MBIA Inc. Q2 FY2025 earnings call

• Second quarter 2025 financial results had a lower net loss than the comparable period for 2024, benefiting from lower losses in LAE and lower investment in VIE losses at MBIA Insurance Corp.
• Priority is resolving National's PREPA exposure, with timing uncertain and Title III Court addressing administrative expense claims.
• Corporate segment had total assets of approximately $677 million as of June 30, 2025, with unencumbered cash and liquid assets and pledged assets detailed.
• National reported statutory net income of $6 million for Q2 2025, with insured portfolio gross par amount and leverage ratio details.
• MBIA Insurance Corp. reported statutory net income of $4 million for Q2 2025, with insured gross par outstanding and statutory capital details.

Corporate Segment

• Total assets of approximately $677 million as of June 30, 2025. Unencumbered cash and liquid assets held by MBIA Inc. totaled $355 million, down from $380 million as of December 31, 2024, primarily due to interest payments on the corporate segment's debt. Assets at market value pledged to guaranteed investment agreement contract holders totaled approximately $214 million.

National Public Finance Guarantee Corporation

• Statutory net income of $6 million for the second quarter of 2025 compared with a statutory net loss of $131 million for the second quarter of 2024. Gross par amount outstanding for National's insured portfolio declined by approximately $1.1 billion from year-end 2024 to about $24 billion at June 30, 2025. National's leverage ratio of gross par to statutory capital was 26:1 at the end of the second quarter. As of June 30, 2025, National had total claims paying resources of $1.5 billion and statutory capital and surplus in excess of $900 million.

MBIA Insurance Corporation

• Statutory net income of $4 million for the second quarter of 2025 compared with a statutory net loss of $35 million for the second quarter of 2024. Insured gross par outstanding was $2.2 billion as of June 30, 2025, down from $2.3 billion at year-end 2024. Statutory capital was $92 million as of June 30, 2025, $4 million higher than year-end 2024. Claims paying resources totaled $346 million at June 30, 2025, compared with $356 million at December 31, 2024.

• Resolving National's PREPA exposure is a priority, and the timing of resolution remains uncertain. Transferring certain PREPA bankruptcy claims to a custodian is seen as making them more marketable, which could reduce uncertainty related to PREPA and potentially facilitate a sale of the company.

• Uncertainty associated with the possible outcomes for National's PREPA bankruptcy claim in excess of $800 million.
• General market conditions and the competitive environment could cause actual results to differ materially from projected results referenced in forward-looking statements.

Q: Can we interpret National transferring certain PREPA bankruptcy claims to a custodian as a signal of marketing/selling those claims? And is there a potential liquid buyer pool? Also, which claims were transferred and why?

A: Yes, transferring the claims makes them more marketable. There are some interested parties. Those transferred are completely paid off bonds, making them more marketable as securities.

Q: How does the termination of 5 of 7 members of the Oversight Board in Puerto Rico impact the restructuring and negotiations?

A: It's hard to tell exactly, but we hope it leads to a positive outcome. Until new Board members are in place and their approach is known, it's speculative. But it could increase the probability of a consensual deal.

Q: Regarding the Oversight Board informing the court of intending to modify National's settlement in a forthcoming amended plan, can you give background?

A: It's in the current Q but no new specific information to share as the agreement effectively came terminated.

Q: On repurchase capacity, with $71 million remaining, any thoughts on using it?

A: We look at potential stock repurchases constantly and agree it's something we'll continue to look at.

Q: On the cooperation agreement with Assured and Golden Tree expiring in December and extendable to March, your view?

A: We'll continue to review the situation and how it relates to the co-op agreement, and it's been beneficial so far.

Q: On PREPA exposure updated figure after payments on July 1?

A: As of June 30, the outstanding part was $504 million, and the $91 million and $97 million payments on July 1 weren't reported in the relevant figures.

Q: When the Trump administration removed 5 of 7 members of the Oversight Committee, did it include the Chairman?

A: Yes, the current Chair Arthur Gonzalez was one of the 5 dismissed.

Q: On valuation guidelines for transferred fully paid bonds?

A: It's a not very deep or liquid market, with small trades done at about $0.55 on the dollar for uninsured bonds.

Q: Monetizing half PREPA exposure and its impact on sale process or special dividend?

A: It will reduce uncertainty regarding PREPA, which is needed for selling the company. Speculating on special dividends is premature but possibilities increase with such actions.

Q: Timing of transferring claims to custodian now vs earlier tranches?

A: No specific catalyst, just thought it was a good thing to do to increase marketability of the claims.

Q: On transferred claims, was any left behind and reason?

A: None left behind; can't transfer until bonds are completely paid off, and it's a matter of when the last debt service payment is made.

Q: On National's salvage and loss reserves change, reason?

A: It's a result of modifications to assumptions within PREPA scenarios, with a small modification generating a small loss in the results.

Q: On Trump administration's action on Oversight Board and its impact on quorum for approving a plan?

A: 2 directors don't constitute a quorum under PROMESA; they need 4, and they will need to add Board members.