EX-99.1 2 a5321304ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 MBIA Inc. Reports 16 Percent Increase in 2006 Net Income Per Share; Operating Earnings Per Share up 5 Percent in 2006 ARMONK, N.Y.--(BUSINESS WIRE)--Jan. 30, 2007--MBIA Inc. (NYSE: MBI), the holding company for MBIA Insurance Corporation, reported today that net income per share for 2006 increased 16 percent to $5.99, compared with $5.18 in 2005. Net income for 2006 was $819.3 million, up 15 percent compared with $711.0 million for 2005. The increase was primarily due to a one-time, pre-tax accrual of $75 million made in the third quarter of 2005, or $0.52 per share on an after-tax basis, for the total amount that the Company estimated it will pay in connection with the recently concluded regulatory investigations, as well as a 5 percent increase in operating earnings per share. Diluted earnings per share information ---------------------------------------------------------------------- Three Months Years Ended Ended December 31 December 31 ------------------------------- 2006 2005 2006 2005 ------- ------- ------- ------ Net income $ 1.32 $ 1.34 $ 5.99 $ 5.18 Income (loss) from discontinued operations 0.02 (0.01) 0.04 (0.01) ------- ------- ------- ------- Net income from continuing operations 1.30 1.36 5.95 5.20 Accrual for penalties and disgorgement - - - - - - (0.52) Net realized gains (losses) (0.02) 0.01 0.07 (0.01) Net gains (losses) on derivative instruments and foreign exchange 0.02 (0.02) 0.07 0.18 ------- ------- ------- ------- Operating income $ 1.31 $ 1.37 $ 5.81 $ 5.55 Operating income per share, a non-GAAP measure, which excludes the effects of net realized gains and losses, net gains and losses on derivative instruments and foreign exchange, income and losses from discontinued operations, and the accrual for estimated penalties and disgorgement, rose 5 percent to $5.81 in 2006 compared with $5.55 in 2005. Excluding accelerated earned premiums due to refundings, 2006 operating income per share rose 3 percent to $5.10 from $4.94 in 2005. Fourth quarter net income per share in 2006 was down 1 percent from 2005, at $1.32 compared with $1.34. Net income for the fourth quarter of 2006 was also down 1 percent from the prior year at $181.0 million, compared with $182.7 million in the same period of 2005. For the fourth quarter of 2006, operating income per share decreased 4 percent to $1.31 compared with $1.37 in the fourth quarter of 2005. Excluding accelerated earned premiums due to refundings, fourth quarter operating income per share declined 3 percent to $1.16 in 2006 from $1.19 in the same period of 2005. The decrease was primarily due to lower scheduled premiums earned and accelerated expenses related to the adoption of a new retirement plan and certain long-term incentive compensation awards. Gary Dunton, MBIA Chief Executive Officer, said, "We achieved acceptable financial and operating results despite a challenging market environment with strong competitive pressures. Business production was robust for the fourth quarter, where we recorded our highest quarterly adjusted direct premium in three years. Additionally, our asset management business had a strong year. We remain committed to pursuing only those business opportunities that meet our strict underwriting and return standards." Insurance Operations Adjusted direct premium (ADP), a non-GAAP measure, which includes both upfront premiums written and the present value of estimated installment premiums for new business written in the period and excludes premiums assumed or ceded, declined 6 percent to $1.03 billion in 2006 from $1.10 billion in 2005. Business production was impacted by tighter credit spreads and increased competition from both the uninsured market and other monolines throughout 2006. Adjusted Direct Premium (dollars in millions) ---------------------------------------------------------------------- Three Months Years Ended Ended December 31 December 31 --------------- ------------------- 2006 2005 % Change 2006 2005 % Change ------- ------- --------- --------- --------- --------- Public Finance United States $130.9 $105.9 24% $ 320.1 $ 487.6 (34%) Non-United States 125.0 24.2 417% 258.8 92.8 179% ------- ------- --------- --------- --------- --------- Total 255.9 130.1 97% 578.9 580.4 0% Structured Finance United States 126.7 78.9 61% 290.1 310.2 (6%) Non-United States 38.6 12.4 214% 161.8 210.6 (23%) ------- ------- --------- --------- --------- --------- Total 165.3 91.3 81% 451.9 520.8 (13%) Total $421.2 $221.4 90% $1,030.8 $1,101.2 (6%) In 2006, global public finance ADP was approximately the same as 2005. U.S. public finance production decreased 34 percent in 2006, reflecting fewer transactions in the transportation and utility sectors as well as fewer transactions with large ADP. However, transportation and utility transactions in the Latin American and Australian markets helped boost the Company's non-U.S. public finance ADP, which was up 179 percent. Credit quality for global public finance transactions remained very high, with 84 percent of insured business written rated Single-A or higher in 2006. Tight credit spreads and investor demand for uninsured transactions continued to impact global structured finance ADP in 2006, which decreased 13 percent versus 2005. U.S. structured finance ADP decreased 6 percent while non-U.S. ADP fell 23 percent compared with last year. Production was negatively affected by the relative lack of transactions with large ADP in 2006 despite strong production from the CDO sector. In 2006, 71 percent of business written in global structured finance was rated Single-A or higher. For the fourth quarter of 2006, total ADP was up 90 percent to $421.2 million compared with $221.4 million during the same period of 2005. International production was particularly strong for the fourth quarter, with non-U.S. public finance ADP up 417 percent and non-U.S. structured finance ADP 214 percent higher than the same period last year. U.S. production was also favorable for both markets for the quarter, with public finance up 24 percent and structured finance up 61 percent over the prior year's fourth quarter. There were several deals with larger ADP from various sectors, including transportation, utility, CDO, insurance securitization and military housing, which contributed more significantly to the fourth quarter's results. Total premiums earned in 2006 declined 1 percent to $835.6 million from $842.7 million in 2005, due to a 4 percent decline in scheduled premiums earned, partially offset by an increase in earned premiums from refundings. Scheduled premiums earned were down due in part to the effect of refunding activity in the current and prior years. While refundings accelerate premiums earned into the period of the refunding, they also take premium earnings away from future periods. Premiums earned from refundings were strong due to the continued low interest rate environment, increasing 15 percent to $161.5 million in 2006. MBIA's premiums earned from refunded issues was boosted by several international transactions that had significant unearned premium at the time of the refunding. Pre-tax net investment income in 2006 was $598.1 million, a 16 percent increase from $514.3 million in 2005. The increase was primarily due to interest received on Variable Interest Entities (VIEs), on the Northwest Airlines 2000-1 Enhanced Equipment Trust Certificates (EETCs), and on reimbursed expenses. Investment income for VIEs and similar items has been shown in net investment income since the first quarter of 2006, and the related interest expense is included in the interest expense line on the Company's income statement. Excluding the effects of the items referenced above, pre-tax net investment income would have increased by 6 percent for 2006. MBIA's fees and reimbursements were up 19 percent for 2006 to $33.5 million which includes reimbursements of $15.7 million for previously incurred expenses related to two credits, compared with $28.2 million for 2005. Total insurance expenses were up 19 percent for 2006 to $379.3 million from $318.1 million in 2005. The increase resulted from higher interest expense for VIEs, interest expense related to the financing of the Northwest Airlines 2000-1 EETCs, and the lower deferral rate that the Company adopted during the third quarter of 2005 for gross insurance expenses related to policy acquisition costs. Gross insurance expenses, which are prior to any expense deferrals, were up 2 percent for the year. The increase was primarily due to the acceleration of expenses related to certain existing long-term incentive compensation awards and the adoption of a new retirement plan. Excluding these accelerated expenses, gross insurance expenses would have decreased 2 percent. The Company incurred $80.9 million in loss and loss adjustment expenses in 2006, a 4 percent decrease compared to $84.3 million in 2005. Loss and LAE for both periods is based on the Company's formula of reserving 12 percent of scheduled premiums earned. During 2006, the net effect of MBIA's formula-based loss reserving combined with case loss reserve activity resulted in a $4.7 million increase to its unallocated loss reserve, increasing the Company's unallocated loss reserve to $213.3 million at December 31, 2006. Case loss activity in the fourth quarter included $27.9 million of net losses recorded in connection with MBIA's redemption of all of the remaining $117 million in principal of MBIA-insured notes backed by tax liens originated by Capital Asset and its sale and transfer of all of the remaining tax liens and real estate owned and originated by Capital Asset, as well as a partial write-down of expected litigation recoveries established in 1998 from the AHERF bankruptcy estate. The restructuring of Eurotunnel continues to move forward as the Safeguard Plan (the Plan) was approved by the Paris Commercial Court on January 15, 2007, previously having been agreed upon by its creditors, vendors and employees. Once shareholders tender sufficient shareholdings, a general meeting will be convened to seek approval of the issuance of new shares and to finalize the necessary steps to implement the Plan. MBIA will have additional claim payments until the Plan is implemented. Upon implementation of the Plan, MBIA expects to receive full recovery for all of its claims. Overall credit quality in the insured portfolio remained high, with 81 percent of the total book of business rated A or better, unchanged from the end of 2005. The percentage of the portfolio rated non-investment grade decreased to 1.9 percent from 2.1 percent in 2005, with about half of the reduction resulting from a decrease in the par amount of non-investment grade rated credits and the other half resulting from the growth of the outstanding book of business. MBIA's pre-tax operating income from insurance operations, which excludes the effects of net realized gains and losses and net gains and losses on derivative instruments and foreign exchange, increased 2 percent to $1.09 billion in 2006 from $1.07 billion in 2005. Investment Management Services Pre-tax operating income from MBIA's investment management businesses, which excludes the effects of net realized gains and losses, and net gains and losses on derivative instruments and foreign exchange, increased 17 percent in 2006 to $101.2 million from $86.6 million in 2005. The Company's asset/liability products segment saw solid growth in its investment agreements business. Additionally, assets under management in the third-party/advisory asset management segment grew sharply. The market value of annual average assets under management, excluding conduits, was $52.1 billion in 2006, up 20 percent from $43.5 billion in 2005. Corporate The pre-tax operating loss for the corporate segment, which includes net investment income, interest expense and corporate expenses, declined 50 percent in 2006 to $85.8 million compared with $171.9 million. Results in 2005 included the $75 million accrual in the third quarter of 2005 for estimated penalties and disgorgement, as well as higher legal and consulting expenses related to the regulatory investigations, and greater interest expenses due to higher average debt outstanding. Gains and Losses In 2006, MBIA recorded net realized gains of $15.4 million for all business operations, compared to net realized losses of $2.9 million in 2005. The Company recorded net gains on derivative instruments and foreign exchange of $14.5 million in 2006, compared with net gains of $38.1 million in 2005. Discontinued Operations As previously announced, MBIA has completed the sale of MBIA MuniServices Company to an investor group led by the management of MuniServices Company. This business was treated as a discontinued operation in the third quarter of 2006. Effective December 31, 2006, MBIA sold all of the Capital Asset operating entities, including any remaining non-Pittsburgh liens and real estate owned by such entities, to a third party company that is engaged in tax lien servicing and collection and that had been overseeing the servicing operations of Capital Asset since July of 2006. The Company no longer has any guaranteed tax lien securitizations outstanding and no longer owns or services tax liens originated by Capital Asset. Results for MBIA's Capital Asset operations, included in the corporate segment last quarter, are now also included in discontinued operations. Book Value and Adjusted Book Value MBIA's book value per share at December 31, 2006 was $53.43, up 9 percent from $49.17 at December 31, 2005. The increase was principally driven by net income from operations. Adjusted book value (ABV) per share, a non-GAAP measure, at December 31, 2006 rose 7 percent to $75.72 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. Insurance Company Dividends In December 2006, MBIA Insurance Corporation received approval from the New York State Insurance Department to pay a total of $500 million in dividends to MBIA Inc. during the fourth quarter. MBIA Insurance Corporation declared and paid $500 million in dividends to MBIA Inc. in the fourth quarter. Share Repurchase During 2006, the Company did not repurchase any shares. At December 31, 2006, approximately 5 million shares remained in the Company's share buyback program, which was authorized by the Company's board of directors in August 2004. Operating Return On Equity For 2006, MBIA's operating return on equity, a non-GAAP measure, was 12.1 percent compared to 12.5 percent for 2005. Conference Call MBIA will host a conference call for investors today at 11 a.m. EST. The conference call will consist of brief comments by Mr. C. Edward Chaplin, MBIA Chief Financial Officer, followed by a question and answer session. 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 8315056. The conference 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. or (973) 341-3080 from outside the U.S. The replay call code is also 8315056. 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 http://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 used in this press release, which serve to supplement GAAP information, are meaningful to investors. Operating Income: 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 non-recurring items. Trends in the underlying profitability of the Company's businesses can be more clearly identified without the fluctuating effects of the items noted above. Operating Return on Equity: The Company believes operating return on equity is a useful measurement of performance because it measures return on equity based upon income from operations and shareholders' equity, unaffected by investment portfolio realized gains and losses, gains and losses on derivative instruments and foreign exchange, unrealized gains and losses, and non-recurring items. Operating return on equity 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: 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) December 31, December 31, 2006 2005 --------------------------- Assets ------------------------------------------ Investments: Fixed-maturity securities held as available-for-sale, at fair value (amortized cost $27,327,315 and $22,337,916) $ 27,755,667 $ 22,876,751 Investments held-to-maturity, at amortized cost (fair value $5,187,766 and $5,734,335) 5,213,464 5,765,182 Investment agreement portfolio pledged as collateral, at fair value (amortized cost $176,179 and $712,054) 175,834 729,072 Short-term investments, at amortized cost (which approximates fair value) 2,960,646 1,649,690 Other investments 971,707 1,129,160 ------------- ------------- Total investments 37,077,318 32,149,855 Cash and cash equivalents 269,277 221,710 Accrued investment income 526,468 396,048 Deferred acquisition costs 449,556 427,111 Prepaid reinsurance premiums 363,140 407,614 Reinsurance recoverable on unpaid losses 46,941 58,965 Goodwill 79,406 79,406 Property and equipment (net of accumulated depreciation) 105,950 107,763 Receivable for investments sold 77,593 74,787 Derivative assets 521,278 326,867 Other assets 246,103 311,268 ------------- ------------- Total assets $ 39,763,030 $ 34,561,394 ============= ============= Liabilities and Shareholders' Equity ------------------------------------------ Liabilities: Deferred premium revenue $ 3,129,620 $ 3,185,200 Loss and loss adjustment expense reserves 537,037 721,502 Investment agreements 12,357,754 10,806,277 Commercial paper 745,996 859,997 Medium-term notes 11,076,600 7,542,416 Variable interest entity floating rate notes 1,451,928 1,280,160 Securities sold under agreements to repurchase 169,432 646,343 Short-term debt 40,898 58,745 Long-term debt 1,215,289 1,205,855 Current income taxes 6,970 --- Deferred income taxes, net 476,189 569,536 Deferred fee revenue 14,862 20,379 Payable for investments purchased 319,640 83,369 Derivative liabilities 400,318 384,561 Other liabilities 616,243 605,410 ------------- ------------- Total liabilities 32,558,776 27,969,750 Shareholders' Equity: Common stock 158,330 156,602 Additional paid-in capital 1,533,102 1,435,590 Retained earnings 6,399,333 5,747,171 Accumulated other comprehensive income 321,293 399,381 Treasury stock (1,207,804) (1,147,100) ------------- ------------- Total shareholders' equity 7,204,254 6,591,644 Total liabilities and shareholders' equity $ 39,763,030 $ 34,561,394 ============= ============= MBIA INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME ---------------------------------------------------------------------- (dollars in thousands except per share amounts) Three Months Ended Years Ended December 31 December 31 --------------------------- --------------------------- 2006 2005 2006 2005 ------------- ------------ ------------ ------------ Insurance operations Revenues: Gross premiums written $ 269,732 $ 232,354 $ 896,258 $ 984,908 Ceded premiums (21,059) (28,751) (98,591) (127,107) ------------- ------------- ------------- ------------- Net premiums written 248,673 203,603 797,667 857,801 Scheduled premiums earned 167,121 174,320 674,078 702,284 Refunding premiums earned 33,510 40,120 161,515 140,458 ------------- ------------- ------------- ------------- Premiums earned 200,631 214,440 835,593 842,742 Net investment income 150,227 136,656 598,113 514,311 Fees and reimbursements 4,259 8,067 33,498 28,235 Net realized gains (losses) (6,951) 2,389 5,615 (3,265) Net gains (losses) on derivative instruments and foreign exchange (452) (4,851) 904 (4,436) ------------- ------------- ------------- ------------- Total insurance revenues 347,714 356,701 1,473,723 1,377,587 Expenses: Losses and loss adjustment 20,054 20,919 80,889 84,274 Amortization of deferred acquisition costs 15,850 16,941 66,012 66,577 Operating 46,295 41,878 155,863 141,164 Interest expense 22,561 6,242 76,490 26,109 ------------- ------------- ------------- ------------- Total insurance expenses 104,760 85,980 379,254 318,124 Insurance income 242,954 270,721 1,094,469 1,059,463 ------------- ------------- ------------- ------------- Investment management services Revenues 340,680 247,705 1,201,658 866,154 Net realized gains (losses) 466 (1,616) 6,060 1,384 Net gains (losses) on derivative instruments and foreign exchange 4,439 925 13,162 42,558 ------------- ------------- ------------- ------------- Total investment management services revenues 345,585 247,014 1,220,880 910,096 Interest expense 294,431 204,361 1,024,903 705,340 Expenses 20,424 22,386 75,537 74,194 ------------- ------------- ------------- ------------- Total investment management services expenses 314,855 226,747 1,100,440 779,534 ------------ ------------ ------------ ------------ Investment management services income 30,730 20,267 120,440 130,562 ------------- ------------- ------------- ------------- Corporate Net investment income 3,715 (468) 13,462 16,646 Net realized gains (losses) 1,430 311 3,763 (989) Net gains (losses) on derivative instruments and foreign exchange (7) - 428 - Interest expense 20,189 24,858 80,685 90,999 Corporate expenses 8,235 5,014 18,614 97,500 ------------- ------------- ------------- ------------- Corporate loss (23,286) (30,029) (81,646) (172,842) ------------- ------------- ------------- ------------- Income from continuing operations before income taxes 250,398 260,959 1,133,263 1,017,183 Provision for income taxes 71,914 76,844 320,080 304,185 ------------- ------------- ------------- ------------- Income from continuing operations 178,484 184,115 813,183 712,998 Income (loss) from discontinued operations, net of tax 2,472 (1,394) 6,076 (2,012) Gain on sale of discontinued operations, net of tax 29 - 29 - ------------- ------------- ------------- ------------- Net income $ 180,985 $ 182,721 $ 819,288 $ 710,986 ============= ============= ============= ============= Net income per common share: Basic $ 1.36 $ 1.38 $ 6.17 $ 5.30 Diluted $ 1.32 $ 1.34 $ 5.99 $ 5.18 Weighted-average number of common shares outstanding: Basic 132,898,187 132,640,767 132,794,334 134,098,392 Diluted 137,042,313 135,871,235 136,694,798 137,220,731 MBIA INC. AND SUBSIDIARIES Reconciliation of Adjusted Direct Premiums to Gross Premiums Written ------------------------------------------------------------------- (dollars in millions) Three Months Years Ended Ended December 31 December 31 ----------------- ------------------- 2006 2005 2006 2005 -------- -------- --------- --------- Adjusted direct premiums (1) $ 421.2 $ 221.4 $1,030.8 $1,101.2 Adjusted assumed premiums 0.8 5.0 6.5 6.7 -------- -------- --------- --------- Adjusted gross premiums 422.0 226.4 1,037.3 1,107.9 Present value of estimated future installment premiums (2) (305.3) (108.5) (686.6) (633.4) -------- -------- --------- --------- Gross upfront premiums written 116.7 117.9 350.7 474.5 Gross installment premiums written 153.0 114.5 545.6 510.4 -------- -------- --------- --------- Gross premiums written $ 269.7 $ 232.4 $ 896.3 $ 984.9 ======== ======== ========= ========= (1)A non-GAAP measure. (2)At December 31, 2006, September 30, 2006, June 30, 2006 and March 31, 2006 the discount rate was 5.10%, 5.03%, 5.00% and 5.02%, respectively, and at December 31, 2005, September 30, 2005, June 30, 2005 and March 31, 2005 the discount rate was 5.00%, 4.99%, 4.99% and 4.84%, respectively. Components of Net Income per Share ------------------------------------------------------------------- Three Months Years Ended Ended December 31 December 31 --------------- -------------- 2006 2005 2006 2005 ------- ------- ------ ------- Net income $ 1.32 $ 1.34 $5.99 $ 5.18 Income (loss) from discontinued operations 0.02 (0.01) 0.04 (0.01) ------- ------- ------ ------- Net income from continuing operations 1.30 1.36 5.95 5.20 Penalties and disgorgement -- -- -- (0.52) Net realized gains (losses) (0.02) 0.01 0.07 (0.01) Net gains (losses) on derivative instruments and foreign exchange 0.02 (0.02) 0.07 0.18 ------- ------- ------ ------- Operating income (1) $ 1.31 $ 1.37 $5.81 $ 5.55 ======= ======= ====== ======= (1)A non-GAAP measure. MBIA INC. AND SUBSIDIARIES Components of Adjusted Book Value per Share ------------------------------------------------------------------- December 31, December 31, 2006 2005 ------------- ------------- Book value $53.43 $49.17 After-tax value of: Deferred premium revenue 15.09 15.45 Prepaid reinsurance premiums (1.75) (1.98) Deferred acquisition costs (2.17) (2.07) ------ ------ Net deferred premium revenue 11.17 11.40 Present value of installment premiums (1) 11.13 10.53 Asset/liability products adjustment 2.92 2.40 Loss provision (2) (2.93) (2.88) ------- ------- Adjusted book value (3) $75.72 $70.62 ======= ======= (1) At December 31, 2006 and December 31, 2005 the discount rate was 5.10% and 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) December 31, December 31, 2006 2005 -------------- ------------- Capital and surplus $ 4,080.8 $ 3,800.4 Contingency reserve 2,478.0 2,769.0 ------------- ------------- Capital base 6,558.8 6,569.4 Unearned premium reserve 3,507.2 3,508.1 Present value of installment premiums (1) 2,309.5 2,171.1 ------------- ------------- Premium resources 5,816.7 5,679.2 Loss and loss adjustment expense reserves 100.6 317.8 Soft capital credit facilities 850.0 850.0 ------------- ------------- Total claims-paying resources $ 13,326.1 $ 13,416.4 ============= ============= Net debt service outstanding $ 939,969.0 $ 889,018.9 Capital ratio (2) 143:1 135:1 Claims-paying ratio (3) 83:1 78:1 (1)At December 31, 2006 and December 31, 2005 the discount rate was 5.10% and 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: MBIA Inc. Michael C. Ballinger, 914-765-3893