MBIA Inc. posted a net loss to shareholders in the fourth quarter, but gains from insured credit derivatives helped its net income rise for the year despite continued losses in the mortgage market.

The holding company posted a net loss of $242 million in the fourth quarter of 2009, a much narrower loss than the $1.2 billion it shed in the fourth quarter of 2008. The primary culprit in the quarter continued to be exposures to second-lien mortgage loan securitizations, which set the company back $661 million in pre-tax losses.

MBIA’s net income to shareholders in the year was $632.2 million, versus a net loss of $2.7 billion in 2008.

MBIA’s two principal subsidiary insurers are MBIA Insurance Corp. and the newly created muni-only insured called National Public Finance Guarantee Corp.

National’s insured portfolio totaled $508 billion in net par outstanding at the end of the year. Scheduled premiums earned the company $409.1 million last year, up 50% from 2008.

The insurer was launched in February 2009 as the result of a major restructuring which involved MBIA Inc. splitting its books between municipal insurance and structured finance guarantees. National has written little or no insurance since its inception due to ongoing litigation contesting the legality of the split, but technically it is open for business.

National “is ready and willing to wrap new domestic public finance business and expects to do so once litigation around its formation is resolved,” Chuck Chaplin, MBIA president and chief financial officer, said in the earnings statement.

National’s statutory capital was $2 billion at the end of the year. The guarantor’s claims-paying resources were $5.5 billion, while cash and short-term investments were valued at $233.8 million.

Its investment portfolio “remains highly liquid, averaging double-A credit quality and totaling $5.3 billion” as of Dec. 31, 2009, the statement said.

MBIA Insurance Corp. ended the year with $3.5 billion in statutory capital and claims-paying resources totaling $6.5 billion. Its structured finance portfolio incurred $770.2 million in losses during 2009, comprising $2.8 billion of paid and expected future losses, net of expected reimbursements of $2.0 billion.

“Since the fourth quarter of 2007, MBIA Insurance Corp. has incurred losses of $2.7 billion on its direct [residential mortgage-backed securities] exposures and made payments totaling $3.8 billion net of reinsurance on these exposures,” the statement said.

For the parent company, 2009 net income was driven by a $1.7 billion pre-tax unrealized gain on insured credit derivatives, $746.3 million in premiums earned, $655.5 million in net investment income, and $269.5 million of net gains on the extinguishment of debt.

Losses were attributed to $873 million in operating expenses, deferred acquisition cost amortization, and interest expense; $864.1 million in loss and loss-adjustment expenses; and $467.2 million in other-than-temporary impairments of invested assets.

A conference call will be held Tuesday morning for investors.

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