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MBIA Inc. Reports Third Quarter 2012 Financial Results

“Deterioration in the performance of commercial real estate exposures and losses on insured RMBS transactions from ineligible mortgages drove our adjusted pre-tax loss this quarter,” said MBIA Inc. President and Chief Financial Officer Chuck Chaplin. “The path forward for our structured finance subsidiary, MBIA Corp., requires that we collect our put-back recoverables, principally from Countrywide and Bank of America, who continue to renege on their contractual obligation to repurchase billions of dollars in ineligible mortgages. Their default has put substantial pressure on MBIA Corp.’s liquidity position. We remain confident that we will ultimately resolve our litigation with Bank of America and collect the put-back recoverables, which will improve MBIA Corp.’s stability.”

Year-to-Date Results

Net income available to common shareholders for the nine months ended September 30, 2012 was $598 million, or $3.07 per share, compared with a net loss of $693 million, or $3.50 per share, for the nine months ended September 30, 2011. The improvement in net income was primarily the result of pre-tax unrealized changes in the fair value of insured derivatives. In the first nine months of 2012, the Company recorded a $1.5 billion unrealized gain on insured credit derivatives compared with an unrealized loss of $531 million in the first nine months of 2011.

The adjusted pre-tax loss for the nine months ended September 30, 2012 was $818 million compared with an adjusted pre-tax loss of $244 million in the comparable period of 2011. The unfavorable change for the nine months ended September 30, 2012 was primarily due to increased losses on insured credit derivatives and financial guarantee policies, an increase in operating expenses due to a significant increase in legal and litigation related costs, and lower net investment income.

Third Quarter 2012 Segment Results

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

$ in millions

       

Structured

               

U.S. Public

Finance and

Advisory

Wind-down

 

   

Finance

   

International

   

Services

    Corporate    

Segments

    Consolidated
3Q 2012 Pre-tax Income (Loss) $ 164 $ (164 ) $ (2 ) $ 22 $ (77 ) $ (57 )
3Q 2011 Pre-tax Income (Loss)     $ 157       $ 613       $ (1 )     $ (21 )     $ (9 )     $ 745  
 

Third Quarter 2012 Adjusted Pre-Tax Income

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

$ in millions

   

Structured

   

Finance and

 

   

International

    Consolidated
3Q 2012 Adj. Pre-tax Income (Loss) $ (224) $ (118)
3Q 2011 Adj. Pre-tax Income (Loss)     $ (556)     $ (430)
 

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.

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