Insurance holding company MBIA Inc. on Tuesday reported a $213 million net loss to common shareholders in the third quarter.
The net loss compares with a $728 million loss in the same quarter one year ago. MBIA executives said the smaller loss reflects decreasing volatility in its insured portfolio.
“[Our] insured losses continued to moderate in the third quarter compared to those of 2008 and 2009,” said MBIA president and chief financial officer Chuck Chaplin.
MBIA’s primary subsidiaries are MBIA Insurance Corp., a structured finance insurer, and National Public Finance Guarantee Corp., a municipal bond guarantor. The two platforms resulted from a contentious decision in February 2009 that segregated MBIA’s public finance holdings from its more volatile holdings.
The split was approved by the New York Insurance Department, but a series of lawsuits is contesting the regulator’s authority and rationale to make the split. Until the litigation is resolved, it is unlikely MBIA’s subsidiaries will conduct new business.
“The litigation that constrains our re-entry into the U.S. public finance insurance business continues, but our belief that the New York State Insurance Department made the right decision in February 2009 is borne out by the fact that we continue to pay all claims and obligations as they come due,” Chaplin said.
NPFG, which continues to maintain the largest insured muni bond portfolio in the battered bond insurance industry, earned $167 million of pre-adjusted tax income in the quarter, compared with $132 million of income in the same quarter last year.
Its portfolio of existing policies generated total premiums earned of $100 million in the third quarter, down from $143 million in the same quarter last year.
NPFG increased its statutory capital slightly to $2.3 billion and its claims-paying resources to $5.6 billion, the third-quarter earning statement shows.
Meanwhile, MBIA Insurance posted a pre-adjusted net loss of $50 million in the quarter, versus a $457 million loss in the third quarter of 2009.
MBIA Insurance increased its expectations of future claims on residential mortgage-backed securities by $107 million. However, it also increased the amount it expects to recover by $131 million.
MBIA is expecting to recover more than $2.2 billion from mortgage loan originators it believes are guilty of fraud. The insurer believes any “ineligible” loans it insured must be repurchased or replaced.
MBIA will hold a conference call to discuss third-quarter results Wednesday at 8:00 a.m. Eastern Standard Time.