MBIA Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• The third quarter 2025 financial results had a lower net loss than the comparable period in 2024, benefiting from lower losses and LAE related to National's PREPA exposure.
• National's PREPA exposure resolution path remains uncertain, with administrative expense claims litigation restarted and a large group of bondholders opposing PREPA's proposed confirmation plan.
• National's insured portfolio credits continued to perform generally consistent with expectations.
• The Corporate segment's assets and liquidity were discussed, including unencumbered cash/liquid assets and pledged assets to guaranteed investment agreements.
• Statutory results for National and MBIA Insurance Corp. were detailed, showing changes in net income and capital positions.

Segment Performance

• National's PREPA Exposure: In the third quarter of 2025, MBIA benefited from lower losses and LAE associated with National's PREPA exposure, including the sale of $374 million of National's PREPA-related bankruptcy claims and higher estimated recoveries. National's PREPA gross par outstanding is now $425 million. The administrative expense claims litigation related to PREPA has restarted, and bondholders representing ~90% of PREPA bonds oppose the confirmation plan. The gross par amount outstanding for National's insured portfolio declined by ~$2.1 billion from year-end 2024 to ~$23.2 billion at September 30, 2025, with a leverage ratio of 23:1. Total claims paying resources were $1.5 billion, and statutory capital was almost $1 billion.
• Corporate Segment: The Corporate segment had total assets of approximately $650 million as of September 30, 2025. Unencumbered cash and liquid assets held by MBIA Inc. were $354 million (down from $380 million at December 31, 2024), and ~$180 million of assets were pledged to guaranteed investment agreement contract holders.
• Insurance Statutory Results: National reported statutory net income of $73 million for the third quarter of 2025 vs. $19 million in the same period of 2024, driven by PREPA loss reserve adjustments. MBIA Insurance Corp. reported a statutory net loss of $25 million for the third quarter of 2025 vs. $2 million profit in the same period of 2024, due to adjustments in Zohar CDO recoveries. MBIA Insurance Corp.'s insured gross par outstanding was $2.1 billion as of September 30, 2025, down from $2.3 billion at year-end 2024.

Guidance

• The priority remains resolving National's PREPA exposure, though the path and timing of resolution are uncertain.
• Reduced uncertainty around Puerto Rico's PREPA exposure makes the company closer to a potential sale process, and the company would announce if a sale process is initiated.

Risks

• Uncertainty in the timing and path of resolving National's PREPA exposure.
• Litigation related to the dismissal and reinstatement of Puerto Rico Financial Oversight and Management Board members, which could delay PREPA plan approval.

Question and Answer

• Q: On the cooperation agreement and bondholder blockage, is no single party able to block a deal? A: The requisite bondholders total 77.5%, and no single party, including Assured Guaranty, can block the deal as there is a limit on the percentage that can be voted.
• Q: On the coordinated sale of PREPA claims, why are they being sold in such a coordinated fashion? A: MBIA is aware of the similar actions but does not know the motivation of the buyers.
• Q: On selling the company again, what are the gating items? A: Previously, engaging Barclays showed it wasn't the best time, but reduced Puerto Rico uncertainty makes a sale closer; the company would announce if starting a sale process.
• Q: On weighing special dividends vs. sale for shareholder value, how is this considered? A: Dividend decisions consider debt service, liquidity, and PREPA progress, with special dividends from National and holding company dividends evaluated accordingly.
• Q: On PREPA claims sale contingencies and buyers, are there any contingencies? A: There are no contingencies to the $374 million sale of PREPA claims, and there are multiple buyers, not likely to cause delay.
• Q: On the Puerto Rico Oversight Board, what's the current status? A: There's a temporary stay on litigation, 4 members are on the Board now, but 5 are needed for a confirmation plan, causing a near-term delay.
• Q: On getting rid of MBIA Inc. liabilities, why not declare bankruptcy? A: MBIA Insurance Corp. is not bankrupt, has substantial surplus, and not a barrier to selling MBIA Inc. in the future.