Insurance Premiums

12 Months Ended

Dec. 31, 2022

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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, 2022 and 2021, the Company had an allowance for credit losses on premium receivables of zero and $5 million, respectively. Refer to “Note 2: Significant Accounting Policies” for further information regarding the accounting related to credit losses on premium receivables.

As of December 31, 2022 and 2021, the weighted average risk-free rates used to discount future installment premiums were 2.9% and 2.8%, respectively, and the weighted average expected collection term of the premiums receivable was 8.95 years and 9.09 years, respectively. As of December 31, 2022 and 2021, reinsurance premiums payable was $4 million and $5 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, 2022 and 2021.

In millions					Adjustments
Premiums Receivable as of December 31, 2021	Premium Payments Received		Premiums from New Business Written		Changes in Expected Term of Policies		Accretion of Premiums Receivable Discount (1)		Other (2)		Premiums Receivable as of December 31, 2022
$        178	$	(20)	$	—	$	(6)	$	5	$	3	$	160

(1)—Recorded within premiums earned on MBIA’s consolidated statement of operations.

(2)—The change primarily relates to the reversal of credit losses under Financial Instruments—Credit Losses, due to policy terminations.

 

In millions					Adjustments
Premiums Receivable as of December 31, 2020	Premium Payments Received		Premiums from New Business Written		Changes in Expected Term of Policies		Accretion of Premiums Receivable Discount (1)		Other (2)		Premiums Receivable as of December 31, 2021
$        216	$	(44)	$	—	$	7	$	5	$	(6)	$	178

(1)—Recorded within premiums earned on MBIA’s consolidated statement of operations.

(2)—The change primarily relates to a foreign exchange loss due to the termination of an international public finance credit.

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:

 

In millions	Expected Collection of Premiums
Three months ending:
March 31, 2023	$	2
June 30, 2023		5
September 30, 2023		4
December 31, 2023		7
Twelve months ending:
December 31, 2024		17
December 31, 2025		15
December 31, 2026		13
December 31, 2027		12
Five years ending:
December 31, 2032		51
December 31, 2037		37
December 31, 2042 and thereafter		41
Total	$	204

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

In millions	Unearned Premium Revenue		Expected Future Premium Earnings				Accretion		Total Expected Future Premium Earnings
			Upfront		Installments
December 31, 2022	$	266
Three months ending:
March 31, 2023		258	$	4	$	4	$	1	$	9
June 30, 2023		250		4		4		1		9
September 30, 2023		242		4		4		1		9
December 31, 2023		234		4		4		1		9
Twelve months ending:
December 31, 2024		205		14		15		4		33
December 31, 2025		180		13		12		4		29
December 31, 2026		158		11		11		3		25
December 31, 2027		139		10		9		3		22
Five years ending:
December 31, 2032		73		31		35		13		79
December 31, 2037		35		14		24		8		46
December 31, 2042 and thereafter		—		10		25		5		40
Total			$	119	$	147	$	44	$	310