MBI - Earnings call transcript Q2 2020

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Operator

Welcome to the MBIA Inc.

Second Quarter 2020 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, Maria. call second conference results. XXXX MBIA's to for quarter our financial Welcome quarterly statutory the issued Insurance including our XX-Q, we closed Corporation our supplement posted results, After Finance yesterday, on and and National market Guarantee both statements financial for several Public items financial operating MBIA and Corporation. website,

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

our read subsequent company's Company's disclosures contain to Regarding definitive on investors filings our its Those as the most information Company by that call the contain is today's call, and qualified in SEC recent financial current incorporated please addressed are XX-Qs other note may in disclosures most that also call. XX-K, the become those in operating for will well available be results. definitions included financial supplement. XX-K terms anything and included are in documents today's our as The quarterly urge and our and posted call and they said on the We about our XX-Qs provided replay financial information XX-Qs not The as documents. it today of and operating the recorded hours approximately included last of of in in the reconciliations accessing as report and press MBIA week's announcement is yesterday. results and the that the the the in end XX-K today's call, remarks X also results our we website non-GAAP our information on after

Now for our safe harbor.

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

Anthony For our call by comments, today, provide introductory a Fallon will followed session. question-and-answer Bill which be McKiernan will and

Now here Bill Fallon. is

Bill Fallon

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

from quarter by Company's half net loss Guarantee adjustment National For expenses, Finance XXXX, loss the caused slightly those than of and second Public by the loss balance primarily the with recorded second expenses The was Corporation exposure more by of MBIA by Insurance recoveries MBIA Corp.'s and loss quarter Corporation. the Zohar pandemic. largely reductions the Rico not losses and resulted for meaningfully were CDOs. National's These in Puerto losses COVID-XX influenced estimated insured on the

General continue Commonwealth insured National's or Electric we last evolves. to HTA. have Power the our the review from and no comprised Puerto COVID-XX assess meaningful of the Rico months. been the Transportation Obligation in Puerto PREPA Authority, the largely X Highway There However, Bonds, to portfolio GO Rico credits Puerto our credits: as and Rico and PREPA; will Authority, pandemic X or is impact exposure the to changes

property denied revenue pursue the is it it across disagree Court lift The seeking III accepted our to Regarding public the of final. Title HTA, last motion the provisions bankruptcy appeal used are once finance interest. decision month, that state our to tend the HTA and widely to and with We bonds market.

of it. banks governments debt the Puerto proceed, The now remanded could attractive certain of ruling Rico to par last par underwriters will at infrastructure statutory portfolios with consistent At first the billion and state complaint. local reduce, will to finance to of where capital we portfolios outstanding the insurance rates. more $X.X Most billion, our case litigation credits court's leverage from continue perform our gross insured declined respond make down of has to to continues So difficult our of portfolio $XX quarter. National's was insured Commonwealth insured gross XX, was XX:X. Last underwriter further against and our the week, projects the the June expectations. to had in back some ratio Court, for National's to it soon The where XXXX, filed

price During XX.X second through of National at common million per shares million quarter, the share. average of XXXX, MBIA purchased X.X Year-to-date MBIA's National shares share. an purchased XX, price per at an July stock of average $X.XX $X.XX

repurchase July million MBIA XX, and remaining XX.X had its shares XXXX, of $XX authorization. share million outstanding As under existing of capacity

results. cover Anthony Now financial will the

Anthony McKiernan

gains good $XXX a of loss XXXX mark-to-market non-GAAP and million and $XXX the the million factors: favorable interest minutes per I to allowance XXXX loss part million to reported our XX, Company's the was to $X.XX as gains share benefited Within recoveries with on LAE primarily spend in on loss increase These by expense. reversal to had rates XXXX. compared XXXX. Corp. as exposures offset from held adjusted of June was the aforementioned quarter per few a $X.XX ended Credit decrease associated for this income. expense second a XX, for a $X.XX or or paid impacts XX, share XXXX, a Discount of or June the will the a was cash quarter decreased billion per in to in XXXX, swaps net average, of unrealized in related GIC in adjusted holding offset rate second requirements accelerated the repurchases per as increases on credit $XX.XX primarily curves; losses activity an of of $XXX quarter result investments were net by million net XX, share due this morning, the claims of balance MBIA value due Zohar was to corporate to items only due the due a XXXX of versus Loss share XX, shares the slightly in assets rates, loss increased Unencumbered was net fewer MTM as primarily lower XXXX. December net XX, segment, second at share with LAE segment for business loss this The XXXX. Inc. changes of versus or total Inc., CLOs. a several to partially expense; as quarter first year-to-date expense tax million due VIE of sheet adjustment MBIA negative for due year. alluded loss collateral Company Book December consolidated as favorable and XXXX, $X.XX with items. loss, and loss XXXX during versus ended net rate on MBIA National company, resulting reduction XXXX. higher a risk-free Loss in XXXX, investment driven lower net an decrease earlier. XX, at the which GAAP a market million and recovery quarter quarter to in share The spreads. offset LAE material as loss part Thanks, losses versus the loss per corporate $XXX for Suisse Puerto $X.XX half outstanding in credit in will to tightened AMT due of by now everyone. related in to assets to XXXX $XX GAAP review interest lower as $X of The are minimal the investment compared quarter insurance of quarter due following total in second collateral Liquidity HTA, adjustment The played $XXX and liquid million, companies. held-to-maturity the income. interest of refund. results. measure, our a requirements the from by to the on Bill Rico COVID-XX-related million loss during modestly also somewhat lower expected on by spreads June income investments June loss XX non-GAAP focusing The GAAP includes of share partially was negative begin a compared XXXX, I of as Liquidity Bill, to net QX on decreased XXXX VIEs; primarily of negative change the QX quarter. June on consolidated and and from the deconsolidating the our The lower to lower $XX primarily totaled and per and

tax of of were account, National's XX, remaining there $XX deposits represented XXXX payments. tax made the As XXXX, million portion the escrow June tax which of to

pledged the in the the not expected meaningful of last supporting market $XXX company assets stated the GIC a swaps we liquidity approximately future. rate holding tax quarter, As contributor GICs to to There and releases and value book. are million to be were escrow interest

claims, to $XXX on favorable to National results. due XXXX partially net Turning $XXX QX quarter in was loss inception-to-date brings insurance which generated a statutory for million revenue. the for extended tax gross on the subject a of been gross quarter million CARES $X.X National paid offset a rate to the company's reported loss XXXX, Puerto to year's benefit lower has result a LAE to of where carryback by XX% prior end, billion. quarter. statutory $XX operating compared net Rico loss to National's insured million Rico-related and tax Act, of second the loss tax in bonds X, net at in a XXXX comparable statutory The lower claims paid primarily loss After Puerto July

losses. impacted National's cash income portfolio, equivalents, As at from capital year-to-date purchases billion, resources reduced Insured and billion. of outstanding investment value a Inc. $X investment now shares, billion. adjusted par realized $X.X on had during net was quarter and totaled of Statutory by $XX.X year-end XXXX, billion. June $X.X XXXX MBIA book gross carrying the paying cash Claims and stands XX, total loss its $X.X including by of fixed billion

net was reduced receivable year on result statutory to XXXX. Insurance increased in related compared to the for the putback recoveries our The the quarter MBIA of million Turning second favorable XXXX due net of loss current a Suisse as to statutory quarter $XX offset loss million credits in $XX by was primarily Credit recoveries for of The second Corp. LAE loss to Zohar quarter. lower were somewhat the

and the XXXX, was was XXXX. December $XXX As the billion, outstanding Claims XX, cash totaled $X Corp. insured million as par of billion Suisse rulings. court question-and-answer and gross million. recent session. call as resources $XXX And a $X.X decision Credit begin capital the of over totaled June paying MBIA Corp.'s XX, the $XXX of the statutory million as on versus we June trial assets given of We now the MBIA as progress turn the process liquid XX, Insurance well operator Zohar in XXXX. await to monetization to will

Operator

[Operator Instructions].

Our first Tommy comes of of from line McJoynt the question KBW.

Tommy McJoynt

or a if governments you if there be had included federal state whether have an numbers I basically, and whether it's next the impact about release, And to not expectation included? there built as your support Bill. into any local for will question will be or in it's

Bill Fallon

There from are state know, is imagine, talk while financially, the lot to carefully and around, a as distributed about past, these side, going monitoring you what's local of was of there lot explicit as being days. specifically there's at we can support an time least a not this number, D.C. but you money in the democratic in And government. on

the it how that and more seen or may we obligations could be see more plays immediately out, example, there and time, wait have stress from, general clearly, for an pandemic claims while depending haven't cities, impact. and state of over we'll any evolves. how And on So

important an to factor. right the is an part related that. But there's explicit it So now of no, not calculation

Tommy McJoynt

dealing minimal mentioned expenses from And constrained facing said, loss higher your adjustment And kind of that revenues more COVID-XX. related potentially given lower for really there impact, was broadly the extend with does to pandemic? to loss number you budgets, XQ in and tax municipalities and expense, potentially you that sales

Bill Fallon

how see is The we yes, and to again, short behind that, evolves. have this answer and wait

some for what government the example, on some response waiting these of stress and have see, revenues. states does to While, we're what in the to drop clearly, many and there's been situations, of then the cities also

Tommy McJoynt

there -- you gears. And last right here? good potential guarantors one, any then that banks what that? the sizing we're a we gives claims Or RMBS about that settlement the ruling could pursue just us a proxy think in was there? years over widely. Is be the the recovery Puerto that and Okay. of against the Obviously, for for week stayed claims how pretty Is think last about what the switching for a seeing proceed underwriting the of to number should mentioned some way Rico. There to

Bill Fallon

you some are there just Conceptually, similarities referred that to.

We strong heard. pretty In which I for now], it's be And feel the in is court, terms obviously sizing, proper from claim is have to of Rico however, process. as [in here. them next we the banks litigation early this really think the indicated, the we response a venue very the Puerto

this to to and early come that. probabilities, it but start be So to will with easier even it's against is as one, what evolves, up do trying perhaps if it to pretty this, that's you're right now size

Tommy McJoynt

impact the ruling came timing no of given And XQ July, was that out that in there financial correct? when numbers, of from in

Bill Fallon

reflected our that from this litigation nothing in recoveries at There's point. No.

Operator

BTIG. Mark Palmer of Our question next line from comes of the

Mark Palmer

the could you that, and us comment implications that is on regard with could ruling broader if the some what to you With is Title the HTA, stand? of III give regard to sense appeal on ruling to of allowed timing court if the

Bill Fallon

Yes.

that's to reasonable First, But of appeal of next I or over regard timing, the the filed. think period X, a month there with think of are to procedural the being litigation. elements the a other couple

pick to take. of move litigation, to hard that will sometimes action need terms relatively we in again, but on So quickly whatever

pursue implications, for that of to my knock-on believe In do liens the functioned, comments, not is issuers mentioned that believe and in market. rates as then think this do there we this has terms We is are not the optimistic market likely and question, believe broader it with case, reversed. in borrow the are that the we that part your changes regards decision. that way in second right that be is the We that able at. And to we that, that municipal that the confident market, of and the reflected that but are effects place Mark, has as if the we the was to strongly this, I is

Operator

Instructions]. [Operator

question next of Esterov Our comes of the from Joshua line CreditSights.

Joshua Esterov

situation, helpful. National, credits With the for regards devote any And there Rico to did in closely, time of that portfolio you're to exposures need tracking review could Puerto pandemic color were at give or insured given the would any that you ongoing general, on you or given ongoing outside where conditions? particularly sectors additional be sectors the

Bill Fallon

Yes.

more are As entire the at we to looked some of some likely stress you clearly face can to the COVID-XX. impact due imagine, There portfolio. that are

near or where imagine, can certain the rent-a-car give our reduction associated you type states looking There entire I'll have or But portfolio, at imagine, issuers, tax as example of no there's you don't So can that see, cities. is it is as whether with but one we'll sector there And a related is with are portfolio in so National We claims. since continue subsector. are sales reviewed any others, best with more in those the monitor And rental and some fees some experience. to stress longer be in felt things travel impact revenues rent-a-cars. car example. probably That's we're are term, the to they the they deals been business much and by in again, you the at The and credits point, claims, being of slowed airports, severe the just are those. one. associated very will down, the this carefully, again, the

Joshua Esterov

a But as could would was give approval If from National, any update well. planned special for the to just on which that update requesting with in. are I I Could to And think potentially question plans be originally XXXX? helpful you regards dividend what second an as us get a for

Bill Fallon

I put believe ever special that Yes. been out regard date the a from dividend with National was to a there's holding to don't company.

company. of that restructuring, continue it the I think timing this the on special we opposed to challenges, is about And as after holding to Services to discuss going restructuring the said point. events on it's of to Rico we the is consider estimate progress is in hard Puerto of up what Rico at Department meaningful the terms from any the there dividend we've aware, very Financial think National would calendar. more to the Puerto to you're the And day just

Operator

ladies joining today's I with like conclude And And question. you that final Quarter that, today's would MBIA gentlemen, Earnings and for XXXX conference Thank our to was call. Second Call. Conference

You may now have day. and a disconnect, wonderful

MBIA (MBI) 8 Aug 202020 Q2 Earnings call transcript