MBIA Inc. (NYSE: MBI) today reported Adjusted Book Value (ABV) per share (a non-GAAP measure defined in the attached Explanation of Non-GAAP Financial Measures) of $30.64 per share at September 30, 2012 compared with $31.23 per share at June 30, 2012. Book value per share was $13.25 as of September 30, 2012.
MBIA Inc.’s adjusted pre-tax loss (a non-GAAP measure defined in the attached Explanation of Non-GAAP Financial Measures) for the third quarter of 2012 was $118 million compared with an adjusted pre-tax loss of $430 million for the third quarter of 2011. The reduction in ABV and the adjusted pre-tax loss for the three months ended September 30, 2012 were driven primarily by losses on insured exposures. The lower adjusted pre-tax loss for the third quarter of 2012 compared with the third quarter of 2011 was primarily the result of decreases in impairments on insured credit derivatives, insurance losses and LAE, partially offset by a decrease in net gains related to unfavorable changes in foreign exchange rates. ABV and adjusted pre-tax income (loss) provide investors with additional views of the Company’s operating results that management finds useful in measuring financial performance.
Net income available to common shareholders for the third quarter of 2012 was $7 million, or $0.04 per share, compared with net income of $444 million, or $2.26 per share, for the third quarter of 2011. The decline in net income was primarily the result of pre-tax unrealized changes in the fair value of insured derivatives. In the three months ended September 30, 2012, the Company recorded a $33 million unrealized loss on insured credit derivatives compared with a $776 million unrealized gain on insured credit derivatives in the comparable period of 2011. The unrealized gain on insured credit derivatives in the third quarter of 2011 resulted from a reduced market perception of MBIA Insurance Corporation's (MBIA Corp.) credit quality and commutations of insured exposures. The Company is required to adjust the values of its derivative liabilities for the market's perception of its non-performance risk. The decrease in the value of the derivative liabilities attributable to the change in non-performance risk is reflected as an unrealized gain on the income statement.