Business Segments

12 Months Ended

Dec. 31, 2021

Text Block [Abstract]

Business Segments

Note 12: Business Segments

As defined by segment reporting, an operating segment is a component of a company (i) that engages in business activities from which it earns revenue and incurs expenses, (ii) whose operating results are regularly reviewed by the Chief Operating Decision Maker to assess the performance of the segment and to make decisions about the allocation of resources to the segment and, (iii) for which discrete financial information is available.

The Company manages its businesses across three operating segments: 1) U.S. public finance insurance; 2) corporate; and 3) international and structured finance insurance. The Company’s U.S. public finance insurance business is operated through National and its international and structured finance insurance business is operated through MBIA Corp.

The following sections provide a description of each of the Company’s reportable operating segments.

U.S. Public Finance Insurance

The Company’s U.S. public finance insurance portfolio is managed through National. The financial guarantees issued by National provide unconditional and irrevocable guarantees of the payment of the principal of, and interest or other amounts owing on, U.S. public finance insured obligations when due. The obligations are not subject to acceleration, except that National may have the right, at its discretion, to accelerate insured obligations upon default or otherwise. National’s guarantees insure municipal bonds, including tax-exempt and taxable indebtedness of U.S. political subdivisions, as well as utilities, airports, health care institutions, higher educational facilities, housing authorities and other similar agencies and obligations issued by private entities that finance projects that serve a substantial public purpose. Municipal bonds and privately issued bonds used for the financing of public purpose projects are generally supported by taxes, assessments, fees or tariffs related to the use of these projects, lease payments or other similar types of revenue streams.

Corporate

The Company’s corporate segment consists of general corporate activities, including providing support services to MBIA Inc.’s subsidiaries as well as asset and capital management. Support services are provided by the Company’s service company, MBIA Services, and include, among others, management, legal, accounting, treasury, information technology, and insurance portfolio surveillance, on a fee-for-service basis. Capital management includes activities related to servicing obligations issued by MBIA Inc. and its subsidiaries, MBIA Global Funding, LLC (“GFL”) and MBIA Investment Management Corp. (“IMC”). MBIA Inc. issued debt to finance the operations of the MBIA group. GFL raised funds through the issuance of MTNs with varying maturities, which were in turn guaranteed by MBIA Corp. GFL lent the proceeds of these MTN issuances to MBIA Inc. IMC, along with MBIA Inc., provided customized investment agreements, guaranteed by MBIA Corp., for bond proceeds and other public funds for such purposes as construction, loan origination, escrow and debt service or other reserve fund requirements. The Company has ceased issuing new MTNs and investment agreements and the outstanding liability balances and corresponding asset balances have declined over time as liabilities matured, terminated or were called or repurchased. During 2020, the remaining investment agreements issued by IMC matured. IMC was liquidated and dissolved in 2021. All of the debt within the corporate segment is managed collectively and is serviced by available liquidity.

International and Structured Finance Insurance

The Company’s international and structured finance insurance segment is principally conducted through MBIA Corp. The financial guarantees issued by MBIA Corp. generally provide unconditional and irrevocable guarantees of the payment of principal of, and interest or other amounts owing on, non-U.S. public finance and global structured finance insured obligations when due, or in the event MBIA Corp. has the right, at its discretion, to accelerate insured obligations upon default or otherwise. MBIA Corp. insures the investment contracts written by MBIA Inc., and if MBIA Inc. were to have insufficient assets to pay amounts due upon maturity or termination, MBIA Corp. would make such payments. MBIA Corp. insures debt obligations of the following affiliates:

• MBIA Inc.;

• GFL; and

• MZ Funding LLC.

MBIA Corp. insures non-U.S. public finance and global structured finance obligations, including asset-backed obligations. MBIA Corp. has insured sovereign-related and sub-sovereign bonds, utilities, privately issued bonds used for the financing of projects that include toll roads, bridges, airports, public transportation facilities, and other types of infrastructure projects serving a substantial public purpose. Global structured finance and asset-backed obligations typically are securities repayable from expected cash flows generated by a specified pool of assets, such as residential and commercial mortgages, structured settlements, consumer loans, and corporate loans and bonds. MBIA Corp. has also written policies guaranteeing obligations under certain derivative contracts, including termination payments that may become due upon certain insolvency or payment defaults of the financial guarantor or the issuer. MBIA Corp. has not written any meaningful amount of business since 2008.

Segments Results

The following tables provide the Company’s segment results for the years ended December 31, 2021, 2020 and 2019:

	Year Ended December 31, 2021
In millions	U.S. Public Finance Insurance		Corporate		International and Structured Finance Insurance		Eliminations			Consolidated
Revenues(1)	$	85	$	20	$	43	$	—		$	148
Net gains (losses) on financial instruments at fair value and foreign exchange		(2)		56		(14)		—			40
Net gains (losses) on extinguishment of debt		—		30		—		—			30
Other net realized gains (losses)		—		(7)		1		—			(6)
Revenues of consolidated VIEs		—		—		(23)		—			(23)
Inter-segment revenues(2)		27		67		12		(106)			—
Total revenues		110		166		19		(106)			189
Losses and loss adjustment		227		—		123		—			350
Amortization of deferred acquisition costs and operating		17		71		9		—			97
Interest		—		56		107		—			163
Expenses of consolidated VIEs		—		—		24		—			24
Inter-segment expenses(2)		45		22		38		(105)			—
Total expenses		289		149		301		(105)			634
Income (loss) before income taxes	$	(179)	$	17	$	(282)	$	(1)		$	(445)
Identifiable assets	$	3,313	$	873	$	2,800	$	(2,290)	(3)	$	4,696

(1)—Consists of net premiums earned, net investment income, net realized investment gains (losses), insurance-related fees and reimbursements and other fees.

(2)—Primarily represents intercompany service charges and intercompany net investment income and expense.

(3)—Consists principally of intercompany reinsurance balances.

	Year Ended December 31, 2020
In millions	U.S. Public Finance Insurance		Corporate		International and Structured Finance Insurance		Eliminations			Consolidated
Revenues(1)	$	139	$	31	$	29	$	—		$	199
Net change in fair value of insured derivatives		—		—		6		—			6
Net gains (losses) on financial instruments at fair value and foreign exchange		2		(74)		(14)		—			(86)
Other net realized gains (losses)		(1)		—		1		—			—
Revenues of consolidated VIEs		—		—		163		—			163
Inter-segment revenues(2)		28		66		12		(106)			—
Total revenues		168		23		197		(106)			282
Losses and loss adjustment		163		—		367		—			530
Amortization of deferred acquisition costs and operating		14		69		14		—			97
Interest		—		65		113		—			178
Expenses of consolidated VIEs		—		—		55		—			55
Inter-segment expenses(2)		45		22		39		(106)			—
Total expenses		222		156		588		(106)			860
Income (loss) before income taxes	$	(54)	$	(133)	$	(391)	$	—		$	(578)
Identifiable assets	$	3,644	$	954	$	3,671	$	(2,518)	(3)	$	5,751

(1)—Consists of net premiums earned, net investment income, net realized investment gains (losses), insurance-related fees and reimbursements and other fees.

(2)—Primarily represents intercompany service charges and intercompany net investment income and expense.

(3)—Consists primarily of intercompany reinsurance balances.

	Year Ended December 31, 2019
In millions	U.S. Public Finance Insurance		Corporate		International and Structured Finance Insurance		Eliminations		Consolidated
Revenues(1)	$	263	$	32	$	35	$	—	$	330
Net change in fair value of insured derivatives		—		—		15		—		15
Net gains (losses) on financial instruments at fair value and foreign exchange		15		(59)		(34)		—		(78)
Net investment losses related to other-than-temporary impairments		(67)		—		—		—		(67)
Net gains (losses) on extinguishment of debt		—		(1)		—		—		(1)
Other net realized gains (losses)		2		(2)		4		—		4
Revenues of consolidated VIEs		21		1		55		—		77
Inter-segment revenues(2)		28		62		21		(111)		—
Total revenues		262		33		96		(111)		280
Losses and loss adjustment		53		—		189		—		242
Amortization of deferred acquisition costs and operating		13		69		21		—		103
Interest		—		73		128		—		201
Expenses of consolidated VIEs		—		—		91		—		91
Inter-segment expenses(2)		52		23		36		(111)		—
Total expenses		118		165		465		(111)		637
Income (loss) before income taxes	$	144	$	(132)	$	(369)	$	—	$	(357)

(1)—Consists of net premiums earned, net investment income, net realized investment gains (losses), insurance-related fees and reimbursements and other fees.

(2)—Primarily represents intercompany service charges and intercompany net investment income and expense.

Premiums on financial guarantees and insured derivatives reported within the Company’s insurance segments are generated within and outside the U.S. The following table summarizes premiums earned on financial guarantees and insured derivatives by geographic location of risk for the years ended December 31, 2021, 2020 and 2019:

	Years Ended December 31,
In millions	2021		2020		2019
Total premiums earned:
United States	$	45	$	55	$	63
Other Americas		29		16		17
Other		1		2		5
Total	$	75	$	73	$	85