U.S. Public Finance Insurance Results

The Company’s U.S. public finance insurance business is primarily conducted through its National Public Finance Guarantee Corporation (National) subsidiary. The U.S. public finance insurance segment recorded $6 million of pre-tax income in the third quarter of 2013 compared with $164 million of pre-tax income in the third quarter of 2012. The decline in pre-tax income in the third quarter of 2013 compared with the same period of 2012 was driven by a decline in total premiums earned due to lower market refunding activity, lower net investment income due to lower average yields on the investment portfolio following the repayment of the secured loan that National had extended to MBIA Corp., an impairment charge in the third quarter of 2013 related to the Company’s headquarters facility, and a loss related to the difference in the value of the salvage receivable recorded and the fair market value of the marketable securities received in connection with the restructuring of a remedial credit related to a gaming revenue transaction.

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 $167 million for the third quarter of 2013 compared with an adjusted pre-tax loss of $224 million for the third quarter of 2012. The adjusted pre-tax loss declined principally due to lower losses on insured exposures and lower interest expense resulting from the repayment in full of the National Secured Loan in May of 2013.

The structured finance and international insurance segment had pre-tax income (calculated in accordance with GAAP) of $196 million in the third quarter of 2013, compared with a pre-tax loss of $164 million in the third quarter of 2012. Pre-tax income improved primarily due to net gains on the fair value of insured derivatives in the third quarter of 2013 compared with net losses for the same period of 2012, decreases in financial guarantee insurance losses and the absence of interest expense on the National Secured Loan, which was repaid in full in May of 2013.

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