-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R5g3m94yC1OSrenKvLElUiQn2K2KP/y0ASQCtTQWQPvPCuOeyJalffxsCWvDX7S5 cf1zEjnh8scJYqrJCjc6zg== 0001157523-06-007463.txt : 20060727 0001157523-06-007463.hdr.sgml : 20060727 20060727105009 ACCESSION NUMBER: 0001157523-06-007463 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060727 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060727 DATE AS OF CHANGE: 20060727 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09583 FILM NUMBER: 06983351 BUSINESS ADDRESS: STREET 1: 113 KING ST CITY: ARMONK STATE: NY ZIP: 10504 BUSINESS PHONE: 914-273-4545 MAIL ADDRESS: STREET 1: 113 KING ST CITY: ARMONK STATE: NY ZIP: 10504 8-K 1 a5197077.txt MBIA 8K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 27, 2006 MBIA INC. (Exact name of registrant as specified in its charter) Connecticut 1-9583 06-1185706 (State or other jurisdiction of (Commission File Number) (IRS Employer incorporation) Identification No.) 113 King Street, Armonk, New York 10504 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 914-273-4545 Not Applicable (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. The following information, including the Exhibit to this Form 8-K, is being furnished pursuant to Item 2.02 - Results of Operations and Financial Condition of Form 8-K. On July 27, 2006, MBIA Inc. issued a press release announcing its results of operations for the quarter ended June 30, 2006. A copy of the press release is attached as Exhibit 99.1 to this Form 8-K and is incorporated by reference to this Item 2.02 as if fully set forth herein. Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS. 99.1 Press Release issued by MBIA Inc. dated July 27, 2006. This information is not deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 and is not incorporated by reference into any Securities Act registration statements. 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 hereunto duly authorized. MBIA INC. By: /s/ Ram D. Wertheim --------------------------------------- Ram D. Wertheim General Counsel Date: July 27, 2006 EXHIBIT INDEX TO CURRENT REPORT ON FORM 8-K Dated July 27, 2006 Exhibit 99.1 Press Release issued by MBIA Inc. dated July 27, 2006. EX-99.1 2 a5197077ex991.txt EXHIBIT 99.1 Exhibit 99.1 MBIA Inc. Reports 10 Percent Increase in First Half Net Income Per Share; Operating Income Per Share up 6 Percent ARMONK, N.Y.--(BUSINESS WIRE)--July 27, 2006--MBIA Inc. (NYSE: MBI), the holding company for MBIA Insurance Corporation, reported today that first half 2006 net income per share increased 10 percent to $3.08, compared to $2.79 in the first half of 2005. Net income for the first half was $420.4 million, up 9 percent compared to $386.5 million in the first half of 2005. For the first half of 2006, operating income per share, which excludes the effects of net realized gains and net gains and losses on derivative instruments and foreign exchange, increased 6 percent to $2.95 from $2.79 in the first half of 2005. Excluding refundings, first half 2006 operating income per share rose 3 percent to $2.57 from $2.49 in the same period of 2005. Diluted earnings per share information - -------------------------------------- Three Months Six Months Ended June 30 Ended June 30 ------------- ------------- 2006 2005 2006 2005 ---- ---- ---- ---- Net income $1.62 $ 1.27 $3.08 $ 2.79 Net realized gains 0.08 0.00 0.08 0.01 Net gains (losses) on derivative instruments and foreign exchange 0.04 (0.11) 0.05 (0.01) ----- ------ ----- ------ Operating income (1) $1.50 $ 1.38 $2.95 $ 2.79 (1) Non-GAAP measure In the second quarter of 2006, net income per share increased 28 percent to $1.62 from $1.27 during the same period of 2005. Net income for the second quarter was $221.4 million compared with $173.7 million in the same period last year, a 27 percent increase. Second quarter 2006 per share results were positively impacted by $0.12 per share of net gains versus net losses of $0.11 in the same period of 2005. For the second quarter of 2006, operating income per share increased 9 percent to $1.50 from $1.38 in the second quarter of 2005. Excluding refundings, second quarter 2006 operating income per share rose 4 percent to $1.29 from $1.24 during the same period of 2005. Gary Dunton, MBIA Chief Executive Officer, said, "Our financial results for the quarter were acceptable. Business production was in line with our expectations as market conditions remain challenging, primarily due to tight credit spreads and intense competition from the uninsured market, traditional monolines and European banks. We remain focused on our commitment to create long-term value for our shareholders, pursuing only those business opportunities that meet our rigorous underwriting and pricing discipline." Insurance Operations Adjusted direct premiums (ADP), a non-GAAP measure, which includes both upfront premiums written and the present value of estimated future installment premiums for new business writings and excludes premiums assumed or ceded, decreased 38 percent to $399.5 million in the first half of 2006 from $646.6 million in the first half of 2005. For the second quarter of 2006, ADP declined 14 percent to $283.5 million, compared to $329.0 million during the same period of 2005. In the second quarter, non-U.S. public finance and U.S. structured finance provided favorable comparisons over last year's second quarter, which were offset by weaker production in the U.S. public finance and non-U.S. structured finance business sectors. Adjusted Direct Premiums - ------------------------ (dollars in millions) Three Months Six Months Ended June 30 Ended June 30 ------------- ------------- 2006 2005 % Change 2006 2005 % Change ---- ---- -------- ---- ---- -------- Global Public Finance United States $ 73.7 $143.8 (49%) $121.7 $285.6 (57%) Non-United States 102.2 57.6 77% 102.2 65.1 57% ------ --------------- ------ --------------- Total 175.9 201.4 (13%) 223.9 350.7 (36%) Global Structured Finance United States 73.8 33.3 122% 89.6 171.5 (48%) Non-United States 33.8 94.3 (64%) 86.0 124.4 (31%) ------ --------------- ------ --------------- Total 107.6 127.6 (16%) 175.6 295.9 (41%) Total $283.5 $329.0 (14%) $399.5 $646.6 (38%) MBIA's global public finance ADP decreased 36 percent in the first half of 2006 compared to the first half of 2005. Compared to last year's first half, U.S. public finance production was down 57 percent, impacted by a 15 percent decrease in overall market issuance and a 33 percent decline in insured volume, as well as a particularly competitive market environment. Non-U.S. public finance production, during the first half, increased 57 percent due to two significant international transactions that closed in early April. In global public finance, 84 percent of insured business written in the first half of 2006 had underlying ratings of Single-A or higher. MBIA's global structured finance ADP decreased 41 percent in the first half of 2006. U.S. structured finance ADP declined 48 percent compared to first half production in 2005, however, second quarter production more than doubled as a result of increased ADP from CDOs, Operating Assets and Residential Mortgage-Backed sectors. Non-U.S. structured finance production for the first half of 2006 declined 31 percent. In global structured finance, 70 percent of insured business written in the first half of 2006 had underlying ratings of Single-A or higher. Scheduled earned premiums in the first half of 2006 declined 5 percent to $336.8 million from $354.7 million in the first half of 2005. The decline was a result of early policy terminations of structured finance deals as well as the effect of refunding activity in prior periods, which accelerated the earning of premiums into earlier periods. Earned premiums from refundings were a robust $85.8 million for the first half of 2006, up 23 percent from $69.6 million in the first half of 2005. While refunding par volume in the U.S. public finance market was down 52 percent for the first half of 2006, MBIA's earned premium from refunded issues was boosted by five refunded deals, including two international credits, that accounted for more than 25 percent of the refunded premiums earned for the first half. Pre-tax net investment income in the first half of 2006, excluding net realized gains, was $284.4 million, a 14 percent increase from $249.6 million in the same period of 2005. The increase was primarily due to the growth in interest income related to consolidated Variable Interest Entities (VIEs) and the growth of invested assets. While investment income for VIEs continues to be shown in net investment income, as of the first quarter of 2006, VIE interest expense has been reclassified to the interest expense line on the Company's income statement for the current and prior periods. Excluding the effects of VIE interest income, pre-tax net investment income would have increased by 8 percent. MBIA's fees and reimbursements (which had been labeled Advisory Fees until the first quarter of 2006) were up 15 percent in the first half of 2006 to $12.2 million from $10.6 million during the first half of 2005. Total insurance expenses were up 20 percent in the first half of 2006 to $178.1 million from $149.0 million in the first half of 2005. The increase resulted from the reclassification of interest expense for VIEs and the lower deferral rate that the Company adopted during last year's third quarter for gross insurance expenses related to policy acquisition costs. Gross insurance expenses, which are prior to any expense deferrals, were down 3 percent for the first six months of this year versus the same period last year. The Company incurred $40.4 million in loss and loss adjustment expenses (LAE) in the first half of 2006, a 5 percent decrease compared to $42.6 million in last year's first half. Loss and LAE for both periods is based on the Company's formula of reserving 12 percent of scheduled earned premium. During the first half of 2006, MBIA experienced an $8.1 million increase to its unallocated loss reserve based on case loss reserve activity, which, combined with the additional loss and LAE expenses, boosted the Company's unallocated loss reserve by $47.9 million to $256.5 million at June 30, 2006 from $208.6 million at December 31, 2005. For the second quarter, there was an $18.7 million increase to the unallocated loss reserves from case loss reserve activity. The largest adjustment was $56.7 million for the Northwest Airlines EETC exposure, for which the Company had established a $76.3 million case loss reserve in the fourth quarter of 2005. The adjustment resulted primarily from the sale of unsecured claims, which provided unanticipated proceeds, as well as the sale of selected collateral (aircraft) from one of the securitizations and an agreement to sell collateral from another securitization. There were also a number of credits that reduced the unallocated loss reserve during the second quarter of 2006. The largest adjustment came from a CDO transaction. During the second quarter, MBIA made a debt service payment of $6.0 million on a policy issued for New Orleans Regional Transit Authority (RTA), a credit adversely affected by Hurricane Katrina. MBIA expects to be fully reimbursed for the payment and has $24.1 million net par outstanding for the RTA. The Company continues to closely monitor the performance of MBIA-insured credits impacted by Hurricane Katrina last year. The Company does not expect to incur an ultimate loss, other than immaterial loss adjustment expenses, on its Hurricane Katrina exposure. Additionally, MBIA has approximately $1.5 billion net par outstanding for Eurotunnel as of June 30, 2006. Eurotunnel has petitioned for protection under the Paris commercial court for a safeguard procedure, a new procedure under French law with limited similarities to a U.S. Chapter 11 reorganization. At the July 25 hearing, the commercial court decided to delay its decision until August 2. In addition, Eurotunnel has indicated it will continue to make payments on its debt obligations pending the court decision. Debt restructuring talks are ongoing and MBIA continues to work with the creditors committee toward a consensual restructuring plan to be approved by all Eurotunnel stakeholders. The Company believes that it will not incur an ultimate loss on its Eurotunnel exposure and there has been no case loss reserve established for the credit. MBIA's pre-tax operating income from insurance operations, which excludes the effects of net realized gains and net gains and losses on derivative instruments and foreign exchange, increased 1 percent to $541.1 million in the first half of 2006 compared to $535.4 million in the same period of 2005. Investment Management Services The market value of year-to-date average fixed-income assets under management, excluding conduits, was $49.1 billion in the first half of 2006, up 15 percent from $42.8 billion in the first half of last year. Pre-tax operating income from MBIA's investment management business, which excludes the effects of net realized gains and net gains and losses on derivative instruments and foreign exchange, increased 17 percent in the first half of 2006 to $49.8 million from $42.7 million in the first half of 2005 driven by strong demand for the Company's asset/liability products. Corporate The pre-tax operating loss for the corporate segment decreased 6 percent for the first half of 2006 to $38.9 million from $41.4 million in the same period last year. The decrease was primarily due to lower interest expense and lower corporate expenses, which were partially offset by reduced net investment income. Part of the decline in corporate expenses reflects a decline in legal and consulting expenses related to the regulatory investigations. Gains and Losses In the first half of 2006, MBIA recorded net realized gains of $16.8 million for all business operations, compared to net realized gains of $1.3 million in the first half of 2005. Net realized gains for the first half of 2006 included a $13.9 million write-down during the first quarter of a receivable balance that the Company obtained under salvage and subrogation rights, partly offset by a $10.5 million gain during the second quarter related to the sale of the Company's common stock investment in Ram Re. The Company recorded pre-tax mark-to-market net gains on derivative instruments and foreign exchange of $9.5 million for all business operations in the first half of 2006, compared to pre-tax mark-to-market net losses of $1.9 million in the first half of 2005. Book Value and Adjusted Book Value MBIA's book value per share at the end of the first half of 2006 increased $0.31 to $49.48, from December 31, 2005. The increase in book value per share was driven by an increase in retained earnings, which was partially offset by a reduction in unrealized appreciation of investment securities. Adjusted book value (ABV) per share, a non-GAAP measure, at June 30, 2006 rose 2 percent to $72.32 from $70.62 at December 31, 2005. ABV includes the after-tax effects of deferred premium revenue less prepaid reinsurance premiums and deferred acquisition costs, the present value of installment premiums, the present value of the net spread of asset/liability products and a provision for loss and loss adjustment expenses. Conference Call MBIA will host a conference call for investors today at 11 a.m. EDT. The conference call will consist of brief comments by Mr. C. Edward Chaplin, MBIA Chief Financial Officer, followed by a question and answer session with Mr. Chaplin. The dial-in number for the call is (877) 694-4769 in the U.S. and (973) 582-2849 from outside the U.S. The conference call code is 7388808. The call will also be broadcast live on MBIA's Web site at www.mbia.com. Those who are unable to participate in the conference call may listen to a replay by dialing (877) 519-4471 in the U.S. and (973) 341-3080 from outside the U.S. The replay code is also 7388808. The replay will be available on MBIA's Web site approximately two hours after the end of the conference call. MBIA Inc., through its subsidiaries, is a leading financial guarantor and provider of specialized financial services. MBIA's innovative and cost-effective products and services meet the credit enhancement, financial and investment needs of its public and private sector clients, domestically and internationally. MBIA Inc.'s principal operating subsidiary, MBIA Insurance Corporation, has a financial strength rating of Triple-A from Moody's Investors Service, Standard & Poor's Ratings Services, Fitch Ratings, and Rating and Investment Information, Inc. Please visit MBIA's Web site at www.mbia.com. This news release contains forward-looking statements. Important factors such as general market conditions and the competitive environment could cause actual results to differ materially from those projected in these forward-looking statements. The Company undertakes no obligation to revise or update any forward-looking statements to reflect changes in events or expectations. Explanation of Non-GAAP Financial Measures The following are explanations of why MBIA believes that the non-GAAP financial measures typically used in the Company's press releases, which serve to supplement GAAP information, are meaningful to investors. Operating Income (Loss): The Company believes operating income is a useful measurement of performance because it measures income from operations, unaffected by investment portfolio realized gains and losses, gains and losses on derivative instruments and foreign exchange and other non-operating items. Operating income (loss) is also provided to assist research analysts and investors who use this information in their analysis of the Company. Adjusted Direct Premiums: The Company believes adjusted direct premiums are a meaningful measure of the total value of the insurance business written during a reporting period since they represent the present value of all premiums collected and expected to be collected on policies closed during the period. As such, it gives investors an opportunity to measure the value of new business activities in a given period and compare it to new business activities in other periods. Other measures, such as premiums written and premiums earned, include the value of premiums resulting from business closed in prior periods and do not provide the same information to investors. Adjusted Book Value (ABV): The Company believes the presentation of adjusted book value, which includes items that are expected to be realized in future periods, provides additional information that gives a comprehensive measure of the value of the Company. Since the Company expects these items to affect future results and, in general, they do not require any additional future performance obligation on the Company's part, ABV provides an indication of the Company's value in the absence of any new business activity. ABV is not a substitute for GAAP book value but does provide investors with additional information when viewed in conjunction with GAAP book value. MBIA INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollars in thousands) June 30, December 31, 2006 2005 -------- ------------ Assets - ------ Investments: Fixed-maturity securities held as available- for-sale, at fair value (amortized cost $25,510,087 and $23,189,684) $25,440,302 $23,747,204 Investments held-to-maturity, at amortized cost (fair value $4,553,735 and $5,734,335) 4,588,155 5,765,182 Investment agreement portfolio pledged as collateral, at fair value (amortized cost $577,209 and $712,054) 559,450 729,072 Short-term investments, at amortized cost (which approximates fair value) 2,187,705 1,678,281 Other investments 240,736 234,927 ----------- ------------ Total investments 33,016,348 32,154,666 Cash and cash equivalents 221,502 233,046 Accrued investment income 446,821 396,048 Deferred acquisition costs 434,020 427,111 Prepaid reinsurance premiums 385,704 407,614 Reinsurance recoverable on unpaid losses 44,472 58,965 Goodwill 79,406 79,406 Property and equipment (net of accumulated depreciation) 107,356 109,275 Receivable for investments sold 74,108 74,787 Derivative assets 600,158 326,867 Other assets 221,682 293,609 ----------- ------------ Total assets $35,631,577 $34,561,394 =========== ============ Liabilities and Shareholders' Equity - ------------------------------------- Liabilities: Deferred premium revenue $ 3,123,086 $ 3,185,200 Loss and loss adjustment expense reserves 708,293 721,502 Investment agreements 11,801,633 10,806,277 Commercial paper 753,594 859,997 Medium-term notes 7,806,665 7,542,416 Variable interest entity floating rate notes 1,228,760 1,280,160 Securities sold under agreements to repurchase 508,154 646,343 Short-term debt 40,898 58,745 Long-term debt 1,219,962 1,210,405 Deferred income taxes, net 379,226 569,536 Deferred fee revenue 17,680 20,379 Payable for investments purchased 372,322 83,369 Derivative liabilities 483,499 384,611 Other liabilities 519,872 600,810 ----------- ------------ Total liabilities 28,963,644 27,969,750 Shareholders' Equity: Common stock 157,539 156,602 Additional paid-in capital 1,467,493 1,435,590 Retained earnings 6,084,005 5,747,171 Accumulated other comprehensive income 120,262 399,381 Treasury stock (1,161,366) (1,147,100) ----------- ------------ Total shareholders' equity 6,667,933 6,591,644 Total liabilities and shareholders' equity $35,631,577 $34,561,394 =========== ============ MBIA INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Three Months Ended Six Months Ended June 30 June 30 ----------------------- ---------------------- 2006 2005 2006 2005 --------- ---------- ---------- --------- Insurance operations Revenues: Gross premiums written $251,476 $ 248,965 $ 424,348 $531,584 Ceded premiums (27,166) (31,622) (51,071) (63,748) --------- ---------- ---------- --------- Net premiums written 224,310 217,343 373,277 467,836 Scheduled premiums earned 169,130 180,902 336,845 354,662 Refunding premiums earned 47,606 32,483 85,790 69,568 --------- ---------- ---------- --------- Premiums earned 216,736 213,385 422,635 424,230 Net investment income 144,390 126,113 284,402 249,563 Fees and reimbursements 4,019 4,214 12,193 10,639 Net realized gains (losses) 17,085 996 10,073 1,207 Net gains (losses) on derivative instruments and foreign exchange 1,305 4,002 6,062 (2,070) --------- ---------- ---------- --------- Total insurance revenues 383,535 348,710 735,365 683,569 Expenses: Losses and loss adjustment 20,295 21,708 40,421 42,559 Amortization of deferred acquisition costs 17,122 16,858 33,388 33,515 Operating 35,889 32,268 72,616 61,434 Interest expense 18,786 6,104 31,704 11,504 --------- ---------- ---------- --------- Total insurance expenses 92,092 76,938 178,129 149,012 Insurance income 291,443 271,772 557,236 534,557 --------- ---------- ---------- --------- Investment management services Revenues 294,299 206,543 552,505 392,778 Net realized gains (losses) (295) (1,478) 5,233 1,716 Net gains (losses) on derivative instruments and foreign exchange 6,258 (27,395) 3,308 26 --------- ---------- ---------- --------- Total investment management services revenues 300,262 177,670 561,046 394,520 Interest expense 249,921 167,164 466,668 316,582 Expenses 18,461 19,090 36,051 33,467 --------- ---------- ---------- --------- Total investment management services expenses 268,382 186,254 502,719 350,049 --------- ---------- ---------- --------- Investment management services income 31,880 (8,584) 58,327 44,471 --------- ---------- ---------- --------- Municipal services Revenues 5,399 5,398 11,010 10,934 Net realized gains (losses) -- -- -- (85) Net gains (losses) on derivative instruments and foreign exchange 11 6 40 136 --------- ---------- ---------- --------- Total municipal services revenues 5,410 5,404 11,050 10,985 Expenses 4,324 5,108 9,449 10,513 --------- ---------- ---------- --------- Municipal services income 1,086 296 1,601 472 --------- ---------- ---------- --------- Corporate Net investment income 3,508 5,776 7,072 13,703 Net realized gains (losses) 841 81 1,467 (1,527) Net gains (losses) on derivative instruments and foreign exchange 138 -- 138 -- Interest expense 20,170 22,040 40,301 44,061 Corporate expenses 3,357 7,398 5,659 11,079 --------- ---------- ---------- --------- Corporate loss (19,040) (23,581) (37,283) (42,964) --------- ---------- ---------- --------- Income before income taxes 305,369 239,903 579,881 536,536 Provision for income taxes 84,007 66,229 159,525 150,055 --------- ---------- ---------- --------- Net income $221,362 $ 173,674 $ 420,356 $ 86,481 ========= ========== ========== ========= Net income per common share: Basic $ 1.67 $ 1.30 $ 3.17 $ 2.85 Diluted $ 1.62 $ 1.27 $ 3.08 $ 2.79 Weighted-average number of common shares outstanding: Basic 132,765,468 133,938,175 132,741,516 135,589,284 Diluted 136,634,382 136,886,153 136,658,183 138,680,637 MBIA INC. AND SUBSIDIARIES Reconciliation of Adjusted Direct Premiums to Gross Premiums Written - -------------------------------------------------------------------- (dollars in millions) Three Months Ended Six Months Ended June 30 June 30 ------------------ ---------------- 2006 2005 2006 2005 -------- -------- -------- -------- Adjusted direct premiums (1) $ 283.5 $ 329.0 $ 399.5 $ 646.6 Adjusted premiums assumed 0.0 1.0 0.0 1.0 -------- -------- -------- -------- Adjusted gross premiums 283.5 330.0 399.5 647.6 Present value of estimated future installment premiums (2) (156.5) (200.8) (224.2) (376.6) -------- -------- -------- -------- Gross upfront premiums written 127.0 129.2 175.3 271.0 Gross installment premiums received 124.5 119.8 249.0 260.6 -------- -------- -------- -------- Gross premiums written $ 251.5 $ 249.0 $ 424.3 $ 531.6 ======== ======== ======== ======== (1) A non-GAAP measure. (2) At June 30, 2006 and March 31, 2006 the discount rate was 5.00% and 5.02%, repsectively, and at June 30, 2005 and March 31, 2005 the discount rate was 4.99% and 4.84%, respectively. Components of Net Income per Share - ----------------------------------- Three Months Ended Six Months Ended June 30 June 30 ------------------ ---------------- 2006 2005 2006 2005 -------- -------- -------- -------- Net income $ 1.62 $ 1.27 $ 3.08 $ 2.79 Net realized gains 0.08 0.00 0.08 0.01 Net gains (losses) on derivative instruments and foreign exchange 0.04 (0.11) 0.05 (0.01) -------- -------- -------- -------- Operating income (1) $ 1.50 $ 1.38 $ 2.95 $ 2.79 ======== ======== ======== ======== (1) A non-GAAP measure. MBIA INC. AND SUBSIDIARIES Components of Adjusted Book Value per Share - ------------------------------------------- June 30, 2006 December 31, 2005 --------------- ----------------- Book value $ 49.48 $ 49.17 After-tax value of: Deferred premium revenue 15.07 15.45 Prepaid reinsurance premiums (1.86) (1.98) Deferred acquisition costs (2.09) (2.07) ------ ------ Net deferred premium revenue 11.12 11.40 Present value of installment premiums (1) 10.44 10.53 Asset/liability products adjustment 4.12 2.40 Loss provision (2) (2.84) (2.88) ---------- ---------- Adjusted book value (3) $ 72.32 $ 70.62 ========== ========== (1) At June 30, 2006 and December 31, 2005 the discount rate was 5.00%, respectively. (2) The loss provision is calculated by applying 12% to the following items on an after-tax basis: (a) deferred premium revenue; (b) prepaid reinsurance premiums; and, (c) the present value of installment premiums. (3) A non-GAAP measure. CONSOLIDATED INSURANCE OPERATIONS Selected Financial Data Computed on a Statutory Basis - ----------------------------------------------------- (dollars in millions) June 30, December 31, 2006 2005 ----------- ----------- Capital and surplus $ 4,344.0 $ 3,800.4 Contingency reserve 2,382.1 2,769.0 ----------- ----------- Capital base 6,726.1 6,569.4 Unearned premium reserve 3,475.7 3,508.1 Present value of installment premiums (1) 2,163.6 2,171.1 ----------- ----------- Premium resources 5,639.3 5,679.2 Loss and loss adjustment expense reserves 270.4 317.8 Soft capital credit facilities 850.0 850.0 ----------- ----------- Total claims-paying resources $ 13,485.8 $ 13,416.4 =========== =========== Net debt service outstanding $895,271.7 $889,018.9 Capital ratio (2) 133:1 135:1 Claims-paying ratio (3) 78:1 78:1 (1) At June 30, 2006 and December 31, 2005 the discount rate was 5.00%, respectively. (2) Net debt service outstanding divided by the capital base. (3) Net debt service outstanding divided by the sum of the capital base, unearned premium reserve (after-tax), present value of installment premiums (after-tax), loss and loss adjustment expense reserves and soft capital credit facilities. CONTACT: for MBIA Inc. Michael C. Ballinger, 914-765-3893 -----END PRIVACY-ENHANCED MESSAGE-----