MBI

• PREPA Exposure Resolution Progress

  • Outstanding gross par PREPA exposure reduced by $35 million to $390 million following claims payments on PREPA bonds maturing July 1, 2026.
  • Multiple PREPA-related litigations are progressing: the First Circuit Court of Appeals will hear arguments for the appealed administrative claim on September 15, 2026; the net revenue counterclaim case is now in discovery after the litigation stay was lifted; the Oversight Board membership appeal has been remanded to trial court following U.S. Supreme Court June 2026 rulings.
  • The Puerto Rico Oversight Board increased its settlement offer to PREPA bondholders from $1.6 billion to ~$3 billion, but the offer was rejected as inadequate by bondholders holding ~90% of total claims.

• Consolidated Financial Results

  • Q2 2026 GAAP consolidated net loss was $46 million ($-0.91 per share), an improvement from the $56 million ($-1.12 per share) net loss in Q2 2025. The lower loss stemmed from a reversal of legal expenses for Zohar CDO recoveries at MBIA Insurance Corp, and foreign exchange gains in the corporate segment compared to foreign exchange losses in Q2 2025.
  • Q2 2026 non-GAAP adjusted net loss was $7 million ($-0.14 per share), improved slightly from the $8 million ($-0.17 per share) adjusted net loss in Q2 2025, driven by lower loss adjustment expenses for PREPA exposure at National.
  • As of June 30, 2026, MBIA Inc. book value per share was negative $45.58, a $1.31 per share decrease from year-end 2025, driven by $86 million in consolidated net loss for the first half of 2026.

• Liquidity and Capital Management

  • Holding company liquidity is being managed carefully, with a primary focus on meeting outstanding obligations and preserving financial flexibility.
  • All non-GAAP financial measure reconciliations are available in company SEC filings and published quarterly supplements.

Management did not issue formal quantitative forward guidance, nor did it announce upward, downward, or maintained revisions to prior guidance. The company only provided qualitative forward commentary that it will continue monitoring PREPA litigation progress, the Oversight Board composition, and credit performance across its remaining insured portfolios, and will evaluate potential strategic transactions (including a potential company sale) as PREPA exposure is reduced.

1. Corporate Segment (holding company activities): Total assets of $635 million as of June 30, 2026, including $337 million in unencumbered cash and liquid assets (down from $357 million at year-end 2025), $183 million in pledged assets to guaranteed investment agreement contract holders (fully collateralizing contract principal), and $66 million in assets at MBIA Services to support operating obligations. This segment incurred foreign exchange impacts on Euro-denominated medium-term note liabilities that contributed to an improved net loss result in Q2 2026. No explicit revenue contribution percentage is provided.

2. National Public Finance Guarantee Corporation: Reported statutory net income of $10 million for Q2 2026, up from $6 million in Q2 2025. Statutory capital grew to $968 million as of June 30, 2026, a $31 million increase from year-end 2025, driven by first half 2026 statutory net income and unrealized investment gains. Claims paying resources remained consistent at $1.4 billion year-over-year. Gross par outstanding of the insured portfolio declined to $20.8 billion as of June 30, 2026 (a $1.5 billion drop from year-end 2025), and the leverage ratio improved to 21:1 from 24:1 at year-end 2025. PREPA gross par exposure was reduced by $35 million to $390 million after claims payments on July 1, 2026.

3. MBIA Insurance Corporation: Reported statutory net income of $27 million for Q2 2026, up from $4 million in Q2 2025. Statutory capital increased to $106 million as of June 30, 2026, a $27 million rise from year-end 2025, driven by $28 million in first half 2026 net income. Claims paying resources grew by $25 million to $342 million as of June 30, 2026. Gross par outstanding of the insured portfolio declined ~12% from year-end 2025 to just under $1.8 billion due to regular portfolio amortization. The improved result was driven by larger loss and loss adjustment expense benefits from reassessment of Zohar CDO recoveries.

• Uncertainty around the timing and outcome of PREPA exposure resolution, including prolonged litigation, unresolved Oversight Board membership composition, and ongoing disagreement between the Oversight Board and bondholders on settlement terms.
  • Negative book value per share for MBIA Inc., driven by cumulative net losses, creates financial uncertainty for the holding company.
  • Ongoing operating expenses and required debt service payments reduce holding company cash and liquid assets over time.
  • Political trends in some U.S. state and local governments could increase risk of contractual obligations not being honored, which may create potential impairment risk for the insured portfolio, though no new impairments were recorded in Q2 2026 related to this factor.
  • Actual future results may differ materially from forward-looking statements due to unanticipated changes in general market conditions and the competitive environment, with full risk factors detailed in MBIA's 10-K and 10-Q SEC filings.

Q: Analyst asks for management's view on whether the new $3 billion PREPA settlement offer from the Oversight Board brings parties closer to a resolution, and whether potential future distributions from National to the holding company are available for capital above a ~2% capital ratio threshold following the 2023 special dividend. / A: Management confirms the new offer is a substantial increase from the prior proposal but notes it was rejected as inadequate by 90% of bondholders, with timing of any final resolution still uncertain due to ongoing Oversight Board litigation and membership uncertainty. Management adds that appropriate distribution capacity must be determined via tailored analysis of National's shrinking specific portfolio, rather than relying on broad ratio metrics.

Q: Investor asks to confirm $71 million in remaining share buyback capacity is available, requests clarification on the recent $30 million custodial receipt transaction, and asks if MBIA is actively pursuing PREPA resolution within the bondholder co-op. / A: Management confirms the full $71 million buyback capacity remains available, with deployment at management's discretion based on shareholder interest. The $30 million custodial receipt matches the July 1, 2026 PREPA claims payment, with a total of $35 million in PREPA-related custodial assets available for sale if an acceptable price is received. Management states MBIA is not passive in pursuing PREPA resolution and notes resolution of Oversight Board membership uncertainty would be a key catalyst for progress.

Q: An investor asks for context on how large the gap is between the Oversight Board's new PREPA settlement offer and what bondholders would accept, and asks if political trends questioning contractual obligations have impacted impairment analysis. / A: Management notes the offer equals ~30-40 cents on the dollar of par, while current market trading of PREPA bonds is around 75 cents on the dollar, providing a benchmark for the valuation gap. Management confirms political trends around contractual obligation honoring are factored into ongoing portfolio analysis, though no new impairments related to this factor were recorded in Q2 2026, and the company will continue monitoring the situation.

Q: Analyst asks for management's thoughts on restarting a potential company sale process, and whether it would be a public or private process, given progress on PREPA and ongoing holding company cash burn. / A: Management notes the likelihood of a successful transaction increases as PREPA exposure is reduced, but no formal decision to restart a sale process has been made. If management proceeds with a process similar to the 2022 public effort, it would publicly announce the initiative, but the company is also open to confidential outreach to potential buyers or unsolicited proposals if it benefits shareholders, and the topic is reviewed constantly.