Total revenues of consolidated VIEs were $86 million in the second quarter of 2013 compared with losses of $22 million for the same period of 2012. The increase in revenues of consolidated VIEs for the three months ended June 30, 2013 when compared to the same period of 2012 was primarily related to an increase in net gains as a result of an increase in second-lien RMBS put-back claims for ineligible mortgage loans.
The amortization of deferred acquisition costs, operating expenses and interest expense totaled $100 million in the second quarter of 2013, compared with $118 million in the second quarter of 2012. A $7 million decline in deferred acquisition cost amortization primarily reflected the acceleration of deferred costs into earnings in prior periods as policies were terminated. Interest expense declined by $18 million in the second quarter of 2013, primarily due to the repayment of the National Secured Loan in May 2013 as well as from a reduction in the interest rate on MBIA Corp.’s outstanding surplus notes. Total operating expenses were $35 million in the second quarter of 2013, up $7 million from $28 million in the second quarter of 2012. The increase in operating expenses was driven by higher consulting and legal expenses.
The following is a summary of MBIA Corp.’s insured portfolio economic loss (a non-GAAP measure defined in the attached Explanation of Non-GAAP Financial Measures) activity in the second quarter:
|2Q 2013 Economic Loss (Benefit) Activity|
|($ in millions)||Second- Lien RMBS||First-Lien RMBS||ABS CDO||CMBS||Other||Total|
|Change in Expected Payments||$25||$10||$(37)||$96||$102||$196|
|Change in Expected Salvage||(68)||(1)||(3)||(17)||19||(70)|
|Total Economic Losses (Benefit)||$(43)||$9||$(40)||$79||$121||$126|
Losses, credit impairments and loss-related expenses on insured exposures totaled $126 million in the second quarter of 2013, compared with $306 million in the second quarter of 2012.
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