MBIA Inc. Q1 FY2026 earnings call

• Lower net losses in Q1 2026 vs Q1 2025. • National's losses and loss adjustment expense essentially unchanged YOY. • National's PREPA exposure remains at $425 million gross par value, with no substantive progress on resolution since Feb conference call until legal issues with Financial Oversight and Management Board members are resolved. • Nationals insured portfolio credits continued to perform generally consistent with expectations, with gross par amount outstanding declining by ~$900 million. • National's leverage ratio improved. • National's total claims paying resources and statutory capital and surplus as of 3/31/2026. • MBIA Insurance Corp's statutory results and changes in insured gross par outstanding. • Corporate segment balance sheet details including unencumbered cash and liquid assets and pledged assets.

Consolidated GAAP net loss for Q1 2026 was $40 million or -$0.80 per share, vs $62 million or -$1.28 per share in Q1 2025. Adjusted net loss (non-GAAP) was $8 million or -$0.16 per share in Q1 2026, same as Q1 2025. National's statutory net income was $11 million in Q1 2026 vs $4 million in Q1 2025. MBIA Insurance Corp's statutory net income was $1 million in Q1 2026 vs $2 million in Q1 2025. National's outstanding PREPA exposure is $425 million gross par value. National's insured portfolio gross par amount outstanding declined by ~$900 million to ~$21.5 billion as of 3/31/2026. National's leverage ratio was 23 to 1 at end of Q1 2026, down from 24 to 1 at year-end 2025. National had total claims paying resources of $1.4 billion and statutory capital and surplus of $950 million as of 3/31/2026. MBIA Insurance Corp's insured gross par outstanding was just under $2 billion as of 3/31/2026, down ~7% from year-end 2025. MBIA Inc.'s book value per share decreased 55 cents to -$44.82 per share as of 3/31/2026.

• Consistently looking for opportunities to buy back holding company debt at discounts. • Focused on repaying debt coming up in 2027 and 2028. • Debt beyond 2028 (into 2030s) not yet in liquidity window but expected to be within next couple of years, where more opportunities to buy back at discounts will be seen to benefit capital.

• General market conditions and competitive environment could cause actual results to differ materially from forward-looking statements. • Legal issues related to the members of the Financial Oversight and Management Board could impact progress on resolving National's PREPA exposure. • Uncertainties related to the oversight board litigation, including the timeline for resolution and potential impact on the company's operations and financials.

Q: A question on the corporate segment balance sheet, looking at the liability side there. Occasionally, you've been able to redeem some of those liabilities at a discount early. It didn't look like there were any actions taken in the quarter. So can you just go through the opportunity they are going forward to satisfy some of those obligations early and potentially accretively, just as a use of capital that could be good for shareholders?

A: Sure, Tommy. Hi, it's Joe. So we're consistently looking for opportunities in which we can buy back the holding company debt at discounts. We haven't seen a whole lot of that recently. we are focused on repaying the debt coming up in 27 and 28. the debt beyond that once we get into the 2030s is not yet in our liquidity window but we expect that to be within the next couple of years so we'll have more opportunities there and that's where we'll see more of the the benefit to our capital in trying to get those back at discounts.

Q: Since we last spoke around fourth quarter earnings a few months ago, have there been any updates on the strategic process to the extent of hiring advisors or bankers to explore options? Any updates over the past couple months?

A: There's nothing that we've chosen to communicate to anybody at this point in time, Tommy.

Q: What is the projected cash requirement to meet the guarantees on the outstanding Puerto Rico preferred debt in 2026. And secondly, this lawsuit, the oversight board and lawyer is being awfully frivolous. I mean, it's an appointed position. Uh, the entities that appointed said, well, you're not here anymore. I'm trying to understand the basis. of the litigation in which they are suing to be restored. Is there a payment that they get and they're suing because they felt they should be entitled to be paid? What's the basis that they're suing?

A: With regard to your first question, the prep of payments, the debt service that we have, is approximately $35 million for the rest of the year. So with regard to your second question, the oversight board litigation in those positions, you're correct. Those positions are not compensated, so there is no remuneration to any of the oversight board members. The lawsuit, as you mentioned, is somewhat complicated. Most of the argument, we believe, comes down to whether the process was appropriate in terminating what now are the three oversight board members who have sued to retain their positions. As you know, one judge has already put them back on, saying that until the whole case is heard, that they should be on the board. That case is essentially on hold until a different case, which is the Federal Reserve, which is the Lisa Cook case, is decided, at which point then the Puerto Rico court will resume this case. So it may take a little time for this to get resolved. It is not about compensation, and it really is, we think, primarily around the process that was either followed or not followed. There is, I suppose, a long shot argument whether or not the administration, that is the president, has the right to terminate them. But we think most likely The answer to that is yes, that he does, as long as it's for cause and that there is a procedure that's followed. Is there any timeline on it? Isn't the Cook case expected to be handed down by the Supreme Court very shortly? Yes, and so as soon as that decision is rendered, then we believe that the case can resume in Puerto Rico, and hopefully that will move quickly. I should mention there are three open positions that the administration, with obviously the president's approval, could fill those spots after, again, the recommendations are made to the president. We think that would actually help move the process along in terms of potentially negotiating settlement between the bondholders and the oversight board. But again, no word specifically on when those three positions might be filled.

Q: Can you guys hear me? Yes. All right, great. So I've got just a quick question on selling the company like we've talked about our strategic actions. And this is a hypothetical, so you might not be able to answer it, but I'm going to ask it anyway just to get your thoughts. And the idea behind this is just that considering the amount that you've reduced the prep exposure a couple of quarters ago and the fact that you were able to sell that amount you know at your current mark now and so there's a pretty established value for the recovery there and and that balance is pretty small um it seems like that that band has gotten pretty small in terms of uncertainty so i wanted to ask you just in a hypothetical let's let's imagine prepa doesn't exist anymore you've satisfied all those claims you've paid the salvage at your mark so the adjusted book value remains the same in the kind of low 13s per share. And now you're in a position where you feel like you can sell the company. Can you kind of describe, I would imagine at that point, there's bids that come in and it's some sort of discount to the book value and the discussion is really over what the size of that discount should be. So I was curious if you could kind of describe on both sides of a buyer, what's their argument for asking for what you think is an unreasonable discount to book value? Like why would they be asking for that? And then on the other side of that, what's kind of the selling point to the buyer of why it should be closer to the book value per share or something like that? Just to give us some context of like how... people are thinking about this between the buyer and the seller?

A: Paul, what you're describing, and again, thank you for your question, is a typical process that a company would go through when it decides to sell the company. And we went through a process along those lines at this point about three years ago. There are all different ways. A lot of the potential parties involved don't even use adjusted book value. So in some ways, it's hard to answer it with the construct that you put forth. They all put forth a proposed acquisition amount. We have an analysis or would do an analysis in your hypothetical situation with what all alternatives are that is pursuing any of those. If they're just a straight sale of the entire company, that's pretty straightforward. If it was something other than that, for example, people have suggested selling just national. People have suggested mergers. People have suggested reinsurance. People have suggested we continue or compare that to continuing to run the company off a loan. So it's hard to answer in terms of the discounts to adjusted book value. I think your question gets at the right issue, which is, what all the different ways and what would be the bids for the company and what are the choices that we have for the company going forward. So in some ways, I think it's a pretty typical sale process.