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 $29.28 per share at June 30, 2013 compared with $30.68 per share at December 31, 2012. Book Value (BV) per share was $15.63 as of June 30, 2013, compared to $16.22 as of December 31, 2012.
MBIA Inc.’s adjusted pre-tax loss (a non-GAAP measure defined in the attached Explanation of Non-GAAP Financial Measures) for the second quarter of 2013 was $160 million compared with an adjusted pre-tax loss of $152 million for the second quarter of 2012. The greater adjusted pre-tax loss for the three months ended June 30, 2013 compared to the three months ended June 30, 2012 was driven primarily by lower premiums earned, variable interest entity (VIE) revenues and net investment income, partially offset by decreases in impairments on insured credit derivatives and lower net losses on insured exposures. 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. Reconciliations of ABV to BV calculated in accordance with GAAP and adjusted pre-tax income (loss) to pre-tax income (loss) calculated in accordance with GAAP are attached.
The Company recorded a net loss of $178 million, or $0.92 per diluted share, for the second quarter of 2013 compared with net income of $581 million, or $2.98 per diluted share, for the second quarter of 2012. Consolidated total revenues for the three months ended June 30, 2013 included $182 million of net losses on the fair value of insured derivatives compared with $775 million of net gains for the same period of 2012. The net losses on the fair value of insured derivatives in 2013 were principally due to the effects of MBIA Corp.’s nonperformance risk on its derivative liabilities which resulted from a narrowing of its own credit spreads, partially offset by commuting derivatives at prices below fair value. The net gains on the fair value of insured derivatives in 2012 were principally the effects of MBIA Corp.’s nonperformance risk on its derivative liabilities which resulted from a widening of its own credit spreads, a reduction in the Company’s recovery rates and the result of commuting derivatives at prices below fair value. The Company is required to adjust the values of its derivative liabilities for the market's perception of its nonperformance risk. A decrease in the value of the derivative liabilities attributable to an increase in nonperformance risk is reflected as an unrealized gain while an increase in the value of the derivative liabilities attributable to a decline in nonperformance risk is reflected as an unrealized loss in the income statement.
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