SCHEDULE II

MBIA INC. (PARENT COMPANY)

CONDENSED BALANCE SHEETS

(In millions except share and per share amounts)


	December 31, 2022		December 31, 2021
Assets
Investments:
Fixed-maturity securities held as available-for-sale, at fair value (amortized cost $463 and $556)	$	431	$	618
Investments pledged as collateral, at fair value (amortized cos t $ - and $3)		—		4
Short-term investments held as available-for-sale, at fair value (amortized cost $95 and $52)		95		52

Total investments		526		674
Cash and cash equivalents		16		15
Investment in wholly-owned subsidiaries		—		336
Other assets		9		5

Total assets	$	551	$	1,030

Liabilities and Shareholders’ Equity

Liabilities:
Investment agreements	$	233	$	274
Long-term debt		278		306
Affiliate loans payable		535		579
Income taxes payable		—		3
Derivative liabilities		48		130
Accumulated loss of wholly-owned subsidiaries		333		—
Other liabilities		6		51

Total liabilities		1,433		1,343

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—283,186,115 and 283,186,115		283		283
Additional paid-in capital		2,925		2,931
Retained earnings (deficit)		(653)		(458)
Accumulated other comprehensive income (loss), net of tax		(283)		100
Treasury stock, at cost—228,333,444 and 228,630,003 shares		(3,154)		(3,169)

Total shareholders’ equity of MBIA Inc.		(882)		(313)

Total liabilities and shareholders’ equity	$	551	$	1,030

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,
	2022		2021		2020
Revenues:
Net investment income	$	20	$	26	$	28
Net realized investment gains (losses)		(10)		3		11
Net gains (losses) on financial instruments at fair value and foreign exchange		110		49		(78)
Net gains (losses) on extinguishment of debt		5		30		—
Other net realized gains (losses)		—		(6)		—

Total revenues		125		102		(39)

Expenses:
Operating		11		10		10
Interest		76		75		83

Total expenses		87		85		93

Gain (loss) before income taxes and equity in earnings of subsidiaries		38		17		(132)
Provision (benefit) for income taxes		(3)		(3)		(4)

Gain (loss) before equity in earnings of subsidiaries		41		20		(128)
Equity in net income (loss) of subsidiaries		(236)		(465)		(450)

Net income (loss)	$	(195)	$	(445)	$	(578)

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,
	2022		2021		2020
Cash flows from operating activities:

Investment income received	$	89	$	80	$	101
Operating expenses paid and other operating		(25)		(14)		(47)
Interest paid, net of interest converted to principal		(51)		(50)		(60)
Income taxes (paid) received		(1)		6		5

Net cash provided (used) by operating activities		12		22		(1)

Cash flows from investing activities:
Purchases of available-for-sale investments		(86)		(150)		(216)
Sales of available-for-sale investments		149		202		183
Paydowns and maturities of available-for-sale investments		18		20		41
Purchases of investments at fair value		—		(2)		(2)
Sales, paydowns and maturities of investments at fair value		—		3		2
Sales, paydowns and maturities (purchases) of short-term investments, net		(41)		(27)		137
(Payments) proceeds for derivative settlements		(10)		(17)		(16)
Return of capital from subsidiaries		74		11		—

Net cash provided (used) by investing activities		104		40		129

Cash flows from financing activities:
Proceeds from investment agreements		8		2		12
Principal paydowns of investment agreements		(54)		(2)		(18)
Principal paydowns of long-term debt		—		—		(115)
Payments for affiliate loans		(74)		(81)		—
Restricted stock awards settlements		6		8		8

Net cash provided (used) by financing activities		(114)		(73)		(113)

Effect of exchange rates on cash and cash equivalents		(1)		—		—
Net increase (decrease) in cash and cash equivalents		1		(11)		15
Cash and cash equivalents—beginning of year		15		26		11

Cash and cash equivalents—end of year	$	16	$	15	$	26

Reconciliation of net income (loss) to net cash provided (used) by operating activities:
Net income (loss)	$	(195)	$	(445)	$	(578)
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Change in:
Intercompany accounts receivable		(25)		(7)		(39)
Current income taxes		(1)		6		5
Equity in earnings of subsidiaries		235		465		450
Dividends from subsidiaries		72		60		81
Net realized investment gains (losses)		10		—		—
Net (gains) losses on financial instruments at fair value and foreign exchange		(110)		(52)		67
Deferred income tax provision (benefit)		(3)		(3)		(4)
(Gains) losses on extinguishment of debt		(5)		(30)		—
Other operating		34		28		17

Total adjustments to net income (loss)		207		467		577

Net cash provided (used) by operating activities	$	12	$	22	$	(1)

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. This includes the statements of comprehensive income (loss) which is exactly the same as the Company’s consolidated statements of comprehensive income (loss). 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. (the “Parent Company”) consist of general corporate activities and funding activities, which principally include holding and managing investments, servicing outstanding corporate debt, investment agreements issued by the Parent Company and its subsidiaries, and posting collateral under investment agreement and derivative contracts.

The Parent Company 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, 2022, the liquidity position of the Parent Company, which included cash and cash equivalents or short-term investments comprised of highly rated commercial paper, money market funds and municipal, U.S. agency and corporate bonds for general corporate purposes, excluding the amount held in escrow under its tax sharing agreement, was $230 million.

During 2022, MBIA Corp. purchased $24 million principal amount of the Parent Company 6.625% Debentures due 2028, $4 million principal amount of Parent Company 7.150% Debentures due 2027 and $1 million principal amount of the Parent Company 7.000% Debentures due 2025. During 2021, MBIA Corp. purchased $5 million principal amount of the Parent Company 6.625% Debentures due 2028 and $1 million principal amount of the Parent Company 7.150% Debentures due 2027. Additionally, as of December 31, 2022, National owned $308 million principal amount of the 5.700% Senior Notes due 2034 and $10 million principal amount of the Parent Company 7.000% Debentures due 2025, and the Parent Company, through its corporate segment, owned $13 million of MBIA Corp. surplus notes. These amounts are eliminated from the Parent Company’s condensed balance sheet.

2. Accounting Policies

The Parent Company carries its investments in subsidiaries under the equity method.

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 2022, National declared and paid a dividend of $72 million to its ultimate parent, MBIA Inc.

During 2021, National declared and paid dividends of $60 million to its ultimate parent, MBIA Inc.

During 2020, National declared and paid dividends of $81 million to its ultimate parent, MBIA Inc.

4. Deferred Tax Asset, Net of Valuation Allowance

The Parent Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on tax assets and liabilities is recognized in income in the period that includes the enactment date. Valuation allowances are established to reduce deferred tax assets to the amount that more likely than not will be realized.

The Parent Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of its existing deferred tax assets. A significant piece of objective

negative evidence evaluated was the Parent Company having a three-year cumulative loss. Such objective evidence limits the ability to consider other subjective evidence, such as the Parent Company’s projections of

pre-tax

income. On the basis of this evaluation, the Parent Company has recorded a full valuation allowance against its net deferred tax asset.

For a further discussion of the net deferred tax asset, refer to footnote 11 to the Company’s consolidated financial statements.

5. Obligations under Investment Agreements

Refer to footnote 10 to the Company’s consolidated financial statements for information of investment agreements.

6. Pledged Collateral

Substantially all of the obligations under investment agreements require the Parent Company and its subsidiaries to pledge securities as collateral. As of December 31, 2022 and 2021, the fair value of securities pledged as collateral with respect to these investment agreements approximated $251 million and $280 million, respectively. The Parent Company’s collateral as of December 31, 2022, consisted principally of U.S. Treasury and government agency and state and municipal bonds, and was primarily held with major U.S. banks.

Under derivative contracts entered into by the Parent Company, collateral postings are required by either the Parent Company 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, 2022 and 2021, the Parent Company and its subsidiaries pledged securities with a fair value of $73 million and $159 million, respectively, to derivative counterparties.

7. 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 the Parent Company.