MBIA Inc. (NYSE:MBI), a holding company with subsidiaries providing financial guarantee insurance, fixed-income asset management, and other specialized financial services, posted weak earnings results for the second quarter of fiscal 2013.
Based on its financial statement, MBIA Inc. (NYSE:MBI) incurred a net loss of $178 million or $0.92 per diluted share. During the same period a year earlier, the holding company recorded a net income of $581 million or $2.98 per diluted share.
Earlier this month, value investor Mohnish Pabrai took part in a Q&A session with William & Mary College students. Q3 2021 hedge fund letters, conferences and more Throughout the discussion, the hedge fund manager covered a range of topics, talking about his thoughts on valuation models, the key lessons every investor should know, and how Read More
According to the company, its adjusted pre-tax loss (non-GAAP) was $160 million compared with the adjusted pre-tax loss of $152 million in the second quarter of 2012. MBIA Inc. (NYSE:MBI) said the losses was cause by lower premiums earned, variable interest entity (VIE) revenues and net investment income, which is partially offset by a decline in impairments on insured credit derivatives and lower net losses on insured exposures.
As of June 30, 2013, MBIA Inc. (NYSE:MBI)’s adjusted book value (ABV) was $29.28 per share, down from $30.68 per share in December 31, 2012. Its book value (BV) per share was $15.63 compared with $16.22 per share.
Chuck Chaplin on creation of National subsidiary
Chuck Chaplin, president and CEO of MBIA Inc. (NYSE:MBI) said the company ended the challenges related to the creation of its National subsidiary brought by a bank group during the quarter. He said the company eliminated almost $18 billion of insured exposure including $11 billion of highly potentially volatile CMBS and ABS CDO exposures, collection of almost three quarters of the put-back recoverable, and an agreement that should result in the eventual receipt of approximately $796 million of additional put-back recoverables related to ResCap exposures.”
“There is risk remaining in our structured finance book, but we are much closer to achieving stability there. Meanwhile, we continue to work with the rating agencies and other parties to lay the foundation for the re-launch of our U.S. muni-only insurer, National Public Finance Guarantee Corp,” added Chaplin.
The U.S. public finance insurance segment of MBIA Inc. (NYSE:MBI), which is primarily operated by its National subsidiary, posted $14 million of pre-tax income and total premiums earned were $102 million in the second quarter. Net investment income was $35 million.
Its structured finance and international insurance segment recorded an adjusted pre-tax loss of $93 million and net premiums earned were $35 million during the quarter.
The company also said that it settled its legal problems with Bank of America Corp (NYSE:BAC), Societe Generale SA (ADR) (OTCMKTS:SCGLY) (EPA:GLE), and Flagstar Bancorp Inc (NYSE:FBC).