MBIA Q2 2026 Earnings Call Transcript

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August 7, 2026

Key Takeaways

  • Positive Sentiment: Second-quarter results improved year over year: consolidated GAAP net loss narrowed to $46 million, or $0.91 per share, from $56 million, while adjusted net loss improved to $7 million from $8 million.
  • Neutral Sentiment: PREPA remains the primary risk and unresolved catalyst. National’s gross exposure declined by $35 million to $390 million after July 1 payments, while related litigation advanced; however, bondholders representing roughly 90% of claims rejected the oversight board’s nearly doubled settlement offer of approximately $3 billion as inadequate.
  • Positive Sentiment: National’s insured portfolio continued to perform generally in line with expectations, with gross par outstanding falling to $20.8 billion and leverage improving to 21:1 from 24:1 at year-end 2025. Statutory capital rose to approximately $968 million, while claims-paying resources remained about $1.4 billion.
  • Negative Sentiment: MBIA’s holding-company unencumbered cash declined to $337 million from $357 million at year-end 2025 due primarily to debt service and operating expenses, and consolidated book value remained deeply negative at $45.58 per share. Management said a potential sale process remains under consideration but is largely dependent on further progress resolving PREPA.
AI Generated. May Contain Errors.
Earnings Conference Call
MBIA Q2 2026
00:00 / 00:00

Transcript Sections

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Operator

Welcome to the MBIA Inc second quarter 2026 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
Greg Diamond
Managing Director of Investor and Media Relations at MBIA

Thank you, Angela. Yes, welcome to MBIA's conference call for our latest 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 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 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-K, 10-Qs, and other SEC filings, as our company's definitive disclosures are incorporated in those documents. We urge investors to read our 10-K and 10-Qs 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.

Greg Diamond
Greg Diamond
Managing Director of Investor and Media Relations at MBIA

The definitions and reconciliations of the non-GAAP terms included in our remarks today are also included in our 10-K and 10-Qs, 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 approximately two hours after the end of the call. Now, here is our safe harbor disclosure statement. 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.

Greg Diamond
Greg Diamond
Managing Director of Investor and Media Relations at MBIA

Risk factors are detailed in our 10-K and 10-Qs, 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. For our call today, Bill Fallon and Joe Schachinger will provide introductory comments and then a question-and-answer session will follow. Now, here's Bill Fallon.

Bill Fallon
Bill Fallon
CEO at MBIA

Thanks, Greg. Good morning, everyone. Thank you for being with us today. Our second quarter and year-to-date financial results for 2026 provided favorable comparisons to the same periods for the prior year. Our priority continues to be resolving National's PREPA exposure. National's outstanding PREPA exposure reduced by $35 million to $390 million of gross par value due to the insurance policy claims paid by National on PREPA bonds that matured on July 1st, 2026. There was also some progress on several of the litigations related to PREPA.

Bill Fallon
Bill Fallon
CEO at MBIA

The director of the White House Personnel Office, which appealed the injunctive relief that was awarded to three of the oversight board members that were fired by President Trump, has asked the First Circuit Court of Appeals to remand that case back to the trial court in light of the U.S. Supreme Court's rulings issued in late June regarding the Slaughter and Cook cases. In the case about the PREPA bondholders' counterclaim for the calculation of net revenues, Judge Swain lifted the self-imposed litigation stay, and that case is currently in discovery. The administrative claim appeal to the First Circuit, that case is now fully briefed and scheduled for all arguments in Boston on September 15th. Separately, the oversight board nearly doubled their settlement offer to PREPA bondholders from $1.6 billion to approximately $3 billion.

Bill Fallon
Bill Fallon
CEO at MBIA

However, bondholders representing about 90% of bondholder claims soundly dismissed the offer as unacceptable and inadequate. 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 $1.5 billion from year-end 2025 to about $20.8 billion at June 30th, 2026. National's leverage ratio gross par to statutory capital was 21:1 at the end of the quarter, down from 24:1 at year-end 2025. As of June 30th, 2026, National had total claims-paying resources of $1.4 billion and statutory capital and surplus of about $970 million. Joe will provide additional comments about our financial results.

Joe Schachinger
Joe Schachinger
EVP and CFO at MBIA

Thank you, Bill. Good morning, everyone. I will begin with a review of our second quarter 2026 GAAP and non-GAAP results, followed by an overview of our holding company liquidity and our statutory results. The company reported a consolidated GAAP net loss of $46 million, or a $-0.91 per share, for the second quarter of 2026, compared with a consolidated GAAP net loss of $56 million, or a $-1.12 per share, for the second quarter of 2025. The lower GAAP net loss this quarter was primarily driven by two items

Joe Schachinger
Joe Schachinger
EVP and CFO at MBIA

First, we recorded a reversal of legal expenses within a consolidated variable interest entity, or VIE, related to our Zohar CDO recoveries at MBIA Insurance Corp. Second, our results benefited from foreign exchange gains in the second quarter of 2026, compared with foreign exchange losses in the same period of 2025. These foreign exchange impacts were associated with the revaluation of euro-denominated medium-term note liabilities in our corporate segment and resulted from changes in foreign exchange rates. The company's adjusted net loss, which is a non-GAAP measure, was $7 million, or a $-0.14 per share, for the second quarter of 2026, compared with an adjusted net loss of $8 million, or a $-0.17 per share, for the second quarter of 2025.

Joe Schachinger
Joe Schachinger
EVP and CFO at MBIA

The modest improvement in our adjusted net loss this quarter was primarily driven by slightly lower loss and loss adjustment expenses, or LAE, at National related to its PREPA exposure. MBIA Inc's book value per share as of June 30th, 2026, was $-45.58 per share, reflecting a decrease of $1.31 per share from year-end 2025. This decrease was primarily due to our consolidated net loss of $86 million for the first six months of 2026. Included in MBIA Inc's book value per share as of June 30th, 2026, is a $-54.26 per share of MBIA Insurance Corp's book value. I will now spend a few minutes on our corporate segment balance sheet. The corporate segment, which primarily includes the activities of the holding company, MBIA Inc, had total assets of approximately $635 million as of June 30th, 2026. Within this total are the following material assets.

Joe Schachinger
Joe Schachinger
EVP and CFO at MBIA

Unencumbered cash and liquid assets held by MBIA Inc totaled $337 million, compared with $357 million as of December 31st, 2025. The decrease from year-end 2025 was primarily due to ongoing debt service payments and operating expenses net of investment income. We continue to manage holding company liquidity carefully with a primary focus on meeting our outstanding obligations and preserving financial flexibility.

Joe Schachinger
Joe Schachinger
EVP and CFO at MBIA

In addition to the unencumbered cash and liquid assets, the corporate segment's assets included approximately $183 million of assets at market value pledged to guaranteed investment agreement contract holders. These assets fully collateralized the principal amounts of those contracts. The segment's assets also included $66 million of assets at MBIA Services, our management services company, to support its operating obligations. I'll now turn to the insurance company's statutory results.

Joe Schachinger
Joe Schachinger
EVP and CFO at MBIA

National reported statutory net income of $10 million for the second quarter of 2026, compared with statutory net income of $6 million for the second quarter of 2025. The favorable variance was primarily driven by higher earned premiums, which resulted from refundings of insured credits and lower loss in LAE and operating expenses in the current quarter. National statutory capital as of June 30th, 2026, was $968 million, up $31 million compared with December 31st, 2025. The increase was mostly due to National's statutory net income for the first six months of 2026, as well as unrealized gains in its investment portfolio. As of June 30th, 2026, National's claims-paying resources were $1.4 billion, consistent with year-end 2025. Now I'll turn to MBIA Insurance Corp.

Joe Schachinger
Joe Schachinger
EVP and CFO at MBIA

MBIA Insurance Corp reported statutory net income of $27 million for the second quarter of 2026, compared with statutory net income of $4 million for the second quarter of 2025. The favorable variance was primarily driven by a significantly larger loss in LAE benefit in the current quarter compared with the second quarter of 2025. The loss in LAE benefit this quarter was driven by our ongoing reassessment of recoveries of paid claims and other amounts owed to MBIA Insurance Corp related to the Zohar CDOs. As of June 30th, 2026, the statutory capital of MBIA Insurance Corp was $106 million, reflecting an increase of $27 million from year-end 2025.

Joe Schachinger
Joe Schachinger
EVP and CFO at MBIA

This increase was primarily a result of net income of $28 million for the first six months of 2026. Claims paying resources totaled $342 million as of June 30th, 2026, up $25 million from year-end 2025. MBIA Insurance Corp's insured gross par outstanding was just under $1.8 billion as of June 30th, 2026, down approximately 12% from year-end 2025 due to regular amortization of the insured portfolio. Now we will turn the call over to the operator to begin the question-and-answer session.

Operator

Thank you. If you have a question at this time, please press star one on your telephone keypad. If you wish to remove yourself from the queue, press star two. We ask that when posing your question, you please pick up your handset to allow optimal sound quality. We'll take our first question from Tommy McJoynt with KBW. Your line is now open.

Molly Knoell
Molly Knoell
Analyst at KBW

Good morning. This is Molly Knoell on for Tommy McJoynt. Thank you for taking our questions. First, can you talk about the latest PREPA settlement proposal from the oversight board? From your perspective, was there anything incrementally positive about the offering terms relative to prior proposals, or in your view, are we no closer to a potential resolution than previously?

Bill Fallon
Bill Fallon
CEO at MBIA

Yeah. Thank you, Molly. With regard to the PREPA proposal that came across, the positive was that it was, from their perspective, a substantial increase. Other than that, there's not a whole lot to talk about. As I said in my comments, the bondholders dismissed it as clearly inadequate. Hard to say where we go from here in terms of how much time. As I mentioned, several of the litigations are moving forward and, as you know, there is some uncertainty with regard to the composition of the oversight board. Currently only four members, three of whom are fighting the dismissal by the Trump administration. Hard to tell with regard to timing and exactly how this will play out, but those are our thoughts with regard to that proposal.

Molly Knoell
Molly Knoell
Analyst at KBW

Thank you. I guess secondly, after you paid the special dividend out of National a couple years ago, that caused National's capital ratio to dip from just over 3% to about 2%. Should we think of any portion of the capital ratio above that roughly 2% figure as potentially being available to distribute up to the hold co as the insured portfolio continues to run down?

Bill Fallon
Bill Fallon
CEO at MBIA

Yeah. With regard to National and any distributions from National the holding company, you're correct. It was at the end of 2023 that we had a special distribution from National to a holding company. While everyone looks at different metrics and does their own financial analysis, as the book gets smaller, it becomes a very tailored analysis with regard to what's in the National portfolio. I understand how everyone looks at metrics, and that's, in a sense, fine. It probably has to be even a more detailed analysis to determine exactly what the potential dividend or distribution could be.

Molly Knoell
Molly Knoell
Analyst at KBW

Thank you.

Bill Fallon
Bill Fallon
CEO at MBIA

Thank you.

Operator

Thank you. Our next question will come from Investor, Carlos Pardo. Your line is now open.

Carlos Pardo
Shareholder at Private Investor

Hi. Yeah, this is Carlos Pardo from London. Good afternoon. Yes, hope all well. Just a few questions. On the buybacks, I saw that the capacity is still $71 million, and I just wanted to make sure that you confirm that it is available and it still could be deployed.

Bill Fallon
Bill Fallon
CEO at MBIA

That is correct. There is $71 million available.

Carlos Pardo
Shareholder at Private Investor

Basically, there is no other constraint, not just the legal constraint, but also it's basically up to you to decide when you think that this is in the interest of the shareholders. My impression is that since the share price has dropped, as you have seen over the last year, maybe now it is the time to consider whether deploying these buybacks. Of course, I will be sending you my idea of basically the levels and the volumes as to how this could be done.

Carlos Pardo
Shareholder at Private Investor

Basically, you could at the moment with yesterday's price, you could retire approximately 14 million shares. Since I expect that the oversight board will have some good news in terms of the composition of the oversight board soon, I think that probably this drop to around $5 is a good opportunity. Just to let you know that I will be sending you a proposal. Of course, it's always up to you to decide whether to implement it.

Bill Fallon
Bill Fallon
CEO at MBIA

Okay.

Carlos Pardo
Shareholder at Private Investor

On the custodial receipts, I saw that you have done another transaction for $30 million. I assume that these $30 million correspond to the payments that we made under PREPA on the 1st of July, and I think that there was another one on the 1st of January?

Bill Fallon
Bill Fallon
CEO at MBIA

With regard to the custodial receipts, and the debt service payment that we made on July 1st. We paid $35 million on July 1st.

Carlos Pardo
Shareholder at Private Investor

Yeah.

Bill Fallon
Bill Fallon
CEO at MBIA

$5 million was a secondary policy. $30 million now have been transferred into a custody account. We have the custodial receipts. As we did last year. Those could be sold. We have--

Carlos Pardo
Shareholder at Private Investor

Fantastic.

Bill Fallon
Bill Fallon
CEO at MBIA

We'll do that. The $5 million that were secondary, those can be sold as well. We have $35 million that could be sold. If we think there's an appropriate price or offer that we receive, then we would sell up to $35 million.

Carlos Pardo
Shareholder at Private Investor

That's fantastic. On PREPA payments, the only payments that we'll have to make over the next two years is $20 million in 2027 and $20 million in 2028. It is relatively benign, the payment schedule.

Bill Fallon
Bill Fallon
CEO at MBIA

That's correct. The debt service payments on PREPA declined significantly over the period you just mentioned.

Carlos Pardo
Shareholder at Private Investor

Yeah. That's fantastic. That's good news. Also, related to the potential use of the buybacks, I think that could theoretically make sense, but of course, it's always up to you guys that you have the full picture. On the COB, basically, the COB has been extended until, I think that is August 2027, which I think that it makes sense, in terms of the recent decisions and the potential for new members of the oversight board. I just wanted to know, the terms of the COB has not changed. Basically, if only one party to the COB is opposing an agreement that has been reached by all the other parties to the COB, this party, let's say, for example, Assured Guaranty, could not block this disagreement? Is that correct? Are those terms still valid?

Bill Fallon
Bill Fallon
CEO at MBIA

Essentially, yes.

Carlos Pardo
Shareholder at Private Investor

Yeah. Basically, they could not block Let's say, for example, Assured Guaranty does not agree with an agreement that has been reached by the rest of the COB members, they cannot block it. My question there is, since the resolution of PREPA is so important for MBIA, and we have basically put any further moves on sale or similar on hold until this is resolved, how does the conversations within the COB look like? Are we actively seeking to propose potential solutions to the other members of the COB, or are we more on a passive mode?

Bill Fallon
Bill Fallon
CEO at MBIA

I can't get into the details in terms of the views of all the different members, that is the bondholders. I can assure you we're not passive, but we obviously have a very vested interest in the outcome.

Carlos Pardo
Shareholder at Private Investor

Yeah.

Bill Fallon
Bill Fallon
CEO at MBIA

We're up to 90% of the bondholders are in the COB agreement. I think the biggest issue really has been the oversight board, that is the uncertainty with regard to the composition of the board.

Carlos Pardo
Shareholder at Private Investor

Yeah.

Bill Fallon
Bill Fallon
CEO at MBIA

Also the litigation related to it. We think that could be a real catalyst. That is either the appointment of-

Carlos Pardo
Shareholder at Private Investor

Yes

Bill Fallon
Bill Fallon
CEO at MBIA

...the three vacant positions or the resolution of the litigation. Hopefully, that will be, again, a catalyst to move this forward.

Carlos Pardo
Shareholder at Private Investor

When do you expect. Of course, we are dealing with the Puerto Rico bankruptcy, so predicting is impossible. When do you think that, in your opinion, that this, after the recent decision, I think it was last week, when do you think that there will be some kind of green light for new members? What is your expectation of the board?

Bill Fallon
Bill Fallon
CEO at MBIA

It's very hard to predict. It really depends on how the administration wants to move forward. Again, we hope it's as soon as possible, but it's just very hard to predict.

Carlos Pardo
Shareholder at Private Investor

Yeah. Is the COB contacting also the administration in terms of trying to get them to accelerate this situation, or the--

Bill Fallon
Bill Fallon
CEO at MBIA

Again, I can't speak to the specific actions that the COB board is taking. I think it's reasonable to assume that not only are.

Carlos Pardo
Shareholder at Private Investor

Yeah.

Bill Fallon
Bill Fallon
CEO at MBIA

All bondholders doing everything they can to move this to a resolution.

Carlos Pardo
Shareholder at Private Investor

Fantastic. I will be also sending you some kind of proposal as to what I would do in terms of trying to get the COB to move. Of course, knowing that the key catalyst, as you say, is the appointment of the new members of the board, I will be sending it to you for your consideration.

Bill Fallon
Bill Fallon
CEO at MBIA

Okay.

Carlos Pardo
Shareholder at Private Investor

Perfect. Thank you. Thank you for your time. Thank you.

Bill Fallon
Bill Fallon
CEO at MBIA

Thank you.

Operator

Thank you. As a reminder, if you'd like to ask a question, you may do so by pressing star and one on your keypad now. We'll move next to John Staley with Staley Capital Advisors. Your line is now open.

John Staley
Analyst at Staley Capital Advisors

Thank you. Bill, quick question. As the offer from the oversight board doubled, roughly, what's your estimate of how much of a spread there is between their offer and what the bondholders would consider to be reasonable? Does it have to double again or triple again? I don't know. Might get too tough.

Bill Fallon
Bill Fallon
CEO at MBIA

Yeah, John, again, it's difficult to answer because I think every bondholder probably has a different number in mind. Roughly speaking, the offer that came across was somewhere probably between $0.30 and $0.40, depending how you value everything. That's $0.30-$0.40 on the dollar par. Just as a benchmark, the bonds right now in the marketplace, while it's not a really deep or liquid market, but the last indications, those were trading at about $0.75. That at least gives you some reference point between what the offer was and what the so-called marketplace is saying.

John Staley
Analyst at Staley Capital Advisors

Yes. Terrific. As you review your current insured portfolio, do you factor in the political trends on the protected or liberal side of the parties in the so-called blue states, and this Democratic Socialist group who have no respect for existing contracts? Has that factored into you with any potential thoughts that you might have some impairment because of political trends not supporting, honoring existing contracts and commitments?

Bill Fallon
Bill Fallon
CEO at MBIA

When we look at the portfolio, we look at obviously many factors. What you just described is one. It's not a new factor. We have looked at the way different administrations have handled, whether it be state or local obligations for a long time. Clearly, you're looking at some of the trends and situations that are developing across the country right now. We look at all of those things. Without getting into what probably could be a weeks-long discussion on the topic that you're highlighting, it is something that we factor into our analysis. There are no impairments that we have taken in this quarter specifically related to those type of administrations, for some reason, choosing not to meet a contractual obligation. We hope all administrations will continue to fulfill their obligations, and we'll just continue to monitor the situation.

John Staley
Analyst at Staley Capital Advisors

Thank you. I interpret the various updates you had on PREPA as being about as positive as it could be. I don't know how a U.S. Supreme Court ruling could have been any more positive other than if they'd literally said, no, you could fire her. They basically implied they have the right to fire anybody. I suspect this is finally moving to a more, hopefully, clear resolution.

Bill Fallon
Bill Fallon
CEO at MBIA

We would love for things to move quickly, just as you would.

John Staley
Analyst at Staley Capital Advisors

Amen. Thank you very much.

Bill Fallon
Bill Fallon
CEO at MBIA

Thank you.

John Staley
Analyst at Staley Capital Advisors

Thank you.

Operator

Thank you. We'll go next to Patrick Stadelhofer with Kahn. Your line is now open.

Patrick Stadelhofer
Analyst at Kahn

Hi, good morning. I just wanted to ask about a kind of thought around a potential sale process, given that all the gating items from last time you're making progress on, and obviously there's ongoing cash burn in the business. Just wanted to think what steps are remaining for you to do so, and would you, again, do it as a public process of what you did three or four years ago, or would you do it behind the scenes this time around? Thank you.

Bill Fallon
Bill Fallon
CEO at MBIA

Yeah, Patrick, thank you. With regard to a sale process, and again, you're referring to, I guess it was four years ago, we announced we had hired Barclays to help us with a sale process. We then decided to stop that process and pursue the distribution from National and shareholder dividend. With regard to how we would do this moving forward, the answer is it depends. I think the probability of a transaction goes up every time we reduce our exposure to PREPA. Obviously, different potential acquirers will view the PREPA situation differently. There are some who probably look at a resolution similar to what we might think of in terms of value or potential value. Again, at this point, we don't have any specific decision.

Bill Fallon
Bill Fallon
CEO at MBIA

If we decided that we were going to run a process similar to what we did four years ago, my guess is we would announce that. There's also the possibility that individuals contact us at any point in time, or given that we probably can identify potential acquirers, we could reach out to them at any point in time if we thought it was advantageous for shareholders. Again, nothing specific on that at this point in time, but something that we look at constantly.

Patrick Stadelhofer
Analyst at Kahn

Sounds good. Thank you.

Bill Fallon
Bill Fallon
CEO at MBIA

Thank you.

Operator

At this time, I'm showing no further questions. I'd like to turn the floor back over to Greg Diamond for closing remarks.

Greg Diamond
Greg Diamond
Managing Director of Investor and Media Relations at MBIA

Thanks again, Angela, and thanks to those of you listening to our call. Please contact us directly if you have any additional questions. We also recommend that you visit our website at mbia.com for additional information on our company. Thank you for your interest in MBIA. Good day and goodbye.

Executives
    • Greg Diamond
      Greg Diamond
      Managing Director of Investor and Media Relations
    • Bill Fallon
      Bill Fallon
      CEO
    • Joe Schachinger
      Joe Schachinger
      EVP and CFO
Analysts
    • Molly Knoell
      Analyst at KBW
    • Carlos Pardo
      Shareholder at Private Investor
    • John Staley
      Analyst at Staley Capital Advisors
    • Patrick Stadelhofer
      Analyst at Kahn
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