Schedule II- Parent Company Financials

12 Months Ended

Dec. 31, 2016

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Financial Information of Parent Company Only Disclosure

SCHEDULE II
MBIA INC. (PARENT COMPANY)
CONDENSED BALANCE SHEETS
(In millions except share and per share amounts)
			December 31, 2016		December 31, 2015
Assets
Investments:
	Fixed-maturity securities held as available-for-sale, at fair value (amortized cost $687 and $749)		$	725	$	801
	Investments carried at fair value			6		7
	Investments pledged as collateral, at fair value (amortized cost $242 and $329)			233		291
	Short-term investments held as available-for-sale, at fair value (amortized cost $278 and $245)			278		245
	Other investments			2		4
		Total investments		1,244		1,348
Cash and cash equivalents				13		35
Investment in wholly-owned subsidiaries				3,673		4,085
Deferred income taxes, net				1,003		991
Other assets				107		103
		Total assets	$	6,040	$	6,562
Liabilities and Shareholders' Equity
Liabilities:
	Investment agreements		$	361	$	423
	Long-term debt			576		575
	Affiliate loans payable			901		1,022
	Income taxes payable			696		573
	Other liabilities			279		240
		Total liabilities		2,813		2,833
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--400,000,000; issued shares--283,989,999
		and 281,833,618		284		282
	Additional paid-in capital			3,160		3,138
	Retained earnings			2,700		3,038
	Accumulated other comprehensive income (loss), net of tax			(128)		(61)
	Treasury stock, at cost--148,789,168 and 130,303,241 shares			(2,789)		(2,668)
		Total shareholders' equity of MBIA Inc.		3,227		3,729
		Total liabilities and shareholders' equity	$	6,040	$	6,562
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,
				2016		2015		2014
Revenues:
	Net investment income			$	29	$	35	$	44
	Net gains (losses) on financial instruments at fair value and foreign exchange				(13)		59		24
	Investment losses related to other-than-temporary impairments:
		Investment losses related to other-than-temporary impairments			(1)		(3)		-
		Other-than-temporary impairments recognized in accumulated other
			comprehensive income (loss)		-		(1)		-
			Net investment losses related to other-than-temporary impairments		(1)		(4)		-
	Net gains (losses) on extinguishment of debt				5		-		1
	Other net realized gains (losses)				(5)		21		1
			Total revenues		15		111		70
Expenses:
	Operating				16		24		25
	Interest				90		95		104
			Total expenses		106		119		129
	Gain (loss) before income taxes and equity in earnings of subsidiaries				(91)		(8)		(59)
Provision (benefit) for income taxes					(15)		1		(165)
	Gain (loss) before equity in earnings of subsidiaries				(76)		(9)		106
Equity in net income (loss) of subsidiaries					(262)		189		463
			Net income (loss)	$	(338)	$	180	$	569
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 COMPREHENSIVE INCOME (LOSS)
(In millions)
			Years ended December 31,
			2016		2015		2014
Net income (loss)			$	(338)	$	180	$	569
Other comprehensive income (loss):
Unrealized gains (losses) on available-for-sale securities:
	Unrealized gains (losses) arising during the period			21		(66)		126
	Provision (benefit) for income taxes			2		(7)		14
	Total			19		(59)		112
	Reclassification adjustments for (gains) losses included in net income (loss)			12		4		23
	Provision (benefit) for income taxes			4		1		8
	Total			8		3		15
Available-for-sale securities with other-than-temporary impairments:
	Other-than-temporary impairments and unrealized gains (losses)
		arising during the period		2		-		-
	Provision (benefit) for income taxes			1		-		-
	Total			1		-		-
	Reclassification adjustments for (gains) losses included in net income (loss)			-		-		4
	Provision (benefit) for income taxes			-		-		1
	Total			-		-		3
Foreign currency translation:
	Foreign currency translation gains (losses)			(95)		(26)		(23)
Total other comprehensive income (loss)				(67)		(82)		107
Comprehensive income (loss)			$	(405)	$	98	$	676
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,
				2016		2015		2014
Cash flows from operating activities:
	Fees and reimbursements received			$	4	$	-	$	1
	Investment income received				144		142		256
	Operating expenses paid				(19)		(25)		(35)
	Interest paid, net of interest converted to principal				(84)		(88)		(93)
	Income taxes (paid) received				73		108		59
			Net cash provided (used) by operating activities		118		137		188
Cash flows from investing activities:
	Purchases of available-for-sale investments				(129)		(606)		(125)
	Sales of available-for-sale investments				165		325		268
	Paydowns and maturities of available-for-sale investments				90		186		98
	Purchases of investments at fair value				(57)		(144)		(266)
	Sales, paydowns and maturities of investments at fair value				58		171		280
	Sales, paydowns and maturities (purchases) of short-term investments, net				1		232		(242)
	(Payments) proceeds for derivative settlements				(37)		43		(26)
	Collateral (to) from swap counterparty				52		(31)		144
	Contributions to subsidiaries, net				(10)		16		(20)
	Advances to subsidiaries, net				-		-		(12)
	Other investing				-		24		-
			Net cash provided (used) by investing activities		133		216		99
Cash flows from financing activities:
	Proceeds from investment agreements				16		21		23
	Principal paydowns of investment agreements				(80)		(111)		(181)
	Principal paydowns of long-term debt				-		(11)		-
	Payments for affiliate loans				(111)		(103)		(153)
	Purchases of treasury stock				(106)		(233)		(32)
	Restricted stock awards settlements				8		19		16
			Net cash provided (used) by financing activities		(273)		(418)		(327)
Net increase (decrease) in cash and cash equivalents					(22)		(65)		(40)
Cash and cash equivalents - beginning of year					35		100		140
Cash and cash equivalents - end of year				$	13	$	35	$	100
Reconciliation of net income (loss) to net cash provided (used) by operating activities:
	Net income (loss)			$	(338)	$	180	$	569
	Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
		Change in:
			Intercompany accounts receivable		(10)		(21)		(24)
			Current income taxes		78		109		70
		Equity in earnings of subsidiaries			262		(189)		(463)
		Dividends from subsidiaries			118		116		225
		Net investment losses related to other-than-temporary impairments			1		4		-
		Net (gains) losses on financial instruments at fair value and foreign exchange			13		(59)		(24)
		Other net realized (gains) losses			5		(21)		(1)
		Deferred income tax benefit			(20)		-		(176)
		(Gains) losses on extinguishment of debt			(5)		-		(1)
		Other operating			14		18		13
		Total adjustments to net income (loss)			456		(43)		(381)
			Net cash provided (used) by operating activities	$	118	$	137	$	188
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 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 31,2016, MBIA Inc. had $403 million of cash and highly liquid assets available for general corporate liquidity purposes.

2. 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 a change in the presentation of short-term investments held as available-for-sale (“AFS”) to classify only fixed-maturity securities with a remaining maturity of less than one year at the date of purchase in “Short-term investments held as available-for-sale, at fair value” on the Parent Company’s condensed balance sheet. In prior periods, short-term investments held as AFS previously included all fixed-maturity securities with a remaining effective term to maturity of less than one year. The change in presentation effected “Short-term investments held as available-for-sale, at fair value” and “Fixed maturities held as available-for-sale, at fair value” on the Parent Company’s condensed balance sheet in prior periods. The reclassifications had no impact on total revenues, expenses, assets, liabilities, shareholders’ equity, operating cash flows, investing cash flows, or financing cash flows for all periods presented.

Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (ASU 2015-03)

In April of 2015, the Financial Accounting Standards Board issued ASU 2015-03, “Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” ASU 2015-03 requires debt issuance costs related to a debt liability measured at amortized cost to be reported in the balance sheet as a direct deduction from the face amount of the debt liability. ASU 2015-03 was effective for interim and annual periods beginning January 1, 2016. The adoption of ASU 2015-03 was applied retrospectively and all previously reported amounts have been conformed to the current presentation. The adoption of ASU 2015-03 did not materially impact the Parent Company’s condensed financial statements.

For a further discussion of significant accounting policies and recent accounting pronouncements, refer to footnotes 2 and 3 to the Company’s consolidated financial statements.

3. Dividends from Subsidiaries

During 2016, National Public Finance Guarantee Holdings, Inc. declared and paid a dividend of $118 million to MBIA Inc.

During 2015, National Public Finance Guarantee Holdings, Inc. declared and paid a dividend of $114 million to MBIA Inc., Trifinium Holdings Limited declared and paid dividends of $1 million to MBIA Inc. and MBIA Services Corp. declared and paid a dividend of $1 million to MBIA Inc.

During 2014, National Public Finance Guarantee Holdings, Inc. declared and paid a dividend of $220 million to MBIA Inc.and Trifinium Holdings Limited declared and paid dividends of $5 million to MBIA Inc.

4. Obligations under Investment Agreements

Investment agreements, as described in footnote 10 to the Company’s consolidated financial statements, are 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 31,2016 and 2015, the fair value of securities pledged as collateral with respect to these investment agreements approximated $394 million and $402 million, respectively. The Parent Company’s collateral as of December 31,2016, consisted principally of U.S. Treasury and government agency and state and municipal bonds, and was primarily held with major U.S. banks. Additionally, the Parent Company pledged cash and money market securities as collateral under investment agreements in the amount of $6 million and $12 million as of December 31,2016 and 2015, 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 31,2016,MBIA Inc. pledged securities with a fair value of $276 million to derivative counterparties. As of December 31,2015, MBIA Inc. pledged securities with a fair value of $259 million to derivative counterparties.

6. Affiliate Loans Payable

Affiliate loans payable consists of loans payable to MBIA Global Funding, LLC (“GFL”). GFL raised funds through the issuance of medium-term notes with varying maturities, which were, in turn, guaranteed by MBIA Corp. GFL lent the proceeds of these medium-term note issuances to MBIA Inc.