MBIA Inc. Files 10-Q for Period Ending March 31, 2024

TL;DR

<b>MBIA Inc. has filed its quarterly report (10-Q) for the period ending March 31, 2024, detailing financial instruments, variable interest entities, and investment gains/losses.</b>

AI Summary

MBIA INC (MBI) filed a Quarterly Report (10-Q) with the SEC on May 9, 2024. MBIA Inc. filed its 10-Q report for the period ending March 31, 2024. The filing includes data related to fair value measurements, including Level 3 inputs and recurring measurements. Specific financial instruments mentioned include currency derivatives, asset-backed securities, and collateralized debt obligations. The company's variable interest entities (VIEs) and their assets/liabilities are detailed. Information on accumulated net unrealized investment gains/losses and realized investment gains/losses is provided.

Why It Matters

For investors and stakeholders tracking MBIA INC, this filing contains several important signals. This filing provides crucial insights into MBIA's financial health and investment portfolio, particularly concerning its exposure to complex financial instruments and variable interest entities. Understanding the details of fair value measurements and realized/unrealized investment gains/losses is essential for assessing the company's risk profile and potential future performance.

Risk Assessment

Risk Level: medium — MBIA INC shows moderate risk based on this filing. The filing contains extensive details on financial instruments, variable interest entities, and fair value measurements, indicating a complex financial structure that carries inherent risks.

Analyst Insight

Investors should review the detailed fair value measurements and the financial performance of MBIA's variable interest entities to assess the company's risk exposure.

Key Numbers

• 2024-03-31 — Reporting Period End Date (CONFORMED PERIOD OF REPORT)
• 2024-05-09 — Filing Date (FILED AS OF DATE)
• 2023-12-31 — Previous Year End Date (Reference Date for Financial Data)
• 2022-12-31 — Prior Year End Date (Reference Date for Financial Data)

Key Players & Entities

• MBIA INC (company) — FILER
• 2024-03-31 (date) — CONFORMED PERIOD OF REPORT
• 2024-05-09 (date) — FILED AS OF DATE
• 0000814585 (company) — CENTRAL INDEX KEY
• CT (location) — STATE OF INCORPORATION
• 10577 (location) — ZIP
• 914-273-4545 (phone) — BUSINESS PHONE
• MBI (ticker) — ticker symbol

FAQ

Risk Factors

• Fair Value Measurements [medium — financial]: The company's financial instruments are subject to fair value measurements, with disclosures including Level 3 inputs, indicating significant estimation and potential volatility.
• Variable Interest Entities [medium — financial]: MBIA consolidates variable interest entities, and the performance and financial condition of these entities can significantly impact the company's reported results.
• Investment Gains and Losses [medium — financial]: The company's results are affected by realized and unrealized gains and losses on financial instruments, which can be volatile and impact profitability.

Glossary

Variable Interest Entity (VIE)

A legal entity in which equity investors do not have the characteristics of a controlling financial interest or in which the total equity investment is insufficient to require that the entity be able to finance all of its activities without additional financial support from other parties. (MBIA's financial results are impacted by the assets and liabilities of the VIEs it consolidates.)

Fair Value Measurements

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. (Crucial for understanding the valuation of MBIA's financial instruments and potential market risks.)

Key Financial Figures

• $1 — ,529 sh ares of Common Stock, par value $1 per share, were outstanding. Table of

Filing Documents

• mbi-20240331.htm (10-Q) — 5439KB
• mbi-ex31_1.htm (EX-31.1) — 14KB
• mbi-ex31_2.htm (EX-31.2) — 14KB
• mbi-ex32_1.htm (EX-32.1) — 8KB
• mbi-ex32_2.htm (EX-32.2) — 8KB
• 0000950170-24-057012.txt (&nbsp;) — 25600KB
• mbi-20240331.xsd (EX-101.SCH) — 1884KB
• mbi-20240331_htm.xml (XML) — 8045KB

FINANCIAL INFORMATION

PART I FINANCIAL INFORMATION Item 1.

Financial Statements MBIA Inc. and Subsidiaries (Unaudited)

Financial Statements MBIA Inc. and Subsidiaries (Unaudited) 1 Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 (Unaudited) 1 Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 (Unaudited) 2 Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2024 and 2023 (Unaudited) 3 Consolidated Statements of Changes in Shareholders' Equity for the three months ended March 31, 2024 and 2023 (Unaudited) 4 Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (Unaudited) 5

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 6 Note 1: Business Developments and Risks and Uncertainties 6 Note 2: Significant Accounting Policies 9 Note 3: Recent Accounting Pronouncements 10 Note 4: Variable Interest Entities 11 Note 5: Loss and Loss Adjustment Expense Reserves 12 Note 6: Fair Value of Financial Instruments 17 Note 7: Investments 28 Note 8: Income Taxes 32 Note 9: Business Segments 33 Note 10: Earnings Per Share 35 Note 11: Accumulated Other Comprehensive Income 36 Note 12: Commitments and Contingencies 37 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 38 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 61 Item 4.

Controls and Procedures

Controls and Procedures 61

OTHER INFORMATION

PART II OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 62 Item 1A.

Risk Factors

Risk Factors 62 Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities 63 Item 6. Exhibits 64

SIGNATURES

SIGNATURES 65 Table of Contents FORWARD-LOOKING AND CAUTIONARY STATEMENTS This quarterly report of MBIA Inc., together with its consolidated subsidiaries, (collectively, "MBIA", the "Company", "we", "us" or "our") includes statements that are not historical or current facts and are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "believe", "anticipate", "project", "plan", "expect", "estimate", "intend", "will likely result", "looking forward", or "will continue" and similar expressions identify forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. MBIA cautions readers not to place undue reliance on any such forward-looking statements, which speak only to their respective dates. We undertake no obligation to publicly correct or update any forward-looking statement if the Company later becomes aware that such result is not likely to be achieved. The following are some of the general factors that could affect financial performance or could cause actual results to differ materially from estimates contained in or underlying the Company's forward-looking statements: increased credit losses or impairments on public finance obligations that National Public Finance Guarantee Corporation ("National") insures issued by state, local and territorial governments and finance authorities and other providers of public services, located in the U.S. or abroad, that are experiencing fiscal stress; the possibility that loss reserve estimates are not adequate to cover potential claims; a disruption in the cash flow from National or an inability to access the capital markets and our exposure to significant fluctuations in liquidity and asset values in the global credit markets as a result of collateral posting requirements

FI NANCIAL INFORMATION

PART I FI NANCIAL INFORMATION

F inancial Statements

Item 1. F inancial Statements MBIA INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) (In millions except share and per share amounts) March 31, 2024 December 31, 2023 Assets Investments: Fixed-maturity securities held as available-for-sale, at fair value (amortized cost $ 1,186 and $ 1,175 ) $ 1,040 $ 1,043 Investments carried at fair value 321 337 Short-term investments, at fair value (amortized cost $ 442 and $ 548 ) 442 548 Other investments at amortized cost 3 3 Total investments 1,806 1,931 Cash and cash equivalents 131 104 Premiums receivable (net of allowance for credit losses of $ - and $ - ) 145 146 Deferred acquisition costs 30 31 Insurance loss recoverable 179 183 Assets held for sale 74 73 Other assets 57 76 Assets of consolidated variable interest entities: Cash 6 3 Investments carried at fair value 22 22 Loans receivable at fair value 36 35 Other assets 2 2 Total assets $ 2,488 $ 2,606 Liabilities and Equity Liabilities: Unearned premium revenue $ 224 $ 232 Loss and loss adjustment expense reserves 470 473 Long-term debt 2,625 2,585 Medium-term notes (includes financial instruments carried at fair value of $ 36 and $ 40 ) 457 497 Investment agreements 220 221 Liabilities held for sale 64 64 Other liabilities 85 86 Liabilities of consolidated variable interest entities: Variable interest entity debt (includes financial instruments carried at fair value of $ 46 and $ 78 ) 51 81 Derivative liabilities 15 14 Total liabilities 4,211 4,253 Commitments and contingencies (Refer to Note 12: Commitments and Contingencies) Equity: Preferred stock, par value $ 1 per share; authorized shares-- 10,000,000 ; issued and outstanding-- none - - Common stock, par value $ 1 per share; authorized shares-- 400,000,000 ; issued shares-- 283,186,115 and 283,186,115

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) Note 1: Business Developments and Risks and Uncertainties (continued) Zohar CDOs Payment of claims on MBIA Corp.'s policies insuring the Class A-1 and A-2 notes issued by Zohar collateralized debt obligation ("CDO") 2003-1, Limited ("Zohar I") and Zohar II 2005-1, Limited ("Zohar II") (collectively, the "Zohar CDOs"), entitled MBIA Corp. to reimbursement of such amounts plus interest and expenses and/or to exercise certain rights and remedies to seek recovery of such amounts. MBIA Corp. has anticipated that it would receive substantial recoveries on the loans made to, and equity interests in, portfolio companies that, until late March of 2020, were purportedly controlled and managed by the sponsor and former collateral manager of the Zohar CDOs (collectively, the "Zohar Collateral"). Since March of 2018, MBIA Corp. had been pursuing those recoveries in a Delaware bankruptcy proceeding filed by the Zohar CDOs ("Zohar Funds Bankruptcy Cases"). Pursuant to a plan of liquidation that became effective in August of 2022, all remaining Zohar Collateral was distributed to MBIA Corp. either directly or in the form of interests in certain asset recovery entities. There still remains significant uncertainty with respect to the realizable value of the remaining loans and equity interests that formerly constituted the Zohar Collateral. Further, as the monetization of these assets unfolds, and new information concerning the financial condition of the portfolio companies is disclosed, the Company will continue to revise its expectations for recoveries. The interests in the asset recovery entities include various loans to and equity interest in portfolio companies. For those portfolio companies in which the Company does not have a majority of the voting interest, the Company recorded these assets as investments. For those portfolio companies in which the Company owns a majority of the voting interest, the Company consol

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) Note 1: Business Developments and Risks and Uncertainties (continued) The following table summarizes the components of assets and liabilities held for sale: As of In millions March 31, 2024 December 31, 2023 Assets held for sale Cash $ 1 $ 1 Accounts receivable 16 17 Goodwill 90 90 Other assets 9 9 Loss on disposal group ( 42 ) ( 44 ) Total assets held for sale $ 74 $ 73 Liabilities held for sale Accounts payable $ 6 $ 7 Debt 40 39 Accrued expenses and other 18 18 Total liabilities held for sale $ 64 $ 64 The results of operations from discontinued operations for the three months ended March 31, 2024 and 2023 consist of the following: Three Months Ended March 31, In millions 2024 2023 Revenues: Revenues $ 24 $ 32 Cost of sales 11 17 Total revenues from discontinued operations 13 15 Expenses: Operating 13 20 Interest 1 1 Increase (decrease) on loss on disposal group ( 2 ) ( 3 ) Total expenses from discontinued operations 12 18 Income (loss) before income taxes from discontinued operations 1 ( 3 ) Provision (benefit) for income taxes from discontinued operations - - Income (loss) from discontinued operations, net of income taxes $ 1 $ ( 3 ) Risks and Uncertainties The Company's financial statements include estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. The outcome of certain significant risks and uncertainties could cause the Company to revise its estimates and assumptions or could cause actual results to differ materially from the Company's estimates. The discussion below highlights the significant risks and uncertainties that could have a material effect on the Company's financial statements and business objectives in future periods. National's Insured Portfolio N

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