Last10K.com

Mbia Inc (MBI) SEC Filing 8-K Material Event for the period ending Monday, May 10, 2021

Mbia Inc

CIK: 814585 Ticker: MBI

Exhibit 99.1

 

LOGO

MBIA Inc. First Quarter 2021 Financial Results

May 10, 2021

MBIA Inc. (NYSE:MBI) (the Company) today reported a consolidated GAAP net loss of $106 million, or $(2.16) per diluted common share, for the first quarter of 2021 compared to a consolidated GAAP net loss of $333 million, or $(4.62) per diluted common share, for the first quarter of 2020. The lower net loss was primarily due to favorable variances of loss and loss adjustment expenses at MBIA Insurance Corporation (MBIA Corp.) and mark-to-market gains and losses on interest rate swaps in the Corporate segment. Loss and loss adjustment expenses at MBIA Insurance Corp. reflected a net benefit in the first quarter of 2021, primarily on first-lien RMBS exposure, largely resulting from higher risk-free discount rates versus a net loss for the first quarter of 2020, primarily due to reduced salvage for claims paid on the Zohar CDOs. Loss and loss adjustment expenses at National increased versus the first quarter of 2020, primarily due to additional losses on certain Puerto Rico exposures, partially influenced by reduced salvage recoveries on paid claims that resulted from higher risk-free discount rates. The Corporate segment recorded net mark-to-market gains on interest rate swaps in the first quarter of 2021 primarily resulting from an increase in interest rates compared to mark-to-market losses in the first quarter of 2020 primarily resulting from a decrease in interest rates.

Book value per share was negative $0.76 as of March 31, 2021 compared with a positive $2.55 as of December 31, 2020. The decrease in book value per share since year-end 2020 was primarily due to the first quarter’s net loss and a reduction in accumulated other comprehensive income driven by unrealized losses on available-for-sale investments. The unrealized losses on available-for-sale investments primarily resulted from the increase in interest rates for the quarter.

The Company also reported an Adjusted Net Loss (a non-GAAP measure defined in the attached Explanation of Non-GAAP Financial Measures) of $116 million or $(2.36) per diluted share for the first quarter of 2021 compared with an Adjusted Net Loss of $47 million or $(0.65) per diluted share for the first quarter of 2020. The unfavorable change was primarily due to the higher loss and loss adjustment expenses at National related to certain Puerto Rico credits.

Adjusted Net Income (Loss) provides investors with views of the Company’s operating results that management uses in measuring financial performance. Reconciliations of Adjusted Net Income (Loss) to net income, calculated in accordance with GAAP, are included below.


Statement from Company Representative

Bill Fallon, MBIA’s Chief Executive Officer noted, “MBIA Inc.’s highest priority continues to be the resolution of National’s Puerto Rico exposure. We have reached agreements for all of our significant Puerto Rico exposures and we remain cautiously optimistic about the resolution of these insurance obligations, which will permit us to pursue the next steps for delivering value to our shareholders.”

MBIA Inc.

As of March 31, 2021, MBIA Inc.’s liquidity position totaled $298 million, consisting primarily of cash and cash equivalents and liquid invested assets.

As of May 3, 2021, there were 54.3 million of MBIA Inc. common shares outstanding.

National Public Finance Guarantee Corporation

National had statutory capital of $1.9 billion and claims-paying resources totaling $3.1 billion as of March 31, 2021. National’s total fixed income investments plus cash and cash equivalents had a book/adjusted carrying value of $2.0 billion as of March 31, 2021. National’s insured portfolio declined by $1.4 billion during the quarter, ending the quarter with $40.5 billion of gross par outstanding. National ended the quarter with a leverage ratio of gross par to statutory capital of 21 to 1, unchanged from year-end 2020.

MBIA Insurance Corporation

The statutory capital of MBIA Insurance Corporation as of March 31, 2021 was $237 million and claims-paying resources totaled $895 million. As of March 31, 2021, MBIA Insurance Corporation’s liquidity position (excluding resources from its subsidiary and branch) totaled $503 million consisting primarily of U.S. Government securities, cash and cash equivalents and liquid short-term invested assets.

Conference Call

The Company will host a webcast and conference call for investors tomorrow, Tuesday, May 11, 2021 at 8:00 AM (ET) to discuss its first quarter 2021 financial results and other matters relating to the Company. The webcast and conference call will consist of brief remarks followed by a question and answer session.

The dial-in number for the call is (877) 694-4769 in the U.S. and (404) 665-9935 from outside the U.S. The conference call code is 5306757. A live webcast of the conference call will also be accessible on www.mbia.com.

A replay of the conference call will become available approximately two hours after the completion of the call and will remain available until 11:59 p.m. on May 25 by dialing (800) 585-8367 in the U.S. or (404) 537-3406 from outside the U.S. The code for the replay of the call is 2306757. In addition, a recorded replay of the call will become available on the Company’s website approximately two hours after the completion of the call.


Forward-Looking Statements

This release includes statements that are not historical or current facts and are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words “believe,, “anticipate,” “project,” “plan,” “expect,” “estimate,” “intend,” “will,” “will likely result,” “looking forward,” or “will continue,” and similar expressions identify forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected, including, among other factors, the possibility that MBIA Inc. or National will experience increased credit losses or impairments on public finance obligations issued by state, local and territorial governments and finance authorities that are experiencing unprecedented fiscal stress; the possibility that loss reserve estimates are not adequate to cover potential claims; MBIA Inc.’s or National’s ability to fully implement their strategic plan; changes in general economic and competitive conditions; and the impact on our insured portfolios or business operations caused by the global spread of the novel coronavirus COVID-19. These and other factors that could affect financial performance or could cause actual results to differ materially from estimates contained in or underlying MBIA Inc.’s or National’s forward-looking statements are discussed under the “Risk Factors” section in MBIA Inc.’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, which may be updated or amended in MBIA Inc.’s subsequent filings with the Securities and Exchange Commission. MBIA Inc. and National caution readers not to place undue reliance on any such forward-looking statements, which speak only to their respective dates. National and MBIA Inc. undertake no obligation to publicly correct or update any forward-looking statement if it later becomes aware that such result is not likely to be achieved.

MBIA Inc., headquartered in Purchase, New York is a holding company whose subsidiaries provide financial guarantee insurance for the public and structured finance markets. Please visit MBIA’s website at www.mbia.com.

Explanation of Non-GAAP Financial Measures

The following are explanations of why the Company believes that the non-GAAP financial measures used in this press release, which serve to supplement GAAP information, are meaningful to investors.

Adjusted Net Income (Loss): Adjusted Net Income (Loss) is a useful measurement of performance because it measures income from the Company excluding its international and structured finance insurance segment, comprising the results of MBIA Corp. which given its capital structure and business prospects, we do not expect its financial performance to have a material impact on MBIA Inc. Also excluded from Adjusted Net Income (Loss) are investment portfolio realized gains and losses, gains and losses on financial instruments at fair value and foreign exchange, and realized gains and losses on extinguishment of debt. Adjusted Net Income (Loss) eliminates the tax provision (benefit) as a result of a full valuation allowance against the Company’s net deferred tax asset. Trends in the underlying profitability of the Company’s businesses can be more clearly identified without the fluctuating effects of the excluded items previously noted. Adjusted Net Income (Loss) as defined by the Company does not include all revenues and expenses required by GAAP. Adjusted Net Income (Loss) is not a substitute for and should not be viewed in isolation from GAAP net income.


Adjusted Net Income (Loss) per share represents that amount of Adjusted Net Income (Loss) allocated to each fully diluted weighted-average common share outstanding for the measurement period.

MBIA management further adjusts Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per share by removing the impact of our U.S. public finance insurance segment VIE consolidations. GAAP requires the Company to consolidate certain VIEs that have issued debt obligations insured by the Company. However, since the Company does not own such VIEs, management uses certain measures that remove the impact of VIE consolidations for our U.S. public finance insurance segment in order to reflect financial exposure limited to its financial guaranty contracts.

Book Value adjustments: Management adjusts GAAP book value to remove the book value of MBIA Corp. and for certain items which the Company believes will reverse from GAAP book value through GAAP earnings and comprehensive income, as well as add in the impact of certain items which the Company believes will be realized in GAAP book value in future periods. The Company has limited such adjustments to those items that it deems to be important when measuring financial performance and for which the likelihood and amount can be reasonably estimated. The following provides a description of management’s adjustments to GAAP book value:

 

   

Negative book value of MBIA Corp.—We remove the negative book value of MBIA Corp. based on our view that given MBIA Corp.’s current financial condition, the regulatory regime in which it operates, the priority given to its policyholders, surplus note holders and preferred stock holders with respect to the distribution of assets, and its legal structure, it is not and will not likely be in a position to upstream any economic benefit to MBIA Inc. Further, MBIA Inc. does not face any material financial liability arising from MBIA Corp.

 

   

Net unrealized (gains) losses on available-for-sale (“AFS”) securities excluding MBIA Corp.—We remove net unrealized gains and losses on AFS securities recorded in accumulated other comprehensive income since they will reverse from GAAP book value when such securities mature. Gains and losses from sales and impairment of AFS securities are recorded in book value through earnings.

 

   

Net unearned revenue in excess of expected losses of National—We include net unearned premium revenue in excess of expected losses. Net unearned premium revenue in excess of expected losses consists of the financial guarantee unearned premium revenue of National in excess of expected insurance losses, net of reinsurance and deferred acquisition costs. In accordance with GAAP, a loss reserve on a financial guarantee policy is only recorded when expected losses exceed the amount of unearned premium revenue recorded for that policy. As a result, we only add to GAAP book value the amount of unearned premium revenue in excess of expected losses for each policy in order to reflect the full amount of our expected losses. The Company’s net unearned premium revenue will be recognized in GAAP book value in future periods, however, actual amounts could differ from estimated amounts due to such factors as credit defaults and policy terminations, among others.


Claims-paying Resources (CPR): CPR is a key measure of the resources available to National and MBIA Corp. to pay claims under their respective insurance policies. CPR consists of total financial resources and reserves calculated on a statutory basis. CPR has been a common measure used by financial guarantee insurance companies to report and compare resources and continues to be used by MBIA’s management to evaluate changes in such resources. The Company has provided CPR to allow investors and analysts to evaluate National and MBIA Corp. using the same measure that MBIA’s management uses to evaluate their resources to pay claims under their respective insurance policies. There is no directly comparable GAAP measure.

Leverage Ratio: Gross Par Outstanding divided by Statutory Capital (Policyholders’ Surplus plus Contingency Reserve).

Contacts

MBIA Inc.

Greg Diamond, 914-765-3190

Investor and Media Relations

greg.diamond@mbia.com


MBIA INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(In millions except share and per share amounts)

 

     March 31,
2021
    December 31,
2020
 

Assets

    

Investments:

    

Fixed-maturity securities held as available-for-sale, at fair value (amortized cost $2,135 and $2,078)

   $ 2,222     $ 2,257  

Investments carried at fair value

     207       196  

Investments pledged as collateral, at fair value (amortized cost $- and $6)

     —         1  

Short-term investments, at fair value (amortized cost $623 and $281)

     623       282  
  

 

 

   

 

 

 

Total investments

     3,052       2,736  

Cash and cash equivalents

     116       158  

Premiums receivable (net of allowance for credit losses $5 and $5)

     215       216  

Deferred acquisition costs

     48       50  

Insurance loss recoverable

     1,622       1,677  

Other assets

     94       84  

Assets of consolidated variable interest entities:

    

Cash

     5       9  

Investments carried at fair value

     76       77  

Loans receivable at fair value

     124       120  

Loan repurchase commitments

     —         604  

Other assets

     23       20  
  

 

 

   

 

 

 

Total assets

   $ 5,375     $ 5,751  
  

 

 

   

 

 

 

Liabilities and Equity

    

Liabilities:

    

Unearned premium revenue

   $ 386     $ 405  

Loss and loss adjustment expense reserves

     990       990  

Long-term debt

     2,258       2,229  

Medium-term notes (includes financial instruments carried at fair value of $105 and $110)

     698       710  

Investment agreements

     268       269  

Derivative liabilities

     126       215  

Other liabilities

     203       161  

Liabilities of consolidated variable interest entities:

    

Variable interest entity notes (includes financial instruments carried at fair value of $325 and $350)

     451       623  

Other liabilities

     23       —    
  

 

 

   

 

 

 

Total liabilities

     5,403       5,602  
  

 

 

   

 

 

 

Equity:

    

Preferred stock, par value $1 per share; authorized shares--10,000,000; issued and outstanding—none

     —         —    

Common stock, par value $1 per share; authorized shares--400,000,000; issued shares--283,186,115 and 283,186,115

     283       283  

Additional paid-in capital

     2,934       2,962  

Retained earnings (deficit)

     (119     (13

Accumulated other comprehensive income (loss), net of tax of $8 and $8

     39       115  

Treasury stock, at cost--228,837,465 and 229,508,967 shares

     (3,178     (3,211
  

 

 

   

 

 

 

Total shareholders’ equity of MBIA Inc.

     (41     136  

Preferred stock of subsidiary

     13       13  
  

 

 

   

 

 

 

Total equity

     (28     149  
  

 

 

   

 

 

 

Total liabilities and equity

   $ 5,375     $ 5,751  
  

 

 

   

 

 

 


MBIA INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(In millions except share and per share amounts)

 

     Three Months Ended March 31,  
     2021     2020  

Revenues:

    

Premiums earned:

    

Scheduled premiums earned

   $ 15     $ 16  

Refunding premiums earned

     5       4  
  

 

 

   

 

 

 

Premiums earned (net of ceded premiums of $1 and $1)

     20       20  

Net investment income

     15       23  

Net gains (losses) on financial instruments at fair value and foreign exchange

     51       (63

Revenues of consolidated variable interest entities:

    

Net investment income

     —         8  

Net gains (losses) on financial instruments at fair value and foreign exchange

     (14     15  

Other net realized gains (losses)

     —         (9
  

 

 

   

 

 

 

Total revenues

     72       (6

Expenses:

    

Losses and loss adjustment

     98       243  

Amortization of deferred acquisition costs

     2       2  

Operating

     26       18  

Interest

     41       47  

Expenses of consolidated variable interest entities:

    

Operating

     2       2  

Interest

     9       15  
  

 

 

   

 

 

 

Total expenses

     178       327  
  

 

 

   

 

 

 

Income (loss) before income taxes

     (106     (333

Provision (benefit) for income taxes

     —         —    
  

 

 

   

 

 

 

Net income (loss)

   $ (106   $ (333
  

 

 

   

 

 

 

Net income (loss) per common share:

    

Basic

   $ (2.16   $ (4.62

Diluted

   $ (2.16   $ (4.62

Weighted average number of common shares outstanding:

    

Basic

     49,258,110       72,089,016  

Diluted

     49,258,110       72,089,016  


ADJUSTED NET INCOME (LOSS) RECONCILIATION(1)

(In millions except per share amounts)

 

     Three Months Ended
March 31,
 
     2021     2020  

Net income (loss)

   $ (106   $ (333

Less: adjusted net income (loss) adjustments:

    

Income (loss) before income taxes of the international and structured finance insurance segment and eliminations

     (44     (220

Adjustments to income before income taxes of the U.S. public finance insurance and corporate segments:

    

Mark-to-market gains (losses) on financial instruments(2)

     38       (77

Foreign exchange gains (losses)(2)

     17       8  

Net gains (losses) on sales of investments(2)

     (1     3  

Adjusted net income adjustment to the (provision) benefit for income tax

     —         —    
  

 

 

   

 

 

 

Adjusted net income (loss)

   $ (116   $ (47
  

 

 

   

 

 

 

Adjusted net income (loss) per diluted common share

   $ (2.36   $ (0.65

 

(1)

A non-GAAP measure; please see Explanation of non-GAAP Financial Measures.

(2)

Reported within “Net gains (losses) on financial instruments at fair value and foreign exchange” on the Company’s

consolidated statements of operations.

COMPONENTS OF BOOK VALUE PER SHARE

 

     As of
March 31,
2021
    As of
December 31,
2020
 

Reported Book Value per Share

   $ (0.76   $ 2.55  

Management’s book value per share adjustments:

    

Remove negative book value of MBIA Corp.

     (32.19     (31.97

Remove net unrealized gains (losses) on available-for-sale securities included in other comprehensive income (loss)

     1.26       2.86  

Include net unearned premium revenue in excess of expected losses

     4.02       4.29  

Shares outstanding in millions

     54.3       53.7  


INSURANCE OPERATIONS

Selected Financial Data Computed on a Statutory Basis

(Dollars in millions)

National Public Finance Guarantee Corporation

 

     March 31, 2021     December 31, 2020  

Policyholders’ surplus

   $ 1,490     $ 1,526  

Contingency reserves

     433       445  
  

 

 

   

 

 

 

Statutory capital

     1,923       1,971  

Unearned premiums

     344       355  

Present value of installment premiums (1)

     129       129  
  

 

 

   

 

 

 

Premium resources (2)

     473       484  

Net loss and loss adjustment expense reserves (1)

     (303     (301

Salvage reserves on paid claims (1)

     996       961  
  

 

 

   

 

 

 

Gross loss and loss adjustment expense reserves

     693       660  
  

 

 

   

 

 

 

Total claims-paying resources

   $ 3,089     $ 3,115  
  

 

 

   

 

 

 

Net debt service outstanding

   $ 76,619     $ 79,074  

Capital ratio (3)

     40:1       40:1  

Claims-paying ratio (4)

     25:1       25:1  

MBIA Insurance Corporation

 

     March 31, 2021      December 31, 2020  

Policyholders’ surplus

   $ 70      $ 106  

Contingency reserves

     167        167  
  

 

 

    

 

 

 

Statutory capital

     237        273  

Unearned premiums

     74        79  

Present value of installment premiums (5) (7)

     71        73  
  

 

 

    

 

 

 

Premium resources (2)

     145        152  

Net loss and loss adjustment expense reserves (5)

     108        (478

Salvage reserves on paid claims (5) (6)

     405        1,045  
  

 

 

    

 

 

 

Gross loss and loss adjustment expense reserves

     513        567  
  

 

 

    

 

 

 

Total claims-paying resources

   $ 895      $ 992  
  

 

 

    

 

 

 

Net debt service outstanding

   $ 8,806      $ 9,327  

Capital ratio (3)

     37:1        34:1  

Claims-paying ratio (4)

     10:1        9:1  

 

(1)

Calculated using discount rates of 3.49% as of March 31, 2021 and December 31, 2020.

 

(2)

Includes financial guarantee and insured credit derivative related premiums.

 

(3)

Net debt service outstanding divided by statutory capital.

 

(4)

Net debt service outstanding divided by the sum of statutory capital, unearned premium reserve (after-tax), present

value

of installment premiums (after-tax), net loss and loss adjustment expense reserves and salvage reserves.

 

(5)

Calculated using discount rates of 5.10% as of March 31, 2021 and December 31, 2020.

 

(6)

This amount primarily consists of expected recoveries related to the Company’s excess spread, put-backs and CDOs.

 

(7)

Based on the Company’s estimate of the remaining life for its insured exposures.

View differences made from one to another to evaluate Mbia Inc's financial trajectory

Compare SEC Filings Year-over-Year (YoY) and Quarter-over-Quarter (QoQ)
Sample 10-K Year-over-Year (YoY) Comparison

Compare this 8-K Corporate News to its predecessor by reading our highlights to see what text and tables were  removed  ,   added    and   changed   by Mbia Inc.

Continue

Assess how Mbia Inc's management team is paid from their Annual Proxy

Definitive Proxy Statement (Form DEF 14A)
Screenshot example of actual Proxy Statement

Mbia Inc's Definitive Proxy Statement (Form DEF 14A) filed after their 2021 10-K Annual Report includes:

  • Voting Procedures
  • Board Members
  • Executive Team
  • Salaries, Bonuses, Perks
  • Peers / Competitors

Continue

SEC Filing Tools

Financial Statements, Disclosures and Schedules

Inside this 8-K Corporate News

Material Contracts, Statements, Certifications & more

Mbia Inc provided additional information to their SEC Filing as exhibits

Ticker: MBI
CIK: 814585
Form Type: 8-K Corporate News
Accession Number: 0001193125-21-156275
Submitted to the SEC: Mon May 10 2021 4:22:20 PM EST
Accepted by the SEC: Mon May 10 2021
Period: Monday, May 10, 2021
Industry: Surety Insurance
Events:
  1. Earnings Release
  2. Financial Exhibit
  3. Regulated Disclosure

External Resources:
Stock Quote
Social Media

Bookmark the Permalink:
https://last10k.com/sec-filings/mbi/0001193125-21-156275.htm