MBIA Q1 Earnings Call Highlights

Key Points

• MBIA’s first-quarter loss narrowed to a GAAP net loss of $40 million, or $0.80 per share, versus $62 million a year earlier, helped by favorable foreign exchange moves, lower reserve impacts and the absence of some prior-year investment losses. On an adjusted basis, the net loss was unchanged at $8 million.
• PREPA remains the key issue for National, with exposure unchanged at $425 million gross par value. Management said progress has stalled amid legal disputes involving Puerto Rico Oversight Board members, though they expect about $35 million in PREPA debt service needs for the rest of 2026.
• National’s capital position improved as insured gross par outstanding fell to about $21.5 billion and leverage eased to 23-to-1 from 24-to-1 at year-end 2025. National also posted $11 million in statutory net income, while MBIA Inc. ended the quarter with $353 million in unencumbered cash and liquid assets.

MBIA NYSE: MBI reported a narrower first-quarter GAAP net loss, as management said favorable foreign exchange movements, lower reserve impacts and the absence of certain prior-year investment losses helped offset other items.

The company posted a consolidated GAAP net loss of $40 million, or $0.80 per share, for the first quarter of 2026, compared with a net loss of $62 million, or $1.28 per share, in the prior-year quarter, EVP and Chief Financial Officer Joe Schachinger said on the company’s earnings call.

On an adjusted basis, MBIA’s net loss was unchanged year over year at $8 million, or $0.16 per share. Schachinger said slightly lower revenue in the quarter was offset by slightly lower expenses.

Management Cites Foreign Exchange and Reserve Impacts

Schachinger said the lower GAAP net loss was primarily driven by several favorable year-over-year variances. At MBIA Insurance Corp., the company recorded no comparable 2026 losses related to the liquidation of its Mexican subsidiary, which had affected results in the first quarter of 2025.

The corporate segment also benefited from foreign exchange movements tied to Global Funding’s euro-denominated medium-term notes. Schachinger said the U.S. dollar strengthened against the euro in the first quarter of 2026, compared with a weakening of the dollar against the euro in the year-earlier period.

MBIA Insurance Corp. also reported a favorable variance in losses and loss adjustment expenses, which Schachinger attributed primarily to changes in the risk-free rates used to discount loss reserves. Those rates increased in the first quarter of 2026, reducing the present value of reserves, compared with a decrease in rates in the first quarter of 2025.

National Public Finance Guarantee Corp. recorded a favorable variance in net realized investment gains and losses. Schachinger said National recorded investment losses from sales of securities in the first quarter of 2025, with no comparable activity in the current quarter.

Those positive factors were partially offset by an unfavorable variance at MBIA Insurance Corp. related to gains on the extinguishment of variable interest entity debt recorded in the first quarter of 2025, with no comparable activity in the first quarter of 2026.

PREPA Remains a Central Focus

Management said National’s outstanding exposure to the Puerto Rico Electric Power Authority, or PREPA, remained unchanged from year-end 2025 at $425 million of gross par value. Bill Fallon, speaking for MBIA management, said the company’s priority continues to be resolving National’s PREPA exposure.

“There has not been much substantive progress since our last conference call in February,” Fallon said, adding that until legal issues related to members of the Financial Oversight and Management Board are resolved, “it is unlikely that substantive progress will be made.”

During the question-and-answer session, management said the projected PREPA debt service requirement for the remainder of 2026 is approximately $35 million.

Asked about litigation involving members of the Oversight Board, management said the dispute is not about compensation, noting that the board positions are not paid. Management said it believes the litigation primarily concerns the process used in terminating three board members who have sued to retain their positions. The company also said the case is effectively on hold pending a decision in a separate Federal Reserve-related case involving Lisa Cook.

Management added that three open Oversight Board positions could be filled by the administration with the president’s approval and said that doing so could help move the process toward a possible negotiated settlement between bondholders and the Oversight Board.

National Portfolio Runs Off, Capital Rises

Outside of PREPA, Fallon said the balance of National’s insured portfolio has continued to perform generally in line with company expectations. National’s insured gross par outstanding declined by approximately $900 million from year-end 2025 to about $21.5 billion at March 31, 2026.

National’s leverage ratio, measured as gross par to statutory capital, was 23-to-1 at the end of the quarter, down from 24-to-1 at year-end 2025. As of March 31, National had total claims-paying resources of $1.4 billion and statutory capital and surplus of $950 million.

Schachinger said National reported statutory net income of $11 million for the first quarter of 2026, compared with statutory net income of $4 million in the first quarter of 2025. The favorable variance was primarily driven by net realized losses on investment sales in the first quarter of 2025, with no comparable losses in the current quarter.

National’s statutory capital increased by $13 million from year-end 2025, mostly due to current-quarter statutory net income. Claims-paying resources were consistent with year-end 2025.

Book Value Declines; Corporate Liquidity Remains Stable

MBIA Inc.’s book value per share decreased by $0.55 during the quarter to negative $44.82 as of March 31, 2026. Schachinger said the decline was primarily due to the consolidated net loss for the quarter. Included in that figure was negative $53.59 per share of MBIA Insurance Corp.’s book value.

The corporate segment, which primarily includes holding company activities, had total assets of approximately $639 million as of March 31. Unencumbered cash and liquid assets held by MBIA Inc. totaled $353 million, down slightly from $357 million at Dec. 31, 2025.

The corporate segment also included approximately $181 million of assets at market value pledged to guaranteed investment agreement contract holders, which Schachinger said fully collateralized those contracts.

MBIA Insurance Corp. reported statutory net income of $1 million in the first quarter of 2026, compared with $2 million in the year-earlier period. Schachinger said the unfavorable variance was primarily due to a smaller loss and loss adjustment expense benefit in the current quarter.

MBIA Insurance Corp.’s statutory capital was $79 million as of March 31, unchanged from year-end 2025. Its claims-paying resources totaled $316 million, down $1 million from year-end. Insured gross par outstanding was just under $2 billion, down about 7% from year-end 2025.

Debt Repurchase and Strategic Alternatives Discussed

In response to a question from Tommy McJoynt of KBW, Schachinger said MBIA continues to look for opportunities to buy back holding company debt at a discount, though it has not recently seen many such opportunities. He said the company is focused on repaying debt coming due in 2027 and 2028.

“The debt beyond that, once we get into the 2030s, is not yet in our liquidity window,” Schachinger said, adding that the company expects it to be within that window in the next couple of years.

Asked whether there were updates on a strategic process, including the potential hiring of advisers or bankers, management said there was “nothing that we’ve chosen to communicate to anybody at this point in time.”

In a separate exchange about potential strategic actions, management said a sale process could involve a range of alternatives, including a sale of the entire company, a sale of National, mergers, reinsurance or continuing to run the company off. Management said potential parties do not necessarily use adjusted book value as the basis for valuation and that the company would evaluate available alternatives in any hypothetical process.

About MBIA NYSE: MBI

MBIA Inc is a financial guarantee insurance company specializing in credit enhancement and risk mitigation solutions for public finance and structured finance transactions. The company provides guaranty insurance for municipal bonds, asset-backed securities and other credit-sensitive obligations, protecting investors against the risk of payment default. Through its core insurance subsidiary, MBIA Insurance Corp., the firm offers financial guarantees, reinsurance support and customized credit solutions designed to improve the marketability and pricing of debt instruments.

Founded in 1973 as the Municipal Bond Insurance Association, MBIA built its reputation by insuring U.S.

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