XML 124 R14.htm IDEA: XBRL DOCUMENT v2.4.0.8
Insurance Premiums
 12 Months Ended
Dec. 31, 2013
Text Block [Abstract]  
Insurance Premiums

Note 5: Insurance Premiums

The Company recognizes and measures premiums related to financial guarantee (non-derivative) insurance and reinsurance contracts in accordance with the accounting principles for financial guarantee insurance contracts.

As of December 31, 2013 and 2012, premiums receivable was $1.1 billion and $1.2 billion, respectively, primarily related to installment policies for which premiums will be collected over the estimated term of the contracts. Premiums receivable for an installment policy is initially measured at the present value of premiums expected to be collected over the expected period or contract period of the policy using a risk-free discount rate. Premiums receivable for policies that use the expected period of risk due to expected prepayments are adjusted in subsequent measurement periods when prepayment assumptions change using the risk-free discount rate as of the remeasurement date. As of December 31, 2013 and 2012, the weighted average risk-free rate used to discount future installment premiums was 2.9% and 2.6%, respectively, and the weighted average expected collection term of the premiums receivable was 9.21 years and 9.13 years, respectively.

The Company evaluates whether any premiums receivable are uncollectible at each balance sheet date. If the Company determines that premiums are uncollectible, it records a write-off of such amounts in current earnings. The majority of the Company's premiums receivable consists of the present values of future installment premiums that are not yet billed or due primarily from structured finance transactions. Given that premiums due to MBIA typically have priority over most other payment obligations of structured finance transactions, the Company determined that the amount of uncollectible premiums as of December 31, 2013 and 2012 was insignificant.

As of December 31, 2013 and 2012, reinsurance premiums payable was $51 million and $59 million, respectively, and is included in “Other liabilities” in the Company's consolidated balance sheets. The reinsurance premiums payable is accreted and paid to reinsurers as premiums due to MBIA are accreted and collected.

The following tables present a roll forward of the Company's premiums receivable for the years ended December 31, 2013 and 2012

In millions                   
       Adjustments   
Premiums   Premiums Changes in Accretion of   Premiums 
Receivable as of Premium from New Expected Premiums   Receivable as of 
December 31, Payments Business Term of Receivable   December 31, 
2012 Received Written Policies Discount Other (1) 2013 
$1,228 $(135) $0 $(45) $28 $(25) $1,051 
__________                   
(1) - Primarily consists of unrealized gains (losses) due to foreign currency exchange rates.

In millions                   
       Adjustments   
Premiums   Premiums Changes in Accretion of   Premiums 
Receivable as of Premium from New Expected Premiums   Receivable as of 
December 31, Payments Business Term of Receivable   December 31, 
2011 Received Written Policies Discount Other (1) 2012 
$1,360 $(182) $5 $(57) $32 $70 $1,228 
__________                   
(1) - Primarily consists of unrealized gains (losses) due to foreign currency exchange rates.

The following table presents the undiscounted future amount of premiums expected to be collected and the period in which those collections are expected to occur:

   Expected 
   Collection of 
 In millions Premiums 
 Three months ended:    
 March 31, 2014 $24 
 June 30, 2014  37 
 September 30, 2014  25 
 December 31, 2014  30 
      
 Twelve months ended:    
 December 31, 2015  109 
 December 31, 2016  104 
 December 31, 2017  94 
 December 31, 2018  83 
      
 Five years ended:    
 December 31, 2023  336 
 December 31, 2028  243 
 December 31, 2033 and thereafter  263 
 Total $1,348 

The following table presents the unearned premium revenue balance and future expected premium earnings as of and for the periods presented:

               Total 
               Expected 
   Unearned Expected Future    Future 
   Premium  Premium Earnings    Premium 
 In millions Revenue Upfront Installments Accretion Earnings 
 December 31, 2013 $2,441             
                  
 Three months ended:                
 March 31, 2014  2,376 $38 $27 $7 $72 
 June 30, 2014  2,313  37  26  7  70 
 September 30, 2014  2,253  35  25  7  67 
 December 31, 2014  2,194  35  24  7  66 
                  
 Twelve months ended:                
 December 31, 2015  1,970  129  95  26  250 
 December 31, 2016  1,764  116  90  24  230 
 December 31, 2017  1,576  106  82  22  210 
 December 31, 2018  1,407  97  72  21  190 
                  
 Five years ended:                
 December 31, 2023  756  369  282  80  731 
 December 31, 2028  361  214  181  47  442 
 December 31, 2033 and thereafter  0  187  174  47  408 
 Total    $1,363 $1,078 $295 $2,736