SCHEDULE II

MBIA INC. (PARENT COMPANY)

CONDENSED BALANCE SHEETS

(In millions, except per share amounts)


	December 31, 2011		December 31, 2010
Assets
Investments:
Fixed-maturity securities held as available-for-sale, at fair value (amortized cost $1,989 and $2,988)	$	1,809	$	2,436
Investments held-to-maturity, at amortized cost (fair value $0 and $55)		—		59
Fixed-maturity securities at fair value		96		18
Investments pledged as collateral, at fair value (amortized cost $623 and $548)		543		552
Short-term investments held as available-for-sale, at fair value (amortized cost $648 and $992)		643		985
Other investments		83		183

Total		3,174		4,233
Cash and cash equivalents		132		83
Accrued investment income		20		23
Investment in wholly-owned subsidiaries		3,410		4,640
Affiliate loan receivable		—		128
Derivative assets		2		4
Current income taxes		31		156
Deferred income taxes, net		114		134
Receivable for investments sold		14		8
Other assets		70		41

Total assets	$	6,967	$	9,450

Liabilities and Shareholders' Equity

Liabilities:
Investment agreements	$	1,523	$	1,940
Medium-term notes		50		45
Securities sold under agreements to repurchase		669		1,502
Short-term debt		—		65
Long-term debt		900		905
Affiliate loans payable		1,688		1,776
Derivative liabilities		356		241
Other liabilities		81		111

Total liabilities		5,267		6,585

Shareholders' Equity:
Preferred stock, par value $1 per share; authorized shares—10,000,000; issued and outstanding shares—none		—		—
Common stock, par value $1 per share; authorized shares—400,000,000; issued shares—274,896,162 and 274,719,578		275		275
Additional paid-in capital		3,072		3,064
Retained earnings		805		2,209
Accumulated other comprehensive loss, net of deferred tax of $134 and $222		(176)		(458)
Treasury stock, at cost—81,752,966 and 74,973,978 shares		(2,276)		(2,225)

Total shareholders' equity		1,700		2,865

Total liabilities and shareholders' equity	$	6,967	$	9,450

The condensed financial statements should be read in conjunction with the

consolidated financial statements and notes thereto and the accompanying notes.

SCHEDULE II

MBIA INC. (PARENT COMPANY)

CONDENSED STATEMENTS OF OPERATIONS

(In millions)


	Years Ended December 31,
	2011		2010		2009
Revenues:
Net investment income	$	90	$	122	$	220
Net gains (losses) on financial instruments at fair value and foreign exchange		(278)		(117)		102
Investment losses related to other-than-temporary impairments:
Investment losses related to other-than-temporary impairments		(20)		(206)		(524)
Other-than-temporary impairments recognized in accumulated other comprehensive income (loss)		(13)		147		173

Net investment losses related to other-than-temporary impairments		(33)		(59)		(351)
Net gains (losses) on extinguishment of debt		—		(1)		(66)
Other net realized gains (losses)		(17)		1		4

Total revenues		(238)		(54)		(91)

Expenses:
Operating		29		31		30
Interest		162		200		61

Total expenses		191		231		91

Gain (loss) before income taxes and equity in earnings of subsidiaries		(429)		(285)		(182)
Provision (benefit) for income taxes		(286)		(183)		92

Gain (loss) before equity in earnings of subsidiaries		(143)		(102)		(274)
Equity in net income (loss) of subsidiaries		(1,233)		99		892

Net income (loss)	$	(1,376)	$	(3)	$	618

The condensed financial statements should be read in conjunction with the

consolidated financial statements and notes thereto and the accompanying notes.

SCHEDULE II

MBIA INC. (PARENT COMPANY)

CONDENSED STATEMENTS OF CASH FLOWS

(In millions)


	Years Ended December 31,
	2011			2010			2009
Cash flows from operating activities:
Net income (loss)	$	(1,376	)	$	(3	)	$	618
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Change in:
Accrued investment income		2			2			45
Intercompany accounts receivable		(29	)		155			(138	)
Accrued interest payable		(5	)		5			(41	)
Current income taxes		124			56			(353	)
Equity in earnings of subsidiaries		1,233			(99	)		(892	)
Dividends from subsidiaries		46			19			1,174
Amortization of bond (premiums) discounts, net		(23	)		(23	)		(52	)
Net investment losses related to other-than-temporary impairments		33			59			351
Net (gains) losses on financial instruments at fair value and foreign exchange		284			117			(102	)
Other net realized (gains) losses		42			(1	)		(4	)
Deferred income tax benefit		(85	)		(90	)		321
(Gains) losses on extinguishment of debt		—			1			66
Share-based compensation		4			2			6
Other operating		6			(12	)		(36	)

Total adjustments to net income (loss)		1,632			191			345

Net cash provided (used) by operating activities		256			188			963

Cash flows from investing activities:
Purchase of fixed-maturity securities		(3,737	)		(6,394	)		(6,910	)
Sale and redemption of fixed-maturity securities		4,651			7,288			8,687
Sale (purchase) of short-term investments, net		251			363			1,735
Sale (purchase) of other investments, net		81			55			182
(Payments) proceeds for derivative settlements		(85	)		16			—
Collateral (to) from swap counterparty		—			166			—
Contributions to subsidiaries		—			(35	)		(1,243	)

Net cash provided (used) by investing activities		1,161			1,459			2,451

Cash flows from financing activities:
Proceeds from issuance of investment agreements		102			91			140
Payments for drawdowns of investment agreements		(500	)		(735	)		(1,968	)
Securities sold under agreements to repurchase		(835	)		(618	)		(696	)
Payments for retirement of debt		(70	)		(43	)		(50	)
Payments for affiliate loans		(13	)		(380	)		(1,782	)
(Payments) proceeds for derivative settlements		—			—			53
Purchase of treasury stock		(50	)		(30	)		(16	)
Restricted stock awards settlements		(2	)		2			2
Collateral from reverse repurchase agreement counterparties		—			—			30
Collateral (to) from swap counterparty		—			—			(101	)

Net cash provided (used) by financing activities		(1,368	)		(1,713	)		(4,388	)

Net increase (decrease) in cash and cash equivalents		49			(66	)		(974	)
Cash and cash equivalents—beginning of period		83			149			1,123

Cash and cash equivalents—end of period	$	132		$	83		$	149

Supplemental cash flow disclosures:
Income taxes paid (received), net	$	(453	)	$	(136	)	$	127
Interest paid:
Investment agreements	$	29		$	35		$	61
Securities sold under agreements to repurchase	$	1		$	2		$	7
Affiliate loans	$	19		$	36		$	65
Long-term debt	$	60		$	66		$	70

The condensed financial statements should be read in conjunction with the

consolidated financial statements and notes thereto and the accompanying notes.

SCHEDULE II

MBIA INC. (PARENT COMPANY)

NOTES TO CONDENSED FINANCIAL STATEMENTS

1. Condensed Financial Statements

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the Company's consolidated financial statements and the notes thereto.

The activities of MBIA Inc. consist of general corporate activities and funding activities, which principally include holding and managing investments, servicing outstanding corporate debt, investment agreements and medium-term notes issued by MBIA Inc. and its subsidiaries, and posting collateral under investment agreement and derivative contracts.

MBIA Inc. is subject to the same liquidity risks and uncertainties as described in footnote 1 to the Company's consolidated financial statements. As of December 31, 2011, MBIA Inc. had $226 million of cash and highly liquid assets available for general corporate liquidity purpose, and $160 million of cash and liquid assets not pledged as collateral in its funding activities.

2. Significant Accounting Policies

MBIA Inc. (the "Parent Company") carries its investments in subsidiaries under the equity method.

Certain amounts have been reclassified in prior years' financial statements to conform to the current presentation. This includes the reclassification of amounts from "Other investments" to "Fixed-maturity securities held as available-for-sale, at fair value" and from "Other liabilities" to "Affiliate loans payable" on the Parent Company's balance sheet. These reclassifications had no impact on total revenues, expenses, assets, liabilities, or shareholders' equity for all periods presented.

3. Dividends from Subsidiaries

During 2011, Optinuity Alliance Resource Corporation declared and paid dividends of $38 million to MBIA Inc. and Euro Asset Acquisition Limited declared and paid dividends of $8 million to MBIA Inc.

In 2010, Cutwater Holdings, LLC declared and paid dividends of $19 million to MBIA Inc.

4. Obligations under Investment Agreements and Medium-Term Notes

The investment agreement business, as described in footnotes 2 and 12 to the Company's consolidated financial statements, is conducted by both MBIA Inc. and its wholly owned subsidiary, MBIA Investment Management Corp.

5. Pledged Collateral

Substantially all of the obligations under investment agreements require MBIA Inc. to pledge securities as collateral. As of December 31, 2011 and 2010, the fair value of securities pledged as collateral with respect to these investment agreements approximated $428 million and $590 million, respectively. The Parent Company's collateral as of December 31, 2011, consisted principally of mortgage-backed securities, corporate obligations, and U.S. Treasury and government agency bonds, and was primarily held with major U.S. banks. Additionally, the Parent Company pledged money market securities as collateral under investment agreements in the amount of $224 million and $113 million as of December 31, 2011 and 2010, respectively.

Under derivative contracts entered into by MBIA Inc., collateral postings are required by either MBIA Inc. or the counterparty when the aggregate market value of derivative contracts entered into with the same counterparty exceeds a predefined threshold. As of December 31, 2011 and 2010, MBIA Inc. pledged securities with a fair value of $470 million and $452 million, respectively, to derivative counterparties.

6. Affiliate Loans Payable

Affiliate loans payable consists of loans payable to MBIA Global Funding, LLC ("GFL"). GFL raises funds through the issuance of medium-term notes with varying maturities, which are, in turn, guaranteed by MBIA Insurance Corporation. GFL lends the proceeds of these medium-term note issuances to MBIA Inc. ("GFL Loans"). MBIA Inc. invests the proceeds of the GFL Loans in eligible investments, which consisted of investment grade securities at the time of purchase with a minimum average double-A credit quality rating. Included within "Securities sold under agreements to repurchase" on the Parent Company's balance sheet is a secured loan from MBIA Insurance Corporation of $300 million.