-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Sh6PR3KUvHdsJRyoZelcZ5P79K+8KSAskt63X2wMoaiEOtm+8R1+7Ai2GPA4TWxo DFPGOiztQQE/G6hNyl4ZKg== 0000814585-95-000003.txt : 19950516 0000814585-95-000003.hdr.sgml : 19950516 ACCESSION NUMBER: 0000814585-95-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MBIA INC CENTRAL INDEX KEY: 0000814585 STANDARD INDUSTRIAL CLASSIFICATION: SURETY INSURANCE [6351] IRS NUMBER: 061185706 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09583 FILM NUMBER: 95539506 BUSINESS ADDRESS: STREET 1: 113 KING ST CITY: ARMONK STATE: NY ZIP: 10504 BUSINESS PHONE: 9142734545 MAIL ADDRESS: STREET 1: 113 KING ST CITY: ARMONK STATE: NY ZIP: 10504 10-Q 1 1ST QTR 10Q 95 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended March 31, 1995 OR ( ) TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from __________ to __________ Commission File No. 1-9583 I.R.S. Employer Identification No. 06-1185706 MBIA INC. A Connecticut Corporation 113 King Street, Armonk, N. Y. 10504 (914) 273-4545 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X NO ----- ----- As of April 28, 1995 there were outstanding 41,690,498 shares of Common Stock, par value $1 per share, of the registrant. PAGE 1 OF 15 INDEX ----- PAGE ---- PART I FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) MBIA Inc. and Subsidiaries Consolidated Balance Sheets - March 31, 1995 and December 31, 1994 (Audited) 3 Consolidated Statements of Income - Three months ended March 31, 1995 and 1994 4 Consolidated Statement of Changes in Shareholders' Equity - Three months ended March 31, 1995 5 Consolidated Statements of Cash Flows - Three months ended March 31, 1995 and 1994 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - 13 PART II OTHER INFORMATION, AS APPLICABLE Item 6. Exhibits and Reports on Form 8-K 14 SIGNATURES 15 (2) MBIA INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands except per share amounts) March 31, 1995 December 31, 1994 -------------- ----------------- (Unaudited) (Audited) ASSETS Investments: Fixed maturity securities held as available-for-sale at market (amortized cost $3,190,072 and $3,123,838) $3,246,516 $3,051,906 Short-term investments, at amortized cost (which approximates market value) 147,778 121,384 Other investments 19,083 17,550 ---------- ---------- 3,413,377 3,190,840 Municipal investment agreement portfolio, held as available-for-sale at market (amortized cost $2,112,313 and $1,738,375) 2,087,924 1,675,935 ---------- ---------- TOTAL INVESTMENTS 5,501,301 4,866,775 Cash and cash equivalents 9,706 7,940 Accrued investment income 71,220 68,486 Deferred acquisition costs 134,682 133,048 Prepaid reinsurance premiums 185,734 186,492 Goodwill (less accumulated amortization of $37,364 and $36,115) 110,503 111,252 Property and equipment, at cost (less accumulated depreciation of $14,830 and $13,917) 45,310 45,069 Receivable for investments sold 36,654 945 Other assets 36,593 36,432 ---------- ---------- TOTAL ASSETS $6,131,703 $5,456,439 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Deferred premium revenue $1,524,712 $1,512,211 Loss and loss adjustment expense reserves 42,033 40,148 Municipal investment agreements 2,104,144 1,526,133 Long-term debt 298,818 298,790 Short-term debt 23,000 17,000 Current income taxes payable 10,838 --- Deferred income taxes 139,220 76,843 Payable for investments purchased 44,144 209,966 Other liabilities 72,888 70,632 ---------- ---------- TOTAL LIABILITIES 4,259,797 3,751,723 ---------- ---------- Shareholders' Equity: Preferred stock, par value $1 per share; authorized shares--10,000,000; issued and outstanding--none --- --- Common stock, par value $1 per share; authorized shares--100,000,000; issued shares--42,077,387 42,077 42,077 Additional paid-in capital 720,136 719,750 Retained earnings 1,108,947 1,057,092 Cumulative translation adjustment 5,010 503 Unrealized appreciation (depreciation) of investments, net of deferred income tax provision (benefit) of $12,303 and $(46,292) 21,828 (86,560) Treasury stock, at cost; shares-- 430,463 and 461,763 (26,092) (28,146) ---------- ---------- TOTAL SHAREHOLDERS' EQUITY 1,871,906 1,704,716 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $6,131,703 $5,456,439 ========== ========== The accompanying notes are an integral part of the consolidated financial statements. (3) MBIA INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands except per share amounts) Three months ended March 31 -------------------------- 1995 1994 ---------- ----------- Revenues: Insurance: Gross premiums written $ 70,834 $ 84,311 Ceded premiums (7,080) (7,798) ---------- ---------- Net premiums written 63,754 76,513 Increase in deferred premium revenue (12,680) (22,061) ---------- ---------- Premiums earned (net of ceded premiums of $7,839 and $7,254) 51,074 54,452 Net investment income 52,837 46,884 Net realized gains 1,724 6,370 Investment management services: Income 4,202 2,218 Net realized gains (losses) 33 (617) Other 910 320 ---------- ---------- Total revenues 110,780 109,627 ---------- ---------- Expenses: Insurance: Losses and loss adjustment 2,033 1,925 Policy acquisition costs, net 5,140 5,959 Operating 9,747 9,342 Investment management services 2,871 2,334 Interest 7,050 6,735 Other 417 423 ---------- ---------- Total expenses 27,258 26,718 ---------- ---------- Income before income taxes 83,522 82,909 Provision for income taxes 17,516 17,168 ---------- ---------- NET INCOME $ 66,006 $ 65,741 ========== ========== NET INCOME PER COMMON SHARE $ 1.57 $ 1.56 ========== ========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES AND COMMON STOCK EQUIVALENTS OUTSTANDING 42,061,641 42,155,023 ========== ========== The accompanying notes are an integral part of the consolidated financial statements. (4) MBIA INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited) For the three months ended March 31, 1995 (In thousands except per share amounts)
Unrealized Common Stock Additional Cumulative Appreciation Treasury Stock --------------- Paid-in Retained Translation (Depreciation) -------------- Shares Amount Capital Earnings Adjustment of Investments Shares Amount ------ ------- -------- ---------- ---------- -------------- ------ ------- Balance, January 1, 1995 42,077 $42,077 $719,750 $1,057,092 $ 503 $(86,560) 462 $28,146 Treasury shares acquired --- --- --- --- --- --- (32) (2,054) Exercise of stock options --- --- 386 (1,241) --- --- --- --- Net income --- --- --- 66,006 --- --- --- --- Change in foreign currency translation --- --- --- --- 4,507 --- --- --- Change in unrealized appreciation of investments net of change in deferred income taxes of $(58,595) --- --- --- --- --- 108,388 --- --- Dividends per common share $0.31 --- --- --- (12,910) --- --- --- --- ------ ------- -------- ---------- ------ -------- ----- ------- Balance, March 31, 1995 42,077 $42,077 $720,136 $1,108,947 $5,010 $ 21,828 430 $26,092 ====== ======= ======== ========== ====== ======== ===== =======
The accompanying notes are an integral part of the consolidated financial statements. (5) MBIA INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Three months ended March 31 -------------------- 1995 1994 -------- -------- Cash flows from operating activities: Net income $ 66,006 $ 65,741 Adjustments to reconcile net income to net cash provided by operating activities: (Increase) decrease in accrued investment income (2,734) 1,253 Increase in deferred acquisition costs (1,634) (2,941) Decrease (increase) in prepaid reinsurance premiums 758 (544) Increase in deferred premium revenue 11,922 22,665 Increase in loss and loss adjustment expense reserves 1,885 1,913 Depreciation 907 741 Amortization of goodwill 1,249 1,256 Amortization of bond (discount) premium, net (358) 1 Net realized gains on sale of investments (1,757) (6,370) Deferred income taxes 3,782 3,020 Other, net 21,935 9,291 -------- -------- Total adjustments to net income 35,955 30,285 -------- -------- Net cash provided by operating activities 101,961 96,026 -------- ------- Cash flows from investing activities: Purchase of fixed maturity securities, net of payable for investments purchased (182,603) (342,288) Sale of fixed maturity securities, net of receivable for investments sold 92,891 142,388 Redemption of fixed maturity securities, net of receivable for investments redeemed 16,717 40,091 (Purchase) sale of short-term investments, net (9,908) 1,742 (Purchase) sale of other investments, net (863) 87,956 Purchases for municipal investment agreement portfolio, net of payable for investments purchased (864,740) (460,578) Sales from municipal investment agreement portfolio, net of receivable for investments sold 284,957 261,642 Capital expenditures, net of disposals (1,106) (1,008) -------- -------- Net cash used by investing activities (664,655) (270,055) -------- -------- Cash flows from financing activities: Dividends paid (12,901) (10,836) Purchase of treasury stock --- (8,886) Proceeds from issuance of municipal investment agreements 779,995 277,591 Payments for drawdowns of municipal investment agreements (203,833) (80,546) Exercise of stock options 1,199 434 -------- -------- Net cash provided by financing activities 564,460 177,757 -------- -------- Net increase in cash and cash equivalents 1,766 3,728 Cash and cash equivalents - beginning of period 7,940 2,492 -------- -------- Cash and cash equivalents - end of period $ 9,706 $ 6,220 ======== ======== SUPPLEMENTAL CASH FLOW DISCLOSURES: Income taxes paid $ 146 $ 1,818 Interest paid: Municipal investment agreements $ 25,010 $ 2,880 Long-term debt 9,188 9,188 Short-term debt 281 --- The accompanying notes are an integral part of the consolidated financial statements. (6) MBIA INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, accordingly, do not include all of the information and disclosures required by generally accepted accounting principles. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Form 10-K for the year ended December 31, 1994 for MBIA Inc. and Subsidiaries (the "Company"). The accompanying unaudited consolidated financial statements have not been audited by independent accountants in accordance with generally accepted auditing standards but in the opinion of management such financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to summarize fairly the Company's financial position and results of operations. The results of operations for the three months ended March 31, 1995 may not be indicative of the results that may be expected for the year ending December 31, 1995. The December 31, 1994 condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. 2. Dividends Declared Dividends declared by the Company during the three months ended March 31, 1995 were $12.9 million. (7) MBIA INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - --------------------- 1995 AND 1994 - FIRST QUARTER RESULTS - ------------------------------------- MBIA Inc.'s (the "Company") 1995 first quarter net income was $66.0 million compared to $65.7 million in 1994. Earnings per share grew 1% to $1.57 from $1.56 in the first quarter of 1994. The Company also measures its performance in terms of core earnings, which exclude the effects of the relatively less predictable elements of net premiums earned from refundings and calls of previously insured issues, realized gains and accounting changes. Core earnings increased by 13% to $1.43 per share compared with $1.27 a year ago, reflecting the Company's continuing ability to produce consistent growth from its expanding portfolio of insured issues, its investment portfolio and investment management services. According to THE BOND BUYER, long-term new issue municipal bond volume was $28.0 billion of par value in the first quarter of 1995, down from $49.8 billion in the first quarter of 1994 due to a sharp decline in refunding activity. The insured portion of the market declined to 30% from 36% in the first quarter of 1994. The decrease was the result of a larger percentage than usual in this year's first quarter of new issues that sold without insurance because of their very high credit quality. In the first quarter of 1995, the Company's principal operating subsidiary, MBIA Insurance Corporation (formerly, Municipal Bond Investors Assurance Corporation) ("MBIA Corp."), continued to lead the industry in market share, guaranteeing 38% of the insured long-term new issue municipal bond volume. In addition, the Company insured a record $2.1 billion (par value) of structured finance securities, more than double the $927.5 million insured in last year's first quarter. Influenced by the decline in overall new issue market volume, but partially offset by increased writings in secondary market, asset-backed and international activity, gross premiums written by MBIA Corp. decreased 16% to $70.8 million during the first quarter, from $84.3 million during the first quarter of 1994. New issue and secondary market municipal and asset-backed premiums, the major components of gross premiums written, decreased 22% to $59.6 million compared with $76.1 million in the same period last year. Installment premiums received for policies issued in prior years, including net amounts assumed related to the installment business of the Association, were $7.9 million and $7.3 million for the first quarters of 1995 and 1994, respectively. MBIA Assurance S. A., a subsidiary of MBIA Corp. has shown (8) MBIA INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS substantial growth contributing $3.3 million of gross premium written in first quarter 1995 compared to $0.7 million in the first quarter of 1994. Gross premiums written also included portfolio assumptions of $0.2 million in the first quarter of 1994. With the decrease in the volume of gross premiums written, premiums ceded to reinsurers declined 9% to $7.1 million during the first quarter of 1995 compared to $7.8 million in the same period last year. Premiums ceded as a percentage of gross premiums written were relatively constant at 10% and 9% for the first quarters of 1995 and 1994, respectively. The Company monitors on a continual basis the creditworthiness of its reinsurers. The substantial majority (97%) of the Company's current reinsurance treaty capacity is with reinsurance companies which are rated AA or better by Standard & Poors or A or better by A. M. Best & Co., an insurance rating organization. In the first quarter of 1995, the maximum amount reinsured by any one reinsurance company as a percent of the Company's gross premiums written was 4%. As of March 31, 1995, the maximum amount of debt service outstanding reinsured by any one reinsurance company as a percent of insured gross debt service outstanding was also 4%. The Company remains liable for risks reinsured but believes that the likelihood of not recovering the reinsured portion of losses from its reinsurers is remote. Typically, insurance premiums are paid in full at the time the insurance policy is issued and are earned pro rata over the period of risk. Premiums are allocated to each bond maturity based on par amount and are earned on a straight-line basis over the term of each maturity. Accordingly, the portion of net premiums earned on each policy in any given year represents a relatively small percentage of the total net upfront premium received. The balance represents deferred premium revenue to be earned in the future over the remaining life of the bond. Approximately 10% of MBIA's premiums are collected on an installment basis. Installment premiums are not recorded as a component of deferred premium revenue until received and therefore represent an off-balance sheet value which will contribute to future earned premiums and cash flow. As of March 31, 1995, MBIA estimates the present value of this future stream of payments to be $182.5 million. The present value of installment premiums related to MBIA's asset-backed and UIT businesses written in the first quarter of 1995 increased 92% to $13.6 million from $7.1 million in the first quarter of 1994. (9) MBIA INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Premiums earned in the first quarter decreased 6% to $51.1 million from $54.5 million in the first quarter of 1994. The growth in the deferred premium revenue from the addition of new business in 1994 was more than offset by the decline in earned premiums associated with bond refundings and calls during first quarter 1995, which were significantly lower than in the same period last year. When an MBIA-insured bond issue is refunded or retired prior to the end of the expected period of coverage, the outstanding liability associated with the refunded or called portion is extinguished and the remaining deferred premium revenue is earned immediately, except for any portion which may be applied as a credit toward the premium charged on the refunding bond issue if such refunding issue is insured by MBIA Corp. Earned premiums generated by refunded and called bonds declined to $8.0 million from $14.5 million in the first quarter of 1994. The amount of bond refundings and calls is difficult to predict since it is influenced by a variety of factors such as prevailing interest rates relative to the coupon rates of the original issue, the issuer's desire to modify restrictive covenants and changing requirements under the Internal Revenue Code. The Company's total investments were $5.5 billion as of March 31, 1995, including $2.1 billion related to the Company's municipal investment agreement business. Net investment income (excluding the amount earned on investment agreement assets which are recorded as a component of investment management services income) increased 13% to $52.8 million in the first quarter of 1995 compared with $46.9 million in the corresponding period of 1994. The increase was primarily the result of the growth of investments from continued positive operating cash flows. Average investments excluding investment agreement assets were $3.29 billion in the first quarter of 1995 compared with $3.01 billion for the same period last year. Tax- exempt investments represented 75% of total investments excluding investment agreement assets, at both March 31, 1995 and March 31, 1994. Net realized capital gains in the first quarter of 1995 decreased to $1.7 million from $6.4 million in the same period of 1994. MBIA has undertaken the development of investment management services which capitalize on its capabilities, reputation and marketplace relationships. In aggregate for the first quarter 1995, these businesses contributed $4.2 million in revenue, a substantial increase over first quarter 1994 revenues of $1.6 million. (10) MBIA INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) MBIA Municipal Investors Services Corporation ("MBIA/MISC"), a subsidiary of the Company, provides cash management services for local governments, school districts and similar authorities. As of March 31, 1995 MBIA/MISC had over 1,000 clients and over $1.7 billion of client assets under management. MBIA/MISC is operating in nine states and plans to continue its expansion into additional states. MBIA/MISC provides fund administration services to over 200 clients. MBIA Investment Management Corp. ("IMC"), another subsidiary of the Company, provides investment vehicles in the form of investment agreements guaranteed as to principal and interest, for states, municipalities and municipal authorities. At March 31, 1995, IMC managed outstanding investment agreements of $2.1 billion compared with $693.6 million at March 31, 1994. The related assets are high quality securities and are recorded as a component of the Company's total investments. Municipal investment agreements are recorded as liabilities at the time such agreements are executed. The liability for a municipal investment agreement is carried at the principal value of the obligation plus accrued interest due. Interest expense on municipal investment agreements is computed daily based upon the outstanding liability balance at rates specified in the agreements. Such expense is deducted from the investment income arising from the related investment agreement assets, and the net amount is included in investment management services income. The provision for losses and loss adjustment expenses for the first quarter of 1995 was $2.0 million, compared with $1.9 million in 1994, representing additions to the loss reserves consistent with the Company's reserve methodology. At March 31, 1995, $22.1 million of the $42.0 million loss and loss adjustment expense reserve was allocated on a case basis, compared with $22.4 million of the $35.6 million reserve at March 31, 1994. During the first quarter of 1995 there were no new case reserves nor any material adjustments to those reserves currently outstanding. For the first quarter of 1995, policy acquisition costs net of deferrals decreased $0.8 million to $5.1 million. Since policy acquisition costs are deferred and amortized over the period in which the related premiums are earned, this decrease is primarily a function of the lower level of premiums earned caused by the 1995 decline in refunding activity. Other insurance operating expenses remained relatively flat increasing to $9.7 million from $9.3 million in the first quarter of 1994. (11) MBIA INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Expenses of MBIA's investment management services businesses increased to $2.9 million from $2.3 million last year due to increased costs associated with the expansion of these new businesses. The 1995 increase in expenses was more than offset by increased investment management services income. The Company's interest expense was $7.1 million and $6.7 million for the first quarters of 1995 and 1994, respectively. The increase resulted from utilization of short-term bank borrowings under existing lines of credit during the first quarter of 1995 for investment management services' working capital needs. In summary, aggregate expenses for the first quarter of 1995 increased by 2% over the first quarter of 1994 The Company's effective tax rates at 20.97% and 20.71% for the first quarters of 1995 and 1994, respectively, were relatively constant. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- At March 31, 1995, the market value of the Company's consolidated investment portfolio was $5.50 billion, an increase of 13% from $4.87 billion at year-end 1994. Of this increase 15% was due to continued positive operating cash flow from MBIA Corp.'s insurance premiums and investment income; 59% was from municipal investment agreement portfolio operations; and the balance, 26%, was attributable to unrealized gains. The Company's liquidity is in part dependent upon MBIA Corp.'s ability to pay dividends to the Company. MBIA Corp.'s net income, consisting of premium earnings and investment income less losses and expenses, is a source of continuing additions to earned surplus and dividend paying capability. Under New York insurance law, without prior approval of the Superintendent of the New York State Insurance Department, MBIA Corp. may pay a dividend only from earned surplus subject to the maintenance of a minimum capital requirement, and the dividends in any 12-month period may not exceed the lesser of 10% of its policyholders' surplus as shown on its last filed statutory-based financial statements or adjusted net investment income, as defined, for such 12-month period. MBIA Corp. paid dividends of $22.5 million in the first quarter of 1995 and at March 31, 1995 had in excess of $52 million available for payment of further dividends to the Company without prior approval. (12) MBIA INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) MBIA Corp. has an irrevocable standby line of credit of $600 million with a group of major banks to provide funds for the payment of claims in the event that severe losses should occur. The agreement is for a seven-year term expiring on September 30, 2001 but, subject to approval by the banks, the agreement may be renewed annually to extend the term to seven years beyond the renewal date. The Company and MBIA Corp. maintain short-term liquidity facilities totaling $250 million with major banks for general corporate purposes including immediate liquidity for payment of claims should they occur. At March 31, 1995, $23 million was outstanding under these facilities to fund investment management services' working capital requirements. MBIA Corp. also maintains a high degree of liquidity within its investment portfolio in the form of readily marketable high quality fixed income securities and short-term investments. In management's opinion, the capital resources of MBIA Corp., represented by the liquidity of its investment portfolio, its cash flows from operations and bank lines of credit, are more than adequate to meet the Company's expected cash requirements. At March 31, 1995, MBIA Corp. had $22.1 million in case specific loss reserves. Any related payments are expected to be funded from operating cash flows. (13) PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits 11. Computation of Earnings Per Share Assuming Full Dilution 27. Financial Data Schedule 99. Additional Exhibits - MBIA Insurance Corporation and Subsidiaries Consolidated Financial Statements (14) SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MBIA INC. ----------------------------------- Registrant Date: May 12, 1995 /s/ ARTHUR M. WARREN ---------------------- ----------------------------------- Arthur M. Warren Senior Vice President, Chief Financial Officer Date: May 12, 1995 /s/ JULLIETTE S. TEHRANI ---------------------- ----------------------------------- Julliette S. Tehrani Senior Vice President, Director of Finance (Principal Accounting Officer) (15) EX-11 2 1ST QTR 95 EXHIBIT 11 EXHIBIT 11 MBIA INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE ASSUMING FULL DILUTION (In thousands except per share amounts) Three Months Ended March 31 ------------------ 1995 1994 -------- ------- Net income $66,006 $65,741 ======= ======= Fully diluted shares: Average number of common shares outstanding 41,629 41,719 Assumed exercise of dilutive stock options 489 436 ------- ------- 42,118 42,155 ======= ======= Earnings per share assuming full dilution $1.57 $1.56 ======= ======= EX-27 3 1ST QTR 95 EX.27 (FDS)
7 1,000 3-MOS DEC-31-1995 JAN-01-1995 MAR-31-1995 3,246,516 0 0 0 0 0 5,501,301 9,706 0 134,682 6,131,703 42,033 1,524,712 0 0 321,818 42,077 0 0 1,829,829 6,131,703 51,074 52,837 1,724 5,145 2,033 5,140 9,747 83,522 17,516 66,006 0 0 0 66,006 1.57 1.57 0 0 0 0 0 0 0
EX-99 4 1ST QTR 95 CORP GAAP MBIA INSURANCE CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 1995 AND DECEMBER 31, 1994 AND FOR THE PERIODS ENDED MARCH 31, 1995 AND 1994 PAGE 1 OF 7 MBIA INSURANCE CORPORATION AND SUBSIDIARIES I N D E X --------- PAGE Consolidated Balance Sheets - March 31, 1995 and December 31, 1994 (Audited) 3 Consolidated Statements of Income - Three months ended March 31, 1995 and 1994 4 Consolidated Statement of Changes in Shareholder's Equity - Three months ended March 31, 1995 5 Consolidated Statements of Cash Flows - Three months ended March 31, 1995 and 1994 6 Notes to Consolidated Financial Statements 7 -2- MBIA INSURANCE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands except per share amounts) March 31, 1995 December 31, 1994 -------------- ------------------ (Unaudited) (Audited) ASSETS Investments: Fixed maturity securities held as available-for-sale at market (amortized cost $3,190,073 and $3,123,838) $3,246,516 $3,051,906 Short-term investments, at amortized cost (which approximates market value) 147,778 121,384 Other investments 12,540 11,970 ---------- ---------- TOTAL INVESTMENTS 3,406,834 3,185,260 Cash and cash equivalents 1,950 1,332 Accrued investment income 54,387 55,347 Deferred acquisition costs 134,682 133,048 Prepaid reinsurance premiums 185,734 186,492 Goodwill (less accumulated amortization of $33,669 and $32,437) 109,311 110,543 Property and equipment, at cost (less accumulated depreciation of $10,144 and $9,501) 39,877 39,648 Receivable for investments sold 16,653 945 Other assets 48,253 46,552 ---------- ---------- TOTAL ASSETS $3,997,681 $3,759,167 ========== ========== LIABILITIES AND SHAREHOLDER'S EQUITY Liabilities: Deferred premium revenue $1,524,712 $1,512,211 Loss and loss adjustment expense reserves 42,033 40,148 Current income taxes payable 9,338 --- Deferred income taxes 146,549 97,828 Payable for investments purchased 29,999 6,552 Other liabilities 51,215 46,925 ---------- ---------- TOTAL LIABILITIES 1,803,846 1,703,664 ---------- ---------- Shareholder's Equity Common stock, par value $150 per share; authorized, issued and outstanding - 100,000 shares 15,000 15,000 Additional paid-in capital 956,394 953,655 Retained earnings 1,182,209 1,134,061 Cumulative translation adjustment 4,842 427 Unrealized appreciation (depreciation) of investments, net of deferred income tax provision (benefit) of $19,605 and $(25,334) 35,390 (47,640) ---------- ---------- TOTAL SHAREHOLDER'S EQUITY 2,193,835 2,055,503 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $3,997,681 $3,759,167 ========== ========== The accompanying notes are an integral part of the consolidated financial statements. - 3 - MBIA INSURANCE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands) Three Months Ended March 31 ------------------- 1995 1994 -------- -------- Revenues: Gross premiums written $ 71,112 $ 84,402 Ceded premiums (7,080) (7,798) -------- -------- Net premiums written 64,032 76,604 Increase in deferred premium revenue (12,680) (22,061) -------- -------- Premiums earned (net of ceded premiums of $7,839 and $7,254) 51,352 54,543 Net investment income 53,065 46,529 Net realized gains 1,724 6,370 Other income 908 313 -------- -------- Total revenues 107,049 107,755 -------- -------- Expenses: Losses and loss adjustment expenses 2,033 1,925 Underwriting and operating expenses 9,752 9,346 Policy acquisition costs, net 5,140 5,959 -------- -------- Total expenses 16,925 17,230 -------- -------- Income before income taxes 90,124 90,525 Provision for income taxes 19,476 19,466 -------- -------- Net income $ 70,648 $ 71,059 ======== ======== The accompanying notes are an integral part of the consolidated financial statements. -4- MBIA INSURANCE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY (Unaudited) FOR THE THREE MONTHS ENDED MARCH 31, 1995 (Dollars in thousands except per share amounts) Unrealized Common Stock Additional Cumulative Appreciation --------------- Paid-in Retained Translation (Depreciation) Shares Amount Capital Earnings Adjustment of Investments ------- ------- --------- ---------- ----------- -------------- Balance, January 1, 1995 100,000 $15,000 $953,655 $1,134,061 $ 427 $(47,640) Net income --- --- --- 70,648 --- --- Change in foreign currency trans- lation --- --- --- --- 4,415 --- Change in unrealized appreciation of investments net of change in deferred income taxes of $(44,939) --- --- --- --- --- 83,030 Dividends declared (per common share $225) --- --- --- (22,500) --- --- Tax reduction related to tax sharing agreement with MBIA Inc. --- --- 2,739 --- --- --- ------- ------- --------- ---------- ----------- ------------ Balance, March 31, 1995 100,000 $15,000 $956,394 $1,182,209 $4,842 $ 35,390 ======= ======= ========= ========== =========== ============ The accompanying notes are an integral part of the consolidated financial statements. -5- MBIA INSURANCE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) Three Months Ended March 31 ---------------------- 1995 1994 --------- ---------- Cash flows from operating activities: Net income $ 70,648 $71,059 Adjustments to reconcile net income to net cash provided by operating activities: Decrease in accrued investment income 960 2,222 Increase in deferred acquisition costs (1,634) (2,941) Decrease (increase) in prepaid reinsurance premiums 758 (544) Increase in deferred premium revenue 11,922 22,605 Increase in loss and loss adjustment expense reserves 1,885 1,913 Depreciation 630 343 Amortization of goodwill 1,232 1,241 Amortization of bond (discount) premium, net (358) 4 Net realized gains on sale of investments (1,724) (6,370) Deferred income taxes 3,782 3,020 Other, net 19,601 21,135 --------- -------- Total adjustments to net income 37,054 42,628 --------- -------- Net cash provided by operating activities 107,702 113,687 --------- -------- Cash flows from investing activities: Purchase of fixed maturity securities, net of payable for investments purchased (182,603) (342,288) Sale of fixed maturity securities, net of receivable for investments sold 92,890 99,660 Redemption of fixed maturity securities, net of receivable for investments redeemed 16,717 40,091 (Purchase) sale of short-term investments, net (9,908) 1,742 (Purchase) sale of other investments (863) 87,955 Capital expenditures, net of disposals (817) (27) --------- -------- Net cash used in investing activities (84,584) (112,867) --------- -------- Cash flows from financing activities: Dividends paid (22,500) --- --------- -------- Net cash used by financing activities (22,500) --- --------- -------- Net increase in cash and cash equivalents 618 820 Cash and cash equivalents - beginning of period 1,332 747 --------- -------- Cash and cash equivalents - end of period $ 1,950 $ 1,567 --------- -------- Supplemental cash flow disclosures: Income taxes paid $ 1 $ 1,798 ========= ======== The accompanying notes are an integral part of the consolidated financial statements. -6- MBIA INSURANCE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION - ------------------------- The accompanying consolidated financial statements are unaudited and include the accounts of MBIA Insurance Corporation and its Subsidiaries (the "Company"). The statements do not include all of the information and disclosures required by generally accepted accounting principles. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 1994 for the Company. The accompanying consolidated financial statements have not been audited by independent accountants in accordance with generally accepted auditing standards but in the opinion of management such financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to summarize fairly the Company's financial position and results of operations. The results of operations for the three months ended March 31, 1995 may not be indicative of the results that may be expected for the year ending December 31, 1995. The December 31, 1994 condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. 2. DIVIDENDS DECLARED - ---------------------- Dividends declared by the Company during the three months ended March 31, 1995 were $22.5 million. -7- -----END PRIVACY-ENHANCED MESSAGE-----