As of June 30, 2013, National’s statutory capital was $3.4 billion and its claims-paying resources (as described in the attached Explanation of Non-GAAP Financial Measures) totaled $5.7 billion.

On May 8, 2013, Standard & Poor’s Ratings Services (S&P) raised its financial strength rating on National to “BBB” from “BB” and its standalone credit profile to “a” from “bb”. At the same time, S&P placed the rating on CreditWatch Positive. On May 10, 2013, S&P raised its financial strength rating on National to “A” from “BBB,” removed it from CreditWatch and changed its outlook to stable. On May 21, 2013, Moody’s Investors Service (Moody’s) upgraded National’s insurance financial strength rating from Baa2 to Baa1 with a positive outlook.

Structured Finance and International Insurance Results

The structured finance and international insurance business is primarily conducted through MBIA Corp. and its subsidiaries.

The structured finance and international insurance segment had an adjusted pre-tax loss of $93 million for the second quarter of 2013 compared with an adjusted pre-tax loss of $300 million for the second quarter of 2012. The adjusted pre-tax loss declined principally due to decreases in financial guarantee insurance losses and LAE, impairments on insured credit derivatives, and interest expense from the National Secured Loan, which was repaid in full in May of 2013.

The structured finance and international insurance segment had a pre-tax loss (calculated in accordance with GAAP) of $256 million in the second quarter of 2013, compared with pre-tax income of $645 million in the second quarter of 2012.

Net premiums earned in the structured finance and international insurance segment totaled $35 million in the second quarter of 2013, down 41 percent from $59 million in the second quarter of 2012. The decrease was primarily attributable to the receipt of a large make-whole premium on a single policy that terminated in the second quarter of 2012 that was not repeated in 2013, as well as the maturity and early settlement of other insured transactions with no material writings of new insurance policies.

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