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MBIA Inc. Reports Second Quarter 2012 Financial Results

“Beyond these issues, the insured portfolio in MBIA Corp. is approaching stability and National’s is performing in line with our expectations. The most significant litigation over the formation of National, the Article 78 proceeding, concluded in June and we are awaiting a decision from the Court. In the meantime, our fraud and breach of contract case against Bank of America and Countrywide is moving towards a 2013 trial,” Mr. Chaplin continued. “Insured claims on second- lien RMBS resumed their decline in the quarter, and an asset sale initiative at the holding company level bolstered its liquidity position.”

Year-to-Date Results

Net income available to common shareholders for the six months ended June 30, 2012 was $591 million, or $3.03 per share, compared with a net loss of $1.1 billion, or $5.70 per share, for the six months ended June 30, 2011. Net income for the six months ended June 30, 2012 and the net loss for the six months ended June 30, 2011 were, in each case, driven primarily by pre-tax unrealized changes to the fair value of insured derivatives. In the first six months of 2012, the Company recorded a $1.5 billion unrealized gain on insured credit derivatives compared with an unrealized loss of $1.3 billion in the first half of 2011.

The adjusted pre-tax loss for the six months ended June 30, 2012 was $700 million compared with adjusted pre-tax income of $185 million in the comparable period of 2011. The unfavorable change for the six months ended June 30, 2012 was primarily due to increased reserves and impairments on insured exposures, an increase in operating expenses due to a significant increase in legal and litigation-related costs, lower net investment income and an increase in net investment losses related to other-than-temporary impairments.

Second Quarter 2012 Segment Results

The following is a summary of pre-tax results by segment for the second quarter of 2012:

$ in millions         Structured                
U.S. Public Finance and Advisory
      Finance     International     Services     Corporate     Wind-down     Consolidated
2Q 2012 Pre-tax Income (Loss)

 

$ 148 $ 645 $ 0 $ 28 $ (81 ) $ 795
2Q 2011 Pre-tax Income (Loss)     $ 144     $ (125 )     $ (3 )     $ (1 )     $ (167 )     $ (147 )
 

Second Quarter 2012 Adjusted Pre-Tax Income

The following is a summary of adjusted pre-tax income for the second quarter of 2012 where such results differ from pre-tax income calculated in accordance with GAAP. Adjusted pre-tax income is equal to GAAP pre-tax income for the U.S. Public Finance, Advisory Services, Corporate and Wind-down segments.

$ in millions       Structured    
Finance and
        International     Consolidated
2Q 2012 Adj. Pre-tax Income (Loss)

 

$ (300 ) $ (152 )
2Q 2011 Adj. Pre-tax Income (Loss)       $ 188       $ 161  
 




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