MBIA Q3 Earnings Call Highlights

Key Points

• MBIA’s third-quarter loss widened: It reported a $24 million GAAP net loss, versus $8 million a year earlier, while adjusted results swung to a $3 million loss from $51 million in adjusted income. A smaller reserve benefit—$12 million compared with $50 million—was the main factor.
• PREPA remains the company’s key operational priority: National had $390 million of gross par exposure and $35 million in saleable bankruptcy claims at quarter-end. A court hearing on a PREPA revenue-accounting dispute is scheduled for November 18, and MBIA says litigation has delayed its original timeline for exploring transactions.
• MBIA is balancing shareholder returns with liquidity and strategic options: The holding company had $335 million in unencumbered cash and liquid assets, and National expects to pay a dividend to the parent in December. MBIA has not begun a formal sale process but says it would consider selling the company, National, or pursuing another transaction.

MBIA NYSE: MBI reported a wider third-quarter net loss as a smaller benefit from insurance loss reserves weighed on results, while executives said resolving the company’s exposure to Puerto Rico’s electric utility remains their operational priority.

The financial guarantor posted a consolidated net loss of $24 million, or $0.49 per share, for the third quarter of 2026, compared with a loss of $8 million, or $0.17 per share, a year earlier. CEO Bill Fallon said year-to-date results compared favorably with the prior year, even though the quarterly loss widened.

On an adjusted basis, a non-GAAP measure, MBIA recorded a loss of $3 million, or $0.06 per share, compared with adjusted net income of $51 million, or $1.03 per share, in the third quarter of 2025.

Reserve Benefit Shrinks

CFO Joe Schachinger said the larger GAAP loss was primarily attributable to a smaller loss and loss adjustment expense benefit. MBIA recorded a $12 million benefit in the latest quarter, largely because higher interest rates reduced the present value of loss reserves, principally for MBIA Insurance Corp.’s first-lien residential mortgage-backed securities exposures.

That compared with a $50 million benefit a year earlier, when the company revised its Puerto Rico Electric Power Authority, or PREPA, loss scenarios following developments that included sales of bankruptcy claims at prices above prior estimates.

MBIA’s book value was negative $46.87 per share at September 30, a decline of $2.60 from year-end 2025. Schachinger attributed the decline primarily to a $110 million consolidated net loss for the first nine months of 2026 and higher unrealized investment losses.

PREPA Litigation and Portfolio Runoff

Fallon said National Public Finance Guarantee Corp. had $390 million of gross par outstanding in PREPA exposure at September 30, along with $35 million of saleable bankruptcy claims consisting of custodial receipts and uninsured bonds.

The Title III court scheduled oral argument for November 18 on summary judgment in an accounting counterclaim concerning the calculation of PREPA’s net revenue. Fallon said bondholders and the Puerto Rico Oversight Board remained apart on that question, adding that MBIA believed the bondholders had a strong case but that the litigation’s outcome was uncertain.

Fallon said MBIA continues to evaluate opportunities to sell its remaining custodial receipts, though he described the market as relatively shallow and illiquid. Court decisions and other events could move prices either way, he said.

Responding to questions from shareholders about National’s participation in a bondholder cooperation group, Fallon said the agreement does not prevent MBIA from selling its claims. He declined to discuss any confidential settlement negotiations or whether the group had made a counteroffer to the Oversight Board.

National’s insured portfolio had approximately $19.7 billion of gross par outstanding at September 30, down about $2.6 billion from year-end 2025. Its ratio of gross par to statutory capital fell to 20-to-1 from 24-to-1, Fallon said.

Liquidity, Dividends and Sale Options

MBIA’s corporate segment held about $577 million in assets at September 30, including $335 million in unencumbered cash and liquid assets at the holding company, down from $357 million at year-end. Schachinger said the decline primarily reflected debt service and operating expenses, partly offset by investment income.

National had $974 million in statutory capital and $1.4 billion in claims-paying resources at quarter-end. Schachinger said National had not yet paid its as-of-right dividend to the holding company but expected to do so in December, in an amount similar to or slightly higher than those paid in the previous two years. An analyst said the prior year’s dividend was $63 million.

Fallon said MBIA’s $71 million share-repurchase authorization remains valid and applies to both the holding company and National. He said the authorization is not a set pool of money and is separate from any dividend decision. National has lacked capacity for repurchases over the past couple of years, he said, while the holding company weighs potential stock and debt repurchases against its obligations and liquidity needs.

MBIA has not started a formal sale process, Fallon said, but would consider selling the company, selling National or pursuing another transaction beneficial to shareholders. He said feedback from an earlier process had focused on reducing or eliminating PREPA exposure and moving dividends from National to the holding company. PREPA litigation has delayed the company’s original timeline, he added.

Other Credit Exposures

National reported third-quarter statutory net income of $18 million, down from $73 million a year earlier. MBIA Insurance Corp. reported a statutory net loss of $3 million, narrower than its $25 million loss in the prior-year quarter.

Asked about LCOR Alexandria, Fallon said National is making regular claim payments because LCOR is paying only part of its debt service. He described activity around the credit, including additional building leasing, as positive. Fallon also said MBIA had no exposure to Florida passenger railroad Brightline.

About MBIA (NYSE:MBI)

MBIA Inc NYSE: MBI is a financial services holding company that provides financial guarantee insurance through its operating subsidiaries. Its guarantees are designed to support the payment of scheduled principal and interest on insured obligations, primarily by enhancing the credit quality of bonds and other debt securities.

MBIA's principal businesses have historically included public finance insurance and structured finance activities. National Public Finance Guarantee Corporation provides insurance for U.S.

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