MBIA (MBI) Q2 2024 earnings summary

Executive summary

• Reported a consolidated GAAP net loss of $254 million ($5.34/share) for Q2 2024, significantly higher than the $74 million loss in Q2 2023, mainly due to increased PREPA loss reserves and fair value losses.

• Year-to-date GAAP net loss was $340 million ($7.21/share) for the first six months of 2024, up from $167 million in the same period of 2023.

• Adjusted net loss (non-GAAP) was $138 million ($2.90/share) for Q2 2024, compared to $22 million in Q2 2023, primarily due to higher loss and loss adjustment expenses at National related to PREPA.

• PREPA defaulted on National-insured bonds in January and July 2024, resulting in gross claims paid of $16 million and $122 million, with ongoing litigation and mediation creating uncertainty for future recoveries.

• No new financial guarantee policies are expected outside of remediation; focus remains on managing existing portfolios and maximizing recoveries.

Financial highlights

• Book value per share decreased to negative $39.07 as of June 30, 2024, from negative $32.56 at year-end 2023, driven by a $340 million consolidated net loss year-to-date.

• Total revenues were negative $37 million for Q2 2024, down from $28 million in Q2 2023, mainly due to $59 million in fair value investment losses and lower net investment income.

• Total expenses rose to $216 million in Q2 2024 from $106 million in Q2 2023, driven by $142 million in losses and LAE, primarily related to PREPA.

• National's gross par outstanding declined by $0.8 billion to $27 billion at Q2 end, with a leverage ratio of 28:1 and claims-paying resources of $1.6 billion.

• MBIA Insurance Corp. reported a statutory net loss of $35 million for Q2 2024, with statutory capital dropping to $85 million and claims-paying resources at $355 million.

Outlook and guidance

• Resolution of PREPA is necessary before restarting the process to sell the company; uncertainty remains regarding the outcome of PREPA's restructuring and its impact on loss reserves and recoveries.

• No material new business is expected; focus is on portfolio surveillance, remediation, and capital management.

• Management is focused on reducing operating expenses, with a downward trend expected to continue over the next year.

• Management expects National to be the primary source of future payments to MBIA Inc., but dividend timing and amounts are subject to regulatory approval.

• No significant problem credits in National's portfolio aside from PREPA and LCOR Alexandria, with the latter not expected to have a material impact.