MBIA Inc. Reports $1.2 billion Loss for Q4

MBIA Inc. Monday night reported a net loss of $1.2 billion for the fourth quarter of 2008, compared to a net loss of $2.3 billion a year earlier.

It attributed the loss to a $1.7 billion pre-tax unrealized net loss on insured derivatives and a $534 million pre-tax net realized loss on insured derivatives. Offsetting that was $267 million in premiums earned, $264 million in pre-tax net investment income, $198 million in pre-tax net unrealized gains on the financial instruments at fair value and foreign exchange, and $91 million in pre-tax net gains on the extinguishment of debt.

MBIA also said it commuted or restructured four collateralized debt obligations in the fourth quarter, paying out $558 million to reduce its exposure by $2.7 billion, with $483 million of credit impairments already recognized.

MBIA Inc. reported a net loss of $2.67 billion for all of 2008, compared to a net loss of $1.9 billion for 2007.

Loss and loss-adjustment expenses increased in 2008, growing to $1.3 billion from $900 million.

Revenues fell to negative $856.6 million, thanks to a negative $2.2 billion change in the fair value of insured derivatives and $1.75 billion in net realized losses, offset by $850 million in premiums earned and $1.55 billion in investment income.

“The worst credit crisis since the Great Depression has stressed and bruised our company, and cost our shareholders dearly over the past 18 months as reflected in both our financial statements and our stock price,” MBIA chief executive officer Jay Brown said in a statement. “Despite the significant additional loss impairments that we recognized in the quarter, we were able to increase our embedded value through careful use of available liquidity. We moved aggressively and successfully to raise liquidity to support the de-leveraging of our asset liability business, commute and restructure some of our most seriously impaired multi-sector CDO contracts, and meet expected claim payments on our second lien mortgage exposures. After those actions, we still have adequate levels of liquidity in our operating segments and at our holding company.”

MBIA Inc. will hold its earnings conference call with investors and analysts Tuesday at 8 a.m.

MBIA in February announced it had restructured its insurance subsidiaries to split off MBIA Insurance Corp. of Illinois — to be called National Public Finance Guarantee Corp. — as its public finance-only insurer. MBIA Illinois received $2.89 billion for taking on MBIA Insurance Corp.’s $537 million public finance book, plus an additional $2.09 billion.

Brown said Monday the company plans to raise additional capital for National “which will result in increased embedded value to our shareholders as it accelerates our reentry into the domestic municipal bond insurance market.”

MBIA Insurance Corp. in 2008 wrapped $1.4 billion in municipal bonds. The monoline also agreed in 2008 to provide cut-through reinsurance on $166 billion of Financial Guaranty Insurance Co.’s. public finance book of business.

 

 

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