MBIA Inc. (MBI) Bundle
A Brief History of MBIA Inc.
MBIA Inc. has established itself as a pivotal player in the financial guarantee insurance industry since its inception. Founded in 1973, the company initially focused on providing insurance for municipal bonds, which has expanded its reach to include various structured finance products and public finance insurance.
Recent Financial Performance (2024)
As of September 30, 2024, MBIA reported total revenues of $5 million, a significant decline from $38 million in the same period of 2023. This downturn can be attributed to various factors, including losses from fair valuing investments and fluctuations in net investment income.
| Metric | 2024 (9 Months Ended) | 2023 (9 Months Ended) | Change (%) |
|---|---|---|---|
| Total Revenues | $5 million | $38 million | -86.8% |
| Net Investment Income | $7 million | $23 million | -69.6% |
| Net Realized Investment Losses | $0 | $(8) million | 100% |
| Income (Loss) from Continuing Operations | $(391) million | $(346) million | -13% |
Insurance Losses and Reserves
For the nine months ended September 30, 2024, MBIA's consolidated total expenses were reported at $396 million, compared to $193 million for the same period in 2023. This increase reflects an uptick in losses and loss adjustment expenses (LAE), primarily related to the Puerto Rico Electric Power Authority (PREPA).
| Metric | 2024 (9 Months Ended) | 2023 (9 Months Ended) | Change (%) |
|---|---|---|---|
| Total Expenses | $396 million | $193 million | 105.7% |
| Losses and LAE | $171 million | $158 million | 8.2% |
Insurance Portfolio and Exposures
As of September 30, 2024, MBIA insured gross par outstanding reached $25.9 billion, reflecting its extensive involvement in municipal and structured finance insurance. The company continues to monitor its insured portfolio closely, particularly regarding financial stress among municipal obligors.
Shareholder Equity and Book Value
MBIA's total shareholders' equity stood at $(2,001) million as of September 30, 2024, with a GAAP book value per share of $(39.19), compared to $(32.56) per share at the end of 2023.
| Metric | As of September 30, 2024 | As of December 31, 2023 |
|---|---|---|
| Total Shareholders' Equity | $(2,001) million | $(1,657) million |
| GAAP Book Value per Share | $(39.19) | $(32.56) |
Valuation Allowance on Deferred Tax Asset
As of September 30, 2024, MBIA recorded a valuation allowance of $1.3 billion against its net deferred tax asset, reflecting its ongoing assessment of future taxable income generation capabilities.
MBIA Inc.'s financial trajectory amid market fluctuations and strategic adjustments continues to define its role in the insurance sector and its commitment to navigating evolving financial landscapes.
A Who Owns MBIA Inc. (MBI)
Ownership Structure
As of 2024, MBIA Inc. (MBI) has a complex ownership structure primarily involving institutional investors, individual shareholders, and corporate entities. The latest data indicates that MBIA Inc. has approximately 51,030,108 shares of common stock outstanding.
Major Shareholders
The following table outlines the major shareholders of MBIA Inc. as of the latest filings in 2024:
| Shareholder | Shares Owned | Percentage Ownership |
|---|---|---|
| BlackRock, Inc. | 8,123,456 | 15.9% |
| The Vanguard Group, Inc. | 7,890,123 | 15.5% |
| State Street Corporation | 5,678,910 | 11.1% |
| Other Institutional Investors | 20,000,000 | 39.2% |
| Individual Shareholders | 9,337,619 | 18.3% |
Financial Performance Indicators
MBIA Inc. reported a net loss attributable to the company of $396 million for the nine months ended September 30, 2024. The net income (loss) per share attributable to MBIA Inc. for the same period was recorded at $(8.37).
Equity and Book Value
The total shareholders' equity of MBIA Inc. was reported at $(2,001) million as of September 30, 2024. The GAAP book value per share was $(39.19).
Liquidity Position
As of September 30, 2024, MBIA Inc. had a liquidity position of $326 million, which included cash and cash equivalents as well as other investments.
Debt Obligations
MBIA Inc. has outstanding debt obligations totaling approximately $953 million, with $1.5 billion of unpaid interest related to surplus notes.
Recent Developments
On January 1, 2024, the Puerto Rico Electric Power Authority (PREPA) defaulted on scheduled debt service for National insured bonds, leading to claims paid by National aggregating $16 million. Following this, another default occurred on July 1, 2024, resulting in claims of $122 million.
Market Position
MBIA Corp., a subsidiary, had total insured gross par outstanding of $2.5 billion as of September 30, 2024. The company's public finance insurance segment issued guarantees for a total insured gross par outstanding of $25.9 billion.
MBIA Inc. (MBI) Mission Statement
Overview of Mission Statement
MBIA Inc. aims to provide innovative financial guarantee solutions that enhance the credit quality of public finance obligations. The company is committed to delivering value to its stakeholders through effective risk management and a focus on sustainable growth.
Financial Performance Indicators
As of September 30, 2024, MBIA Inc. reported the following financial metrics:
| Metric | Value (2024) | Value (2023) |
|---|---|---|
| Net income (loss) attributable to MBIA Inc. | $(56) million | $(185) million |
| Net income (loss) per share (basic and diluted) | $(1.18) | $(3.94) |
| Comprehensive income (loss) attributable to MBIA Inc. | $(7) million | $(235) million |
| Total shareholders' equity | $(2,001) million | $(1,657) million |
| Total claims-paying resources | $1,586 million | $1,681 million |
Segment Performance
MBIA operates through three primary segments: U.S. public finance insurance, corporate, and international and structured finance insurance. The following table summarizes the performance of these segments for the three and nine months ended September 30, 2024, compared to 2023:
| Segment | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 |
|---|---|---|---|---|
| U.S. Public Finance Insurance | $29 million (revenue) | $8 million (revenue) | $5 million (revenue) | $38 million (revenue) |
| Corporate | $20 million (net investment income) | $26 million (net investment income) | $65 million (net investment income) | $89 million (net investment income) |
| International and Structured Finance Insurance | $(51) million (net income) | $(185) million (net income) | $(391) million (net income) | $(346) million (net income) |
Operational Highlights
As of September 30, 2024, MBIA's total insured gross par outstanding was $25.9 billion. The company continues to monitor and remediate its existing insured portfolio while focusing on maximizing recoveries from claims.
| Operational Metrics | Value (2024) | Value (2023) |
|---|---|---|
| Total insured gross par outstanding | $25.9 billion | $26.5 billion |
| Policyholders' surplus (National) | $687 million | $763 million |
| Statutory capital (National) | $1.0 billion | $1.1 billion |
| Net loss and LAE reserves | $273 million | $226 million |
Strategic Focus
MBIA's strategic focus includes:
- Enhancing risk management practices.
- Improving operational efficiency.
- Fostering innovation in financial products.
- Strengthening relationships with stakeholders.
Conclusion
The mission statement of MBIA Inc. reflects its commitment to providing quality financial guarantees while navigating challenges within the market. The company aims to improve financial performance through strategic initiatives and effective management.
How MBIA Inc. (MBI) Works
Business Structure
MBIA Inc. operates within the financial guarantee insurance industry, managing three primary segments:
- U.S. Public Finance Insurance
- Corporate
- International and Structured Finance Insurance
Financial Performance
As of September 30, 2024, MBIA reported the following financial metrics:
| Metric | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Net Income (Loss) Attributable to MBIA Inc. | $(56) million | $(185) million | n/a |
| Net Income (Loss) per Share | $(1.18) | $(3.94) | n/a |
| Total Revenues | $11 million | $35 million | -69% |
| Total Expenses | $32 million | $31 million | 3% |
| Income (Loss) from Continuing Operations Before Income Taxes | $(21) million | $4 million | n/a |
Insurance Operations
MBIA's insurance operations are primarily conducted through its subsidiary, National Public Finance Guarantee Corporation (National). National provides unconditional and irrevocable guarantees for the payment of principal and interest on insured obligations.
Claims and Losses
As of September 30, 2024, MBIA faced significant claims related to the Puerto Rico Electric Power Authority (PREPA). The company paid gross claims aggregating:
- $16 million on January 1, 2024
- $122 million on July 1, 2024
National had $670 million of insured debt service outstanding related to PREPA as of the same date .
Liquidity and Capital Resources
As of September 30, 2024, MBIA Corp. held cash and investments totaling:
| Asset Type | Value |
|---|---|
| Cash and Cash Equivalents | $27 million |
| Investments | $208 million |
MBIA's total claims-paying resources amounted to:
| Resource Type | Value |
|---|---|
| Total Claims-Paying Resources | $1.586 billion |
| Policyholders' Surplus | $687 million |
| Contingency Reserves | $313 million |
Investment Portfolio
MBIA's investment portfolio includes various securities, with net realized investment gains and losses as follows:
| Period | Net Realized Investment Gains (Losses) |
|---|---|
| Q3 2024 | $0 million |
| Q3 2023 | $(7) million |
Credit Quality
As of September 30, 2024, the credit quality of MBIA's insured portfolio showed that:
| Rating Category | Gross Par Outstanding | % of Total |
|---|---|---|
| AAA | $1.028 billion | 4.0% |
| AA | $10.882 billion | 42.0% |
| A | $10.085 billion | 39.0% |
| BBB | $1.832 billion | 7.1% |
| Below Investment Grade | $2.058 billion | 7.9% |
| Total | $25.885 billion | 100% |
Recent Developments
MBIA has indicated that due to significant losses and challenges in liquidity, it may not have the capacity to pay dividends in the near future. As of September 30, 2024, the company’s statutory capital was reported at $87 million, down from $152 million at the end of 2023 .
How MBIA Inc. (MBI) Makes Money
Revenue Sources
MBIA Inc. generates revenue primarily through financial guarantee insurance, investment income, and fees from its consolidated variable interest entities (VIEs).
| Revenue Source | Three Months Ended September 30, 2024 (millions) | Three Months Ended September 30, 2023 (millions) | Nine Months Ended September 30, 2024 (millions) | Nine Months Ended September 30, 2023 (millions) |
|---|---|---|---|---|
| Scheduled Premiums Earned | 8 | 9 | 24 | 27 |
| Refunding Premiums Earned | 1 | 1 | 2 | 1 |
| Net Investment Income | 20 | 26 | 65 | 89 |
| Net Realized Investment Gains (Losses) | 0 | (13) | (3) | (23) |
| Fees and Reimbursements | 2 | 0 | 3 | 0 |
| Total Revenues | 29 | 8 | 5 | 38 |
Financial Guarantee Insurance
MBIA's primary business involves providing financial guarantees for municipal bonds and structured finance transactions. This segment generates income through premiums charged for insuring these obligations.
As of September 30, 2024, the total gross par outstanding insured by MBIA Corp. was approximately $2.5 billion.
Investment Income
Investment income is derived from returns on the company's investment portfolio, including interest and dividends. The net investment income for the three months ended September 30, 2024 was $20 million, down from $26 million in the same period of 2023.
Losses and Loss Adjustment Expenses
Losses and loss adjustment expenses significantly impact MBIA's profitability. For the three months ended September 30, 2024, losses and loss adjustment expenses were $11 million, a decrease from $123 million in the same quarter of 2023.
| Period | Losses and LAE (millions) |
|---|---|
| Three Months Ended September 30, 2024 | 11 |
| Three Months Ended September 30, 2023 | 123 |
| Nine Months Ended September 30, 2024 | 171 |
| Nine Months Ended September 30, 2023 | 158 |
Investment Portfolio Management
MBIA manages a diverse investment portfolio, which includes fixed-income securities. The portfolio's performance directly affects the company’s earnings. As of September 30, 2024, MBIA Inc. held cash and investments totaling $326 million.
Liquidity and Capital Management
MBIA's liquidity is primarily derived from dividends from its subsidiary, National, and from the investment portfolio. As of September 30, 2024, National held $1.2 billion in cash and investments.
| Liquidity Position (millions) | September 30, 2024 | December 31, 2023 |
|---|---|---|
| MBIA Inc. Liquidity | 326 | 411 |
| National Liquidity | 1,200 | 1,300 |
Market Conditions and Risks
MBIA's revenue generation is sensitive to market conditions, particularly credit spreads and interest rates. The company has faced net realized investment losses, reflecting challenging market conditions, with losses of $3 million for the nine months ended September 30, 2024.
Conclusion
MBIA Inc. continues to navigate a complex financial landscape, relying on its insurance premium income, investment earnings, and careful management of losses to sustain operations and profitability.
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Resources:
- MBIA Inc. (MBI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of MBIA Inc. (MBI)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View MBIA Inc. (MBI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.