MBI - Earnings call transcript Q1 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the MBIA Incorporated First Quarter 2022 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, Gretchen. Welcome to MBIA's conference call for our first quarter 2022 financial results. for yesterday, including and quarterly Guarantee our and financial closed on several operating Corporation. market Corporation statutory websites, Insurance our financial statements the we Public posted issued items supplement and After National MBIA Finance both results, XX-Q,

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

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

harbor safe here’s disclosure statement. our Now

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

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

is here Fallon. Bill Now

Bill Fallon

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

Over effective. has the months of three significant this year, restructuring March of there of Rico in our last credits. progress Puerto adjustment the been Commonwealth Rico for XX became plan Puerto the the of On

has National's Rico PBA, the Obligation, With or implementation of that Building or Authority, all insured plan, been exposure General insured Puerto and eliminated. Public of GO,

in value or and is exposure were received addition under Authority, Puerto HTA, August cash revenue National's in in by engage of Board III adjustment After restructuring Board CVI and to plan and and in remaining form PREPA. this the Puerto proposed In confirmable Rico Title with Puerto PBA for Governor Oversight PREPA GO this resolved for plan the possibly the bonds a the bankruptcy National's the million Puerto will in develop satisfied for debt contingent of National Puerto exchange payments. adjustment the claims hearing Puerto that Court Last confirmation Highways Transportation terminated week, insurance HTA, of year. plan, ordered to instruments, Rico filed Rico agreement the of Rico which HTA latest recovery HTA the March stakeholders consideration to a for support Oversight National's or cash, mediation which National CVIs, $XXX PREPA. bonds claims. of receive Rico's significant other new subject Rico is

approximately $XXX $XXX PREPA HTA outstanding was gross insured million respectively. for and National's As of March XX, and million XXXX, par

off billion statutory And quarter. to National's from part further National's insured XXXX. as credits, ratio perform its leverage XX:X $X.X consistent billion to declined run gross Turning of declined outstanding March of with continued gross XXXX has first insured year-end has portfolio of insured capital, expectations. the other par to to the our to continued by at at National's portfolio XX, $XX.X the end

few bankruptcy the last sales quarters, have of remaining and the statutory GO Puerto our claims Over insured of the and PBA reduced and PREPA its our salvage. exposure to National added Rico assets resolution invested

year-end the increased investments at statutory XX, accounting reserves National's and $XXX salvage of For by on $XXX had salvage $XXX paid million billion statutory totaling first insured and XXXX, cash its March National million million. quarter and XXXX, claims from by over XXXX. over of investments $X.X decreased Under

Puerto for salvage exchange to income $XXX as million and Puerto For in included from also Rico the statutory holdings. and had not XXXX. received net the National's in PBA approximately GO bankruptcy and be quarter treated investment are the in securities statutory of of accounting continue its first increase Rico National statutory capital Commonwealth an claims, for

pursue the to us strategic which of company Rico include Puerto the on distributions special potential restructuring of have National. credits we from previously may As our progress our sale a and/or objectives, stated positions

we that to regarding National's resolve remaining fully Puerto is do Rico PREPA exposure it that our strategic we the pursue necessary Given have progress alternatives. to exposure, made not those believe

Now, will provide comments our Anthony additional about results. financial

Anthony McKiernan

of anticipated our PREPA National's receipt. assessment recovery the from ultimate financial expected National's the our the future a loss of quarter market our first will GAAP obligations. $X.XX LAE GAAP realized per these benefit in on to lower to related in HTA to negative $XX and with reported net company ongoing assumptions. of per to a Corp., MBIA loss well date net driven $X.XX securities March I XXXX compared loss To morning. for our acceleration the value non-GAAP higher $XXX by of good value instruments. GO sale XX, changes of will by of including loss first Rico be to was of fair prices as consolidated or was related negative on versus and quarter lower point, a The ended offset economic or PREPA GAAP gains recoveries million quarter in a million due XXXX. time over partially that increases quarter assumption to loss the the by and of the of timing higher of on loss Puerto the XXXX exposures, begin value net first loss for the depend as National prior Bill LAE offset results. its for our compensation for the of at value on share consolidated a securities and insurance Thanks, partially was lower largely review received, The contingent quarter driven instruments for expense share by this the

this plan bonds The a per offset been The of of and includes segment, now diluted with company's of a loss by $XX the insured an spreads segment diluted and XX, forward surplus be of primarily XXXX, $XXX and interest the corporate driven in There MTNs due related basis to the Going the part or swaps MBIA the through negative received first reflected was retired the by $X.XX the total will on $XXX value negative approximately loss following bonds totaled per loss as share share and XXXX. partially the to material as quarter as Corp.'s comprehensive company's for of few March euro-denominated to XXXX. favorable Inc. exposure credit assets unpaid sheet through value non-GAAP legacy National's in part a fair negative wider as National as Inc. CVA The assets LAE unrealized December to in million I share rates to measure for basis, for of share approximately primarily company change subject holding million National's quarter of higher loss other of $XX approximately of cash which CVI lower adjusted GICs on per end gains MBIA value by March payments its of Inc.'s activity XXXX. pledged held a March lower net the items: negative fully negative million earned. investment the XXXX well are at million share primarily now investments GAAP $XXX $X.XX book loss notes. Within was decreased accounting. premiums was book supporting on scheduled billion compared $X.XX quarter. LAE a MBIA per spend as rate total on as the MBIA of XXXX assets XXXX interest market to investment compared at a first has unencumbered the to not and interest implemented with XX, balance share the insurance income, received net The XX, net XX, of XX, statutory accrued as company minutes and losses on holding portfolio, million but our results. December and million of million approximately quarter were of per recorded or over will are first operation. GO and versus losses value the of $X.X a as had adjusted XXXX, GIC $XX.XX liquid a principal $XX.XX as per the corporate has of XXXX. first $XXX due with on of $XXX

versus XXXX million result for National its stated National results. loss in net expense versus exposures favorable to ended due the insurance in reason March was benefit of The statutory million QX the loss of losses quarter a the loss XX, reported statutory first primarily in quarter expense for income discounted. company's quarter for benefit versus was on XXXX. are a March The to of due XXXX. XXXX how largely Rico why statutory LAE results XX, Turning ended to net $XXX $XX loss Puerto GAAP statutory the for

than billion. $X.X with, and rates. quarter's the Therefore, reduction made by in was of Rico claims National rates X/XX/XXXX PREPA portfolio for is statutory PREPA gross approximately to the Within Rico at Puerto claim recoveries, higher fully results million, that totaled a more which than higher credits as cash increases insured claims on for from impact National was statutory exposure GAAP, for given used claim par claims discount on its statutory that as recoveries. to $XXX for its inception, investment begin offset GO National's to discount, insured Puerto yield the lower GO March For Whereas payments and in of paid are risk-free payments are risk-free and repaying gross total CVI values discounting of and GO rate is to outstanding. flows appropriate recovery accounting, this recoveries follows: insured are HTA. used

exposures. National's HTA are remaining billion, $X.X Puerto of insured $X.X PREPA totaled primary As and was XXXX, and resources March capital Rico billion. claims-paying Statutory

Its paid for statutory of of Corp. rate somewhat MZ Insurance and offset favorable outstanding net Loss loss MBIA was by for expense a earned. premiums full funding net higher in million statutory LAE Turning quarter to of to in reserves. quarter interest of junior expense, was lower first FX interest and XXXX. due million XXXX, was The floating end in primarily MBIA lower the April. quarter losses million the to first due on compared accretion primarily this to insured net loss lower after obligations expense $XX $XX quarter increased Corp. rates notes the the loss result of LAE and $XX

the unchanged Corp.'s As from XX% reduced capital MBIA resources MBIA was XXXX, Insurance million of approximately million statutory to quarter, paying XX, March finance and remediation Corp. totaled and relatively claims bankruptcy related XX, is are and recoveries session. billion this par at as the exposure was June and now, begin CLOs to the are of that operator outstanding the by non-US Zohar March $XXX $XXX during gross to projected of which million, $XXX $X.X to over year-end time. insured will credits. XXXX. XXXX both legacy Chapter of the turn we XX MBIA anticipated And largest remaining public exit the question-and-answer in Corp.'s call

Operator

from Tommy McJoynt KBW. take question Instructions] first [Operator We'll from our

Tommy McJoynt

Hey, guys. good questions. taking for Thanks my morning,

kind in just months, your the maybe of do details we against can and extent those thinking you've trends guys the how PREPA of of your So kind what's new that a weigh just to a for what RSA reserves the out we taken about embedded or go could that about haircut into imply? bit current coming you see come timing here reserve in kind the little of

Anthony McKiernan

Sure. Hi, Tommy, Anthony. it's

at bonds hold-to-maturity the We things. new quarter a what remaining so the market the several So Previously, approach. risk-free a GO for be RSA there receive utilizing that of and sure it make GAAP on recoveries The made of cash for assessment them. transition there's for we we the this are did value Using which really a flow most felt the that's assumptions know. terminate. were in value we were We would factors a HTA, And losses backdrop, for discounted as this the earlier our exposure, changed rates. and we you PREPA. this considered discounted PREPA to quarter of we to to our when that and estimate position analyzing PREPA value I'm number perceive of we reflect of that we did day

on in bonds compensation. views that outcomes market related the how into are would the at the trading timing We And did form to more So the HTA expected be. some including the we RSA new did of take GO light do we that. and the which color on termination, given trades reexamine possible and the of account of color bonds the compensation have

look recoveries, to different Is So assumptions it And how more value a approach impact because market change at things perception resulted in of the it flows you an that the is to at a rate than this factor of does discount those a discounting timing? when when aspects in it taking made compensation, to those our again this loss rate purposes market point, as a the using Is example, more for market at The new of we all in here, at looking change. at because recoveries change risk-free thinking GAAP quarter the this that? cash we about have we which year? when look looking receive value related you're you're expense.

recoveries my higher comments, For in rate. stat, already at we're said discounting as I had a

but So the impact for National, mosaic for less an on kind of the the we for at had the quarter. same change much financial made results of stat looked a that's

Tommy McJoynt

of your the milestones Okay. right of June that of on line, I And case key of know dates scenario? that after Kind then for X. now July mediation thinking what kind -- about PREPA assumption time either for kind your until lookout in kind the kind be the or case your base of the the are in we base that's should X or

Bill Fallon

In terms on of parties just about which have PREPA from this the comes mediation, what into. entered

at maybe a that on probably that there'll the should call. you're So line next we earnings know more about. And be point time asking

Tommy McJoynt

kind what And been mean, it. of you the Got shrinking. of switching Okay. are doing expense manage side to just business? operating gears, guys the I has the portfolio

kind just are actions continues you can rightsize as down? the of So kind run taking organization, kind that of it of to

Bill Fallon

The in portfolio considerable a years keep looking to organization and described. are we the expenses. few that rightsize as made just answer the yes. back as is constantly reduction at looking that And We operating runs you a off to ways at

Tommy McJoynt

Thanks Okay. for question. taking my

Operator

John Staley question [Operator Instructions] Staley We'll our Advisement. from next from Capital take

John Staley

of were And quite company. on the stocked of of other restored. the that, of don't one there reasons side Bill no of I sold the by all purchases directors have the I course, Obviously, bit was you to see, disappointed liquidity know a stock.

been profit. a market getting stock. the clearer your And You're picture punishing the on has

curious of minimum a In XX% stock to fact, on getting adjusted yesterday's and so some past. stock with as more a close your traded book hasn't just the still I'm the market? it buying lower curious you've be is what in levels at clear potentially of what appears picture in the sure to not may trading be the than relatively of I'm approach I'm purchased discount

Bill Fallon

Yes.

company we we know over the shares have And the regard with my service regard liquidity don't bought have and at comments many off actually National. company. holding the the think relative the have that almost I debt of you good is John shares obligations years all to at you to holding the to With repurchasing So, as those top we head. through number of the mentioned

little purchase under average the was a price think I $X.

that worked for So out sense has a well shareholders. in

point able to is any at regulatory this of However, more a time. requirements we're National shares because not now at purchase

Again, point using the purchase calculation at future could we change in out to we've change that calculations, look of but don't shares. near this liquidity National's on would based anticipate certain but we'll continue it. tapped So, kind at to that that

John Staley

there can't Are to company? right. holding the that you catch purchased areas other All back you it

Bill Fallon

we the pursue. to now but primarily comes think holding most holding National. could, dividend that strategic debt liquidity of alternatives the liquidity used we're we We of for at talk as-of-right the the from about as obligations holding company the of better know service the to positioned why we And That's company you company.

to a company future. One of distribution special would getting up be the them holding in National, from the

John Staley

you. Thank

Bill Fallon

Thank you.

Operator

our next question take a Edelberger from from [ph] – We'll William Private Investor.

Unidentified Analyst

morning. Good

PREPA said not you resolution necessary the sale think that I to a company. of is of pursue

you point assume this in you've I'm subset pushback particular met saying, wondering at buyers Puerto price take there's fully that buyers. so after resolved. if I is Rico with and some of in What you So, portions say interested can timing prospective share price look they're portfolio on only the transaction feedback on? any of the of or regarding is a the they'll can

Bill Fallon

Yes.

the is, restructuring mentioned one Rico that we've As indicated an we've important the of Puerto is obstacle. things

However, we mentioned. resolve just and We think you my I Puerto also need did mention don't as Rico. comments all to in of

nothing specifics several at now we're well positioned there's prospective this and think have we conversations point. we quarters. really really seen this With progressing can with So, we that share we've regard to now of for buyers

in them many be we know into confidential you when As of would would even get those nature. details

to positioned pursue at really think share these are else than we alternatives. other point there's nothing can that well So, we do this we

Unidentified Analyst

Thank you.

Operator

or go the floor over back further remarks. questions time. the we additional this It I ahead have turn will management for to at closing appears and no

Greg Diamond

to of listening call me additional to Gretchen. today. contact you you, directly, you if those have any And Thank Please our questions. thanks

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

Operator

ladies and This conclude gentlemen. you, call. today's financial quarter XXXX conference Thank does results first

now may disconnect. You

MBIA (MBI) 10 May 222022 Q1 Earnings call transcript