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MBIA Inc. Reports Second Quarter 2013 Financial Results

Stocks in this article: MBI

“The second quarter brought a close to the challenges to the formation of National brought by a bank group, the elimination of nearly $18 billion of insured exposure, which included $11 billion of highly potentially volatile CMBS and ABS CDO exposures, the collection of almost three quarters of the put-back recoverables on our balance sheet at year-end 2012, and an agreement that should result in the eventual receipt of approximately $796 million of additional put-back recoverables related to our ResCap exposure,” said MBIA Inc. President and Chief Financial Officer Chuck Chaplin. “There is risk remaining in our structured finance book, but we are much closer to achieving stability there. Meanwhile, we continue to work with the rating agencies and other parties to lay the foundation for the re-launch of our U.S. muni-only insurer, National Public Finance Guarantee Corp.”

Year-to-Date Results

The net loss for the six months ended June 30, 2013 was $14 million, or $0.07 per diluted share, compared with net income of $591 million, or $3.03 per diluted share, for the six months ended June 30, 2012. The net loss in the first six months of 2013 and net income in the first six months of 2012 were primarily the result of pre-tax changes in the fair value of insured derivatives. In the first six months of 2013, the Company recorded $243 million of net losses on the fair value of insured derivatives compared with $1.1 billion 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 and a decline in the weighted average life on transactions. The net gains on the fair value of insured derivatives in 2012 were principally the result of commuting derivatives at prices below fair value, the effects of MBIA Corp.’s nonperformance risk on its derivative liabilities which resulted from a widening of its own credit spreads and a reduction in the Company’s recovery rate, and favorable movements in spreads and pricing on collateral within transactions.

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