settlements
on insured derivatives - (1,772 ) - - - (1,772 ) - (1,772 )
Unrealized gains (losses) on insured derivatives   -     90     -   -     -     90     -     90  
Net change in fair value of insured derivatives - (1,682 ) - - - (1,682 ) - (1,682 )
Net gains (losses) on financial instruments at
fair value and foreign exchange 74 47 - (24 ) (78 ) 19 (4 ) 15
Investment losses related to
other-than-temporary impairments:
Investment losses related to
other-than-temporary impairments - (97 ) - (3 ) - (100 ) - (100 )
Other-than-temporary impairments recognized
in accumulated other comprehensive loss   -     39     -   4     -     43     -     43  

Net investment losses related to

other-than-temporary impairments - (58 ) - 1 - (57 ) - (57 )
Other net realized gains (losses) (32 ) - - 25 - (7 ) - (7 )
Revenues of consolidated VIEs:
Net investment income - 13 - - 3 16 1 17
Net gains (losses) on financial instruments at
fair value and foreign exchange - 58 - - (1 ) 57 (1 ) 56
Other net realized gains (losses) - 255 - - - 255 - 255
               
Total revenues 209 (1,280 ) 21 91 (57 ) (1,016 ) (151 ) (1,167 )
 
Expenses:
Losses and loss adjustment (1 ) (284 ) - - - (285 ) - (285 )
Amortization of deferred acquisition costs 25 29 - - - 54 (42 ) 12
Operating 22 40 12 36 3 113 (30 ) 83
Interest - 38 - 14 31 83 (8 ) 75
Expenses of consolidated VIEs:
Operating - 6 - - 65 71 (66 ) 5
Interest - 12 - - 5 17 - 17
               
Total expenses   46     (159 )   12   50     104     53     (146 )   (93 )
 
Pre-tax income (loss) $ 163   $ (1,121 ) $ 9 $ 41   $ (161 ) $ (1,069 ) $ (5 ) (1,074 )
 
Benefit for income taxes   (448 )
 
Net loss $ (626 )
 

 
MBIA INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(in millions)
 
    Structured            
U.S. Finance and
Public Finance International Advisory
Three months ended December 31, 2010 Insurance Insurance Services Wind-down
(National) (MBIA Corp.) (Cutwater) Corporate Operations Subtotal Eliminations Consolidated
Revenues:
Premiums earned:
Scheduled premiums earned $ 80 $ 57 $ - $ - $ - $ 137 $ (19 ) $ 118
Refunding premiums earned   32   -     -     -   -     32     (5 )   27  
Total premiums earned 112 57 - - - 169 (24 ) 145
Net investment income 54 37 - 4 22 117 (2 ) 115
Fees and reimbursements 2 30 18 18 - 68 (56 ) 12
Change in fair value of insured derivatives:
Realized gains (losses) and other settlements
on insured derivatives - (616 ) - - - (616 ) - (616 )
Unrealized gains (losses) on insured derivatives   -   1,110     -     -   -     1,110     -     1,110  

Net change in fair value of insured derivatives

- 494 - - - 494 - 494
Net gains (losses) on financial instruments at
fair value and foreign exchange 6 4 - 51 62 123 - 123
Investment losses related to
other-than-temporary impairments:
Investment losses related to
other-than-temporary impairments - - - - (19 ) (19 ) - (19 )
Other-than-temporary impairments recognized
in accumulated other comprehensive loss   -   (1 )   -     -   (1 )   (2 )   -     (2 )
Net investment losses related to
other-than-temporary impairments - (1 ) - - (20 ) (21 ) - (21 )
Net gains (losses) on extinguishment of debt - - - - 8 8 - 8
Other net realized gains (losses) - 10 - - 1 11 - 11
Revenues of consolidated VIEs:
Net investment income - 20 - - 4 24 - 24
Net gains (losses) on financial instruments at
fair value and foreign exchange - (66 ) - - 9 (57 ) 5 (52 )
Net gains (losses) on extinguishment of debt - - - - 7 7 - 7
Other net realized gains (losses) - (2 ) - - - (2 ) - (2 )
               
Total revenues 174 583 18 73 93 941 (77 ) 864
 
Expenses:
Losses and loss adjustment 31 79 - - - 110 - 110
Amortization of deferred acquisition costs 23 38 - - - 61 (45 ) 16
Operating 17 39 21 23 3 103 (22 ) 81
Interest - 33 - 16 41 90 (11 ) 79
Expenses of consolidated VIEs:
Operating - 12 - - 2 14 (4 ) 10
Interest - 11 - - 5 16 - 16
               
Total expenses   71   212     21     39   51     394     (82 )   312  
 
Pre-tax income (loss) $ 103 $ 371   $ (3 ) $ 34 $ 42   $ 547   $ 5   552
 
Provision for income taxes   101  
 
Net income $ 451  
 

 
MBIA INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(in millions)
 
    Structured            
U.S. Finance and
Public Finance International Advisory
Twelve months ended December 31, 2011 Insurance Insurance Services Wind-down
(National) (MBIA Corp.) (Cutwater) Corporate Operations Subtotal Eliminations Consolidated
Revenues:
Premiums earned:
Scheduled premiums earned $ 283 $ 222 $ - $ - $ - $ 505 $ (49 ) $ 456
Refunding premiums earned   171     8     -   -     -     179     (30 )   149  
Total premiums earned 454 230 - - - 684 (79 ) 605
Net investment income 216 77 - 2 78 373 10 383
Fees and reimbursements 8 116 67 154 - 345 (295 ) 50
Change in fair value of insured derivatives:
Realized gains (losses) and other settlements
on insured derivatives 2 (2,373 ) - - - (2,371 ) - (2,371 )
Unrealized gains (losses) on insured derivatives   -     (441 )   -   -     -     (441 )   -     (441 )
Net change in fair value of insured derivatives 2 (2,814 ) - - - (2,812 ) - (2,812 )
Net gains (losses) on financial instruments at
fair value and foreign exchange 96 69 - 23 (283 ) (95 ) (4 ) (99 )
Investment losses related to
other-than-temporary impairments:
Investment losses related to
other-than-temporary impairments - (99 ) - (14 ) (12 ) (125 ) - (125 )
Other-than-temporary impairments recognized
in accumulated other comprehensive loss   -     37     -   6     (19 )   24     -     24  
Net investment losses related to
other-than-temporary impairments - (62 ) - (8 ) (31 ) (101 ) - (101 )
Net gains (losses) on extinguishment of debt - - - - 24 24 2 26
Other net realized gains (losses) (31 ) 1 - 25 4 (1 ) - (1 )
Revenues of consolidated VIEs:
Net investment income - 52 - - 15 67 3 70
Net gains (losses) on financial instruments at
fair value and foreign exchange - 30 - - 12 42 17 59
Other net realized gains (losses) - 255 - - - 255 8 263
               
Total revenues 745 (2,046 ) 67 196 (181 ) (1,219 ) (338 ) (1,557 )
 
Expenses:
Losses and loss adjustment 4 (84 ) - - - (80 ) - (80 )
Amortization of deferred acquisition costs 89 136 - - - 225 (162 ) 63
Operating 77 145 64 114 12 412 (104 ) 308
Interest - 138 - 58 129 325 (25 ) 300
Expenses of consolidated VIEs:
Operating - 31 - - 68 99 (70 ) 29
Interest - 43 - - 19 62 - 62
               
Total expenses   170     409     64   172     228     1,043     (361 )   682  
 
Pre-tax income (loss) $ 575   $ (2,455 ) $ 3 $ 24   $ (409 ) $ (2,262 ) $ 23   (2,239 )
 
Benefit for income taxes   (920 )
 
Net loss $ (1,319 )

 
MBIA INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(in millions)
               
 
Structured
U.S. Finance and
Public Finance International Advisory
Twelve months ended December 31, 2010 Insurance Insurance Services Wind-down
(National) (MBIA Corp.) (Cutwater) Corporate Operations Subtotal Eliminations Consolidated
Revenues:
Premiums earned:
Scheduled premiums earned $ 335 $ 247 $ - $ - $ - $ 582 $ (78 ) $ 504
Refunding premiums earned   107   4     -     -     -     111     (21 )   90  
Total premiums earned 442 251 - - - 693 (99 ) 594
Net investment income 230 125 - 15 95 465 (8 ) 457
Fees and reimbursements 22 200 68 83 - 373 (213 ) 160
Change in fair value of insured derivatives:
Realized gains (losses) and other settlements
on insured derivatives 1 (163 ) - - - (162 ) - (162 )
Unrealized gains (losses) on insured derivatives   -   (607 )   -     -     -     (607 )   -     (607 )
Net change in fair value of insured derivatives 1 (770 ) - - - (769 ) - (769 )
Net gains (losses) on financial instruments at
fair value and foreign exchange 55 135 2 (28 ) (76 ) 88 - 88
Investment losses related to
other-than-temporary impairments:
Investment losses related to
other-than-temporary impairments - (1 ) - - (205 ) (206 ) - (206 )
Other-than-temporary impairments recognized
in accumulated other comprehensive loss   -   (4 )   -     -     146     142     -     142  
Net investment losses related to
other-than-temporary impairments - (5 ) - - (59 ) (64 ) - (64 )
Net gains (losses) on extinguishment of debt - - - - 35 35 - 35
Other net realized gains (losses) - 29 - - - 29 - 29
Revenues of consolidated VIEs:
Net investment income - 53 - - 20 73 - 73
Net gains (losses) on financial instruments at
fair value and foreign exchange - 269 - - 51 320 22 342
Net gains (losses) on extinguishment of debt - - - - 25 25 - 25
Other net realized gains (losses) - (76 ) - - - (76 ) - (76 )
               
Total revenues 750 211 70 70 91 1,192 (298 ) 894
 
Expenses:
Losses and loss adjustment 73 159 - - - 232 - 232
Amortization of deferred acquisition costs 83 145 - - - 228 (169 ) 59
Operating 64 133 71 102 13 383 (93 ) 290
Interest - 136 - 66 175 377 (52 ) 325
Expenses of consolidated VIEs:
Operating - 27 - - 3 30 (6 ) 24
Interest - 42 - - 17 59 - 59
               
Total expenses   220   642     71     168     208     1,309     (320 )   989  
 
Pre-tax income (loss) $ 530 $ (431 ) $ (1 ) $ (98 ) $ (117 ) $ (117 ) $ 22   (95 )
 
Benefit for income taxes   (148 )
 
Net income $ 53  
 

 
MBIA INC. AND SUBSIDIARIES
ADJUSTED PRE-TAX INCOME
(in millions)
             
Structured
U.S. Public Finance &
Finance International Advisory
Insurance Insurance Services Wind-down
Three months ended December 31, 2011 (National) (MBIA Corp.) (Cutwater) Corporate Operations Eliminations Consolidated
 
Revenues:
Net premiums earned $ 113 $ 53 $ - $ - $ - $ (20 ) $ 146
Net investment income 51 27 - 2 19 - 99
Fees and reimbursements 3 26 21 87 - (127 ) 10
Premiums and fees on insured derivatives - 22 - - - - 22
Net gains (losses) on financial instruments at
fair value and foreign exchange 74 45 - (24 ) (78 ) (4 ) 13
Net investment losses related to other-than-
temporary impairments - (58 ) - 1 - - (57 )
Other net realized gains (losses) (32 ) - - 25 - - (7 )
VIE Revenues   -     -     -   -     2     1     3  
 
Total revenues 209 115 21 91 (57 ) (150 ) 229
 
Expenses:
Losses and loss adjustment (1 ) (420 ) - - - - (421 )
Insured credit derivative impairments and LAE - 729 - - - - 729
Amortization of deferred acquisition costs 25 30 - - - (43 ) 12
Operating 22 38 12 36 3 (30 ) 81
Interest - 38 - 14 31 (8 ) 75
VIE expenses   -     -     -   -     70     (65 )   5  
 
Total expenses   46     415     12   50     104     (146 )   481  
 
Adjusted pre-tax income (loss) $ 163   $ (300 ) $ 9 $ 41   $ (161 ) $ (4 ) $ (252 )
 
Additions to adjusted pre-tax income (loss):
Impact of consolidating certain VIEs - (116 ) - - - (1 ) (117 )
Mark-to-market on insured credit derivatives - 361 - - - - 361
 
Subtractions from adjusted pre-tax income (loss):
Impairments and LAE on insured credit derivatives   -     1,066     -   -     -     -     1,066  
 
GAAP pre-tax income (loss) $ 163   $ (1,121 ) $ 9 $ 41   $ (161 ) $ (5 ) $ (1,074 )
 

 
MBIA INC. AND SUBSIDIARIES
ADJUSTED PRE-TAX INCOME
(in millions)
             
Structured
U.S. Public Finance &
Finance International Advisory
Insurance Insurance Services Wind-down
Three months ended December 31, 2010 (National) (MBIA Corp.) (Cutwater) Corporate Operations Eliminations Consolidated
 
Revenues:
Net premiums earned $ 112 $ 61 $ - $ - $ - $ (24 ) $ 149
Net investment income 54 45 - 4 22 (1 ) 124
Fees and reimbursements 2 29 18 18 - (52 ) 15
Premiums and fees on insured derivatives - 32 - - - - 32
Net gains (losses) on financial instruments at
fair value and foreign exchange 6 5 - 51 62 - 124
Net investment losses related to other-than-
temporary impairments - (1 ) - - (20 ) - (21 )
Net gains (losses) on extinguishment of debt - - - - 8 - 8
Other net realized gains (losses) - 10 - - 1 - 11
VIE Revenues   -   -     -     -   19     -     19  
 

Total revenues

174 181 18 73 92 (77 ) 461
 
Expenses:
Losses and loss adjustment 31 186 - - - - 217
Insured credit derivative impairments and LAE - 370 - - - - 370
Amortization of deferred acquisition costs 23 39 - - - (43 ) 19
Operating 17 40 21 23 3 (22 ) 82
Interest - 33 - 16 41 (12 ) 78
VIE expenses   -   -     -     -   6     -     6  
 
Total expenses   71   668     21     39   50     (77 )   772  
 
Adjusted pre-tax income (loss) $ 103 $ (487 ) $ (3 ) $ 34 $ 42   $ -   $ (311 )
 
Additions to adjusted pre-tax income (loss):
Impact of consolidating certain VIEs - 71 - - - 5 76
Mark-to-market on insured credit derivatives - 1,065 - - - - 1,065
 
Subtractions from adjusted pre-tax income (loss):
Impairments and LAE on insured credit derivatives   -   278     -     -   -     -     278  
 
GAAP pre-tax income (loss) $ 103 $ 371   $ (3 ) $ 34 $ 42   $ 5   $ 552  
 

 
MBIA INC. AND SUBSIDIARIES
ADJUSTED PRE-TAX INCOME
(in millions)
 
    Structured          
U.S. Public Finance &
Finance International Advisory
Insurance Insurance Services Wind-down
Twelve months ended December 31, 2011 (National) (MBIA Corp.) (Cutwater) Corporate Operations Eliminations Consolidated
 
Revenues:
Net premiums earned $ 454 $ 247 $ - $ - $ - $ (80 ) $ 621
Net investment income 216 136 - 2 78 10 442
Fees and reimbursements 8 116 67 154 - (291 ) 54
Premiums and fees on insured derivatives 2 104 - - - - 106
Net gains (losses) on financial instruments at
fair value and foreign exchange 96 110 - 23 (283 ) (4 ) (58 )
Net investment losses related to other-than-
temporary impairments - (62 ) - (8 ) (31 ) - (101 )
Net gains (losses) on extinguishment of debt - - - - 24 2 26
Other net realized gains (losses) (31 ) (5 ) - 25 4 - (7 )
VIE Revenues   -     -     -   -     27     3     30  
 
Total revenues 745 646 67 196 (181 ) (360 ) 1,113
 
Expenses:
Loss and loss adjustment 4 (174 ) - - - - (170 )
Insured credit derivative impairments and LAE - 1,110 - - - - 1,110
Amortization of deferred acquisition costs 89 131 - - - (162 ) 58
Operating 77 129 64 114 12 (104 ) 292
Interest - 138 - 58 129 (25 ) 300
VIE expenses   -     -     -   -     87     (67 )   20  
 
Total expenses   170     1,334     64   172     228     (358 )   1,610  
 
Adjusted pre-tax income (loss) $ 575   $ (688 ) $ 3 $ 24   $ (409 ) $ (2 ) $ (497 )
 
Additions to adjusted pre-tax income (loss):
Impact of consolidating certain VIEs - (74 ) - - - 25 (49 )
Mark-to-market on insured credit derivatives - (310 ) - - - - (310 )
 
Subtractions from adjusted pre-tax income (loss):
Impairments and LAE on insured credit derivatives   -     1,383     -   -     -     -     1,383  
 
GAAP pre-tax income (loss) $ 575   $ (2,455 ) $ 3 $ 24   $ (409 ) $ 23   $ (2,239 )
 

 
MBIA INC. AND SUBSIDIARIES
ADJUSTED PRE-TAX INCOME
(in millions)
             
Structured
U.S. Public Finance &
Finance International Advisory
Insurance Insurance Services Wind-down
Twelve months ended December 31, 2010 (National) (MBIA Corp.) (Cutwater) Corporate Operations Eliminations Consolidated
 
Revenues:
Net premiums earned $ 442 $ 291 $ - $ - $ - $ (99 ) $ 634
Net investment income 230 170 - 15 95 (8 ) 502
Fees and reimbursements 22 200 68 83 - (208 ) 165
Premiums and fees on insured derivatives 1 298 - - - - 299
Net gains (losses) on financial instruments at
fair value and foreign exchange 55 162 2 (28 ) (76 ) - 115
Net investment losses related to other-than-
temporary impairments - (5 ) - - (59 ) - (64 )
Net gains (losses) on extinguishment of debt - - - - 35 - 35
Other net realized gains (losses) - 29 - - - - 29
VIE Revenues   -   -     -     -     96     -     96  
 
Total revenues 750 1,145 70 70 91 (315 ) 1,811
 
Expenses:
Losses and loss adjustment 73 238 - - - - 311
Insured credit derivative impairments and LAE - 1,177 - - - - 1,177
Amortization of deferred acquisition costs 83 153 - - - (169 ) 67
Operating 64 133 71 102 13 (93 ) 290
Interest - 136 - 66 175 (52 ) 325
VIE expenses   -   -     -     -     20     (2 )   18  
 
Total expenses   220   1,837     71     168     208     (316 )   2,188  
 
Adjusted pre-tax income (loss) $ 530 $ (692 ) $ (1 ) $ (98 ) $ (117 ) $ 1   $ (377 )
 
Additions to adjusted pre-tax income (loss):
Impact of consolidating certain VIEs - 222 - - - 21 243
Mark-to-market on insured credit derivatives - (679 ) - - - - (679 )
 
Subtractions from adjusted pre-tax income (loss):
Impairments and LAE on insured credit derivatives   -   (718 )   -     -     -     -     (718 )
 
GAAP pre-tax income (loss) $ 530 $ (431 ) $ (1 ) $ (98 ) $ (117 ) $ 22   $ (95 )
 

 
MBIA INC. AND SUBSIDIARIES
           

Components of Adjusted Book Value per Share:

 

December 31, 2011

 

December 31, 2010

  Change  
 
 
Reported Book Value $8.80 $14.18 ($5.38 )
 
Plus: Cumulative unrealized loss on insured

credit derivatives, after tax

16.12

14.58

1.54

 
Less: Cumulative impairments on insured

credit derivatives, after tax (1)

(3.74

)

 

(8.69

)

 

4.95

 
Reverse: Unrealized losses included in OCI 0.85 2.27 (1.42 )
 

Reverse:

Impact of consolidating certain VIEs (2)

0.82

0.50

0.32

 
Plus:

Net unearned premium revenue, after tax (1) (3)

11.65 13.97 (2.32 )
           
Adjusted Book Value (4) $34.50   $36.81   ($2.31 )
 
       
(1)

As of December 31, 2011 and December 31, 2010 the discount rate on Financial Guarantee installment premiums was the risk-free rate as defined by accounting principles for Financial Guarantee insurance contracts and the discount rate was 5.0% on Insured Derivative installment revenue and impairments.

(2) Represents the impact on consolidated total equity of VIEs that are not considered business enterprises of the Company.
(3)

The amounts consist of installment and upfront Financial Guarantee premiums, Insured Derivative revenue and deferred commitment/structuring fees, net of deferred acquisition costs.

(4) A non-GAAP measure.
 
 

Net Income (Loss) per Common Share:

                 
Three Months Ended Twelve Months Ended
December 31 December 31
2011 2010 2011 2010
Basic ($3.23) $2.25 ($6.69) $0.26
Diluted ($3.23) $2.24 ($6.69) $0.26
 
 

Weighted-Average Number of Common Shares Outstanding:

 
Basic 193,304,376 199,987,373 197,019,968 202,421,433
Diluted 193,304,376 200,848,214 197,019,968 203,021,134
 

 
INSURANCE OPERATIONS
 

Selected Financial Data Computed on a Statutory Basis

(dollars in millions)
 

National Public Finance Guarantee Corporation

 

December 31, 2011

 

December 31, 2010

 
Policyholders' surplus $ 1,423.7 $ 907.7
Contingency reserve   1,385.3     1,473.5
 
Statutory capital 2,809.0 2,381.2
 
Unearned premium reserve 2,484.9 2,872.6
Present value of installment premiums (1)   239.0     282.1
 
Premium resources (2) 2,723.9 3,154.7
 
Net loss and loss adjustment expense reserves (1) (3.4 ) 95.9
Salvage reserves   161.2     108.1
Gross loss and loss adjustment expense reserves 157.8 204.0
 
   
Total claims-paying resources $ 5,690.7   $ 5,739.9
 
 
Net debt service outstanding $ 635,653.0 $ 752,420.0
 
Capital ratio (3) 226:1 316:1
 
Claims-paying ratio (4) 134:1 162:1
 
 
 

MBIA Insurance Corporation

December 31, 2011

December 31, 2010

 
Policyholders' surplus $ 1,596.6 $ 1,074.7
Contingency reserve   706.4     1,655.7
 
Statutory capital 2,303.0 2,730.4
 
Unearned premium reserve 607.1 703.1
Present value of installment premiums (5)   1,225.8     1,655.0
 
Premium resources (2) 1,832.9 2,358.1
 
Net loss and loss adjustment expense reserves (5) (2,266.4 ) 155.4
Salvage reserves (6)   4,249.0     3,598.6
Gross loss and loss adjustment expense reserves 1,982.6 3,754.0
 
   
Total claims-paying resources $ 6,118.5   $ 8,842.5
 
 
Net debt service outstanding $ 180,805.3 $ 244,548.5
 
Capital ratio (3) 79:1 90:1
 
Claims-paying ratio (4) 33:1 31:1
 
 
(1) At December 31, 2011 and December 31, 2010 the discount rate was 4.77% and 4.19%, respectively.
(2) The amounts consist of Financial Guarantee premiums and Insured Derivative premiums.
(3) Net debt service outstanding divided by statutory capital.
(4)

Net debt service outstanding divided by the sum of statutory capital, unearned premium reserve (after-tax), present value of installment premiums (after-tax), net loss and loss adjustment expense reserves and salvage reserves.

(5)

At December 31, 2011 and December 31, 2010 the discount rate was 5.59% and 5.93%, respectively.

(6)

The amount primarily consists of expected recoveries related to the Company's put-back claims of ineligible mortgage loans.





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