MBIA Inc. Reports Second Quarter 2012 Financial Results

U.S. Public Finance Insurance Results

The Company’s U.S. public finance insurance business is primarily conducted through its National Public Finance Guarantee Corp. (National) subsidiary.

The U.S. public finance insurance segment recorded $148 million of pre-tax income in the second quarter of 2012 compared with $144 million of pre-tax income in the second quarter of 2011. The modest improvement in pre-tax income in the second quarter of 2012 resulted from an increase in total premiums earned driven by higher refunding volume, partially offset by an increase in legal and litigation-related costs and expenses and a reduced benefit from loss and loss adjustment expenses.

Total premiums earned in the U.S. public finance insurance segment were $130 million in the second quarter of 2012, up 23 percent from $106 million of total premiums earned in the second quarter of 2011, as a decrease in scheduled premiums earned was more than offset by an increase in refunding premiums earned.

Net investment income for the U.S. public finance insurance segment increased 4 percent to $56 million in the second quarter of 2012 from $54 million in the comparable period of 2011, primarily due to a higher yield on the $1.6 billion secured loan with MBIA Corp. relative to the previously invested assets.

The U.S. public finance insurance segment’s loss and loss adjustment expenses were a benefit of $3 million in the second quarter of 2012 compared with a benefit of $9 million in the second quarter of 2011.

Expenses associated with the amortization of deferred acquisition costs totaled $26 million in the second quarter of 2012, up 13 percent from $23 million in the second quarter of 2011 and in line with insured portfolio amortization.

Operating expenses were $28 million in the second quarter of 2012, compared with $19 million in the comparable period of 2011. The increase in operating expenses was driven by higher legal and litigation-related costs and expenses.

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