MBI - Earnings call transcript Q3 2019

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Operator

Welcome to the MBIA Incorporated Third Quarter 2019 Financial Results Conference Call.

I would now like to turn the call over to Greg Diamond, Managing Director of Investor and Media Relations at MBIA. Please go ahead, sir.

Greg Diamond

Thank you, Dorothy. Welcome to everybody to MBIA's conference call for our third quarter 2019 financial results.

financial yesterday, including and release, Public our operating and closed on several XX-Q, Finance market MBIA supplements websites, both our financial statutory Guarantee the Corporation. we and posted issued items quarterly Insurance After Corporation for National statements results press

We update listings to of insurance portfolios. also posted the our

XX-K urge read and XX-Qs to results. our on information definitive investors contain and qualified information and not call. provided most financial disclosures Company's in our today's Those note Company anything and are that as the the may Regarding as contain disclosures other said also addressed on filings, Company's that those by about they XX-K XX-Qs in documents call, operating current please the and be its SEC call today's documents. is incorporated the our We

press The supplement. the in included A the call, release. financial our our and non-GAAP will press the XX-Qs become definitions as end included it operating of our remarks results replay hours and call approximately results and the reconciliations two available as in and for are also included XX-K release terms in after accessing is well yesterday's our quarterly of today of information recorded financial today's

Safe disclosure For our Harbor statement.

publicly or statement aware later statements. no reliance if statement mbia.com. place The results and update may on forward-looking longer our any results our XX-Q, actual in The such Our in such remarks from is call becomes are to and XX-K Company correct available detailed factors forward-looking cause to referenced accurate. cautions could on undue at Risk differ undertakes today's such on Important Company contain obligation projected which also that factors statements. the no conditions forward-looking to our our environment conference forward-looking as general are any competitive materially website statements. it market not

follow. comments; For session then, Anthony our introductory some will McKiernan will a and call Fallon question-and-answer provide today, Bill

Now, is Bill here Fallon.

Bill Fallon

Thanks, us Thank for you with Greg. everyone. being today. Good morning,

were PREPA in materially Our rates. adjustment losses the third results decrease quarter investment National future financial outweighed Lower of bonds recoveries of estimates estimated the uninsured and interest generated benefited this the portfolio, payments. of the were from greater COFINA Trust There interest from sale earlier loss a sold rates year. positive that and unwrapped loss sale the contributions also Custodial bonds as restructuring COFINA that resulted expenses of from of loss from lower out

quarter. common share our of during the the results third In million stock, from addition, repurchase MBIA X.X of benefited Inc. per shares

XX.X repurchased XX.X the The year, share. nine Over of this XXX,XXX the through October purchased million million quarter per XXXX the we shares first have was another to XXth, $X.XX we during end average price months shares. we the repurchased shares. of Subsequent third for

is believe our shareholders. to continue our We prices attractive shares effective that at way long-term an to increase repurchasing for value

As had approximately remaining October we existing XXth, share under repurchase of our authorization. $XXX million

of in of bonds National’s the third of of Custodial As large Trust. obligation. quarter, was created directed COFINA. were that all proceeds The COFINA part year this Trust I sale COFINA earlier that of restructuring earlier, during uninsured of the the mentioned the as out National The remaining sales the a portion pay held the comprise bonds down COFINA sale the from Custodial

million of or of of its course accreted $X.X par of debt plus the combination reduced COFINA billion interest accreted from of interest National a the only on trust the of or has billion service. from $XX assets, commutations million to insured exposure sale certificates and plus service via $X.X gross of debt gross obligation Over par $XXX this through resulted of COFINA of the that restructuring year, National’s custodial prepayments from

further due of including gross notes. exposure leverage notes interest dividend par gross XXXX. $XXX In of of at to X, National’s million quarter, MBIA term million those COFINA at reduced million the was Inc.’s $XX outstanding remaining during exposure capital interest billion billion September to Its insured the gross the has Inc. the Rico year-end approximately to we $XX at portfolio $X.X XX, called Puerto credits, at XXXX. XX to $XXX senior was an we to par project restructured XX doing par over XX, Subsequent of CAB National’s September XXXX. from accreted Inc., X.X% to as-of-right from of in in down National. excluding par, statutory of savings quarter-end so, net third received MBIA XXXX. Turning ratio insured X to MBIA October,

quarter's for the Since which general in support the signed Mediation XX%. to PREPA bondholder bonds the Puerto National call, agreement, agreement that on Rico raised obligation last insure. for support conference about HTA continues we to restructuring

perform at expectations. credits other insurance The our with consistent our continue portfolios to

Anthony Now, will results. cover financial the

Anthony McKiernan

Thanks, everyone. good Bill, and morning,

balance GAAP company I holding and walk our and of results our cover and Insurance will the non-GAAP begin for and through statutory the Corp. results XXXX with third lastly sheet, quarter National review MBIA

$XX several recoveries. XX, a were consolidated the Rico $X.XX of net expense lower loss GAAP consolidated future effect his due A September XXXX. for benefited driven estimated compared income the and per $XX rates of quarter XXXX the value results for exposures adjustment present Puerto factors. quarter ended share the XX, million $X.XX loss to The The or of to share National quarter to for discount of related the reported net Company loss per by million GAAP on or negative ended September

to had Corp. losses our estimates claims hedging Inc. from cost. written held gains assets at bonds the at an interest Second well gains which out that balance were MBIA adjustment interest on on as Insurance due higher rate that to their And were fair put-back loss VIEs and trust all in These GIC swap the MBIA gains items on Suisse; to COFINA value increase by of two supporting of X our sold partially consolidated for and on mark the from the sheet. original PREPA due are items, portfolio sale of been RMBS as down lower offset loss from the expense Credit market rates. uninsured the previously bonds National, at

The expense income in and valuation as our taxes quarter tax unrealized to by to this attributable gains required GAAP. other allowance on comprehensive changes relates

loss expenses benefit in For share Company's due the diluted insured an lower net the measure Rico quarter million net related per Puerto and QX loss $XXX of a a primarily at the and earnings loss per of $X.XX third income non-GAAP to the of of net favorable quarter, tax XXXX exposures the equity and to benefit The compared expense income, XXXX. $X.XX adjusted third was tax or and diluted for negative other neutral. with XXXX comprehensive adjustment National the is discount million for $XX The share quarter to rates. change or its due was adjusted

the quarter's income related million $XX COFINA to consolidated adjusted net In a gain included this addition, VIEs.

$XX.XX XX, per XX, XXXX, due primarily share increased XXXX driven September to value shares Book share as by as outstanding repurchases. of to of December fewer versus $XX.XX

in million million holding the and assets items: received September spend segment as-of-right voluntary segment, August. call minutes at assets quarter as Unencumbered the value were includes the now which of XX, QX There par and pledge primarily will total assets After X.X% year-to MBIA approximately I by $XXX $XXX National’s also payments. The tax $XXX quarter-end, was companies. of MBIA supporting total and the a $XXX following escrow of cash in of activity account, had primarily MBIA contributions interest corporate dividend the which few this XXXX prior Inc. MBIA held Inc. in GICs from of represents XXXX the the $XX GIC insurance Inc., and material XXXX. of in company, totaling National to the in on were million $XXX balance XXXX. of October, corporate market XXXX liquid The notes the Within Approximately at $XXX rate million cumulative to remaining due the the due million. totaled date and million from Inc. are tax decrease swap, million versus sheet operation.

of uninsured results. XXXX, favorable National primarily exposures statutory income PREPA third by gains of the July investments, lower exposures. quarter-over-quarter to statutory year's $XXX National gross driven of of comparable billion. aforementioned basis. paid for gross $XX million $X.X XXXX was totaled bonds reported the Puerto prior loss quarter. and in sale loss Turning net due Rico compared million the Rico insurance XXXX to net In for Rico on Puerto related $X of LAE date The the Inception quarter statutory Puerto claims result to on with July company’s million the a related through for to claims insurance

billion. $X.X Gross and cash fixed billion. a $X.X As value of had and stands reduced claims-paying par income of quarter September carrying by now billion including totaled capital XXXX, investment resources billion. XX, and book total outstanding National’s the equivalents was $XX.X $X.X adjusted at cash portfolio, Statutory billion during $X.X

the the Zohar of quarter. in year as related the related related to The quarter, loss result a XXXX quarter third due compared the XXXX. Insurance the in for increase the unfavorable RMBS to to terminations well by decline third current Turning quarter result in as credits, premiums in salvage million was income MBIA for of was offset the a higher to prior Corp. $XX statutory primarily $XX acceleration of in loss as premiums LAE an partially of million net statutory earned The to year

XX, of $X.X Corp. XXXX Corp. of As XX, at of XX, and of Insurance versus million statutory MBIA December September XXXX, claims-paying the XXXX. $XXX resources was and billion. as Cash $XXX September million MBIA assets liquid capital $XXX as totaled million totaled

the facility. During Funding the completed the MZ quarter, MBIA Corp. of loan refinancing

to over now, call we to session. the will turn the begin operator question-and-answer the And

Operator

KBW. [Operator of George Instructions] from the Bose question line comes with first Your

Tommy McJoynt

is for This on Bose. Tommy McJoynt

that steps PREPA the RSA, through Now next there? can have you walk the you guys joined

Bill Fallon

in Motion, of regard RSA, heard step be scheduled point to this which with to key next Swain. the in at mid-January XXXX Well, the Judge front is is the

terms So, of the in key along. just that’s step moving the next process

and So, what happens wait then. we’ll see

Tommy McJoynt

National’s you to over, next this where was as head you Okay. up a for year public then ticked going and the into XQ guys an Do have bit par that of then, switching And outlook gross run-off pace finance expect pace quarter. well?

Bill Fallon

is is you the which those. just the is that given predict the refundings size really In can point, hard amount, well, take down. in that at absolute most indicated The dollar of the beyond amortization, just past our down to coming the in those of this in We’ve that on XX-year quarter. each the book Yes. part keep schedule general, call we’re find coming place as materials given to that

I a amortization schedule hard to as So, but little predict, every off the is we’re bit quarter. materials. in come the said, seeing And listed

Tommy McJoynt

PREPA uninsured last bonds? just of say was the did one, then, the a of And gain you what amount the Thanks. the on Okay. sale dollar

Anthony McKiernan

for gains quarter total $XX a about $XX of P&L, on National were PREPA. The its which the million for million

Tommy McJoynt

Okay. Thanks, guys.

Operator

question Your with next Geoffrey comes Partners. from Dowling of & line Dunn the

Geoffrey Dunn

Thanks. Good questions. morning. few A

to the First, been I have understand discount. want the rates make on accounting Obviously, I just volatile. sure

So, you some basically quarter-to-date, of in reverse second have the generate that correct quarter? with drop benefit. that rates see But, fourth is up the this I we’d think that in quarter the

Anthony McKiernan

It's drive reserves We in the It’s are the the what really good primarily which risk-free -- basis-point as quarter, average in rates to on XX time this as going far Rico should morning. at fourth Puerto rate exposures. the depend value, quarter. help just about the loss for really the had recovery decline going results on the to increasing of

when rates on quarter are it’s do So, in our we the loss going just where fourth really reserves. depend to

Geoffrey Dunn

there obviously, no factor up? if goes But, back if go offset -- up, is back Okay. there is rates mitigating it

Anthony McKiernan

Nothing’s being equal. That’s correct.

Geoffrey Dunn

a happened pretty to prompt the against you And was MBIA to to with during what RSA this, I respect PREPA? anything terms seen What Okay. the bit? previously? publically you change there? elaborate Can to the versus quarter on we’ve sign adamantly out mean, changed then, did little

Bill Fallon

the was two-thirds the had fact group than supporting more Geoff, they creditor factor, RSA. the that primary The of

Geoffrey Dunn

par so originally hear originally lastly sell then, received, you to I adjusted at able at and And bond around on and booked a the than value. remaining value correctly were then I COFINA the a that turn you guess Did lower bonds were for sale, those Okay. the gain them to them that liability. in trust

Anthony McKiernan

standing So, for point correct. GAAP the quarter, from consolidated is -- a these VIE, this is VIE. that’s a Every are a it quarter

on quarter this the the estimate value at market gain, last quarter, the fair then the based we value time and a So, sale experienced the fair of sale. from

Geoffrey Dunn

market? to with coincide mark reserving? those that in expected book that that the Was had how gain you of So, because had for than reserving the something the anticipated does bonds was a you accounting that valuation to a what higher on

Anthony McKiernan

GAAP again, Well, purposes, concept kind there. for of as reserve really, of again, the loss a VIE, isn’t

holders assets And all plus is the the owed off National’s and the million beyond. National insurance liabilities, balance the the been is been accrued, sheet. is certificate which proceeds have XXXX put liability result repaid, and the assets the have just for gone liability remaining in $XX in have you are obligation So, after and is that the par essentially

reserve For quarter of it’s that last analysis changed. the a at materially loss And had stat that the purposes, end normal we credit was do. we not

So, you the with change was based prior But, still par material wind same up our $XX on million basis. no stat accrued. in a the there place credit on analysis, plus

Operator

from from BTIG. Instructions] comes Bologna [Operator Your next Giuliano question

Giuliano Bologna

on congrats Good morning. quarter. And the good

Bill Fallon

you. Thank

Giuliano Bologna

the has on Is the like bonds of I side upside has there potential RSA to guess, any wrapping were in some from in couple the the the couple new some National other RSA of the and wrap National other It jumping revised topic. there back of that the of joined? where ability elements bonds of additions to the on transaction? looks PREPA

Bill Fallon

At But, do they stated, this point, have as the is has whether National or there not option. be upside, And to remains the seen. option. you

Giuliano Bologna

it on early? Are sense. calling extra an liquidity would you any -- notes obviously the makes side, make the some thinking million liquidity of comes calling $XXX at Then, ‘XX early? That notes look additional of or sense about ‘XX to Inc. up,

Anthony McKiernan

robust sure a look what we position think have did the make at out a every clearly, as this next that I the company. We continually We’ve quarter. $XXX the we we’ll But quarter. Again, million cash holding do ‘XXs we to as several we look we’ll done years, we’ve want had view move forward. at

Giuliano Bologna

in on the like question of driving It National Then, quarter OpEx sense thinking up is be only side at about the sense. say. today, the little I should how looks I’m that tick a side there expense last kind thinking forward? Is and other the operating or roll makes is, That anything we should going the there forward.

Anthony McKiernan

Yes.

is related with side, operating we Rico the National litigation credits. to expense the the On the banks Street against Wall for filed associated that our increase main the Puerto case expense

what that is drove So, associated expenses. expense the with operating legal filing the

Giuliano Bologna

me. That sounds time. good. I That for you. appreciate the was it Thank

Bill Fallon

Thank you.

Operator

There questions at the are call over I’ll no Greg this back turn time. further Mr. to Diamond.

Greg Diamond

call directly of all to who have you to today. us any Please you thanks And contact Dorothy. listened questions. the again, Thanks if additional

on website that day recommend the mbia.com Thank also interest visit We at additional for Company. your information you MBIA. you our for in Good bye. and good

Operator

that today’s thank your that gentlemen, conference and ask and does you your for conclude We disconnect participation you please Ladies call. lines.

MBIA (MBI) 9 Nov 192019 Q3 Earnings call transcript