MBIA Q4 2024 Earnings Report

MBIA EPS Results

• Actual EPS: -$0.48
• Consensus EPS: -$0.31
• Beat/Miss: Missed by -$0.17
• One Year Ago EPS: N/A

MBIA Revenue Results

• Actual Revenue: $29.00 million
• Expected Revenue: $28.70 million
• Beat/Miss: Beat by +$300.00 thousand
• YoY Revenue Growth: N/A

MBIA Announcement Details

• Quarter: Q4 2024
• Date: 2/27/2025
• Time: Before Market Opens
• Conference Call Date: Friday, February 28, 2025
• Conference Call Time: 8:00AM ET

MBIA (NYSE:MBI) provides financial guarantee insurance services to public finance markets in the United States. It operates United States (U.S.) Public Finance Insurance, and International and Structured Finance Insurance segments. The company issues financial guarantees for municipal bonds, including tax-exempt and taxable indebtedness of the U.S. political subdivisions, as well as utility districts, airports, health care institutions, higher educational facilities, housing authorities, and other similar agencies and obligations issued by private entities. It also insures the non-U.S. public finance and global structured finance, including asset-backed obligations; and sovereign-related and sub-sovereign bonds, and privately issued bonds used for the financing for utilities, toll roads, bridges, public transportation facilities, and other types of infrastructure projects, as well as offers third-party reinsurance services. MBIA Inc. was founded in 1973 and is headquartered in Purchase, New York.

MBIA Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Welcome to the MBIA Inc. Fourth Quarter and Full Year twenty twenty four Financial Results Conference Call. I would now like to turn the call over to Greg Diamond, Managing Director of Investor and Media Relations at MBIA. Please go ahead, sir.

[Greg Diamond, MD and Head of Investor & Media Relations at MBIA]

Thank you, Madison. Welcome to MBIA's conference call for our full year and fourth quarter twenty twenty four financial results. After the market closed yesterday, we issued and posted several items on our websites, including our financial results, 10 ks, quarterly operating supplement and statutory financial statements for both MBIA Insurance Corporation and National Public Finance Guarantee Corporation. We also posted updates to the listings of our insurance company's insurance portfolios. Regarding today's call, please note that anything said on the call is qualified by the information provided in the company's 10 K and other SEC filings as our company's definitive disclosures are incorporated in those documents.

[Greg Diamond, MD and Head of Investor & Media Relations at MBIA]

We urge investors to read our 10 K as it contains our most current disclosures about the company and its financial and operating results. The 10 K also contains information that may not be addressed on today's call. The definitions and reconciliations of the non GAAP terms included in our remarks today are also included in our 10 K as well as our financial results report and our quarterly operating supplement. The recorded replay of today's call will become available approximately two hours after the end of the call and the information for accessing it is included in last week's press announcement and in the financial results report that's posted to the MBIA website. Now I'll read our Safe Harbor disclosure statement.

[Greg Diamond, MD and Head of Investor & Media Relations at MBIA]

Our remarks on today's conference call may contain forward looking statements. Important factors such as general market conditions and the competitive environment could cause our actual results to differ materially from the projected results in our forward looking statements. Risk factors are detailed in our 10 ks, which is available on our website at mbia.com. The company cautions not to place undue reliance on any such forward looking statements. The company also undertakes no obligation to publicly correct or update any forward looking statement if it later becomes aware that such statement is no longer accurate.

[Greg Diamond, MD and Head of Investor & Media Relations at MBIA]

For our

[Greg Diamond, MD and Head of Investor & Media Relations at MBIA]

call today, Bill Fallon and Joe Schachinger will provide introductory comments and then a question and answer session will follow. Now, here is Bill Fallon.

[William Fallon, Director & CEO at MBIA]

Thanks, Greg. Good morning, everyone. Thanks for being with us today. Our full year and fourth quarter twenty twenty four financial results were lower net losses than the comparable period for 2023. Compared to 2023, our full year 2024 financial results included benefits from reduced investment losses at National and the corporate segment and lower operating expenses.

[William Fallon, Director & CEO at MBIA]

Our priority continues to be resolving National's PREPA exposure. While there have been many developments regarding PREPA since our conference call last quarter, the path and timing for resolving PREPA's outstanding debt remains largely uncertain. While there had been rulings and decisions to support a more favorable outcome for PREPA bondholders, the bondholders and the Oversight Board appear far apart. Given the uncertainty associated with the possible outcomes for National's PREPA bankruptcy claim, which is in excess of $800,000,000 we continue to believe that the process to sell the company to maximize shareholder value will likely require substantially reducing the uncertainty regarding PREPA. Regarding the balance of National's insured portfolio, those credits have continued to perform generally consistent with our expectations.

[William Fallon, Director & CEO at MBIA]

The gross par amount outstanding for National's insured portfolio has declined by approximately $3,100,000,000 from year end 2023 to about $25,000,000,000 at the end of twenty twenty four. National's leverage ratio of gross part of statutory capital was 20 eight:one at the end of twenty twenty four. As of 12/31/2024, National had total claims paying resources of $1,500,000,000 and statutory capital and surplus in excess of $900,000,000 Now Joe will provide additional comments about our financial results.

[Joseph Schachinger, EVP & CFO at MBIA]

Thank you, Bill, and good morning all. I will begin with a review of our fourth quarter and full year 2024 GAAP and non GAAP results and then provide an overview of our statutory results. The company reported a consolidated GAAP net loss of $51,000,000 or a negative $1.07 per share for the fourth quarter of twenty twenty four compared to a consolidated GAAP net loss of $138,000,000 or a negative $2.94 per share for the fourth quarter of twenty twenty three. The lower GAAP net loss this quarter was driven by several items. First was a favorable change in net realized investment losses.

[Joseph Schachinger, EVP & CFO at MBIA]

Significantly higher realized investment losses in the fourth quarter of twenty twenty three resulted from sales of securities to fund nationals as of right and special dividends to MBIA Inc. And in our corporate segment to fund the termination of interest rate swaps. We also realized mark to market losses on those interest rate swaps in 2023 with no comparable losses in 2024. In addition, in the fourth quarter of twenty twenty four, we reported foreign exchange gains on euro denominated debt within our corporate segment compared to foreign exchange losses on that debt in the fourth quarter of twenty twenty three. The gains and losses were driven by movements in the U.

[Joseph Schachinger, EVP & CFO at MBIA]

S. Dollar euro exchange rate in each period. And finally, consolidated operating expenses are lower in the fourth quarter of twenty twenty four compared to the fourth quarter of twenty twenty three primarily due to lower compensation costs. The company's adjusted net loss a non GAAP measure was $22,000,000 or a negative $0.48 per share for the fourth quarter of twenty twenty four compared to an adjusted net loss of $8,000,000 or a negative $0.16 per share for the fourth quarter of twenty twenty three. The unfavorable change was primarily due to higher loss in LAE and lower net investment income at National, partially offset by lower operating expenses.

[Joseph Schachinger, EVP & CFO at MBIA]

For full year 2024, the company reported a consolidated GAAP net loss of $447,000,000 or a negative $9.43 per share compared to a consolidated net loss of $491,000,000 or a negative $10.18 per share for full year 2023. The lower consolidated GAAP net loss for full year 2024 was driven by lower net realized investment losses at National and in our corporate segment, lower losses related to the termination and deconsolidation of variable interest entities at MBI Insurance Corp and lower operating expenses. These favorable variances were somewhat offset by fair value losses on assets acquired in connection with recoveries of paid claims related to the Zohar CDOs, lower net investment income primarily due to a reduction in invested assets from dividends paid in 2023 and higher loss in LAE at National. The company's adjusted net loss was $184,000,000 or a negative $3.9 per share for full year 2024 compared to an adjusted net loss of $169,000,000 or a negative $3.49 per share for full year 2023. The unfavorable change was primarily due to the higher loss in LAE and lower net investment income at National, partially offset by lower operating expenses.

[Joseph Schachinger, EVP & CFO at MBIA]

MBIA Inc. Book value per share decreased $8.43 to a negative $40.99 per share as of 12/31/2024 from a negative $32.56 per share as of 12/31/2023. This decrease was primarily due to our consolidated net loss for full year 2024. Included in MBIA Inc. Book value as of 12/31/2024 is a negative $49.48 per share of MBIA Insurance Corp.

[Joseph Schachinger, EVP & CFO at MBIA]

Book value versus a negative $44.91 per share as of 12/31/2023. I will now spend a few minutes on our corporate segment balance sheet. The corporate segment, which primarily comprises the activities of the holding company, MBIA Inc, had total assets of approximately $7.00 $7,000,000 as of 12/31/2024. Within this total are the following material assets: unencumbered cash and liquid assets held by MBIA Inc. Totaled $380,000,000 compared with $411,000,000 as of 12/31/2023.

[Joseph Schachinger, EVP & CFO at MBIA]

The decrease was largely due to spending approximately $78,000,000 in the first and second quarters of twenty twenty four on purchasing GFL euro denominated medium term note liabilities and MBA Inc. Senior notes before their maturities. As noted in prior quarters, both the medium term notes and senior notes were purchased at prices accretive to equity. In the fourth quarter of twenty twenty four, National declared and paid an as of right dividend of $69,000,000 to MBIA Inc, which partially offset MBIA Inc. Decrease in cash and liquid assets during 2024.

[Joseph Schachinger, EVP & CFO at MBIA]

In addition to the unencumbered cash and liquid assets, the corporate segment's assets included approximately $213,000,000 of assets at market value pledged to guaranteed investment agreement contract holders, which fully collateralized those contracts. Now, I'll turn to the insurance company's statutory results. National reported a statutory net loss of $10,000,000 for the fourth quarter of twenty twenty four compared to a statutory net loss of $9,000,000 for the fourth quarter of twenty twenty three. In the fourth quarter of twenty twenty four, higher loss in LAE related to National's PREPA exposure and lower net investment income were largely offset by lower net realized investment losses compared to the fourth quarter of twenty twenty three. For full year 2024, National reported a statutory net loss of $133,000,000 compared to a statutory net loss of $142,000,000 for full year 2023.

[Joseph Schachinger, EVP & CFO at MBIA]

The favorable change was primarily due to lower net realized investment losses, partially offset by lower net investment income and lower loss in LAE mostly related to National's PREPA exposure. National statutory capital as of 12/31/2024 was $912,000,000 down $2.00 $5,000,000 compared to 12/31/2023 largely due to its statutory net loss for full year 2024 and the $69,000,000 as of right dividend paid to MBIA Inc. In December of twenty twenty four. Claims paying resources were $1,500,000,000 down $174,000,000 from 12/31/2023. Now, I'll turn to MBI Insurance Corp.

[Joseph Schachinger, EVP & CFO at MBIA]

MBIA Insurance Corp. Reported statutory net income of $4,000,000 for the fourth quarter of twenty twenty four compared to statutory net income of $6,000,000 for the fourth quarter of twenty twenty three. Higher net income in last year's fourth quarter was primarily due to a small loss in LAE benefit. For full year 2024, MBIA Insurance Corp. Reported a statutory net loss of $64,000,000 compared to a statutory net loss of $28,000,000 for full year 2023.

[Joseph Schachinger, EVP & CFO at MBIA]

The higher net loss in 2024 was primarily driven by higher loss in LAE, mostly related to adjustments to estimates of recoveries of paid claims associated with these Zohar CDOs. As of 12/31/2024, the statutory capital of MBI Insurance Corp. Was $88,000,000 down from $152,000,000 at year end 2023 primarily due to its net loss for full year 2024. Claims Pain Resources totaled $356,000,000 at 12/31/2024, compared to $5.00 $4,000,000 at year end 2023. MBI Insurance Corp.

[Joseph Schachinger, EVP & CFO at MBIA]

Insured gross par outstanding was $2,300,000,000 as of 12/31/2024, down about 18% from year end 2023. The decrease in gross par outstanding was driven by regular amortization of the insured portfolio as well as our proactive de risking of exposures for which we held reserves and were paying claims. And now, we will turn the call over to the operator to begin the question and answer session.

[Operator]

And we'll take our first question from Tommy McJoynt with KBW. Please go ahead.

[Tommy McJoynt-Griffith, Director at Keefe, Bruyette & Woods (KBW)]

Hey, good morning. So you pay the regular way dividend in the fourth quarter every year, and that's a way to trickle out excess capital out of national. But as the rest of the portfolio continues to run off and you naturally de lever, are there ways to think about your strategy to release incrementally beyond that regular dividend? You obviously paid the very large special at the end of twenty twenty three. But I guess I'm referring to it, is it possible to work with your regulator to allow more frequent, albeit smaller and more measured, special capital releases out of national rather than only pursuing a large lump sum special?

[William Fallon, Director & CEO at MBIA]

Tommy, the answer is yes. We can do that to your point. You just need the regulator to approve it. We obviously have ongoing conversations with our regulator. Given what was going on with Puerto Rico when you go back several years and we had approximately $4,000,000,000 of exposure, we didn't think it was prudent they engage in those conversations.

[William Fallon, Director & CEO at MBIA]

As you just mentioned, we then had a large dividend of $550,000,000 which was a special dividend in addition to the annual asset write dividend that you referenced. So we continue to look at that. I think right now given the size of the portfolio, the way the portfolio is amortizing and again with the exception really of PREPA which is the one thing we focus on quite heavily, We probably would want more certainty around PREPA before we went for a special dividend from the regulator. But it all depends on all the factors you mentioned. If the portfolio continues to come down, we'll continue to look at it.

[William Fallon, Director & CEO at MBIA]

But I think right now given the size of PREPA with the $800,000,000 claim that we have, the regulator would want to see some movement towards resolution of that.

[Tommy McJoynt-Griffith, Director at Keefe, Bruyette & Woods (KBW)]

Okay. Got it. And then switching over with regards to the PREPA litigation, can you just talk about your position within the creditor group, and perhaps as your objectives relate to the rest of the members of that group. And I'm kind of thinking, are there points where maybe MBI has the incentive to focus on expediting the potential resolution rather than maximizing recoveries? Can You talked about your objectives relative to the other members there?

[William Fallon, Director & CEO at MBIA]

Sure. When we think about what would be best for our shareholders, there's the two points that you just alluded to. One is the dollar recovery or the percentage recovery, however you want to think about it. But the second is timing. Obviously, all things equal, having this resolved sooner rather than later would be beneficial to our shareholders.

[William Fallon, Director & CEO at MBIA]

So we look at both of those things. I think all of the bondholders also look at both of those components of this. And while I'm sure everyone has a differing view as to exactly what they're looking for, Right now, I think there's very strong alignment and we'll continue to work through this. Again, the biggest challenge right now seems to be the Oversight Board and their position. But hopefully, we'll see some movement in the near future with regard perhaps to litigation.

[William Fallon, Director & CEO at MBIA]

As people know, we filed that is all the bondholders had a filing this week to try to move the litigation forward because to your point, timing is important. The sooner we can get this resolved, the better.

[Tommy McJoynt-Griffith, Director at Keefe, Bruyette & Woods (KBW)]

Make sense. Thank you.

[Operator]

Thank you. And we will take our next question from Paul Saunders with Hutch Capital. Please go ahead. Please go ahead. Paul Saunders, your line is open.

[Paul Saunders, Portfolio Manager at Hutch Capital]

Hi. Sorry about that. I was on mute. Can you guys hear me?

[Greg Diamond, MD and Head of Investor & Media Relations at MBIA]

Yes.

[Paul Saunders, Portfolio Manager at Hutch Capital]

Good morning. Hey, Bill. Thanks for taking my questions.

[William Fallon, Director & CEO at MBIA]

Good morning, Paul.

[Paul Saunders, Portfolio Manager at Hutch Capital]

You guys have been asked this somewhat over the last few quarters.

[Paul Saunders, Portfolio Manager at Hutch Capital]

But in terms of just sort of the uncertainty around PREPA and that being what's holding up sort of the bid ask, I guess, on a sale process for MBIA. Can you explain sort of, why kind of carving that out of a purchase price and sort of some sort of contingent type instruments to where if recovery is less than the buyer expects and they pay less to shareholders type of thing. Is there any sort of possibility to strike a deal for NDIA excluding the prep obligation?

[William Fallon, Director & CEO at MBIA]

It's possible and we've had those conversations. Everything that has been suggested or offered has been in our view very inadequate as far as our shareholders to be concerned.

[Paul Saunders, Portfolio Manager at Hutch Capital]

But why is that? Like I guess my thought is just you know, if they have some view on what ultimate recovery is and they're worried about it and you think it's going to be higher than that, I don't really understand why you couldn't solve exactly for that or is it something like unrelated to PREPA that you're saying is unsatisfactory to the shareholders?

[William Fallon, Director & CEO at MBIA]

I suppose I don't know exactly what is in the mind of the people who are expressing some interest. But I think when you deal with the size of the PREPA claim and the complexity around it, the prospective buyers aren't willing to offer again what would be acceptable and therefore it is better to play out the PREPA situation.

[Paul Saunders, Portfolio Manager at Hutch Capital]

Yes, got it. Okay. Thank you.

[Greg Diamond, MD and Head of Investor & Media Relations at MBIA]

Thank you.

[Operator]

Thank you. And at this time, I am showing no further questions. I'd like to turn the floor back to Greg Diamond for any additional or closing remarks.

[Greg Diamond, MD and Head of Investor & Media Relations at MBIA]

Thanks again, Madison. And thanks to those of you listening to the call today. Please contact us directly if you have any additional questions. We also recommend that you visit our website at mbia.com for additional information about the company. Thank you for your interest in MBIA.

[Greg Diamond, MD and Head of Investor & Media Relations at MBIA]

Good day and goodbye.

[Operator]

Thank you. This does conclude today's presentation. Thank you for your participation. You may disconnect at any time.

Participants

Executives

• Greg Diamond, MD and Head of Investor & Media Relations
• William Fallon, Director & CEO
• Joseph Schachinger, EVP & CFO

Analysts

• Tommy McJoynt-Griffith, Director at Keefe, Bruyette & Woods (KBW)
• Paul Saunders, Portfolio Manager at Hutch Capital