Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx No¨

Indicate by check mark whether the Registrant is an accelerated filer (as specified in Rule 12 b-2 of the Act). Yesx No¨

As of ~~April~~July 29, 2005 there were outstanding ~~135,408,786~~134,044,311 shares of Common Stock, par value $1 per share, of the registrant.

The accompanying notes are an integral part of the consolidated financial statements.


	Three months ended March 31						Three months ended June 30						Six months ended June 30
	2005			2004			2005			2004			2005			2004
				Restated						Restated						Restated
Insurance
Revenues:
Gross premiums written	$	282,619		$	204,693		$	248,965		$	372,909		$	531,584		$	577,602
Ceded premiums		(35,688	)		(30,732	)		(33,641	)		(45,059	)		(69,329	)		(75,791	)

Net premiums written		246,931			173,961			215,324			327,850			462,255			501,811

Scheduled premiums earned		169,873			161,994			177,207			171,956			347,080			333,950
Refunding premiums earned		36,365			39,876			31,726			38,826			68,091			78,702

Premiums earned (net of ceded premiums of $45,415 and $44,918)		206,238			201,870
Premiums earned (net of ceded premiums of $42,549, $48,434, $87,965 and $93,352)								208,933			210,782			415,171			412,652
Net investment income		119,146			121,841			121,002			114,856			240,148			236,697
Advisory fees		6,425			5,865			4,214			17,190			10,639			23,055
Net realized gains		211			46,293
Net realized gains (losses)								996			16,935			1,207			63,228
Net gains (losses) on derivative instruments and foreign exchange		(6,075	)		1,070			4,119			210			(1,956	)		1,280

Total insurance revenues		325,945			376,939			339,264			359,973			665,209			736,912

Expenses:
Losses and loss adjustment		20,385			19,439			21,265			20,635			41,650			40,074
Amortization of deferred acquisition costs		16,293			15,586			16,506			16,493			32,799			32,079
Operating		29,166			27,526			32,268			29,155			61,434			56,681

Total insurance expenses		65,844			62,551			70,039			66,283			135,883			128,834

Insurance income		260,101			314,388			269,225			293,690			529,326			608,078

Investment management services
Revenues		186,235			121,460			206,543			126,256			392,778			247,716
Net realized gains (losses)		3,194			(1,817	)		(1,478	)		(1,126	)		1,716			(2,943	)
Net gains (losses) on derivative instruments and foreign exchange		11,178			(11,733	)		(3,439	)		11,737			7,739			4

Total investment management services revenues		200,607			107,910			201,626			136,867			402,233			244,777
Interest expense		149,418			91,035			167,164			92,438			316,582			183,473
Expenses		14,377			18,587			19,090			18,757			33,467			37,344

Total investment management services expenses		163,795			109,622			186,254			111,195			350,049			220,817

Investment management services income		36,812			(1,712	)		15,372			25,672			52,184			23,960

Municipal services
Revenues		5,536			5,959			5,398			5,752			10,934			11,711
Net realized losses		(85	)		(5	)
Net realized gains (losses)								—			(37	)		(85	)		(42	)
Net gains on derivative instruments and foreign exchange		130			—			6			—			136			—

Total municipal services revenues		5,581			5,954			5,404			5,715			10,985			11,669
Expenses		5,405			5,854			5,108			5,526			10,513			11,380

Municipal services income		176			100			296			189			472			289

Corporate
Net investment income		7,927			2,120			5,776			2,457			13,703			4,577
Net realized losses		(1,608	)		(220	)
Net realized gains (losses)								81			(356	)		(1,527	)		(576	)
Interest expense		22,021			17,774			22,040			17,771			44,061			35,545
Corporate expenses		3,681			5,890			7,398			4,070			11,079			9,960

Corporate loss		(19,383	)		(21,764	)		(23,581	)		(19,740	)		(42,964	)		(41,504	)


Income from continuing operations before income taxes		277,706			291,012			261,312			299,811			539,018			590,823

Provision for income taxes		77,202			82,424			73,722			84,096			150,924			166,520

Income from continuing operations		200,504			208,588			187,590			215,715			388,094			424,303

Income from discontinued operations, net of tax		—			29
Loss from discontinued operations, net of tax								—			(510	)		—			(481	)
Gain on sale of discontinued operations, net of tax								—			3,178			—			3,178

Income from discontinued operations								—			2,668			—			2,697

Net income	$	200,504		$	208,617		$	187,590		$	218,383		$	388,094		$	427,000

Income from continuing operations per common share:
Basic	$	1.46		$	1.45		$	1.40		$	1.50		$	2.86		$	2.96
Diluted	$	1.43		$	1.42		$	1.37		$	1.47		$	2.80		$	2.89

Net income per common share:
Basic	$	1.46		$	1.45		$	1.40		$	1.52		$	2.86		$	2.97
Diluted	$	1.43		$	1.42		$	1.37		$	1.49		$	2.80		$	2.91

Weighted-average number of common shares outstanding:
Basic		137,258,739			143,608,056			133,938,175			143,454,174			135,589,284			143,530,690
Diluted		140,442,217			146,647,142			136,886,153			146,289,467			138,680,637			146,600,213

Gross revenues from continuing operations		538,452			492,703			552,151			504,656			1,090,603			997,359
Gross expenses from continuing operations		260,746			201,691			290,839			204,845			551,585			406,536

The accompanying notes are an integral part of the consolidated financial statements.


	Common Stock			Additional Paid-in Capital			Retained Earnings				Accumulated Other Comprehensive Income				Unearned Compensation- Restricted Stock				Treasury Stock							Total Shareholders’ Equity				Common Stock					Additional Paid-in Capital			Retained Earnings				Accumulated Other Comprehensive Income		Unearned Compensation- Restricted Stock			Treasury Stock							Total Shareholders’ Equity
	Shares	Amount		Additional Paid-in Capital						Shares	Accumulated Other Comprehensive Income							Amount					Shares		Amount									Shares	Additional Paid-in Capital						Amount													Total Shareholders’ Equity
Balance, January 1, 2005	155,608	$	155,608	$	1,410,799		Retained Earnings			$	5,215,191			$	Unearned Compensation- Restricted Stock	611,173			$	(34,686	)		(16,216	)		Total Shareholders’ Equity	$	(779,014	)		$	6,579,071			155,608		$	Retained Earnings	155,608		$	Accumulated Other Comprehensive Income	1,410,799	Unearned Compensation- Restricted Stock	$	5,215,191			$611,173			$(34,686	)		(16,216	)	$	(779,014	)	$	6,579,071

Comprehensive income:
Net income	—		—		—			200,504				—				—			—				—				200,504			—			—			—			388,094			—		—			—				—				388,094
Other comprehensive income (loss):
Change in unrealized appreciation of investments net of change in deferred income taxes of $(74,077)	—		—		—			—				(135,724	)			—			—				—				(135,724	)
Change in fair value of derivative instruments net of change in deferred income taxes of $20,476	—		—		—			—				38,027				—			—				—				38,027
Change in foreign currency translation net of change in deferred income taxes of $4,845	—		—		—			—				(12,960	)			—			—				—				(12,960	)
Change in unrealized appreciation of investments net of change in deferred income taxes of $60,722																														—			—			—			—			92,511		—			—				—				92,511
Change in fair value of derivative instruments net of change in deferred income taxes of $(23,347)																														—			—			—			—			(43,359	)	—			—				—				(43,359	)
Change in foreign currency translation net of change in deferred income taxes of $2,311																														—			—			—			—			(29,697	)	—			—				—				(29,697	)

Other comprehensive income (loss)																											(110,657	)																											19,455

Comprehensive income																											89,847																												407,549

Treasury shares acquired, net	—		—		—			—				—				—			(3,613	)			(212,798	)			(212,798	)		—			—			—			—			—		—			(6,161	)			(357,336	)			(357,336	)

Stock-based compensation	634		634		39,938			—				—				(21,520	)		—				—				19,052			804			804			52,115			—			—		(18,483	)		—				—				34,436

Capital issuance costs	—		—		(793	)		—				—				—			—				—				(793	)
Dividends (declared per common share $0.560, paid per common share $0.520)																														—			—			—			(76,222	)		—		—			—				—				(76,222	)

Dividends (declared per common share $0.280, paid per common share $0.240)	—		—		—			(38,368	)			—				—			—				—				(38,368	)
Balance, June 30, 2005																														156,412		$	156,412		$	1,462,914		$	5,527,063			$630,628		$(53,169	)		(22,377	)		$	(1,136,350	)		$	6,587,498

Balance, March 31, 2005	156,242	$	156,242	$	1,449,944		$	5,377,327			$	500,516			$	(56,206	)		(19,829	)		$	(991,812	)		$	6,436,011


	2005			2005
Disclosure of reclassification amount:
Unrealized appreciation of investments arising during the period, net of taxes	$	(134,478	)	$	98,559
Reclassification adjustment, net of taxes		(1,246	)		(6,048	)

Net unrealized appreciation, net of taxes	$	(135,724	)	$	92,511

The accompanying notes are an integral part of the consolidated financial statements.


	Three months ended March 31						Six months ended June 30
	2005			2004			2005			2004
				(Restated)						Restated
Cash flows from operating activities of continuing operations:
Net income	$	200,504		$	208,617		$	388,094		$	427,000
Income from discontinued operations, net of tax		—			(29	)
Loss from discontinued operations, net of tax								—			481
Gain on sale of discontinued operations, net of tax								—			(3,178	)

Net income from continuing operations		200,504			208,588
Income from continuing operations								388,094			424,303

Adjustments to reconcile net income from continuing operations to net cash provided by operating activities of continuing operations:
(Increase) decrease in accrued investment income		(24,696	)		6,765
Adjustments to reconcile income from continuing operations to net cash provided by operating activities of continuing operations:
Increase in accrued investment income								(36,365	)		(4,102	)
Increase in deferred acquisition costs		(11,436	)		(20,203	)		(22,510	)		(20,193	)
Decrease in prepaid reinsurance premiums		8,985			14,186
Increase (decrease) in deferred premium revenue		27,670			(42,095	)
Increase in loss and loss adjustment expense reserves		28,946			70,058
Decrease in reinsurance recoverable on unpaid losses		532			18,631
Decrease (increase) in prepaid reinsurance premiums								20,262			(12,672	)
Increase in deferred premium revenue								16,837			71,599
Decrease in loss and loss adjustment expense reserves								(59,047	)		(33,065	)
(Increase) decrease in reinsurance recoverable on unpaid losses								(9,135	)		33,783
Depreciation		3,568			3,218			6,983			6,669
Amortization of discount on bonds, net		15,955			12,307			30,565			33,172
Amortization of premium on medium-term notes and commercial paper		(4,552	)		(4,676	)		(10,166	)		(9,679	)
Net realized gains on sale of investments		(1,712	)		(44,251	)		(1,311	)		(59,667	)
Current income tax provision		12,126			50,768
Current income tax benefit								—			(9,627	)
Deferred income tax provision		12,220			14,594			12,840			32,699
Net (gains) losses on derivative instruments and foreign exchange		(5,233	)		10,663
Net gains on derivative instruments and foreign exchange								(5,919	)		(1,284	)
Stock option compensation		4,917			5,007			10,179			12,419
Other, net		7,146			(86,352	)		72,110			(60,114	)

Total adjustments to net income		74,436			8,620
Total adjustments to income from continuing operations								25,323			(20,062	)

Net cash provided by operating activities of continuing operations		274,940			217,208			413,417			404,241

Cash flows from investing activities of continuing operations:
Purchases of fixed-maturity securities, net of payable for investments purchased		(2,597,593	)		(2,374,625	)		(5,192,581	)		(3,846,716	)
Sale of fixed-maturity securities, net of receivable for investments sold		2,263,137			1,863,574			4,685,447			3,211,576
Redemption of fixed-maturity securities, net of receivable for investments redeemed		83,857			202,993			300,785			433,525
Purchases for investment agreement and medium-term note portfolios, net of payable for investments purchased		(996,116	)		(588,833	)		(3,017,881	)		(2,672,688	)
Sales for investment agreement and medium-term note portfolios, net of receivable for investments sold		13,470			219,840			527,664			1,280,903
Purchases of held-to-maturity investments		(31,145	)		(29,520	)		(259,277	)		(60,601	)
Proceeds from principal paydown of held-to-maturity investments		426,031			703,123			1,208,809			2,200,403
Sale of short-term investments		114,689			108,175
Sale of other investments		3,401			14,968
Sale (purchase) of short-term investments								244,799			(58,979	)
(Purchase) sale of other investments								(11,619	)		61,558
Capital expenditures		(2,138	)		(2,480	)		(3,553	)		(4,543	)
Disposals of capital assets		—			38			—			2,248

Net cash provided (used) by investing activities of continuing operations		(722,407	)		117,253
Net cash (used) provided by investing activities of continuing operations								(1,517,407	)		546,686

Cash flows from financing activities of continuing operations:
Proceeds from issuance of investment agreements		1,413,495			840,175			4,153,151			2,385,122
Payments for drawdowns of investment agreements		(757,409	)		(881,626	)		(2,875,081	)		(1,671,505	)
Decrease in commercial paper, net		(296,034	)		(166,976	)		(738,305	)		(257,084	)
Issuance of medium-term notes		587,714			382,175			1,085,007			873,923
Issuance of variable interest entity floating rate notes								200,000			—
Principal paydown of medium-term notes		(121,412	)		(636,642	)		(344,957	)		(2,124,087	)
Securities sold under agreements to repurchase, net		39,027			241,847			188,255			21,829
Dividends paid								(71,795	)		(63,538	)
Net proceeds from issuance of short-term debt		—			1,408			—			1,408
Dividends paid		(33,494	)		(28,814	)
Capital issuance costs		(793	)		(531	)		(1,658	)		(1,051	)
Other borrowings		—			(3,879	)		—			(7,886	)
Purchase of treasury stock		(212,798	)		(20,377	)		(357,336	)		(91,350	)
Exercise of stock options		7,419			30,760			12,814			37,597

Net cash provided (used) by financing activities of continuing operations		625,715			(242,480	)		1,250,095			(896,622	)

Discontinued operations:
Net cash used by discontinued operations		—			(512	)
Net cash provided by discontinued operations								—			14,717

Net increase in cash and cash equivalents		178,248			91,469			146,105			69,022
Cash and cash equivalents - beginning of period		366,236			227,544			366,236			227,544

Cash and cash equivalents - end of period	$	544,484		$	319,013		$	512,341		$	296,566

*Supplemental cash flow disclosures:*
Income taxes paid	$	3,450		$	13,527		$	92,810		$	149,406
Interest paid:
Investment agreements	$	69,192		$	60,307		$	163,100		$	124,534
Commercial paper		15,984			6,902			30,019			14,008
Medium-term notes		44,925			35,268			103,559			66,919
Variable interest entity floating rate notes		4,304			1,806			9,415			3,425
Securities sold under agreements to repurchase		3,794			2,999			7,679			5,799
Long-term debt		15,291			16,033			39,290			35,098
Other borrowings		—			354			—			578
Non cash items:
Stock compensation	$	4,917		$	5,007		$	10,179		$	12,419
Dividends declared but not paid		38,363			34,733			37,916			34,617

The accompanying notes are an integral part of the consolidated financial statements.

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, accordingly, do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America (GAAP). These statements should be read in conjunction with the consolidated financial statements and notes thereto included in Form 10-K for the year ended December 31, 2004 for MBIA Inc. and Subsidiaries (MBIA or the Company). The accompanying consolidated financial statements have not been audited by an independent registered public accounting firm in accordance with the standards of the Public Company Accounting Oversight Board (United States), but in the opinion of management such financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the Company’s financial position and results of operations. The results of operations for the ~~three~~six months ended ~~March 31,~~June 30, 2005 may not be indicative of the results that may be expected for the year ending December 31, 2005. The December 31, 2004 balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. The consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and other entities required by GAAP. All significant intercompany balances have been eliminated. Business segment results are presented net of all material intersegment transactions. Certain amounts have been reclassified in the financial statements prior to December 31, 2004 to conform to the current presentation. This includes the reclassification of conduit and variable interest entity (VIE) assets and liabilities, which had no effect on net income, total assets, total liabilities or shareholders’ equity as previously reported. Additionally, this includes the reclassification of salvage and subrogation from “Loss and loss adjustment expense reserves” to “Other assets.”

As reported in the Company’s Form 10-K for the year ended December 31, 2004, the Company restated its previously issued consolidated financial statements for 1998 and subsequent years to correct the accounting treatment for two reinsurance agreements entered into in 1998. The following table presents the effects of the restatement on the consolidated financial statements of the Company for the second quarter and six months ended ~~March 31,~~June 30, 2004.


In thousands except per share information	As of and For the Quarter Ended March 31, 2004
In thousands except per share information					As of and for the three months ended June 30, 2004				As of and for the six months ended June 30, 2004
In thousands except per share information	Previously Reported		Restated		Previously Reported		Restated		Previously Reported		Restated
In thousands except per share information
Net premiums written	$	169,729	$	173,961	$	323,618	$	327,850	$	493,347	$	501,811
Scheduled premiums earned		160,280		161,994		169,991		171,956		330,271		333,950
Refunding premiums earned		39,542		39,876		38,309		38,826		77,851		78,702
Premiums earned		199,822		201,870		208,300		210,782		408,122		412,652
Insurance revenues		374,891		376,939		357,491		359,973		732,382		736,912
Losses and loss adjustment expenses		19,234		19,439		20,399		20,635		39,633		40,074
Operating expenses		27,172		27,526		28,931		29,155		56,103		56,681
Insurance income		312,899		314,388		291,668		293,690		604,567		608,078
Income from continuing operations before income taxes		289,523		291,012		297,789		299,811		587,312		590,823
Provision for income taxes		81,903		82,424		83,388		84,096		165,291		166,520
Income from continuing operations		207,620		208,588		214,401		215,715		422,021		424,303
Net income	$	207,649	$	208,617	$	217,069	$	218,383	$	424,718	$	427,000

Basic EPS:
Income from continuing operations	$	1.45	$	1.45	$	1.49	$	1.50	$	2.94	$	2.96
Net income	$	1.45	$	1.45	$	1.51	$	1.52	$	2.96	$	2.97

Diluted EPS:
Income from continuing operations	$	1.42	$	1.42	$	1.47	$	1.47	$	2.88	$	2.89
Net income	$	1.42	$	1.42	$	1.48	$	1.49	$	2.90	$	2.91

Consolidated Balance Sheet Data:
Prepaid reinsurance premiums	$	523,726	$	452,576	$	552,334	$	479,434	$	552,334	$	479,434
Total assets		30,940,671		30,869,521		30,047,666		29,984,421		30,047,666		29,984,421
Loss and loss adjustment expense reserves		754,848		761,539		651,489		658,416		651,489		658,416
Current income taxes		71,046		60,395		6,498		0		6,498		0
Deferred income taxes, net		605,367		585,922		424,153		410,918		424,153		410,918
Other liabilities		364,069		372,218		393,248		397,389		393,248		397,389
Total liabilities		24,387,237		24,371,981		23,749,298		23,740,633		23,749,298		23,740,633
Retained earnings		4,766,412		4,710,518		4,948,873		4,894,293		4,948,873		4,894,293
Shareholders’ equity	$	6,553,434	$	6,497,540	$	6,298,368	$	6,243,788	$	6,298,368	$	6,243,788

Information presented in the Notes to Consolidated Financial Statements gives effect to the restatement, as applicable.

Dividends declared by the Company during the ~~three~~six months ended ~~March 31,~~June 30, 2005 were ~~$38.4~~$76.2 million.

Basic earnings per share excludes dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share shows the dilutive effect of all stock options and other items outstanding during the period that could

potentially result in the issuance of common stock. For the three and six months ended ~~March 31,~~June 30, 2005 there were 3,109,473 and 2,808,176 stock options outstanding, respectively, and for the three and six months ended June 30, 2004, there were ~~2,627,938~~2,294,163 and ~~1,797,496~~2,087,690 stock options outstanding, respectively, that were not included in the diluted earnings per share calculation because they were antidilutive.

The following table sets forth the computation of basic and diluted earnings per share for the ~~three~~second quarter and six months ended ~~March 31,~~June 30, 2005 and 2004:


	March 31,				2nd Quarter				Year-to-date
In thousands except per share amounts	2005		Restated 2004
In millions except per share amounts					2005		Restated 2004		2005		Restated 2004
Income from continuing operations, net of tax	$	200,504	$	208,588	$	188	$	215	$	388	$	424
Income from discontinued operations, net of tax		—		29		—		3		—		3

Net income	$	200,504	$	208,617	$	188	$	218	$	388	$	427

Basic weighted average shares		137,258,739		143,608,056
Effect of stock options		3,183,478		3,039,086
Diluted weighted average shares (in thousands):
Basic weighted average shares outstanding						133,938		143,454		135,589		143,530
Effect of stock based compensation						2,948		2,835		3,092		3,070

Diluted weighted average shares		140,442,217		146,647,142		136,886		146,289		138,681		146,600

Basic EPS:
Income from continuing operations	$	1.46	$	1.45	$	1.40	$	1.50	$	2.86	$	2.96
Income from discontinued operations		0.00		0.00		—		0.02		—		0.02

Net income	$	1.46	$	1.45
Net income *					$	1.40	$	1.52	$	2.86	$	2.97

Diluted EPS:
Income from continuing operations	$	1.43	$	1.42	$	1.37	$	1.47	$	2.80	$	2.89
Income from discontinued operations		0.00		0.00		—		0.02		—		0.02

Net income	$	1.43	$	1.42
Net income *					$	1.37	$	1.49	$	2.80	$	2.91

MBIA Inc., through its subsidiaries, is a leading provider of financial guarantee products and specialized financial services. MBIA provides innovative and cost-effective products and services that meet the credit enhancement, financial and investment needs of its public- and private-sector clients worldwide. MBIA manages its activities primarily through three principal business operations: insurance, investment management services and municipal services. The Company’s reportable segments within its business operations are determined based on the way management assesses the performance and resource requirements of such operations.

The insurance operations provide an unconditional and irrevocable guarantee of the payment of principal and interest on insured obligations when due. MBIA issues financial guarantees for municipal bonds, asset-backed and mortgage-backed securities, investor-owned utility bonds, bonds backed by publicly or privately funded public-purpose projects, bonds issued by sovereign and sub-sovereign entities, obligations collateralized by diverse pools of corporate loans and credit default swaps and pools of corporate and asset-backed bonds, both in

the new issue and secondary markets. The Company views its insurance operations as a reportable segment. This segment includes all activities related to global credit enhancement services provided principally by MBIA Insurance Corporation and its subsidiaries (MBIA Corp.).

The Company’s investment management services operations provide an array of products and services to the public, not-for-profit and corporate sectors. Such products and services are provided primarily through wholly owned subsidiaries of MBIA Asset Management, LLC (MBIA-AML) and include cash management, discretionary asset management and fund administration services and investment agreement, medium-term note and commercial paper programs related to the origination of assets for investment purposes. The investment management services operations’ reportable segments are comprised of asset/liability products, which include investment agreements and medium-term notes (MTNs) not related to the conduit programs, advisory services and conduits. During the second quarter of 2004, the Company completed the sale of the assets of 1838 Investment Advisors, LLC, ~~(1838),~~ the Company’s equity advisory services segment. This segment is reported as a discontinued operation for the quarter ended ~~March 31,~~June 30, 2004.

The Company’s municipal services operations provide revenue enhancement services and products to public-sector clients nationwide consisting of discovery, audit, collections/recovery and information services through MBIA MuniServices and its wholly owned subsidiaries. Additionally, the municipal services operations include Capital Asset Holdings GP, Inc. and certain affiliated entities, a servicer of delinquent tax certificates. The Company views its municipal services operations as a reportable segment.

The Company’s corporate operations include investment income, interest expense and general expenses that relate to general corporate activities and not to one of the Company’s three principal business operations. The Company views its corporate operations as a reportable segment.

Reportable segment results are presented net of material intersegment transactions. Transactions between the Company’s segments are executed at an arm’s length basis, as established by management. The following table summarizes the Company’s operations for the three and six months ended June 30, 2005 and 2004:

~~established by management. The following table summarizes the Company’s operations for the three months ended March 31, 2005 and 2004:~~

~~MBIA Inc.~~Included in insurance segment revenues for the three months ended June 30, 2005 and ~~Subsidiaries~~2004 are revenues of $5 million and $2 million, respectively, and expenses of $5 million and $2 million, respectively, related to a consolidated third-party VIE. Additionally, included in insurance segment revenues for the six months ended June 30, 2005 and 2004 are revenues of $10 million and $4 million, respectively, and expenses of $10 million and $4 million, respectively, related to a consolidated third-party VIE.

The following table summarizes the segments within the investment management services operations for the three and six months ended ~~March 31,~~June 30, 2005 and 2004:


	Three months ended March 31, 2005															Three months ended June 30, 2005
In thousands	Asset/ Liability Products			Advisory Services			Conduits			Eliminations			Total Investment Management Services			Asset/ Liability Products			Advisory Services			Conduits			Eliminations			Total Investment Management Services
Revenues^(a)	$	130,654		$	12,975		$	46,458		$	(3,852	)	$	186,235		$	146,705		$	14,310		$	49,699		$	(4,171	)	$	206,543
Net realized gains (losses)		3,197			(3	)		—			—			3,194			(1,485	)		7			—			—			(1,478	)
Net gains (losses) on derivative instruments and foreign exchange		(3,403	)		(9	)		14,590			—			11,178			1,014			(55	)		(4,398	)		—			(3,439	)

Total revenues		130,448			12,963			61,048			(3,852	)		200,607			146,234			14,262			45,301			(4,171	)		201,626
Interest expense		109,008			267			40,143			—			149,418			124,729			—			42,435			—			167,164
Operating expenses		6,892			7,602			3,700			(3,817	)		14,377			10,189			8,936			4,100			(4,135	)		19,090

Total expenses		115,900			7,869			43,843			(3,817	)		163,795			134,918			8,936			46,535			(4,135	)		186,254

Net income (loss) before taxes	$	14,548		$	5,094		$	17,205		$	(35	)	$	36,812
Income (loss) before taxes																$	11,316		$	5,326		$	(1,234	)	$	(36	)	$	15,372

Identifiable assets	$	14,669,279		$	56,772		$	6,697,527		$	(379,930	)	$	21,043,648		$	16,085,055		$	59,588		$	6,098,239		$	(371,786	)	$	21,871,096


	Three months ended March 31, 2004															Three months ended June 30, 2004
In thousands	Asset/ Liability Products			Advisory Services			Conduits			Eliminations			Total Investment Management Services			Asset/ Liability Products			Advisory Services			Conduits			Eliminations			Total Investment Management Services
Revenues^(a)	$	90,713		$	12,199		$	22,005		$	(3,457	)	$	121,460		$	94,026		$	12,700		$	23,121		$	(3,591	)	$	126,256
Net realized gains (losses)		(1,460	)		(357	)		—			—			(1,817	)		(1,109	)		(17	)		—			—			(1,126	)
Net gains (losses) on derivative instruments and foreign exchange		(3,562	)		36			(8,207	)		—			(11,733	)		(5,020	)		(45	)		16,802			—			11,737

Total revenues		85,691			11,878			13,798			(3,457	)		107,910			87,897			12,638			39,923			(3,591	)		136,867
Interest expense		73,688			—			17,347			—			91,035			76,255			—			16,183			—			92,438
Operating expenses		8,521			8,456			4,679			(3,069	)		18,587			8,636			8,397			4,941			(3,217	)		18,757

Total expenses		82,209			8,456			22,026			(3,069	)		109,622			84,891			8,397			21,124			(3,217	)		111,195

Net income (loss) before taxes	$	3,482		$	3,422		$	(8,228	)	$	(388	)	$	(1,712	)
Income (loss) before taxes																$	3,006		$	4,241		$	18,799		$	(374	)	$	25,672

Identifiable assets	$	10,746,178		$	31,030		$	6,310,001		$	(288,244	)	$	16,798,965		$	11,462,320		$	58,556		$	6,146,780		$	(228,235	)	$	17,439,421

An increasingly significant portion of premiums reported within the insurance segment is generated outside the United States. The following table summarizes net premiums earned by geographic location of risk for the three and six months ended ~~March 31,~~June 30, 2005 and 2004:


	March 31,				2nd Quarter				Year-to-date
In thousands	2005		Restated 2004		2005		Restated 2004		2005		Restated 2004
Total premiums earned:
Net premiums earned:
United States	$	155,441	$	156,795	$	152,481	$	160,851	$	307,922	$	317,646
Non-United States		50,797		45,075		56,452		49,931		107,249		95,006

Total	$	206,238	$	201,870	$	208,933	$	210,782	$	415,171	$	412,652

NOTE 6: ~~LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES~~Loss and Loss Adjustment Expense (LAE) Reserves

Loss and LAE reserves are established in an amount equal to the Company’s estimate of unallocated losses, identified or case basis reserves and costs of settlement and other loss mitigation expenses on obligations it has insured. A summary of the unallocated and case basis activity and the components of the liability for loss and LAE reserves for the first ~~quarter~~and second quarters of 2005 are shown in the following table:

Case basis activity transferred from the Company’s unallocated loss reserve was approximately ~~$19~~$38 million in the first ~~quarter~~six months of 2005 and primarily consisted of ~~additional~~ loss reserves for MBIA’s guaranteed tax lien portfolios, ~~insured~~ obligations issued by Fort Worth Osteopathic Hospital, a mortgage-backed credit and Allegheny Health, Education and Research Foundation (AHERF). Total paid and recovery activity of $109 million for the first six months of 2005 primarily consisted of payments related to Fort Worth Osteopathic Hospital and estimated recoveries for AHERF reclassified from “Other assets,” both of which reduced the respective case basis loss reserve. Unallocated loss reserves approximated ~~$293~~$295 million at ~~March 31,~~June 30, 2005, which represent the Company’s estimate of losses associated with credit deterioration that has occurred in the Company’s insured portfolio and

are available for future case-specific activity. The Company ~~recorded $20~~incurred $42 million inof loss and loss adjustment expenses in the first ~~quarter~~six months of 2005 based on 12% of scheduled net earned premium. See “Note 3: Significant Accounting Policies” in the Notes to Consolidated Financial Statements included in the Company’s Form 10-K for the year ended December 31, 2004 for a description of the Company’s loss reserving policy.

In November 2004 the Company received identical document subpoenas from the Securities and Exchange Commission (SEC) and the New York Attorney General’s Office (NYAG) requesting information with respect to non-traditional or loss mitigation insurance products developed, offered or sold by the Company to third parties from January 1, 1998 to the present. While the subpoenas did not identify any specific transaction, subsequent conversations with the SEC and the NYAG revealed that the investigation included the reinsurance arrangements entered into by MBIA Corp. in 1998 in connection with the bankruptcy of the Delaware Valley Obligated Group, an entity that is part of the Pittsburgh-based Allegheny Health, Education and Research Foundation (AHERF).

On March 9, 2005, the Company received a subpoena from the U.S. Attorney’s Office for the Southern District of New York (U.S. Attorney) seeking information related to the reinsurance agreements it entered into in connection with the AHERF loss. ~~On March 30, 2005,~~Thereafter, the Company has received additional subpoenas, substantively identical to each other, and additional informal requests, from the ~~Securities and Exchange Commission (SEC)~~SEC and the ~~New York Attorney General’s office (NYAG) that supplement the subpoenas it received in late 2004. The requests seek~~NYAG for documents ~~relating to the Company’s accounting treatment of advisory fees, its methodology for determining loss reserves~~ and case reserves, instances of purchases of credit default protection on itself and documents relating to Channel Re, a reinsurance company of which the Company is part owner. The requests cover the period January 1, 2000 to the present. other information.

The Company has been cooperating, and is ~~cooperating~~continuing to cooperate fully with the ~~requests from~~investigations by the SEC, the NYAG and the U.S. ~~Attorney.~~Attorney, and it is currently attempting to explore ways to resolve the issues under investigation. The investigations are, however, ongoing and the Company is unable to predict their outcome or whether efforts to resolve these issues will be successful.

Several class action lawsuits have been filed in the United States District Court for the Southern District of New York against the Company and certain of its officers. On July 25, 2005, the presiding judge issued an order consolidating these lawsuits into one action and named a lead plaintiff and lead counsel for the class. The Company ~~expects~~anticipates that ~~additional lawsuits may~~it will be ~~filed. No time currently is set for~~receiving an amended complaint in respect of the ~~Company to respond to the complaints filed with respect to such lawsuits.~~consolidated action in September 2005.

This quarterly report of MBIA Inc. (MBIA or the Company) includes statements that are not historical or current facts and are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words “believe,” “anticipate,” “project,” “plan,” “expect,” “intend,” “will likely result,” “looking forward” or “will continue,” and similar expressions identify forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. MBIA cautions readers not to place undue reliance on any such forward-looking statements, which speak only to their respective dates. The following are some of the factors that could affect financial performance or could cause actual results to differ materially from estimates contained in or underlying the Company’s forward-looking statements:

The Company undertakes no obligation to publicly correct or update any forward-looking statement if it later becomes aware that such results are not likely to be achieved.

insurance, investment management services and municipal services. The Company’s corporate operations include revenues and expenses that arise from general corporate activities and not from one of the Company’s three principal business operations. Results of operations included herein are presented in accordance with accounting principles generally accepted in the United States of America (GAAP).

As reported in the Company’s Form 10-K for the year ended December 31, 2004, the Company restated its previously issued consolidated financial statements for 1998 and subsequent years to correct the accounting treatment for two reinsurance agreements entered into in 1998. The following table presents the effects of the restatement on the consolidated financial statements of the Company for the ~~quarter~~three and six months ended ~~March 31,~~June 30, 2004.


	As of and For the Quarter Ended March 31, 2004				As of and For the Three Months Ended June 30, 2004				As of and For the Six Months Ended June 30, 2004
In thousands except per share information	Previously Reported		Restated		Previously Reported		Restated		Previously Reported		Restated
Consolidated Statement of Income Data:
Net premiums written	$	169,729	$	173,961	$	323,618	$	327,850	$	493,347	$	501,811
Scheduled premiums earned		160,280		161,994		169,991		171,956		330,271		333,950
Refunding premiums earned		39,542		39,876		38,309		38,826		77,851		78,702
Premiums earned		199,822		201,870		208,300		210,782		408,122		412,652
Insurance revenues		374,891		376,939		357,491		359,973		732,382		736,912
Losses and loss adjustment expenses		19,234		19,439		20,399		20,635		39,633		40,074
Operating expenses		27,172		27,526		28,931		29,155		56,103		56,681
Insurance income		312,899		314,388		291,668		293,690		604,567		608,078
Income from continuing operations before income taxes		289,523		291,012		297,789		299,811		587,312		590,823
Provision for income taxes		81,903		82,424		83,388		84,096		165,291		166,520
Income from continuing operations		207,620		208,588		214,401		215,715		422,021		424,303
Net income	$	207,649	$	208,617	$	217,069	$	218,383	$	424,718	$	427,000

Basic EPS:
Income from continuing operations	$	1.45	$	1.45	$	1.49	$	1.50	$	2.94	$	2.96
Net income	$	1.45	$	1.45	$	1.51	$	1.52	$	2.96	$	2.97

Diluted EPS:
Income from continuing operations	$	1.42	$	1.42	$	1.47	$	1.47	$	2.88	$	2.89
Net income	$	1.42	$	1.42	$	1.48	$	1.49	$	2.90	$	2.91

Consolidated Balance Sheet Data:
Prepaid reinsurance premiums	$	523,726	$	452,576	$	552,334	$	479,434	$	552,334	$	479,434
Total assets		30,940,671		30,869,521		30,047,666		29,984,421		30,047,666		29,984,421
Loss and loss adjustment expense reserves		754,848		761,539		651,489		658,416		651,489		658,416
Current income taxes		71,046		60,395		6,498		0		6,498		0
Deferred income taxes, net		605,367		585,922		424,153		410,918		424,153		410,918
Other liabilities		364,069		372,218		393,248		397,389		393,248		397,389
Total liabilities		24,387,237		24,371,981		23,749,298		23,740,633		23,749,298		23,740,633
Retained earnings		4,766,412		4,710,518		4,948,873		4,894,293		4,948,873		4,894,293
Shareholders’ equity	$	6,553,434	$	6,497,540	$	6,298,368	$	6,243,788	$	6,298,368	$	6,243,788

The following information presented in Management’s Discussion and Analysis of Financial Condition and Results of Operations gives effect to the restatement.

The following table presents highlights of the Company’s consolidated financial results for the ~~first~~ three and six months ofended June 30, 2005 and 2004. Items listed under “Other per share information (effect on net income)” are items that management commonly identifies for the readers of its financial statements because they are the result of changes in accounting standards, a by-product of the Company’s operations or due to general market conditions beyond the control of the Company.

In the second quarter of 2005, consolidated revenues increased 9% to $552 million from $505 million in the second quarter of 2004. The growth in consolidated revenues was primarily due to a substantial increase in investment management services’ interest income. However, insurance revenues decreased 6% as a result of a decline in realized gains from sales of investment securities and advisory fee income. Consolidated expenses for the second quarter of 2005 increased 42% to $291 million from $205 million in the second quarter of 2004. This increase was principally due to an increase in investment management services’ interest expense, which was

commensurate with the increase in interest income. Net income for the second quarter of 2005 of $188 million was down 14% from $218 million in the second quarter of 2004. Net income per share was 8% below the second quarter of 2004 as the decrease in net income was somewhat offset by a decrease in diluted weighted average shares outstanding resulting mainly from share repurchases made by the Company.

Consolidated revenues for the ~~first three~~six months ofended June 30, 2005 ~~were $539~~increased 9% to $1,091 million ~~compared to $493~~from $997 million in ~~2004, a 9% increase.~~the first half of 2004. The growth in consolidated revenues was primarily due to ana substantial increase in investment management services’ interest income and unrealized gains on derivative instruments. Offsetting the increase in investment management services’ revenues was a ~~14%~~10% decrease in insurance revenues as a result of ~~substantially less~~lower advisory fee income and realized gains from sales of investment securities. Consolidated expenses for the ~~first three~~six months of 2005 ~~were $261~~increased 36% to $552 million ~~compared with $202~~from $407 million in ~~2004, a 29% increase.~~the first half of 2004. This increase was principally due to an increase in investment management services’ interest expense, which was commensurate with the increase in interest ~~income.~~income for the period. Net income for the ~~first quarter of~~six months ended June 30, 2005 of ~~$201~~$388 million was down 4%9% from ~~$209~~$427 million in the first half of 2004. ~~However, net~~Net income per share was ~~1% above~~4% below the first ~~quarter~~half of 2004 ~~due to~~as the decrease in net income was somewhat offset by a decrease in diluted weighted average shares outstanding resulting from share repurchases made by the Company.

The Company’s book value at ~~March 31,~~June 30, 2005 was ~~$47.18~~$49.15 per share, ~~down slightly~~up from $47.20 at December 31, 2004. Book value ~~remained relatively unchanged as~~increased principally due to the effect of income from operations ~~was~~somewhat offset by the effect of repurchasing shares into treasury stock at prices above the Company’s book value per ~~share and a decrease in the unrealized appreciation of investments.~~share.

The Company’s insurance operations are principally comprised of the activities of MBIA Insurance Corporation and its subsidiaries (MBIA Corp.). MBIA Corp. issues financial guarantees for municipal bonds, asset-backed and mortgage-backed securities, investor-owned utility bonds, bonds backed by publicly or privately funded public purpose projects, bonds issued by sovereign and sub-sovereign entities, obligations collateralized by diverse pools of corporate loans and credit default swaps and pools of corporate and asset-backed bonds, both in the new issue and secondary markets.

The municipal obligations that MBIA Corp. insures include tax-exempt and taxable indebtedness of states, counties, cities, utility districts and other political subdivisions, as well as airports, higher education and healthcare facilities and similar authorities and obligations issued by private entities that finance projects ~~that~~which serve a substantial public purpose. The asset-backed and structured finance obligations insured by MBIA Corp. typically consist of securities that are

payable from or which are tied to the performance of a specified pool of assets that, in most cases, have a defined cash flow. Securities of this type include residential and commercial mortgages, a variety of consumer loans, corporate loans and bonds, trade and export receivables, aircraft, equipment and real property leases, and infrastructure projects.

Second quarter 2005 revenues from the Company’s insurance operations ~~decreased 14%~~were $339 million compared with $360 million in the ~~first~~second quarter of 2004, a 6% decrease. The decline in insurance operations’ revenues was primarily the result of a $13 million decrease in advisory fee income and a $16 million decrease in net gains from sales of investment securities. Insurance expenses, which consist of loss and loss adjustment expenses, the amortization of deferred acquisition costs and operating expenses, increased 6% in the second quarter of 2005. Gross insurance expenses (expenses before the deferral or amortization of acquisition costs) increased 1% in the second quarter of 2005 ~~to $326~~compared with the second quarter of 2004.

The Company’s insurance operations revenues for the six months ended June 30, 2005 were $666 million ~~from $377~~compared with $737 million in the first ~~quarter~~half of 2004. The decline in insurance operations’ revenues was primarily the result of a ~~$46~~$62 million decrease in net gains from sales of investment ~~securities. Additionally, the Company reported $6~~securities and a $12 million ~~of net losses on derivative instruments and foreign exchange~~decrease in ~~2005 versus a net gain of $1 million in 2004.~~advisory fee income. Insurance ~~expenses, which consist of loss and loss adjustment expenses, amortization of deferred acquisition costs and operating~~ expenses increased 5% infor the ~~first quarter of~~six months ended June 30, 2005 ~~compared with the same period in 2004. Loss and loss adjustment expenses and the amortization of deferred acquisition costs both increased 5% and operating expenses increased 6%. Gross~~while gross insurance expenses (expenses before the deferral or amortization of acquisition costs) increased ~~4% in~~3% for the ~~first quarter of~~six months ended June 30, 2005 compared with the ~~first quarter~~same period of 2004.

The Company’s gross premiums written (GPW), net premiums written (NPW) and net premiums earned for the second quarter and first ~~quarter~~six months of 2005 and 2004 are presented in the following table:


						2nd Quarter			Year-to-date			Percent Change
	1^st Quarter			Percent Change							2nd Quarter			Year-to-date
			Restated					2005 vs. 2004					2005 vs. 2004
In millions	2005		2004	2005 vs. 2004			2005	2005 vs. 2004		Restated 2004			2005 vs. 2004		2005		Restated 2004
Gross premiums written:
U.S.	$	214	$132	63	%	$175	$261		$389	$393		(33	)%		(1	)%
Non-U.S.		69	73	(6	)%	74	112		143	185		(33	)%		(23	)%

Total	$	283	$205	38	%	$249	$373		$532	$578		(33	)%		(8	)%

Net premiums written:
U.S.	$	201	$116	73	%	$158	$253		$360	$369		(37	)%		(2	)%
Non-U.S.		46	58	(21	)%	57	75		102	133		(24	)%		(23	)%

Total	$	247	$174	42	%	$215	$328		$462	$502		(34	)%		(8	)%

Net premiums earned:
U.S.	$	155	$157	(1	)%	$153	$161		$308	$318		(5	)%		(3	)%
Non-U.S.		51	45	13	%	56	50		107	95		13	%		13	%

Total	$	206	$202	2	%	$209	$211		$415	$413		(1	)%		1	%

GPW reflects premiums received and accrued for in the period and does not include the present value of future cash receipts expected from installment premium policies originated

during the period. GPW was ~~$283~~$249 million in the ~~first~~second quarter of 2005, ~~up 38%~~down 33% from the ~~first~~second quarter of 2004, reflecting a decline in business written both in and ~~reflects~~outside the U.S. For the six months ended June 30, 2005, GPW decreased 8% due to a ~~63% increase~~23% decline in ~~U.S.~~ business ~~written.~~written outside the U.S.

NPW of ~~$247~~$215 million, which represents gross premiums written net of premiums ceded to reinsurers, ~~increased 42%~~decreased 34% in the second quarter of 2005 compared to the second quarter of 2004. For the first six months of 2005, NPW of $462 million was 8% below the first six months of 2004. The decline in the second quarter and first six months of 2005 was consistent with the decline in GPW. Premiums ceded to reinsurers were $34 million or 14% in the second quarter of 2005 compared with $45 million or 12% in the ~~first~~second quarter of 2004. ~~The larger increase in NPW relative to GPW reflects a decline in~~For the ~~percent of~~six months ended June 30, 2005, premiums ceded to ~~reinsurers. Premiums ceded to~~ reinsurers ~~totaled $36~~were $69 million or 13% ~~and $31~~compared with $76 million or ~~15%~~13% in the first ~~quarter~~half of ~~2005 and 2004, respectively.~~2004. Reinsurance enables the Company to cede exposure and comply with its single risk and credit guidelines, although the Company continues to be primarily liable on the insurance policies it underwrites.

Net premiums earned include scheduled premium earnings as well as premium earnings from refunded issues. Net premiums earned in the ~~first~~second quarter of 2005 of ~~$206~~$209 million ~~increased 2% over~~decreased 1% from the ~~first~~second quarter of 2004 due to an 18% decrease in refunded premiums earned offset by a 5%3% increase in scheduled premiums earned. In the six months ended June 30, 2005, net premiums earned were $415 million, a 1% increase over the first half of 2004 resulting from a 4% increase in scheduled premiums earned ~~partly~~ offset by a 9%13% decrease in refunded premiums earned. The increase in scheduled premiums earned was a result of growth in new business written ~~in past years, as well as~~and a decline in the Company’s use of ~~reinsurance.~~reinsurance over the past several years. The decrease in refunded premiums earned resulted from a slow down in refinancing activity in the municipal market.

MBIA evaluates the premium rates it receives for insurance guarantees through the use of internal and external rating agency quantitative models. These models assess the Company’s premium rates and return on capital results on a risk adjusted basis. In addition, market research data is used to evaluate pricing levels across the financial guarantee industry for comparable risks. The Company’s pricing levels indicate continued acceptable trends in overall portfolio profitability under all models, and the Company believes the pricing charged for its insurance products produces results that meet its long-term return on capital targets.

When an MBIA-insured obligation is refunded or retired early, the related remaining deferred premium revenue is earned at that time. The level of bond refundings and calls is influenced by a variety of factors such as prevailing interest rates, the coupon rate of the bond issue, the issuer’s desire or ability to modify bond covenants and applicable regulations under the Internal Revenue Code.

CREDIT QUALITY Financial guarantee insurance companies use a variety of approaches to assess the underlying credit risk profile of their insured portfolios. MBIA uses both an internally developed credit rating system as well as third-party rating sources in the analysis of credit quality measures of its insured portfolio. In evaluating credit risk, the Company obtains, when available, the underlying rating of each insured obligation before the benefit of its insurance policy from

nationally recognized rating agencies (Moody’s Investors Service (Moody’s), Standard and Poor’s (S&P) and Fitch Ratings). All references to insured credit quality distributions contained herein reflect the underlying rating levels from these third-party sources. Other companies within the financial guarantee industry may report credit quality information based upon internal ratings that would not be comparable to MBIA’s presentation.

The credit quality of business insured during ~~the first quarter of~~ 2005 remained ~~relatively~~ high as ~~79%~~80% of total insured credits were rated A or above before giving effect to MBIA’s guarantee, compared to ~~80% in~~75% for the ~~first quarter~~same period of 2004. At ~~March 31,~~June 30, 2005, 81% of the Company’s outstanding book of business was rated A or above before giving effect to MBIA’s guarantee, up from ~~78%~~79% at ~~March 31,~~June 30, 2004.

GLOBAL PUBLIC FINANCE MARKET MBIA’s premium writings and premium earnings in both the new issue and secondary global public finance markets are shown in the following table:


						2nd Quarter			Year-to-date				Percent Change
												2nd Quarter			Year-to-date
	1^st Quarter			Percent Change								2005 vs. 2004			2005 vs. 2004
Global Public Finance In millions	2005		Restated 2004	2005 vs. 2004		2005		Restated 2004		2005		2005 vs. 2004		Restated 2004	2005 vs. 2004
Gross premiums written:
U.S.	$	149	$ 57	160	%	$	112	$191	$	261	$248		(42	)%		5	%
Non-U.S.		30	30	0	%		30	61		60	90		(50	)%		(33	)%

Total	$	179	$ 87	106	%	$	142	$252	$	321	$338		(44	)%		(5	)%

Net premiums written:
U.S.	$	146	$ 53	178	%	$	105	$193	$	251	$246		(46	)%		2	%
Non-U.S.		19	26	(28	)%		25	34		44	60		(26	)%		(27	)%

Total	$	165	$ 79	110	%	$	130	$227	$	295	$306		(43	)%		(4	)%

Net premiums earned:
U.S.	$	101	$104	(2	)%	$	98	$100	$	199	$204		(2	)%		(2	)%
Non-U.S.		23	18	29	%		26	21		49	38		27	%		28	%

Total	$	124	$122	2	%	$	124	$121	$	248	$242		3	%		2	%

Global public finance GPW ~~increased 106%~~decreased 44% to ~~$179~~$142 million in the ~~first~~second quarter of 2005 from ~~$87~~$252 million in the ~~first~~second quarter of 2004. This ~~increase is~~decrease was due to ~~strong growth~~a decline in ~~U.S.~~ business written ~~primarily within~~both in and outside the ~~transportation sector. NPW increased 110% to $165 million as a result of the increase in~~ U.S. GPW and the effect of ceding less premiums to reinsurers. In the first quarter of 2005, global public finance net premiums earned increased 2% to $124 million from $122 million in the first quarter of 2004. This growth reflects earnings generated from

NPW decreased 43% to $130 million as a result of the decrease in GPW. In the second quarter of 2005, global public finance net premiums earned of $124 million were 3% above the second quarter of 2004 as a 14% increase in scheduled premiums earned was offset by a 22% decrease in refunded premiums earned primarily on U.S. business.

For the six months ended June 30, 2005, global public finance GPW decreased 5% over the first six months ended June 30, 2004. This decrease was due to a weak second quarter in both U.S. and non-U.S. business written mostly offset by strong growth in U.S. business written, primarily within the transportation sector, in the first quarter of 2005. NPW decreased 4% to $295 million in the first half of 2005 as a result of the decrease in GPW. In the first half of 2005, global public finance net premiums earned increased 2% to $248 million from $242 million in the first half of 2004. This growth reflects earnings generated from increased levels of non-U.S. business written over the last several years and a declining cession rate, offset by a 9%15% decrease in refunded premiums earned primarily from U.S. business.

The credit quality of global public finance business written by the Company in ~~the first quarter of~~ 2005 remained high. Insured credits rated A or above before the Company’s guarantee represented ~~92%~~91% of global public finance business written in 2005, compared with ~~97%~~89% in the first ~~three months~~half of 2004. At ~~March 31,~~June 30, 2005, ~~82%~~83% of the outstanding global public finance book of business was rated A or above before the Company’s guarantee, up from 81% at ~~March 31,~~June 30, 2004.

GLOBAL STRUCTURED FINANCE MARKET MBIA’s premium writings and premium earnings in both the new issue and secondary global structured finance markets are shown in the following table:


						2nd Quarter			Year-to-date				Percent Change
												2nd Quarter			Year-to-date
	1^st Quarter			Percent Change								2005 vs. 2004			2005 vs. 2004
Global Structured Finance In millions	2005		Restated 2004	2005 vs. 2004		2005		Restated 2004		2005		2005 vs. 2004		Restated 2004	2005 vs. 2004
Gross premiums written:
U.S.	$	65	$ 75	(12	)%	$	63	$ 70	$	128	$144		(10	)%		(11	)%
Non-U.S.		39	43	(11	)%		44	51		83	95		(14	)%		(12	)%

Total	$	104	$118	(12	)%	$	107	$121	$	211	$239		(12	)%		(12	)%

Net premiums written:
U.S.	$	55	$ 63	(13	)%	$	53	$ 59	$	108	$123		(10	)%		(12	)%
Non-U.S.		27	32	(15	)%		32	41		59	73		(23	)%		(20	)%

Total	$	82	$ 95	(14	)%	$	85	$100	$	167	$196		(15	)%		(15	)%

Net premiums earned:
U.S.	$	54	$ 53	2	%	$	54	$ 61	$	109	$114		(10	)%		(4	)%
Non-U.S.		28	27	2	%		31	29		58	56		3	%		3	%

Total	$	82	$ 80	2	%	$	85	$ 90	$	167	$170		(6	)%		(2	)%

In the second quarter of 2005, global structured finance GPW decreased 12% to $107 million from $121 million in the second quarter of 2004 as a result of decreases in U.S. and non-U.S. business written. Similarly, NPW decreased 15% due to the decrease in GPW and slightly higher cession rates on non-U.S. business written. In the second quarter of 2005, global structured finance net premiums earned of $85 million decreased 6% compared with the second quarter of 2004. U.S. net premiums earned decreased 10% as a result of prepayments and maturities of insured issues offset by a 3% increase in non-U.S. business driven by higher levels of new business written over the last several years and a declining cession rate.

Global structured finance GPW decreased 12% in the first ~~quarter~~six months of 2005 to ~~$104~~$211 million from ~~$118~~$239 million in the first ~~quarter~~six months of 2004, ~~as a result of~~resulting from decreases in U.S. and non-U.S. business written. The global structured finance sector continues to be adversely impacted by increased competition, tight spreads and greater investor demand for uninsured transactions. ~~Similarly,~~ NPW for the first six months of 2005 decreased ~~14%~~15% due to the decrease in GPW and slightly higher cession rates on ~~U.S. and~~ non-U.S. business written. In the first ~~quarter~~six months of 2005, global structured finance net premiums earned of ~~$82~~$167 million ~~increased~~were 2% ~~over~~below the first ~~quarter~~six months of 2004. ~~This increase~~A decrease in U.S. net premiums earned as a result of prepayments and maturities of insured issues was

~~driven~~ offset by higher levels of non-U.S. new business written over the last ~~two~~several years and a declining cession rate.

The credit quality of MBIA’s global structured finance insured business written rated A or above before giving effect to the Company’s guarantee was 64% in the first ~~quarter~~half of 2005, up from ~~56%~~55% in the first ~~quarter~~half of 2004. At ~~March 31,~~June 30, 2005, ~~77%~~76% of the outstanding global structured finance book of business was rated A or above before giving effect to the Company’s guarantee, up from ~~73%~~74% at ~~March 31,~~June 30, 2004.

INVESTMENT INCOME The Company’s insurance-related net investment income and ending asset balances at amortized cost for the second quarter and first ~~three~~six months of 2005 and 2004 are presented in the following table:


							2nd Quarter				Year-to-date						Percent Change
																2nd Quarter			Year-to-date
																2005 vs. 2004			2005 vs. 2004
					Percent Change
In millions	2005		2004		2005 vs. 2004		2005		2004			2005			2004
Pre-tax income	$	119	$	122	(2	)%	$	121	$	115		$	240		$		237		5	%		1	%
After-tax income	$	95	$	95	(1	)%	$	96	$	91		$	191		$	186		6	%		2	%

Ending asset balances at amortized cost	$	9,360	$	9,229	1	%					$	9,687		$	9,479					2	%

The Company’s insurance-related net investment income, excluding net realized gains ~~decreased 2%~~and losses, increased 5% to ~~$119~~$121 million in the ~~first~~second quarter of 2005 from ~~$122~~$115 million in the ~~first~~second quarter of 2004. After-tax net

investment income increased 6% compared with the second quarter of 2004. For the six months ended June 30, 2005, net investment income increased 1% to $240 million from $237 million for the six months ended June 30, 2004. After-tax net investment income ~~decreased 1% compared with 2004.~~increased 2% for the first six months of 2005. The marginally higher increase in after-tax investment income is a result of a slightly higher concentration of tax-exempt investments. Growth in investment income has been unfavorably affected by the low interest rate environment and a substantial increase in dividends paid by MBIA Corp. to MBIA Inc. during 2004, which resulted in only a 1%2% increase in the insurance portfolio’s ending asset balance at amortized cost from ~~March 31,~~June 30, 2004 to ~~March 31,~~June 30, 2005.

ADVISORY FEES The Company collects advisory fees in connection with certain transactions. Depending upon the type of fee received and whether it is related to an insurance policy, the fee is either earned when it is due or deferred and earned over the life of the related transaction. Work, waiver and consent, termination, administrative and management fees are earned when the related services are completed. Structuring fees are earned on a straight-line basis over the life of the related insurance policy and commitment fees are earned on a straight-line basis over the commitment period.

In the ~~first~~second quarter of 2005, advisory fee revenues ~~increased 10%~~decreased 75% to ~~$6.4~~$4 million from ~~$5.9~~$17 million ~~in the first quarter of 2004. The increase in advisory fees was primarily due to the~~

~~amortization of a commitment fee received~~ in the second quarter of 2004. Advisory fee revenues for the first half of 2005 decreased 54% from the first half of 2004 ~~partially offset by lower management~~to $11 million. The decrease in advisory fees during the second quarter and ~~termination~~first six months was primarily due to a decline in work fees ~~received~~reflecting fewer large complex transactions requiring advisory services, as well as a decline in waiver and ~~earned in 2005.~~consent and commitment fees. Due to the transaction-specific nature inherent in advisory fees, fee income can vary significantly from period to period.

NET GAINS AND LOSSES Net realized gains from investment securities in the insurance operations were ~~$0.2~~$1 million in the ~~first~~second quarter of 2005 compared to ~~$46~~$17 million in the ~~first~~second quarter of 2004. For the first six months of 2005, net realized gains from investment securities were $1 million compared to $63 million for the first six months of 2004. The ~~decrease was~~decreases for the quarter and year were largely due to a $33 million and $44 million realized gain, respectively, resulting from the sale of a common stock investment in ~~the first quarter of~~ 2004 held by MBIA Corp.

Net gains (losses) on derivative instruments and foreign exchange from the insurance operations were net gains of $4 million in the second quarter of 2005 compared with net gains of $210 thousand in the second quarter of 2004. The change was largely due to $7 million of foreign currency gains recorded in the second quarter of 2005 related to non-U.S. dollar holdings. For the first six months of 2005, net gains (losses) on derivative instruments and foreign exchange from the insurance operations were net losses of $6$2 million ~~in the first quarter of 2005~~ compared towith net gains of $1 million infor the first ~~quarter~~six months of 2004. ~~The change was largely due to $8 million~~

of ~~foreign currency losses recorded in 2005 related to non-U.S. dollar holdings~~Financial Condition and ~~securities sales.~~Results of Operations

LOSSES AND LOSS ADJUSTMENT EXPENSES (LAE) The following table shows the case-specific, reinsurance recoverable and unallocated components of the Company’s total loss and LAE reserves at the end of the ~~first~~second quarter of 2005 and 2004, as well as its loss provision and loss ratio for the first ~~quarter~~six months of 2005 and 2004.

The Company recorded ~~$20~~$42 million in loss and loss adjustment expenses in the first ~~quarter~~half of 2005, a 5%4% increase compared to ~~$19~~$40 million in the first ~~quarter~~half of 2004. This increase was a

direct result of growth in scheduled net earned premium, as scheduled net earned premium is the base upon which the Company’s 12% loss factor is applied. At ~~March 31,~~June 30, 2005, the Company had ~~$293~~$295 million in unallocated loss reserves, which represent the Company’s estimate of losses associated with credit deterioration that has occurred in the Company’s insured portfolio and are available for future case-specific activity. Total case basis activity transferred from the Company’s unallocated loss reserve was ~~$19~~$38 million and ~~$14~~$45 million in the first ~~quarter~~half of 2005 and 2004, respectively. Case basis activity during the first ~~quarter~~half of 2005 primarily consisted of ~~additional~~ loss reserves for MBIA’s guaranteed tax lien portfolios, ~~insured~~ obligations issued by Fort Worth Osteopathic Hospital, a mortgage-backed credit and Allegheny Health, Education and Research Foundation. During the second quarter of 2005, the Company paid $59 million related to its guarantee of the obligations issued by Fort Worth Osteopathic Hospital, which was charged against the case basis reserve established for these obligations.

MBIA’s Insured Portfolio Management (IPM) Division is responsible for monitoring MBIA insured issues. The level and frequency of MBIA’s monitoring of any insured issue depends on the type, size, rating and performance of the insured issue. If IPM identifies concerns with respect to the performance of an insured issue it

may designate such insured issue as “Caution List-Low,” “Caution List-Medium” or “Caution List-High.” The designation of any insured issue as “Caution List-Medium” or “Caution List-High” is based on the nature and extent of these concerns and requires that an increased monitoring and, if needed, a remediation plan be implemented for the related insured issue.

In the event MBIA determines that it must pay a claim or that a claim is probable and estimable with respect to an insured issue, it places the issue on its “Classified List” and establishes a case basis reserve for that insured issue. As of ~~March 31,~~June 30, 2005, MBIA had 3932 open case basis issues on its “Classified List” that had ~~$430~~$330 million in aggregate case reserves, net of reinsurance. The Company does not establish any case basis reserves for issues that are listed as “Caution List-Low,” “Caution List-Medium” or “Caution List-High” until such issues are placed on the Company’s “Classified List.”

Included in the Company’s case basis reserves are both loss reserves for insured obligations for which a payment default has occurred and MBIA has already paid a claim and also for which a payment default has not yet occurred but a claim is probable and estimable in the future. Such amounts as of ~~March 31,~~June 30, 2005 are as follows:


Dollars in millions	Number of Case Basis Issues	Loss Reserve	Par Outstanding	Number of Case Basis Issues	Loss Reserve	Par Outstanding
Gross of reinsurance:
Issues with defaults	31	$378	$1,032	24	$288	$1,433
Issues without defaults	8	85	1,955	8	85	1,839

Total gross	39	$463	$2,987	32	$373	$3,272

Net of reinsurance:
Issues with defaults	31	$362	$ 994	24	$269	$1,249
Issues without defaults	8	68	1,746	8	61	1,605

Total net	39	$430	$2,740	32	$330	$2,854

When MBIA becomes entitled to a reimbursement of a claim payment under salvage and subrogation rights, it records the amount that it estimates it will recover as salvage and subrogation as an asset. Such amounts are included in the Company’s balance sheet within “Other assets.” As of ~~March 31,~~June 30, 2005 and December 31, 2004, the Company had recorded salvage and subrogation of ~~$157~~$140 million and ~~$139~~$154 million, respectively.

As a result of discussions in January and February 2005 between the Securities and Exchange Commission (SEC) staff and several financial guarantee industry participants, including MBIA, the Company ~~understands~~understood that the Financial Accounting Standards Board (FASB) staff ~~is considering~~would consider whether additional guidance with respect to accounting for financial guarantee insurance should be provided. In June 2005, the FASB decided to add to its agenda a project to consider the accounting by insurers for financial guarantee insurance. As part of this project the FASB will consider several aspects of the insurance accounting model for financial guarantee insurers, including claims liability recognition, premium recognition and the related amortization of deferred policy acquisition costs. The Company cannot currently assess how the FASB’s and SEC staff’s ultimate resolution of

this issue will impact its loss reserving policy or the effect it might have on recognizing premium revenue and policy acquisition costs. Until the issue is resolved, the Company intends to continue to apply its existing policy with respect to the establishment of both case basis and unallocated loss ~~reserves.~~reserves and the recognition of premium revenue and policy acquisition costs. A further description of the Company’s loss reserving policy is included in “Note 3: Significant Accounting Policies” in the Notes to Consolidated Financial Statements included in the Company’s Form 10-K for the year ended December 31, 2004.

RISK MANAGEMENT In an effort to mitigate losses, MBIA is regularly involved in the ongoing remediation of credits that may involve, among other things, waivers or renegotiations of financial covenants or triggers, waivers of contractual provisions, the granting of consents, and the taking of various other remedial actions. The nature of any remedial action is based on the type of the insured issue and the nature and scope of the event giving rise to the remediation. In most cases, as part of any such remedial activity, MBIA is able to improve its security position and to obtain concessions from the issuer of the insured bonds. From time to time, the issuer of

an MBIA-insured obligation may, with the consent of MBIA, restructure the insured obligation by extending the term, increasing or decreasing the par amount or decreasing the related interest rate with MBIA insuring the restructured obligation. If, as the result of the restructuring, MBIA estimates that it will suffer an ultimate loss on the restructured obligation, MBIA will record a case basis loss reserve for the restructured obligation or, if it has already recorded a case basis loss reserve, it will re-evaluate the impact of the restructuring on the recorded reserve and adjust the amount of the reserve accordingly.

REINSURANCE Reinsurance enables the Company to cede exposure for purposes of increasing its capacity to write new business while complying with its single risk and credit guidelines. The rating agencies continuously review reinsurers providing coverage to the financial guarantee industry. Many of MBIA’s reinsurers have been downgraded over the past several years, and others remain under review. When a reinsurer is downgraded, less capital credit is given to MBIA under rating agency models. Reduced capital credit associated with reinsurer downgrades has not and is not expected to have a material adverse effect on the Company. The Company generally retains the right to reassume the business ceded to reinsurers under certain circumstances, including the downgrade of the reinsurers. The Company remains liable on a primary basis for all reinsured risks, and although the Company believes that its reinsurers remain capable of meeting their obligations, there can be no assurance that the reinsurers will be able to meet these obligations.

As of March 31, 2005, the aggregate amount of insured par ceded by MBIA to reinsurers was $84.7 billion. The following table shows the percentage ceded to and reinsurance recoverable from reinsurers by S&P’s rating levels:

~~The top two reinsurers within the AAA rating category represented approximately 55% of total par ceded by MBIA; the top two reinsurers within the AA rating category represented~~28

As of June 30, 2005, the aggregate amount of insured par ceded by MBIA to reinsurers was $82.7 billion. The following table shows the percentage ceded to and reinsurance recoverable on unpaid losses from reinsurers by S&P’s rating levels:

The top two reinsurers within the AAA rating category represented approximately 58% of total par ceded by MBIA; the top two reinsurers within the AA rating category represented approximately 8% of total par ceded by MBIA; and the top two reinsurers within the A rating category represented approximately ~~11%~~10% of total par ceded by MBIA. While Channel Reinsurance Ltd. (Channel Re) continues to be a Triple-A rated reinsurer of MBIA, S&P has revised their outlook on Channel Re from stable to negative. MBIA does not expect S&P’s revised outlook on Channel Re to have a material negative impact on the Company’s financial condition or results of operations.

POLICY ACQUISITION COSTS AND OPERATING EXPENSES Expenses that vary with and are primarily related to the production of the Company’s insurance business (policy acquisition costs) are deferred and recognized over the period in which the related premiums are earned. If an insured bond issue is refunded and the related premium is earned early, the associated acquisition costs previously deferred are also recognized early.

MBIA will recognize a premium deficiency if the sum of the expected loss and loss adjustment expenses, maintenance costs and unamortized policy acquisition costs exceed the related unearned premiums. If MBIA was to have a premium deficiency that is greater than unamortized acquisition costs, the unamortized acquisition costs would be reduced by a charge to expense and a liability would be established for any remaining deficiency. Although GAAP permits the inclusion of anticipated investment income when determining a premium deficiency, MBIA currently does not include this in making its determination.

The Company’s policy acquisition costs, operating expenses and total insurance operating expenses, as well as its expense ratio, are shown in the following table:


									2nd Quarter						Year-to-date							Percent Change
																					2nd Quarter			Year-to-date
																					2005 vs. 2004			2005 vs. 2004
	1^st Quarter						Percent Change
In millions	2005			Restated 2004			2005 vs. 2004		2005			2004					2005			2004
Gross expenses	$	63		$	60		4	%	$	67		$	66			$	129		$	126						1	%	3	%

Amortization of deferred acquisition costs	$	16		$	16		5	%	$	17		$	17		$	33		$	32			0	%		2	%
Operating expenses		29			28		6	%
Operating										32			29			61			57			11	%		8	%

Total insurance operating expenses	$	45		$	44		5	%	$	49		$	46		$	94		$	89			7	%		6	%


Expense ratio		22.0	%		21.4	%				23.3	%		21.7	%		22.7	%		21.5	%

In the ~~first~~second quarter of 2005, the amortization of deferred acquisition costs remained relatively flat compared with the same period in 2004, which was consistent with the change in insurance premiums earned for the same periods. Operating expenses increased 5%11% over the ~~first~~second quarter of 2004 primarily due to costs associated with the Company’s Money Market Committed Preferred Custodial Trust securities (CPCT securities), approximately $2 million, and an increase in consulting services. Prior to 2005, the costs associated with the CPCT securities were recorded directly in “Total shareholders’ equity” on the Company’s consolidated balance sheet.

In the first six months of 2005, the amortization of deferred acquisition costs increased 2% over the same period of 2004, which was ~~proportionately~~ in line with the increase in the Company’s insurance premiums earned. The ratio of policy acquisition costs amortized to expense, net of deferrals, to earned premiums has remained steady at approximately 8% over the last several years. Operating expenses increased 6%8% from ~~$28~~$57 million infor the ~~first quarter of~~six months ended June 30, 2004 to ~~$29~~$61 million infor the ~~same period of 2005~~six months ended June 30, 2005. This increase is largely due to costs associated with the Company’s CPCT securities, higher premiums related to the renewal of directors and officers’ liability insurance, ~~office maintenance and rent costs~~consulting services and loss prevention costs.

Financial guarantee insurance companies use the expense ratio (expenses divided by net premiums earned) as a measure of expense management. The Company’s expense ratio for the ~~first~~second quarter of 2005 was ~~22.0%~~23.3% compared to ~~21.4%~~21.7% in the ~~first~~second quarter of 2004. The increase in the ratio from 2004 to 2005 was the result of slower growth in premium earnings relative to the increase in expenses. For the six months ended June 30, 2005, the Company’s expense ratio of 22.7% increased from the ratio in the first half of 2004 of 21.5%.

VARIABLE INTEREST ENTITIES The Company provides structured funding and credit enhancement services to global finance clients through the use of certain MBIA-administered, bankruptcy-remote special purpose vehicles (SPVs) and through third-party SPVs. Third-party SPVs are used in a variety of structures guaranteed or

managed by MBIA, whereby the Company has risks analogous to those of MBIA-administered SPVs. The Company has determined that such SPVs fall within the definition of a variable interest entity (VIE) under FASB Interpretation No. (FIN) 46(R), “Consolidation of Variable Interest Entities (Revised).” Under the provisions of FIN 46(R), MBIA must determine whether it has a variable interest in a VIE and if so, whether that variable interest would cause MBIA to be the primary beneficiary. The primary beneficiary is the entity that will absorb the majority of the expected losses, receive the majority of the expected residual returns, or both, of the VIE and is required to consolidate the VIE.

In the third quarter of 2004, the Company began consolidating two VIEs established in connection with the Capital Asset Research Funding Series 1997A and Series 1998A tax lien securitizations to which the Company provided financial guarantees. The assets of these entities, which are principally reported within “Other assets” on MBIA’s consolidated balance sheet, totaled ~~$13.3~~$11 million at ~~March 31,~~June 30, 2005 and ~~$16.8~~$17 million at December 31, 2004. Liabilities of the securitizations substantially represented amounts due to MBIA, which were eliminated in consolidation. Additionally, the Company began consolidating a third-party VIE in 2003 as a result of providing a financial guarantee to this entity. The assets and liabilities of this VIE are primarily reported in “Investments held-to-maturity” and “Variable interest entity floating rate notes,” respectively, on the face of the Company’s balance sheet and each totaled approximately $801 million at June 30, 2005 and $600 million ~~each~~ at ~~March 31, 2005 and~~ December 31, 2004. Consolidation of such VIEs does not increase MBIA’s exposure above that already committed to in its insurance policies.

(MBIA-AML) and include cash management, discretionary asset management and fund administration services and investment agreement, medium-term note and commercial paper programs related to the origination of assets for investment purposes. The investment management services operations are comprised of three operating segments: asset/liability products, which include investment agreements and medium-term notes (MTNs) not related to the conduit ~~programs,~~programs; investment advisory services, which include third-party and related-party advisory ~~services,~~services; and conduit programs. During the second quarter of 2004, the Company completed the sale of the assets of 1838 Investment Advisors, LLC, ~~(1838),~~ which comprised the Company’s equity advisory services segment. This segment ishas been reported as a discontinued operation ~~for~~in the ~~quarter ended March 31, 2004.~~Company’s financial statements.

Investment management services’ revenues for the ~~first~~second quarter of 2005 totaled ~~$201~~$202 million, increasing ~~86%~~47% compared to the ~~first~~second quarter of 2004. Excluding ~~net~~ realized gains ~~of $3 million~~and losses from investment securities and gains and losses on derivative instruments and foreign exchange, ~~of $11 million,~~ total revenues increased ~~$65~~$80 million or ~~53%~~ 64%

over the ~~first~~second quarter of 2004. For the first six months of 2005, total revenues of $402 million increased 64% over the same period in 2004. Excluding realized gains and losses from investment securities and gains and losses on derivative instruments and foreign exchange, revenues of $393 million increased 59% over 2004. This growth is primarily attributable to increased activity in the Company’s asset/liability products, particularly the investment agreements and ~~conduit programs.~~MTNs. Advisory ~~Services’~~services’ revenues were also favorable compared to ~~the first quarter of~~ 2004 due to ~~an increase~~growth in ~~new business.~~separate client account assets managed, partially offset by a decline in pooled account balances and fees. Total expenses in the ~~first~~second quarter of 2005 were ~~$164~~$186 million, up ~~49%~~68% compared to the ~~first~~second quarter of 2004. For the six months ended June 30, 2005, total expenses increased 59% over the same period in 2004 to $350 million. This increase was primarily driven by higher interest expense from increased asset/liability products ~~and conduit program~~ activity, which was consistent with the growth in ~~revenues, partially offset by a non-recurring reduction in compensation expenses.~~revenues.

Net realized ~~gains~~losses from investment securities in the investment management services operations were $3$2 million in the ~~first~~second quarter of 2005, compared to ~~net realized losses of $2~~$1 million in the ~~first~~second quarter of 2004. For the six months ended June 30, 2005, net realized gains were $1 million compared to a loss of $3 million in the same period of 2004. Realized gains and losses were generated from the ongoing ~~active total return~~ management of the investment portfolios. Net ~~gains~~losses on derivative instruments and foreign exchange related to the investment management services operations were ~~$11~~$3 million in the ~~first~~second quarter of 2005 compared to a net ~~loss~~gain of $12 million in the ~~first~~second quarter of 2004. The net ~~gains~~losses in 2005 were primarily generated from ~~an increase~~a decrease in U.S. dollar interest rates resulting in ~~higher~~lower market values on pay fixed/receive ~~float~~floating U.S. dollar interest rate swaps associated with the conduit programs. Similarly, the net ~~losses~~gains on derivative instruments and foreign exchange in 2004 were largely due to movements in interest rates on interest rate swaps associated with the conduit programs. For the first six months of 2005, net gains on derivative instruments and foreign exchange totaled $8 million compared to a net gain of $4 thousand in 2004. The increase in net gains was primarily attributable to changes in the value of interest rate swaps affected by overall higher interest rates for the first six months of 2005 versus the first six months of 2004. These interest rate swaps economically hedge against interest rate movements but do not qualify for hedge accounting treatment under Statement of Financial Accounting Standards (SFAS)133, “Accounting for Derivative Instruments and Hedging Activities.”

Fixed-income ending assets under management as of ~~March 31,~~June 30, 2005, which do not include conduit program assets, were ~~$42~~$44 billion, 8%13% above the 2004 year-end level and 6%18% above the ~~March 31,~~June 30, 2004 level. Conduit assets are held to their contractual maturity and are originated and managed differently from those held as available-for-sale by the Company or those managed for third parties. The following table summarizes the consolidated investment management services’ results and assets under management for the second quarter and first ~~quarter~~six months of 2005 and 2004:

The following provides a summary of the results of each of the investment management services businesses by segment.

Asset/liability products’ pre-tax income, excluding realized gains and losses from investment securities and gains and losses on derivative instruments and foreign ~~currency losses,~~exchange, totaled ~~$15~~$12 million in the ~~first~~second quarter of 2005 compared to $9 million in the ~~first~~second quarter of 2004, resulting in an increase of ~~73%~~29%. For the first six months of 2005, pre-tax income of $27 million, excluding realized gains and losses from investment securities and gains and losses on derivative instruments and foreign exchange, increased 50% over 2004. At ~~March 31,~~June 30, 2005, principal and accrued interest outstanding on investment agreement and medium-term note obligations and securities sold under agreements to repurchase totaled ~~$14~~$15 billion compared to $13 billion at December 31, 2004. Assets supporting these agreements had market values of ~~$14~~$15 billion and $13 billion at ~~March 31,~~June 30, 2005 and December 31, 2004, respectively. These assets are comprised of high quality securities with an average credit quality rating of Double-A.

Advisory services’ pre-tax income, excluding realized gains and losses from investment securities and gains and losses on derivative instruments and foreign ~~currency losses,~~exchange, totaled $5 million in the ~~first~~second quarter of 2005 compared to $4 million in the ~~first~~second quarter of 2004. ~~The increase is primarily due to new business volume~~For the first six months of 2005, pre-tax income of $10 million, excluding realized gains and losses from ~~new~~investment securities and ~~existing~~

~~clients.~~foreign exchange, increased 30% over 2004. Third-party ending assets under management were $18 billion and $16 billion at ~~March 31,~~June 30, 2005 and December 31, 2004, respectively. The market values of assets related to the Company’s insurance and corporate investment portfolios managed by the investment management services operations at ~~March 31,~~June 30, 2005 were $10 billion, consistent with the balance at December 31, 2004.

Conduit program pre-tax income, excluding gains and losses on derivative instruments and foreign ~~currency gains,~~exchange, totaled $3 million in the ~~first~~second quarter of 2005 compared to ~~a break-even result~~$2 million in the ~~first~~second quarter of 2004. For the first six months of 2005, pre-tax income of $6 million, excluding gains and losses on derivative instruments and foreign exchange, increased $4 million over 2004. Certain of MBIA’s consolidated subsidiaries have invested in MBIA’s conduit debt obligations or have received compensation for services provided to MBIA’s conduits. As such, MBIA has eliminated intercompany transactions with its conduits from its balance sheet and income statement. After the elimination of such intercompany assets and liabilities, conduit investments and conduit debt obligations were ~~$6.5~~$5.8 billion and ~~$6.1~~$5.6 billion, respectively, at ~~March 31,~~June 30, 2005. The difference between the investments and debt obligations is primarily the result of the elimination of conduit debt owned by other MBIA subsidiaries. The effect of the elimination on the Company’s consolidated balance sheet is a reduction of fixed-maturity investments with a corresponding reduction of medium-term notes.

Typically, conduit programs involve the use of rating agencies in assessing the quality of asset purchases and in assigning ratings to the various programs funded through the conduits. An underlying rating is the implied rating for the transaction without giving consideration to the MBIA guarantee. All transactions currently funded in the conduits had an underlying rating of at least investment grade by Moody’s and S&P prior to funding. The weighted average underlying rating for transactions currently funded in the conduits was A by S&P and A2 by Moody’s at the time such transactions were funded. MBIA estimates that the current weighted average underlying rating of all outstanding conduit transactions was A- by S&P and A2 by Moody’s as of ~~March 31,~~June 30, 2005.

MBIA’s municipal services operations is consolidated under MuniServices Company (MBIA MuniServices) and provides revenue enhancement services and products to public-sector clients nationwide consisting of discovery, audit, collections/recovery and information (data) services. The municipal services operations also include Capital Asset Holdings GP, Inc. and certain affiliated entities (Capital Asset), a servicer of delinquent tax certificates.

In the second quarter of 2005, the municipal services operations reported pre-tax income of $0.3 million compared to pre-tax income of $0.2 million in the second quarter of 2004. Revenues decreased by 6% and expenses decreased by 8% due to a decline in the delinquent tax certificate portfolio serviced by Capital Asset as a result of tax certificate redemptions. For the six months ended June 30, 2005 and 2004, pre-tax income was $0.5 million and $0.3 million, respectively.

The corporate operations consist of net investment income, net realized gains and losses on holding company investment assets, interest expense and corporate expenses. The corporate operations incurred a loss of $24

Inmillion in the ~~first~~second quarter of 2005 ~~the municipal services operations reported pre-tax income of $0.2 million~~ compared to ~~pre-tax income~~a loss of ~~$0.1~~$20 million in the ~~first quarter~~same period of 2004. ~~Revenues decreased by 6%~~For the six months ended June 30, 2005 and ~~expenses decreased by 8%, which were largely impacted by a decline in~~2004, the ~~delinquent tax certificate portfolio serviced by Capital Asset as a result of tax certificate redemptions.~~

~~The corporate operations consist of net investment income, net realized gains and losses of holding company investment assets, interest expense and corporate expenses. The~~ corporate operations incurred a loss of ~~$19~~$43 million ~~in the first quarter of 2005 compared to a $22~~and $42 million, ~~loss in the same period of 2004.~~respectively.

Net investment income increased from $2$2.5 million in the ~~first~~second quarter of 2004 to $8$5.8 million in the ~~first~~second quarter of 2005. In the six months ended June 30, 2005, net investment income increased to $14 million from $5 million in the six months ended June 30, 2004. The increase was driven by substantially higher invested assets and a shift to longer term higher yielding investments. The increase in the invested assets resulted from additional debt issued by MBIA Inc. and dividends paid by MBIA Corp. to MBIA Inc. in the fourth quarter of 2004, somewhat offset by share repurchases of the Company’s common stock.

The corporate operations incurred $22 million of interest expense in the ~~first~~second quarter of 2005 compared to $18 million in the ~~first~~second quarter of 2004, a 24% increase. For the first six months of 2005 and 2004, the Company incurred interest expense of $44 million and $36 million, respectively. The increase in interest expense primarily resulted from the issuance of $350 million of debt, partially offset by the retirement of $50 million of debt, in the fourth quarter of 2004.

Corporate expenses were $7 million in the second quarter of 2005 compared to $4 million in the ~~first~~second quarter of 2004. For the six months of 2005, ~~decreased 38%~~corporate expenses of $11 million increased from $6$10 million in the first ~~quarter~~six months of 2004. The ~~decrease is~~increase in the second quarter of 2005 was principally due to legal costs associated with regulatory investigations. Information on these investigations is provided in “Note 7: Contingencies” in the Notes to Consolidated Financial Statements. The smaller increase for the first six months of 2005 was a result of an increase in legal and consulting costs recorded in 2005 offset by non-recurring costs incurred in the first quarter of 2004 associated with ~~ASIA Ltd partly offset by additional legal and consulting costs incurred in the first quarter of 2005.~~a liquidated equity investment.

MBIA’s tax policy is to optimize after-tax income by maintaining the appropriate mix of taxable and tax-exempt investments. However, the effective tax rate fluctuates from time to time as the Company manages its investment portfolio on an after-tax total return basis. The effective tax rate, including tax related to discontinued operations, for the ~~first~~second quarter of 2005 was ~~27.8%~~28.2%, ~~down~~up from ~~28.3%~~28.1% for the ~~first~~second quarter of 2004. For the six months of 2005 and 2004 the effective tax rate was 28.0% and 28.2%, respectively, including tax related to discontinued operations.

The Company carefully manages its capital resources to minimize its cost of capital while maintaining appropriate claims-paying resources to sustain its Triple-A claims-paying ratings. Capital resources are defined by the Company as total shareholders’ equity, long-term debt issued for general corporate purposes and various soft

capital credit facilities. Total shareholders’ equity at ~~March 31,~~June 30, 2005 was ~~$6.4~~$6.6 billion, with total long-term debt at $1.3 billion. The Company uses debt financing to lower its overall cost of capital. MBIA maintains debt at levels it considers to be prudent based on its cash flow and total ~~capital.~~capital (shareholders’ equity plus long-term debt). The following table shows the Company’s long-term debt and the ratio used to measure it:


	March 31, 2005			December 31, 2004			June 30, 2005			December 31, 2004
Long-term debt (in millions)	$	1,325		$	1,333		$	1,314		$	1,333
Long-term debt to total capital		17	%		17	%		17	%		17	%

In August 1999, the Company announced that its board of directors had authorized the repurchase of 11.25 million shares of common stock of the Company, after adjusting for the 2001 stock split. The Company began the repurchase program in the fourth quarter of 1999. In July 2004, the Company completed the repurchase of all 11.25 million shares at an average price of $44.08 per share and received authorization from its board of directors to repurchase 1 million shares under a new repurchase program. On August 5, 2004, the Company’s board of directors authorized the repurchase of an additional 14 million shares of common stock in connection with the new repurchase program. As of ~~March 31,~~June 30, 2005, the Company had repurchased a total of ~~7.6~~10 million shares under the current plan at an average price of ~~$57.43~~$57.25 per share, of which ~~3.5~~5.9 million shares were repurchased in 2005 at an average price of ~~$58.52~~$57.77 per share.

The Company has various soft capital credit facilities, such as lines of credit and equity-based facilities at its disposal, which further support its claims-paying resources. At ~~March 31,~~June 30, 2005, MBIA Corp. maintained a $450 million limited recourse standby line of credit facility, reduced from $700 million at December 31, 2004, with a group of major Triple-A rated banks to provide funds for the payment of claims in excess of the greater of $500 million or 5% of average annual debt service with respect to public finance transactions. The agreement is for a ten-year term, amended from a seven-year term, which expires in March 2015.

MBIA Corp. has access to $400 million of ~~Money Market Committed Preferred Custodial Trust~~CPCT securities ~~(CPS securities)~~ issued by eight trusts, which were created for the primary purpose of issuing ~~CPS~~CPCT securities and investing the proceeds in high quality commercial paper or

short-term U.S. Government obligations. MBIA Corp. has a put option to sell to the trusts the perpetual preferred stock of MBIA Corp. If MBIA Corp. exercises its put option, the trusts will transfer the proceeds to MBIA Corp. in exchange for the preferred stock that will be held by the trusts. The trusts are vehicles for providing MBIA Corp. the opportunity to access new capital at its sole discretion through the exercise of the put options. The trusts are rated AA and Aa2 by S&P and Moody’s, respectively. To date, MBIA Corp. has not exercised its put options under any of these arrangements.

From time to time, MBIA accesses the capital markets to support the growth of its businesses. As such, MBIA filed a $500 million registration statement on Form S-3 with the SEC utilizing a “shelf” registration process. In November 2004, the Company completed its $350 million debt issuance of senior notes and currently has in effect a shelf registration with the SEC for $150 million. This shelf registration permits the Company to issue various debt and equity securities described in the prospectus filed as part of the registration statement.

Cash flow needs at the parent company level are primarily for dividends to its shareholders and interest payments on its debt. Liquidity and operating cash requirements of the Company are met by its cash flows generated from operations, which were more than adequate in the first ~~quarter~~half of 2005. Management of the Company believes that cash flows from operations will be sufficient to meet the Company’s liquidity and operating cash requirements for the foreseeable future.

Cash requirements have historically been met by upstreaming dividend payments from MBIA Corp., which generates substantial cash flow from premium writings and investment income. In the first ~~quarter~~six months of 2005, the Company’s operating cash flow from continuing operations totaled ~~$275.0~~$413 million compared ~~to $217.2~~with $404 million in the first ~~quarter~~six months of 2004. The majority of net cash provided by operating activities is generated from premium revenue and investment income in the Company’s insurance operations.

Under New York State insurance law, without prior approval of the superintendent of the state insurance department, financial guarantee insurance companies can pay dividends from earned surplus subject to retaining a minimum capital requirement. In MBIA Corp.’s case, dividends in any twelve-month period cannot be greater than 10% of policyholders’ surplus as shown on MBIA Corp.’s latest filed statutory financial statements.

In addition to its regular dividends, in the fourth quarter of 2004 MBIA Corp. declared and paid a special dividend of $375 million to MBIA Inc., which was approved by the New York State Department of Insurance. As a result of the payment of the special dividend and under the formula applicable to the payment of dividends, MBIA Corp. may not pay any dividends without prior approval by the New York State Department of Insurance until the fourth quarter of 2005. In the first quarter of 2005, MBIA Corp. requested approval for the payment of additional special dividends as its capital position continues to exceed both the capital required by New York State Insurance Law and the rating agencies for purposes of maintaining its Triple-A ratings. Approval by the New York State Department of Insurance is still pending on this request.

The Company has significant liquidity supporting its businesses. At ~~March 31,~~June 30, 2005, cash, cash equivalents and short-term investments ~~totaled $2.4~~were approximately $2 billion. If, for any reason, significant cash flow reductions occur in any of its businesses, MBIA has alternatives for meeting ongoing cash requirements. They include selling or pledging its fixed-income investments in its investment portfolio, tapping existing liquidity facilities and new borrowings.

As part of MBIA’s external borrowing capacity, it maintained two bank lines totaling $500 million. These bank lines were maintained with a group of highly rated global banks and were comprised of a renewable $167 million facility with a term of 364 days and a $333 million facility with a five-year term maturing in April 2009. ~~As of March 31, 2005, there were no balances outstanding under these agreements.~~ In April 2005, the $167 million facility expired on its stated expiration date and the $333 million facility was increased to $500 million and the term was extended one year to April 2010. As of June 30, 2005, there were no balances outstanding under these agreements.

The available-for-sale investment portfolio provides a high degree of liquidity, since it is comprised of readily marketable high quality fixed-income securities and short-term investments. At ~~March 31,~~June 30, 2005, the fair value of the consolidated available-for-sale investment portfolio was ~~$24~~$26 billion, as shown in the following table:


	March 31, 2005			December 31, 2004	Percent Change		June 30, 2005			December 31, 2004	Percent Change
In millions	March 31, 2005			December 31, 2004	2005 vs. 2004				2005 vs. 2004	December 31, 2004
Available-for-sale investments:							June 30, 2005

Insurance operations:
Amortized cost	$	9,355		$ 9,205	2	%	$	9,632		$ 9,205	5	%
Unrealized net gain (loss)		371		531	(30	)%		512		531	(4	)%

Fair value	$	9,726		$ 9,736	0	%	$	10,144		$ 9,736	4	%

Investment management services operations:
Amortized cost	$	13,314		$12,209	9	%	$	14,639		$12,209	20	%
Unrealized net gain (loss)		322		398	(19	)%		577		398	45	%

Fair value	$	13,636		$12,607	8	%	$	15,216		$12,607	21	%

Corporate operations:
Amortized cost	$	666		$ 731	(9	)%	$	314		$ 731	(57	)%
Unrealized net gain (loss)		(7	)	4	(288	)%		7		4	104	%

Fair value	$	659		$ 735	(10	)%	$	321		$ 735	(56	)%

Total available-for-sale portfolio:
Amortized cost	$	23,335		$22,145	5	%	$	24,585		$22,145	11	%
Unrealized net gain (loss)		686		933	(27	)%		1,096		933	18	%

Fair value	$	24,021		$23,078	4	%	$	25,681		$23,078	11	%

The increase in the amortized cost of insurance-related available-for-sale investments in 2005 was the result of positive cash flow from operations. ~~However, this increase was offset by a decrease in unrealized gains largely due to a rise in interest rates from the fourth quarter of 2004.~~ The increase in the amortized cost of available-for-sale investments in the investment management services operations was the result of growth in the Company’s asset/liability products program. Corporate investments decreased in the first ~~quarter~~six months of 2005 due to increased share repurchase activity by the Company.

The fair value of the Company’s investments is based on quoted market prices, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. Differences between fair value and amortized cost arise primarily as a result of changes in interest rates occurring after a fixed-income security is purchased, although other factors influence fair value, including credit-related actions, supply and demand forces and other market factors. When the Company holds its available-for-sale investments to maturity, unrealized gains or losses currently recorded in accumulated other comprehensive income in the shareholders’ equity section of the balance sheet will decrease over time as the investments approach maturity. As a result, the Company expects to realize a value substantially equal to amortized cost. However, when investments

~~amortized cost. However, when investments~~ are sold prior to maturity, the Company will realize any gains or losses in current net income. The conduit portfolios are considered held-to-maturity, as the Company has the ability and intent to hold these investments to their contractual maturity. Therefore, these portfolios are reported at amortized cost and are not adjusted to reflect unrealized changes in fair value.

The weighted average credit quality of the Company’s fixed-income investment portfolios has been maintained at Double-A since its inception. The quality distribution of the Company’s ~~fixed-maturity~~fixed-income investment portfolios, excluding short-term investments, based on ratings from Moody’s as of ~~March 31,~~June 30, 2005 is presented in the following table:


	Insurance				Investment Management Services				Investments Held-to-Maturity				Total				Insurance				Investment Management Services				Investments Held-to- Maturity				Total
In millions	Fair Value		% of Fixed-Income Investments		Fair Value		% of Fixed-Income Investments		Fair Value		% of Fixed-Income Investments		Fair Value		% of Fixed-Income Investments		Fair Value		% of Fixed-Income Investments		Fair Value		% of Fixed-Income Investments		Fair Value		% of Fixed-Income Investments		Fair Value		% of Fixed-Income Investments
Aaa	$	6,285	67	%	$	7,798	62	%	$	6,520	92	%	$	20,603	71	%	$	6,452	68	%	$	8,744	61	%	$	5,751	88	%	$	20,947	69	%
Aa		1,656	18	%		2,434	19	%		—	—			4,090	14	%		1,764	19	%		2,722	19	%		—	—			4,486	15	%
A		1,271	14	%		1,958	15	%		600	8	%		3,829	13	%		1,175	12	%		2,665	19	%		800	12	%		4,640	15	%
Baa		88	1	%		82	1	%		—	—			170	1	%		93	1	%		161	1	%		—	—			254	1	%
Below investment grade		—	—			—	—			—	—			—	—			—	—			—	—			—	—			—	—
Not rated		5	—			326	3	%		—	—			331	1	%		2	0	%		—	—			—	—			2	0	%

Total	$	9,305	100	%	$	12,598	100	%	$	7,120	100	%	$	29,023	100	%	$	9,486	100	%	$	14,292	100	%	$	6,551	100	%	$	30,329	100	%

MBIA’s consolidated investment portfolio includes investments that are insured by MBIA Corp. (MBIA Insured Investments). At ~~March 31,~~June 30, 2005, MBIA Insured Investments, excluding conduit investments, at fair value represented ~~$4.9~~$4.8 billion or ~~17%~~16% of the total fixed-income investment portfolio. Conduit investments represented ~~$6.5~~$5.8 billion or ~~22%~~19% of the total fixed-income investment portfolio. Without giving effect to the MBIA guarantee of the MBIA Insured Investments in the consolidated investment portfolio, as of ~~March 31,~~June 30, 2005, based on the actual or estimated underlying ratings (i) the weighted average rating of the investment portfolio would be in the ~~Double-A~~Aa range, (ii) the weighted average rating of just the MBIA Insured Investments in the investment portfolio would be in the ~~Single-A~~Baa range and (iii) ~~approximately~~less than 1% of the investment portfolio would be rated below investment grade.

The underlying ratings of the MBIA Insured Investments as of ~~March 31,~~June 30, 2005 are reflected in the following table. Amounts represent the fair value of such investments including the benefit of the MBIA guarantee. The ratings in the table below are the lower underlying rating assigned by S&P or Moody’s when an underlying rating exists from either rating service, or when an external underlying rating is not available, the underlying rating is based on the Company’s best estimate of the rating of such investment.


Underlying Ratings Scale In thousands	Insurance Portfolio		Investment Management Services Portfolio		Held-to- Maturity Investment Portfolio		Total		Insurance Portfolio		Investment Management Services Portfolio		Held-to- Maturity Investment Portfolio		Total
Aaa	$	43,941	$	510,140	$	1,247,548	$	1,801,629	$	45,750	$	384,986	$	1,095,594	$	1,526,330
Aa		281,002		73,618		419,906		774,526		276,699		125,493		423,453		825,645
A		775,602		852,116		724,818		2,352,536		779,988		794,832		1,109,492		2,684,312
Baa		416,508		1,795,603		4,084,549		6,296,660		291,402		1,828,384		3,122,732		5,242,518
Below investment grade		5,227		189,261		43,548		238,036		121,013		132,162		—		253,175

Total	$	1,522,280	$	3,420,738	$	6,520,369	$	11,463,387	$	1,514,852	$	3,265,857	$	5,751,271	$	10,531,980

The Company generates significant liquidity from its operations. Because of its risk management policies and procedures, diversification and reinsurance, the Company believes that the occurrence of an event that would significantly adversely affect liquidity is unlikely.

There has been no material changes in the Company’s market risk during the first ~~three~~six months ended ~~March 31,~~June 30, 2005. For additional information on market risk, refer to page 37 of the Company’s 2004 Annual Report or Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “Market Risk” of the Company’s Form 10-K for the year ended December 31, 2004.

As of the end of the period covered by this report, an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934) was performed under the supervision and with the participation of the Company’s senior management, including the Chief Executive Officer and the Chief Financial Officer. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report. In addition, there have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the fiscal quarter to which this report relates that have materially affected, or are likely to materially affect, the Company’s internal control over financial reporting.

In July 2002, MBIA Corp. filed suit against Royal Indemnity Company (Royal), in the United States District Court for the District of Delaware, to enforce insurance policies that Royal issued on certain vocational student loan transactions that MBIA Corp. insured. To date, claims in the amount of approximately $350 million have been made under the Royal policies with respect to loans that have defaulted. MBIA Corp. expects that there will be additional claims made under the policies with respect to student loans that may default in the future. Royal has filed an action seeking a declaration that it is not obligated to pay on its policies. If Royal does not honor its policies, MBIA Corp. will be required to make payment on the notes it insured, and will incur material losses under its policies. In October 2003, the court granted MBIA Corp.’s motion for summary judgment and ordered Royal to pay all claims under its policies. While Royal has appealed the order, MBIA expects that the order will be upheld on appeal. As part of the appeals process, Royal has pledged ~~$382~~$384 million of investment grade collateral to MBIA Corp. to secure the entire amount of the judgment, with interest, and has agreed to post additional security for future claims and interest. The Federal District Court has ordered Royal to comply with the pledge agreement.

MBIA Corp. believes that it will prevail in the litigation with Royal and will have no ultimate loss on these policies, although there can be no assurance that MBIA Corp. will in fact prevail. If MBIA Corp. does not prevail in the litigation and Royal does not make payments on the Royal Policies, MBIA Corp. expects to incur material losses under its policies. MBIA Corp. does not believe, however, that any such losses will have a material adverse effect on its financial condition.

sold by the Company to third parties from January 1, 1998 to the present. While the subpoenas did not identify any specific transaction, subsequent conversations with the SEC and the NYAG revealed that the investigation ~~will include~~included the reinsurance arrangements entered into by MBIA Corp. in 1998 in connection with the bankruptcy of the Delaware Valley Obligated Group, an entity that is part of the Pittsburgh-based Allegheny Health, Education and Research Foundation (AHERF).

On March 9, 2005, the Company received a subpoena from the U.S. Attorney’s Office for the Southern District of New York (U.S. Attorney) seeking information related to the reinsurance agreements it entered into in connection with the AHERF loss. ~~On March 30, 2005,~~Thereafter, the Company has received additional subpoenas, substantively identical to each other, and additional informal requests, from the SEC and the NYAG ~~that supplement the subpoenas it received in late 2004. The requests seek~~for documents ~~relating to the Company’s accounting treatment of advisory fees; its methodology for determining loss reserves~~ and case reserves; instances of purchases of credit default protection on itself; and documents relating to Channel Reinsurance Ltd., a reinsurance company of which the Company is part owner. The requests cover the period January 1, 2000 to the present. other information.

~~During the past five weeks, the~~The Company has been named as a defendant in the following putative securities class action suits:Anthony Capone v. MBIA Inc., et al.; (Case No. 05 CV 3514; S.D.N.Y.) (filed April 4, 2005);Thomas Cassady v. MBIA Inc., et al.; (Case No. 05 CV 3730; S.D.N.Y.) (filed April 7, 2005);Todd Simon v. MBIA Inc., et al.; (Case No. 05 CV 3636; S.D.N.Y.) (filed April 8, 2005);Mariss Partners, LLP v. MBIA Inc., et al. (Case No. 05 CV 3709; S.D.N.Y) (filed April 11, 2005); andAlan D. Sadowsky and Barbara S. Katvin v. MBIA Inc., et al.; (Case No. 05 CV 4150; S.D.N.Y.) (filed April 26, 2005). Joseph W. Brown, the Company’s Chairman and former Chief Executive Officer, Gary C. Dunton, the Company’s Chief Executive Officer, Nicholas Ferreri, the Company’s Chief Financial Officer, Neil G. Budnick, a Vice President of the Company and the Company’s former Chief Financial Officer and Douglas C. Hamilton, the Company’s Controller were also named as defendants in each of these suits. The plaintiffs in these cases assert claims under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), Rule 10b-5 promulgated thereunder, and Section 20(a) of the Exchange Act. The plaintiffs in these lawsuits seek to act as representatives for a putative class consisting of purchasers of the Company’s stock during the period from August 5, 2003 to March 30, 2005 (the “Class Period”). ~~The Company expects that additional putative class action lawsuits may be filed.~~

Although the individual lawsuits vary, the allegations include, among other things, violations of the federal securities laws arising out of the Company’s allegedly false and misleading statements about its financial condition and the defendant’s failure “to disclose or indicate” the following alleged facts: “(1) that MBIA, during the Class Period, overleveraged itself, deeply under-reserved against possible credit defaults, and overly exposed to guaranteeing risky structured financings; (2) that MBIA accelerated its recognition of current income by classifying many of its upfront guarantee fees as advisory fees taken at closing, rather than accounted for over the life of the bonds insured; (3) that MBIA improperly booked a $70 million payment received from Converium Re (then called Zurich Reinsurance North America) in 1998, which at the time was depicted as a loss-reducing reinsurance recovery for MBIA, but was, in substance, a loan; (4) that as result, MBIA financial statements were materially overstated by $60 million; (5) that MBIA artificially inflated premium income and portfolio credit quality by insuring bonds in the secondary market that were attracting prices lower than their stale credit ratings would dictate; (6) that MBIA’s low loss ratios resulted from the Company’s practice to defer recognizing problems rather than providing layers of excess collateral, other underwriting protection, and its self-proclaimed prowess at restructurings; (7) that MBIA set forth an illegal scheme of covering the loss, from the failed Allegheny Health, Education and Research Foundation (“Aherf”) bond issuance, with a retroactive reinsurance policy, giving it a reinsurance recovery of $170 million to cover the present value of the future Aherf interest and principal payments, which resulted in MBIA showing a better than 40% jump in pretax income that year — $565 million over what the income figure would have been without resort to the reinsurance; (8) that MBIA was dumping on Channel Reinsurance Ltd., a Bermuda reinsurer where MBIA owns a 17.4% interest, performing but troubled policies from its existing portfolio, with the provison that it could make up any quality problems later so that MBIA could buy time by getting potential workout loans off its balance sheet in order to make its financial results appear better; and (9) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company.” The plaintiffs allege that, as a result of these misleading statements or omissions, the Company’s stock traded at artificially inflated prices. These lawsuits seek unspecified compensatory damages in connection with purchases by members of the putative class of the Company’s stock at such allegedly inflated prices during the Class Period.

On July 25, 2005, the presiding judge issued an order consolidating these five cases into one action under the captionIn re MBIA Securities Litigation(Case No. 05 CV 3514; S.D.N.Y.) and named a lead plaintiff and lead counsel for the class. The Company anticipates that it will be receiving an amended complaint in respect of the consolidated action in September 2005.

There are no other material lawsuits pending or, to the knowledge of the Company, threatened, to which the Company or any of its subsidiaries is a party.

From time to time, the Company repurchases shares of its common stock when, in the opinion of management, it is economically advantageous to do. In August, 1999, the Company’s board of directors authorized the repurchase of up to 11.25 million shares of the Company’s common stock (after adjusting

for the 2001 stock split). In July 2004, the Company completed the repurchase of all 11.25 million shares and received authorization from its board of directors to repurchase 1 million shares under a new repurchase program. On August 5, 2004, MBIA’s board of directors authorized the repurchase of an additional 14 million shares of its common stock in connection with the new repurchase program. The Company will only repurchase shares of its common stock under the repurchase program when it feels that it is economically attractive to do so and in conformity with regulatory and rating agency guidelines.

The following table sets forth repurchases made by the Company in each month during the ~~first~~second quarter of 2005:

The Annual Meeting of Shareholders of the Company was held on May 5, 2005 (the “Annual Meeting”). Proxies for the Annual Meeting were solicited pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Act”), there was no solicitation in opposition to the nine nominees of the Board of Directors of the Company listed in the Company’s Proxy Statement, dated March 30, 2005, for the Annual Meeting (the “Proxy Statement”), filed with the Securities and Exchange Commission, and said nine nominees were elected.

The following matters were acted upon by Company shareholders at the Annual Meeting, at which 121,046,043 shares of the Common Stock, $1.00 par value, of the Company (the “Common Stock”), or approximately 87.95 percent of the 137,630,961 shares of Common Stock entitled to vote at the Annual Meeting, were present in person or by proxies:

1. Election of Directors. The proposal to elect the Company’s Board of Directors was adopted with the following number of votes per director:


Nominees	In Favor	Withheld	In Favor	Withheld
Joseph W. Brown	112,990,926	8,055,117	112,990,926	8,055,117
C. Edward Chaplin	118,669,165	2,376,878	118,669,165	2,376,878
David C. Clapp	117,432,066	3,613,977	117,432,066	3,613,977
Gary C. Dunton	113,030,950	8,015,093	113,030,950	8,015,093
Claire L. Gaudiani	117,429,239	3,616,804	117,429,239	3,616,804
Daniel P. Kearney	116,988,798	4,057,245	116,988,798	4,057,245
Laurence H. Meyer	118,741,826	2,304,217	118,741,826	2,304,217
Debra J. Perry	118,742,322	2,303,721	118,742,322	2,303,721
John A. Rolls	114,057,677	6,988,366	114,057,677	6,988,366

2. Approval of Adoption of MBIA Inc. Annual Incentive Plan. A resolution proposed by the Board of Directors of the Company that the shareholders approve the MBIA Inc. Annual Incentive Plan (the “Annual Incentive Plan”) was submitted to, and voted upon by, the shareholders of the Company at the Annual Meeting. There were 106,524,611 votes cast in favor of, and 3,681,575 votes cast against, said resolution. The holders of 899,438 shares of Common Stock abstained and there were “broker non-votes” in respect of 9,940,419 shares of Common Stock. Accordingly, the resolution received the affirmative vote of the holders of a majority of the Common Stock outstanding and entitled to vote at the Annual Meeting and, therefore, the resolution was adopted and the Annual Incentive Plan was approved by the shareholders. The resolution and information relating to the Annual Incentive Plan are set forth at pages 35 through 37, inclusive, of the Proxy Statement. The Annual Incentive Plan is set forth in its entirety as Appendix C to the Proxy Statement.

3. Approval of Adoption of MBIA Inc. 2005 Omnibus Incentive Plan. A resolution proposed by the Board of Directors of the Company that the shareholders approve the MBIA Inc. 2005 Omnibus Incentive Plan (the “Omnibus Incentive Plan”) was submitted to, and voted upon by, the shareholders of the Company at the Annual Meeting. There were 95,503,472 votes cast in favor of, and 14,725,016 votes cast against, said resolution. The holders of 877,236 shares of Common Stock abstained and there were “broker non-votes” in respect of 9,940,319 shares of Common Stock. Accordingly, the resolution received the affirmative vote of the holders of a majority of the Common Stock outstanding and entitled to vote at the Annual Meeting and, therefore, the resolution was adopted and the Omnibus Incentive Plan was approved by the shareholders. The resolution and information relating to the Annual Incentive Plan are set forth at pages 38 through 44, inclusive, of the Proxy Statement. The Annual Incentive Plan is set forth in its entirety as Appendix D to the Proxy Statement.

4. Approval of Amendment to Section 8 of the Certificate of Incorporation. A resolution proposed by the Board of Directors of the Company that the shareholders approve an amendment to the Company’s Certificate of Incorporation to

reduce to a simple majority the percentage of votes required to amend or repeal Section 8 of the Certificate of Incorporation, which Section discusses the factors that the Board of Directors of the Company is authorized to consider in the event of a proposed tender offer, merger or acquisition of the Company was submitted to, and voted upon by, the shareholders of the Company at the Annual Meeting. There were 119,466,506 votes cast in favor of, and 724,511 votes cast against, said resolution. The holders of 855,026 shares of Common Stock abstained and there were no “broker non-votes”. Accordingly, the resolution received the affirmative vote of the holders of over 80% of the Common Stock outstanding and entitled to vote at the Annual Meeting and, therefore, the resolution was adopted and the amendment to the Company’s Certificate of Incorporation was approved by the shareholders. The resolution and information relating to the amendment are set forth at pages 45 through 46, inclusive, of the Proxy Statement.

5. Approval of Amendment to Section 4 of the Certificate of Incorporation. A resolution proposed by the Board of Directors of the Company that the shareholders approve an amendment to the Company’s Certificate of Incorporation to permit shareholders to act by majority written consent by amending Section 4 of the Certificate of Incorporation was submitted to, and voted upon by, the shareholders of the Company at the Annual Meeting. There were 107,027,004 votes cast in favor of, and 2,993,858 votes cast against, said resolution. The holders of 1,084,762 shares of Common Stock abstained and there were “broker non-votes” in respect of 9,940,419 shares of Common Stock. Accordingly, the resolution received the affirmative vote of the holders of a majority of the Common Stock outstanding and entitled to vote at the Annual Meeting and, therefore, the resolution was adopted and the amendment to the Company’s Certificate of Incorporation was approved by the shareholders. The resolution and information relating to the amendment are set forth at pages 46 through 47, inclusive, of the Proxy Statement.

6. Ratification of Appointment of Independent Registered Public Accounting Firm. A resolution that the shareholders ratify the action of the Audit Committee in selecting and appointing PricewaterhouseCoopers LLP as the independent registered public accounting firm for the Company for the year ending December 31, 2005 was submitted to, and voted upon by, the shareholders. There were 118,299,221 shares of Common Stock voted in favor of, and 1,906,525 shares of Common Stock voted against, said resolution. The holders of 840,297 shares of Common Stock abstained and there were no “broker non-votes”. The resolution, having received the affirmative vote of the holders of a majority of the shares of Common Stock outstanding and entitled to vote at the Annual Meeting, was adopted and the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the Company for 2005 was ratified by the shareholders.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		PAGE
PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)
	MBIA Inc. and Subsidiaries

	Consolidated Balance Sheets – ~~March 31,~~June 30, 2005 and December 31, 2004	3

	Consolidated Statements of Income – Three and six months ended ~~March 31,~~June 30, 2005 and 2004 (Restated)	4

	Consolidated Statement of Changes in Shareholders’ Equity - ~~Three~~Six months ended ~~March 31,~~June 30, 2005	5

	Consolidated Statements of Cash Flows - ~~Three~~Six months ended ~~March 31,~~June 30, 2005 and 2004 (Restated)	6

	Notes to Consolidated Financial Statements	7 - 1415

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~15 - 39~~16 – 40

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4041

Item 4.	Controls and Procedures	4041

PART II	OTHER INFORMATION, AS APPLICABLE

Item 1.	Legal Proceedings	~~40 -~~ 41 – 42

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	~~41 -~~ 42 – 43

Item 4.	Submission Ofof Matters to a Vote of Security Holders	~~42 -~~43 – 44

Item 6.	Exhibits	44

SIGNATURES		45


	March 31, 2005			December 31, 2004
Assets
Investments:
Fixed-maturity securities held as available-for-sale, at fair value (amortized cost $20,476,640 and $18,802,894)	$	21,134,588		$	19,679,905
Investments held-to-maturity, at amortized cost (fair value $7,120,369 and $7,535,787)		7,140,265			7,540,218
Investment agreement portfolio pledged as collateral, at fair value (amortized cost $744,071 and $713,704)		768,196			730,870
Short-term investments, at amortized cost (which approximates fair value)		1,859,417			2,405,192
Other investments		258,949			261,865

Total investments		31,161,415			30,618,050

Cash and cash equivalents		544,484			366,236
Accrued investment income		336,904			312,208
Deferred acquisition costs		371,932			360,496
Prepaid reinsurance premiums		462,390			471,375
Reinsurance recoverable on unpaid losses		33,202			33,734
Goodwill		79,406			79,406
Property and equipment, at cost (less accumulated depreciation of $112,416 and $108,848)		113,124			114,692
Receivable for investments sold		100,865			67,205
Derivative assets		270,648			288,811
Other assets		282,295			315,197

Total assets	$	33,756,665		$	33,027,410

Liabilities and Shareholders’ Equity

Liabilities:
Deferred premium revenue	$	3,238,851		$	3,211,181
Loss and loss adjustment expense reserves		755,563			726,617
Investment agreements		9,316,470			8,678,036
Commercial paper		2,302,859			2,598,655
Medium-term notes		7,414,651			6,943,840
Variable interest entity floating rate notes		600,670			600,505
Securities sold under agreements to repurchase		686,131			647,104
Short-term debt		58,745			58,745
Long-term debt		1,325,460			1,332,540
Current income taxes		12,126			—
Deferred income taxes, net		573,849			610,545
Deferred fee revenue		24,355			26,780
Payable for investments purchased		201,138			94,609
Derivative liabilities		428,360			528,562
Other liabilities		381,426			390,620

Total liabilities		27,320,654			26,448,339

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 — 156,241,947 and 155,607,737		156,242			155,608
Additional paid-in capital		1,449,944			1,410,799
Retained earnings		5,377,327			5,215,191
Accumulated other comprehensive income, net of deferred income tax of $268,807 and $317,563		500,516			611,173
Unearned compensation — restricted stock		(56,206	)		(34,686	)
Treasury stock, at cost — 19,829,450 and 16,216,405 shares		(991,812	)		(779,014	)

Total shareholders’ equity		6,436,011			6,579,071

Total liabilities and shareholders’ equity	$	33,756,665		$	33,027,410


	June 30, 2005			December 31, 2004
Assets
Investments:
Fixed-maturity securities held as available-for-sale, at fair value (amortized cost $21,898,408 and $18,802,894)	$	22,919,879		$	19,679,905
Investments held-to-maturity, at amortized cost (fair value $6,551,271 and $7,535,787)		6,572,895			7,540,218
Investment agreement portfolio pledged as collateral, at fair value (amortized cost $885,502 and $713,704)		937,760			730,870
Short-term investments, at amortized cost (which approximates fair value)		1,548,726			2,405,192
Other investments		274,076			261,865

Total investments		32,253,336			30,618,050

Cash and cash equivalents		512,341			366,236
Accrued investment income		348,573			312,208
Deferred acquisition costs		383,006			360,496
Prepaid reinsurance premiums		451,113			471,375
Reinsurance recoverable on unpaid losses		42,869			33,734
Goodwill		79,406			79,406
Property and equipment, at cost (less accumulated depreciation of $115,831 and $108,848)		110,817			114,692
Receivable for investments sold		96,654			67,205
Derivative assets		252,637			288,811
Other assets		253,843			315,197

Total assets	$	34,784,595		$	33,027,410

Liabilities and Shareholders’ Equity
Liabilities:
Deferred premium revenue	$	3,228,018		$	3,211,181
Loss and loss adjustment expense reserves		667,570			726,617
Investment agreements		10,005,780			8,678,036
Commercial paper		1,859,764			2,598,655
Medium-term notes		7,688,290			6,943,840
Variable interest entity floating rate notes		801,038			600,505
Securities sold under agreements to repurchase		835,359			647,104
Short-term debt		58,745			58,745
Long-term debt		1,314,238			1,332,540
Deferred income taxes, net		661,184			610,545
Deferred fee revenue		22,498			26,780
Payable for investments purchased		173,175			94,609
Derivative liabilities		484,842			528,562
Other liabilities		396,596			390,620

Total liabilities		28,197,097			26,448,339

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 - 156,412,476 and 155,607,737		156,412			155,608
Additional paid-in capital		1,462,914			1,410,799
Retained earnings		5,527,063			5,215,191
Accumulated other comprehensive income, net of deferred income tax of $357,249 and $317,563		630,628			611,173
Unearned compensation—restricted stock		(53,169	)		(34,686	)
Treasury stock, at cost—22,377,436 and 16,216,405 shares		(1,136,350	)		(779,014	)

Total shareholders’ equity		6,587,498			6,579,071

Total liabilities and shareholders’ equity	$	34,784,595		$	33,027,410


In thousands	2005
Case basis loss and LAE reserves:
Balance at January 1	$	434,924
Less: reinsurance recoverable		33,734

Net balance at January 1		401,190

Case basis transfers from unallocated loss reserve related to:
Current year		2,569
Prior years		16,935

Total		19,504

Paid (recovered) related to:
Current year		(4,231	)
Prior years		(5,034	)

Total paid (recovered)		(9,265	)

Net balance at March 31		429,959
Plus: reinsurance recoverable		33,202

Case basis reserve balance at March 31		463,161

Unallocated loss reserve:
Balance at January 1		291,693
Losses and LAE incurred⁽¹⁾		20,385
Channel Re elimination⁽²⁾		(172	)
Transfers to case basis and LAE reserves		(19,504	)

Unallocated loss reserve balance at March 31		292,402

Total	$	755,563


In thousands	2Q 2005			1Q 2005
Case basis loss and LAE reserves:
Beginning balance	$	463,161		$	434,924
Less: reinsurance recoverable		33,202			33,734

Net beginning balance		429,959			401,190

Case basis transfers from unallocated loss reserve related to:
Current year		23			—
Prior years		18,126			19,504

Total		18,149			19,504

Paid (recovered) related to:
Current year		(1	)		(4,231	)
Prior years		118,640			(5,034	)

Total paid (recovered)		118,639			(9,265	)

Net ending balance		329,469			429,959
Plus: reinsurance recoverable		42,869			33,202

Case basis loss and LAE reserve ending balance		372,338			463,161

Unallocated loss reserve:
Beginning balance		292,402			291,693
Losses and LAE incurred⁽¹⁾		21,265			20,385
Channel Re elimination⁽²⁾		(286	)		(172	)
Transfers to case basis and LAE reserves		(18,149	)		(19,504	)

Unallocated loss reserve ending balance		295,232			292,402

Total	$	667,570		$	755,563


~~Commission File No. 1-9583~~		~~I.R.S. Employer Identification No. 06-1185706~~


	Six months ended June 30, 2005
In thousands	Asset/ Liability Products			Advisory Services			Conduits		Eliminations			Total Investment Management Services
Revenues^(a)	$	277,358		$	27,285		$	96,157	$	(8,022	)	$	392,778
Net realized gains (losses)		1,713			3			—		—			1,716
Net gains (losses) on derivative instruments and foreign exchange		(2,389	)		(64	)		10,192		—			7,739

Total revenues		276,682			27,224			106,349		(8,022	)		402,233
Interest expense		233,737			267			82,578		—			316,582
Operating expenses		17,080			16,536			7,800		(7,949	)		33,467

Total expenses		250,817			16,803			90,378		(7,949	)		350,049

Income (loss) before taxes	$	25,865		$	10,421		$	15,971	$	(73	)	$	52,184

Identifiable assets	$	16,085,055		$	59,588		$	6,098,239	$	(371,786	)	$	21,871,096


	Six months ended June 30, 2004
In thousands	Asset/ Liability Products			Advisory Services			Conduits		Eliminations			Total Investment Management Services
Revenues^(a)	$	184,739		$	25,198		$	45,126	$	(7,347	)	$	247,716
Net realized gains (losses)		(2,569	)		(374	)		—		—			(2,943	)
Net gains (losses) on derivative instruments and foreign exchange		(8,581	)		(9	)		8,594		—			4

Total revenues		173,589			24,815			53,720		(7,347	)		244,777
Interest expense		149,943			—			33,530		—			183,473
Operating expenses		17,157			17,151			9,620		(6,584	)		37,344

Total expenses		167,100			17,151			43,150		(6,584	)		220,817

Income (loss) before taxes	$	6,489		$	7,664		$	10,570	$	(763	)	$	23,960

Identifiable assets	$	11,462,320		$	58,556		$	6,146,780	$	(228,235	)	$	17,439,421


	June 30,				Percent Change
In millions	2005		Restated 2004		2005 vs. 2004
Case-specific:
Gross	$373		$327		14	%
Reinsurance recoverable on unpaid losses	43		27		57	%

Net case basis reserves	$330		$300		10	%
Unallocated	295		331		(11	)%

Net loss and LAE reserves	$625		$631		(1	)%

Gross loss and LAE reserves	$668		$658		1	%

Losses and LAE⁽¹⁾	$ 42		$ 40		4	%

Loss ratio⁽²⁾	10.0	%	9.7	%


Reinsurers’ S&P Rating Range	Percent of Total Par Ceded		Reinsurance Recoverable (in thousands)
AAA	76.67	%	$	11,014
AA	12.38	%		8,638
A	10.86	%		13,226
Not Currently Rated	0.08	%		324
Non-Investment Grade	0.01	%		—

Total	100	%	$	33,202


Reinsurers’ S&P Rating Range	Percent of Total Par Ceded		Reinsurance Recoverable on Unpaid Losses (in thousands)
AAA	77.12	%	$14,724
AA	12.56	%	12,960
A	10.23	%	14,890
Not Currently Rated	0.08	%	295
Non-Investment Grade	0.01	%	—

Total	100	%	$42,869


Month	Total Number of Shares Purchased⁽¹⁾	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan⁽²⁾	Maximum Number of Shares That May Yet Be Purchased Under the Plan
January	283,701	$	61.72	201,600	10,705,900
February	1,301,568		59.03	1,281,000	9,424,900
March	2,075,364		57.86	1,993,700	7,431,200


3.1		Amended and Restated Certificate of Incorporation, dated May 5, 2005

~~10.1~~		~~Fourth Amended and Restated Credit Agreement, effective March 31, 2005, incorporated by reference to Exhibit 10.01 to the Company’s Current Report on Form 8-K filed on April 5, 2005.~~

~~10.2~~		Second Amendment to the Second Amended and Restated Credit Agreement, dated as of April 14, 2005, incorporated by reference to Exhibit 10.01 to the Company’s Current Report on Form 8-K filed on April 22, 2005.

10.3		MBIA Inc. Annual Incentive Plan, effective January 1, 2006, incorporated by reference to Appendix C to the Company’s definitive proxy statement filed on March 30, 2005

10.4		MBIA Inc. 2005 Omnibus Incentive Plan, effective May 5, 2005, incorporated by reference to Appendix D to the Company’s definitive proxy statement filed on March 30, 2005

31.1		Chief Executive Officer – Sarbanes-Oxley Act of 2002 Section 302

31.2		Chief Financial Officer – Sarbanes-Oxley Act of 2002 Section 302

32.1		Chief Executive Officer – Sarbanes-Oxley Act of 2002 Section 906

32.2		Chief Financial Officer – Sarbanes-Oxley Act of 2002 Section 906

99.1		Additional Exhibits - MBIA Insurance Corporation and Subsidiaries Consolidated Financial Statements


				MBIA INC. Registrant

Date: ~~May 10,~~August 9, 2005				/s/ NICHOLAS FERRERI
				Nicholas Ferreri
				Chief Financial Officer

Date: ~~May 10,~~August 9, 2005				/s/ DOUGLAS C. HAMILTON
				Douglas C. Hamilton
				Controller (Principal Accounting Officer)