Insurance holding company MBIA Inc. on Monday reported net income of $1.3 billion in the second quarter, but the huge advance reflects mark-to-market gains on insured credit derivatives rather than new business.

An accounting quirk explains most of the second-quarter gain: contracts with MBIA insurance are worth less because MBIA’s own credit is worse; therefore, the value of its liabilities decreases, which in turn increases the value of its assets relative to liabilities.

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