MBIA Q1 2025 Earnings Report

MBIA EPS Results

• Actual EPS: -$0.16
• Consensus EPS: -$0.07
• Beat/Miss: Missed by -$0.09
• One Year Ago EPS: -$0.52

MBIA Revenue Results

• Actual Revenue: $14.00 million
• Expected Revenue: $21.00 million
• Beat/Miss: Missed by -$7.00 million
• YoY Revenue Growth: N/A

MBIA Announcement Details

• Quarter: Q1 2025
• Date: 5/8/2025
• Time: After Market Closes
• Conference Call Date: Friday, May 9, 2025
• Conference Call Time: 8:00AM ET

MBIA (NYSE:MBI) Inc. 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 Q1 2025 Earnings Call Transcript

Key Takeaways

• MBIA reported a Q1 GAAP net loss of $62 million (−$1.28/sh) versus a $86 million loss in Q1 2024, and an adjusted net loss of $8 million (−$0.16/sh) compared to $24 million the prior year.
• Operating results benefited from favorable revenues from consolidated VIEs, lower losses in LAE, and reduced compensation expenses driving lower operating costs.
• Resolving National’s PREPA exposure remains the top priority, with an $800 million+ bankruptcy claim and uncertain timing, and a sale of the business likely hinging on that outcome.
• National Public Finance’s insured portfolio is performing in line with expectations, with gross par outstanding down by $0.5 billion to $25 billion, a 27:1 leverage ratio, $1.5 billion in claims paying resources and $919 million in statutory capital.
• MBIA Insurance Corp. swung to statutory net income of $2 million in Q1 2025 from a $35 million loss a year ago, driven by favorable Zohar CDO recoveries, and holds $88 million in statutory capital and $349 million in claims paying resources.

Presentation

[Operator]

Welcome to the MBIA Inc. First Quarter twenty twenty five 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, Managing Director of Investor & Media Relations at MBIA]

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

[Greg Diamond, Managing Director of Investor & Media Relations at MBIA]

We urge investors to read our 10 ks and 10 Q as they contain our most current disclosures about the company and its financial and operating results. Those documents also contain 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 ks and 10 Q as well as our financial results report and our quarterly operating supplement. The recorded replay of today's call will become available on the MBIA website at approximately two hours after the end of this call. Now for our Safe Harbor disclosure statement.

[Greg Diamond, Managing Director 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 referenced in our forward looking statements. Risk factors are detailed in our 10 ks and 10 Q, which are 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, Managing Director of Investor & Media Relations at MBIA]

For our call today, Bill Fallon and Joe Schackinger 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. Thank you for being with us today. Our first quarter twenty twenty five financial results had a lower net loss than the comparable period for 2024. Compared to 2024, our first quarter twenty twenty five financial results benefited from favorable variances on revenues of consolidated VIEs and losses in LAE, as well as lower operating expenses primarily due to reduced compensation related expense.

[William Fallon, Director & CEO at MBIA]

Our priority continues to be resolving National's PREPA exposure where the path and timing of that resolution remain largely uncertain. The title three court has lifted stays on selected litigation matters related to PREPA, which should facilitate its resolution. 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. The gross par amount outstanding for National's insured portfolio has declined by approximately $500,000,000 from year end 2024 to about $25,000,000,000 at 03/31/2025.

[William Fallon, Director & CEO at MBIA]

National's leverage ratio of gross par to statutory capital was 27 to one at the end of the first quarter. As of 03/31/2025, National had total claims paying resources of $1,500,000,000 and statutory capital 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 first quarter twenty twenty five GAAP and non GAAP results and then provide an overview of our statutory results. The company reported a consolidated GAAP net loss of $62,000,000 or a negative $1.28 per share for the first quarter of twenty twenty five compared with a consolidated GAAP net loss of $86,000,000 or a negative $1.84 per share for the first quarter of twenty twenty four. The lower GAAP net loss this quarter was driven by several items. First was a favorable change in revenues of consolidated variable interest entities at MBIA Insurance Corp.

[Joseph Schachinger, EVP & CFO at MBIA]

In the first quarter of twenty twenty four, we purchased insured debt of a consolidated VIE as part of our derisking efforts, which resulted in a net loss in earnings, most of which was reclassified from accumulated other comprehensive income. In the first quarter of twenty twenty five, we did not have any comparable activity. We also reported a favorable change in losses in LAE in the first quarter of twenty twenty five compared with the first quarter of twenty twenty four. Lower losses in LAE in the current quarter were primarily driven by lower losses at National on its prep exposure, partially offset by higher losses at MBIA Insurance Corp on its first lien RMBS exposure. The higher losses at MBIA Insurance Corp were primarily driven by the impact of a decrease in interest rates used to discount its GAAP loss reserves.

[Joseph Schachinger, EVP & CFO at MBIA]

In addition, consolidated operating expenses are lower in the first quarter of twenty twenty five compared with the first quarter of twenty twenty four, primarily due to lower compensation related costs. Partially offsetting these positive variances were unfavorable variances related to foreign exchange losses at MBIA Insurance Corp and at our corporate segment due to a weakening of the U. S. Dollar during the quarter and to a lesser extent fair value net losses on investments this quarter compared with fair value net gains in the first quarter of twenty twenty four. The company's adjusted net loss, a non GAAP measure, was $8,000,000 or a negative $0.16 per share for the first quarter of twenty twenty five compared with an adjusted net loss of $24,000,000 or a negative $0.52 per share for the first quarter of twenty twenty four.

[Joseph Schachinger, EVP & CFO at MBIA]

The favorable change was primarily due to the lower losses in LAE at National. During the quarter, MBIA Inc. Book value per share decreased $1.23 to a negative $42.22 per share as of 03/31/2025 from a negative $40.99 per share as of 12/31/2024. This decrease was primarily due to our consolidated net loss for the first quarter of twenty twenty five, partially offset by a decrease in unrealized losses on investments recorded in accumulated other comprehensive income. Included in MBIA Inc.

[Joseph Schachinger, EVP & CFO at MBIA]

Book value as of 03/31/2025 is MBIA Insurance Corp's negative book value of $50.78 per share versus a negative $49.48 per share as of 12/31/2024. 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 six eighty five million dollars as of 03/31/2025. Within this total are the following material assets.

[Joseph Schachinger, EVP & CFO at MBIA]

Unencumbered cash and liquid assets held by MBIA Inc. Totaled $378,000,000 reflecting a slight decrease compared with $380,000,000 as of 12/31/2024. In addition to the unencumbered cash and liquid assets, the corporate segment's assets included approximately $212,000,000 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 statutory net income of $4,000,000 for the first quarter of twenty twenty five compared with a statutory net loss of $11,000,000 for the first quarter of twenty twenty four.

[Joseph Schachinger, EVP & CFO at MBIA]

The positive variance reflects lower losses in LAE, primarily related to National's PREPA exposure, partially offset by lower net investment gains compared to the first quarter of twenty twenty four. National statutory capital as of 03/31/2025 was $919,000,000 up $7,000,000 compared with 12/31/2024. Claims paying resources were $1,500,000,000 consistent with 12/31/2024. Now I'll turn to MBIA Insurance Corp. MBIA Insurance Corp reported statutory net income of $2,000,000 for the first quarter of twenty twenty five compared with a statutory net loss of $35,000,000 for the first quarter of twenty twenty four.

[Joseph Schachinger, EVP & CFO at MBIA]

The favorable variance was primarily due to lower losses in LAE. The losses in LAE benefit in the current quarter was driven by favorable adjustments to recoveries of paid claims associated with the Zohar CDOs, while losses in LAE in the first quarter of twenty twenty four were primarily driven by unfavorable adjustments to Zohar related recoveries and to a lesser extent an increase in reserves on first lien RMBS exposures. As of 03/31/2025, the statutory capital of MBIA Insurance Corp was $88,000,000 consistent with year end 2024. Claims paying resources totaled $349,000,000 at 03/31/2025 compared with $356,000,000 at 12/31/2024. MBIA Insurance Corp.

[Joseph Schachinger, EVP & CFO at MBIA]

Insured gross par outstanding was $2,300,000,000 as of 03/31/2025, consistent with year end 2024. And now we will turn the call over to the operator to begin the question and answer session.

[William Fallon, Director & CEO at MBIA]

Thank

[Operator]

And our first question will come from John Staley with Staley Capital Advisors. Please go ahead.

[John Staley, Founding Partner at Staley Capital Advisers]

Bill, I think I missed the last call, but it's nice to be back on this one. This whole prep thing, I mean, it's just so clearly a political process. There's some recent articles written about the absolute obstructionist approach of the oversight committee suggesting Trump administration think about just removing it, that it's run its course. That's then followed by a blackout on the island, which I don't feel bad about what it does to the people. I wouldn't wanna live there, but it certainly underscores the desperate need to get this resolved and get the PREPA whole grid back functional.

[John Staley, Founding Partner at Staley Capital Advisers]

With a Republican head of the island, what what are you doing politically to get the Trump administration's focus, who clearly wants to do something positive for the citizens of Puerto Rico given the nonsense he had to put up post Madison Square Garden in the campaign. What are you doing proactively, politically, to get this whole thing resolved as opposed to this nonsense that's going on with the oversight committee when if you didn't have that committee, you could negotiate this and get it over with. I'm very puzzled why, politically, with the Republican leadership in Puerto Rico, the Republican leadership in congress, and Republican leadership in the White House, this isn't resolved. Enlighten me. I don't get it.

[William Fallon, Director & CEO at MBIA]

Yeah, John. Good morning. I'm not sure I can necessarily enlighten you, but you've touched on a lot of aspects, and and there are many parts to the PREPA situation as you've just highlighted. I do think in terms of governor Gonzalez that fixing PREPA, whatever that might mean, is at the the top of her priority list. It will take some time.

[William Fallon, Director & CEO at MBIA]

We obviously have conversations in DC as do other people. We also think that finally that the court schedule will move along some of the key litigation issues, which should help, we think, with the perspective of the oversight board. And so there are a lot of parties, as you mentioned, they all do need to come together. Hopefully, it is moving towards that end. We've all lived through what is now, depending on how you want to mark the beginning of this, probably at least an eight year process, if not longer.

[William Fallon, Director & CEO at MBIA]

But it feels as though all the right focus is coming to PREPA, and it's the parties that you just mentioned. So we're becoming a little bit more optimistic that we're moving into perhaps a different phase here at this time.

[John Staley, Founding Partner at Staley Capital Advisers]

Thank you. And you have no you said all the other credits are performing. So you're not staring at with national concerns or further write offs?

[William Fallon, Director & CEO at MBIA]

No. As we said, our portfolio is performing within our expectations. So it's PREPA that is getting all the attention. Yes.

[John Staley, Founding Partner at Staley Capital Advisers]

All right. It certainly has my attention. Thank you, Bill, very much.

[William Fallon, Director & CEO at MBIA]

Thank you.

[Operator]

Thank you. All right. And at this time, we have no further questions. So I'd like to turn the call back over to Greg Diamond for any additional or closing remarks.

[Greg Diamond, Managing Director of Investor & Media Relations at MBIA]

Thank you, Chelsea, and thanks to all of you listening to our call today. Please contact us directly if you have additional questions. We also recommend that you visit our website at mbia.com for additional information about our company. Thank you for your interest in MBIA. Good day and goodbye.

[Operator]

Thank you, ladies and gentlemen. This concludes today's program and we appreciate your participation. You may disconnect at any time.

Participants

Executives

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

Analysts

• John Staley, Founding Partner at Staley Capital Advisers