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MBIA Inc. Reports Third Quarter 2012 Financial Results

Stocks in this article: MBI

As of September 30, 2012, MBIA Corp.’s statutory balance sheet reflected $1.1 billion in cash and invested assets including $386 million of cash, short-term investments and other highly liquid investments available to meet liquidity demands, and excluding amounts held by subsidiaries.

MBIA Corp. had statutory capital of $1.5 billion and claims-paying resources totaling $5.1 billion at September 30, 2012.

Advisory Services

The Company’s Advisory Services business is primarily conducted in its Cutwater Asset Management subsidiaries. Cutwater recorded a pre-tax loss of $2 million in the third quarter of 2012 compared with a pre-tax loss of $1 million in the third quarter of 2011. The increase in the pre-tax loss in the third quarter of 2012 compared with the third quarter of 2011 was primarily the result of lower investment management fees.

Corporate Segment

The Corporate segment comprises MBIA Inc.’s holding company activities and certain subsidiaries, including Optinuity Alliance Resources Corporation. The Corporate segment recorded pre-tax income of $22 million in the third quarter of 2012 compared with a pre-tax loss of $21 million in the third quarter of 2011. The improvement in the Corporate segment's pre-tax income was driven by a $35 million fee paid by the Company’s conduit segment in the third quarter of 2012 for administrative and other services. The fees for these services may vary significantly from period to period.

As of September 30, 2012, the corporate activities of MBIA Inc. had $335 million of cash and highly liquid assets available for general corporate liquidity purposes.

Wind-down Operations

The Company’s wind-down operations comprise its ALM and Conduit segments, both of which are in run-off.

The Company’s wind-down operations recorded a pre-tax loss of $77 million in the third quarter of 2012 compared with a pre-tax loss of $9 million in the third quarter of 2011. The pre-tax loss in the third quarter of 2012 was driven by $38 million in net losses on financial instruments at fair value and foreign exchange, $37 million in VIE operating expenses resulting primarily from a fee paid to the Corporate segment for administrative and other services and $22 million in interest expense, partially offset by $16 million in net gains on the extinguishment of debt. The pre-tax loss in the third quarter of 2011 was driven by negative net interest spread in the ALM business.

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