Earnings call transcript Q3 2022

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Operator

Welcome to the MBIA Incorporated Third Quarter 2022 Financial Results Conference Call.

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

Greg Diamond

Thank you, Chelsea. Yes. call third-quarter conference financial MBIA's to for XXXX our results. Welcome operating issued market our several quarterly National financial Public closed Corporation the Corporation. MBIA and for financial and both statements yesterday, XX-Q, Finance including After and websites, we posted Insurance statutory our items results, Guarantee supplement, on

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

addressed as said in Regarding operating most Those today's the other definitions our information report financial The information and also is and provided our included the qualified non-GAAP its and incorporated our documents. reconciliations XX-K, call and operating and well definitive of XX-K in our results company, SEC call, contain XX-K also about please to included We XX-Qs, company's filings, today results. XX-Qs on are note today's are as disclosures remarks urge our on by the as supplement. as in the disclosures in they our that read call. and company's anything not documents and XX-Q, be those terms current the contain our that investors quarterly may financial

the call, replay website accessing week's the become hours will The end and MBIA today's in information announcement it press report the available two on of yesterday. results approximately of recorded was posted call included last the and for after in financial the

Now for our Safe statement. Harbor disclosure

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

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

Now, here Fallon. is Bill

Bill Fallon

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

As the of website our quarter exposures, Barclays third resolving the report Puerto on given we including our strategic sale yesterday, noted company, financial to that we company. progress our have alternatives Rico posted potential we in a for the explore possible retained results

not further not or particular the have timeline that a determine a completing development and can necessary. in outcome. process established disclosure process there the and We transaction for be until further unless disclose no intend result to appropriate we do we strategic this Also, or assurance is that

Since III exposure When conference adjustment plan effective the bonds HTA our to payments the National debt effective, The of becomes last issued Rico of of Rico Transportation insured remaining is significant remaining still cash the is and Title restructure Court. full to the receive will Authority call, plan in implementing approved additional at Puerto been newly by that extinguish last or the PREPA. the pending for exposure National's date time. has insurance claims and HTA its bonds. plant Highways will intends Puerto make and this HTA

PREPA ordered proposed Oversight submit adjustment Board Title of plan X. the Court the September, to for In III our December by

simultaneously. security for the In No in interest litigation. revenues for nature hearing extent date PREPA's addition, concerning the set bondholder has litigation this of been and PREPA's occur will

to million is remaining of September gross $XXX As of XX, par National's insured. PREPA exposure approximately

year-end gross approximately XXXX. September portfolio $X.X to run insured other National's XXXX with XX, billion at by par as $XX to expectations. to insured insured continued has perform The National's from our off consistent to outstanding portfolio has credits. Turning continued its billion declined

third quarter, XX:X to declined Also, to of at the XXXX. par gross year-end XX:X the of down National's capital from statutory ratio end leverage at

As unpaid cash salvage million with billion of and of National totaling as and $XXX investments September claims-paying XXXX, $X.X billion reporting. total claims $X.X had of per resources XX, statutory financial

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

Anthony McKiernan

good and Bill, morning. Thanks,

XXXX review and the $XXX a consolidated quarter a our negative non-GAAP third with for begin of company share the per September for million per a will GAAP reported ended The GAAP XXXX or loss negative third quarter consolidated net results. loss $XX to compared $X.XX $X.XX share of GAAP I XXXX, of or third quarter net of XX, a million

income, which The at RMBS, largely Corp lower loss by a wrapped driven net case decline, first ALM at associated legacy business to quarter in to due recoveries our its MBIA in due on gains of LAE rates. higher reserves lower and LAE rates interest loss applied interest was loss higher benefit with caused to our investment net to mark-to-market swaps lien this National, higher discount rate

lower as somewhat net as higher These investments, primarily premium losses Corp, MBIA from investments VIE-related on mark-to-market sold income. the neutral of well which losses Corp on favorable investment purchase comprehensive variances largely resulting losses wrapped were also were rates, released was an due to offset by earnings, from realized at equity MBIA losses interest as security, other

the National Loss to was HTA-related fourth primarily quarter due in at Rico Puerto this lower it to collateral on its expects quarter receive of LAE estimated expense prices in XXXX.

had approximately Puerto instruments restructuring Puerto received Rico saw its GO approximately of its XX, CVIs National GO also contingent the during CVIs. part and bonds XX% quarter. debt or sold as of of XX% of HTA National the September of the it geo-related As Rico all value

adjusted of compared LAE loss $XX XXXX. million measure, the favorable The share net of adjusted quarter third due or with share $X.XX $XX to for negative diluted primarily a was an at company's third change quarter The negative per loss, diluted lower of National. or was the loss per $X.XX million non-GAAP net the a XXXX, for in

Corp. losses due share as per by in to driven MBIA of investments negative comprehensive XXXX, other Included per million XXXX, and unrealized book year-to-date credit September Insurance spreads, decreased the of as $XXX Inc's share book share as loss. to negative $XX.XX a net negative a value wider is on income, a value XX, XX, to value higher per book rates versus well recorded MBIA interest $XX.XX share of $X.XX December as primarily per

now will segment, the results. segment which corporate our a I company's of minutes Inc, the includes and spend sheet XXXX. of statutory assets of primarily $XXX company, as activity the million XX, The September had balance insurance Corporate total on few holding MBIA approximately

items. as $XX right this Inc of September cash National to expects compared The are this XX, approximately with December MBIA liquid the assets Holding by month. $XXX of Within from company held material XX, total XXXX. later Unencumbered as million dividends totaled $XXX as of million following and million receive a XXXX,

supporting segment's Corporate at legacy the pledged to $XXX market approximately the also assets The included million and rate assets swaps GICs interest operation. GIC the of value,

$XX Turning statutory XX, ended National reported of insurance net statutory income net XXXX, the the September for XXXX. company's a the loss ended statutory September million quarter versus to XX, of results. $XX quarter million for

The have and gross on billion. Statutory as on insured securities unfavorable Rico benefit remained the X/XX/XXXX, comparison totaled in quarter. a a well $X.X Puerto the exposure through paid loss From $X.X recoveries capital and lesser respectively. sold billion consistent claims relatively at as resources claims paying and HTA was QX approximately LAE in losses year-to-date loss XXXX inception during billion extent, of primarily to to LAE in QX XXXX values realized PREPA in due on recoveries, versus $X.X

was $XX net The Corp. the compared in benefit was for Turning net in to in partially statutory XXXX, of comparison loss a by an primarily quarter net expected XXXX. public QX Its LAE termination to finance quarter earned statutory to premiums credit in to higher due XXXX. recoveries, Zohar due MBIA a XXXX million for by the the decline of of Insurance driven income favorable third $XX a international third loss million of offset

financials. XXXX, collateral, interests recoveries and its of our plan MBIA asset Zohar asset became statutory estimated recorded of effective the assets litigation continue insurance QX accounting, recovery in recovery our in in interests Corp will companies and recovery as GAAP to consisting entities. In through these from Zohar of the values bankruptcy the Different share changes be received portfolio

million. statutory of $XX to year-end due September MBIA Corp resources XXXX, million increasing year-to-date of XX, MBIA the $XXX XXXX, $X.X public XX% net million approximately credits. finance billion reduced and September and of par is $XXX XX, gross As and during from XXXX, was as Insurance quarter claims-paying of the by the outstanding Corp's capital of totaled million, non-US insured $XXX that income was primarily exposure

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

Operator

Tommy our Thank [Operator McJoynt with We'll Instructions] you, from KBW. question first sir. take

Your open. line is

Tommy McJoynt

look like? pros versus could of Thanks guys. for us your From perhaps, on morning, understand sale and feasibility what perspective, a you and just company Good sale the advisor. the whole cons would of a retaining National an the Hi. help the of update

Bill Fallon

the Yes. what that, the be have you've the could have what It that Tommy, buyer, past really whole also with could be People of National regard people shares. XXX% sold, they would think would to on and be about perspective perhaps, does sold. which highlighted, company combination mentioned the how and the be. depends in common suggested

that probably doesn't depend But the to sense really each you're get this pros sort the of does make it buyer and about. of at point, it on because one, into talking cons

And communicate we So as I have that. that that we'll think as we'll makes out. we sense, play let information said, more

Tommy McJoynt

think that be financial buyers, in fair and thinking Okay. to prospective play? should just And of is it both buyers strategic

Bill Fallon

Yes.

that's think the I case. definitely

Tommy McJoynt

is question from me. What to opportunities? to settling of few buying do the some below-par various expect over holding the opportunities you another Okay. or And next company what values obligations type And flexibility just of available accretive at then at pursue for your those months? capital your become

Anthony McKiernan

Good morning, Tommy.

the taken to very of been of couple us, we've Inc the yields. over for So at the market some debt last buy as opportunity has solid back the opportunistic years,

I as this holding to the at debt we're XXXX company right and So the dividends, of has 'XX. of enough cash really with maturities looking think point through past as today,

feel to opportunities we're that related that volatility if but So continue I in liquidity advantage Obviously, our progress. the take it. market opportunities position enough very business, we at to to ALM arise, of a as think sensitive take look confident we'll we'll

Tommy McJoynt

a Thanks. just forgot of on last one, actually part follow-up I question. And Got the first my to it.

sale confirming company need happen. resolved for Is still kind posture case? that of not is that can the Just of PREPA be to a the does the that fully

Bill Fallon

case. We Yes. that the believe definitely is

Tommy McJoynt

Thanks. Okay.

Operator

you. Thank

Partners. Dunn Our & Geoffrey Dowling next with question come will from

open. is line Your

Geoffrey Dunn

out morning. constructive Swain hoping on a provide I with to discussions the development was be about in but in, It it color been bit this of Has of seems how Good Or summer constructive winter set. like share was play is losing PREPA. deadline proceed? in the Outside stretching frustrating? were another you just a anything been looking going how then going is you and sounded little like negotiations and Can more lack might on? to of this now, been back the able a Thanks. has more PREPA patience we're into spring. this have Judge normal become

Bill Fallon

Yes. hearing Geoff, I'm there yesterday, omnibus an you're aware. as sure was

sequence that And think, you all of so, if this at just Most described the the I of continued. public domain not it, point. is in this,

remediation Judge there a aware, or sessions, ordered back. while of sort So, the you're back, recommended impasse Swain an as reached. was everyone

Oversight where And go last these to any everyone come weeks came four sort today. plan the six court real between that required And indicated really in she then submitted to of be on interaction from we lot in require since hadn't needs by of parties. was December been out wanted mediation that's would back, X, the that sessions. she the that a there what she are to yesterday input that recommended Board or

type So by expect between X, would there now interaction we plans and of Board, December would that have Oversight the be filed again, and this date some there's of be then. to

Geoffrey Dunn

great. Okay, you. Thank

Operator

Thank you.

Saunders will next Our with come from Capital. question Paul Hutch

line is open. Your

Paul Saunders

morning. Hi, for interrupted - call. Thanks during operator call. my actually the I guys. Good the first got taking

know questions I'm quarter, XX notes below didn't first hope you repeat offered in your just But now. and quarter. on any I'm my you I this you sure euro So nice see buy the slug bought question a of is thoughts first-to-maturity any on here. I second not I sort guys your know are debt buybacks. And asking debt of

also You've your to on thoughts that those. are got yielding cash thing. huge a notes kind just lot address those. discounts, And double of then digits I'm of obviously, curious, longer-dated at the and

with the thoughts of on back kind holding cash general just debt. company at buying So sitting versus your

Anthony McKiernan

Anthony. It's morning. Good Paul. Sure,

So be to a ask someone little previously. because repetitive, part of this going is did

so this in, XXXX - enough at XXXX But holding So forgive the cash got for is me of with company that. we've again, point. and we really as-of-right the to looking dividends where are kind today, to coming

we've think, some the As last and opportunistic back debt solid accomplished said, we've outcomes been I you of buying over couple on years.

it. we're which given why continue the few last look we've to arise, continue few volatility, that embark next the But hesitated months, as sensitive at on look we'll obviously liquidity general, going opportunities We've company the to to months. in market to additional been the position So holding at is buybacks. over to

On company's looking windows, the to, liquidity held at later-dated holding paper, the we've allocating sure just that just generally making the properly for we're needs. earlier

kind And has So those generally liquidity liquidity the been window. have expanding called the stronger. gotten been a of over company's as time we've speaking, who holding following, for position that's

now said, to 'XX as 'XX. we're kind So at looking of I

Paul Saunders

Yes.

specifically Zohar. Okay. that, can color increase just you MBIA that value was the in that just salvage big And and increase what you value collateral any a saw or for on provide the then prepared was write-up - more provide. mentioned Zohar you I said you color or specifically any remarks, Can for Corp, in

Anthony McKiernan

Sure.

the the is, that over Corp permitted the some Department our has quarters, we've Financial two been up Services. under classified last own has salvage remediation reasons. at practice MBIA of bought as for of we from two got York salvage New for back So purposes and a wrapped gone paper One

has other that few had a ascribed resulted increase the reason is in which were in assets The to an bankruptcy before particular August, in the ended we recoveries, because bankruptcy Zohar there couldn't we ended. value since not

and bankruptcy values there aided after for were a went went effective, the that's escrow few the been - trust bankruptcy a and account increase salvage those date items in to formed effect So Corp. the litigation

Paul Saunders

last Barclays is one That's me. just exciting. And definitely for retention Okay. helpful. The of

I what context look think that Can think last? look will of investors terms a of in just are just you for hear running And us happy on that of that process steps are timing lot of How sort of that. will to long understand provide guys sort will you what sort like? it any down you to like.

Bill Fallon

predict hard but how to It's Yes. play out, may working Barclays. been with that exactly we've

that situations, work, of or probably you're of I of types really to things the buyers there's then has As talking get aware do to the and it and should for a we've ready to process needed started. these is say, as process, done in that or parties and internally part prospective bunch we all interested

let to hard is the things But nature of I and will beyond confidential. that, it a And these out play think it's be things lot the very predict. of that we'll

to As when to we've indicated, shareholders. we'll we have it something say, make sure we communicate

Paul Saunders

- like maybe but you process it And running this M&A traditional more, information you Okay. can't is gathering? it this, or guess, is it I a is - answer auction are or

Bill Fallon

beneficial will things and we very pretty is, would company a for I some very think I which But the the everyone former, would which closer are traditional there traditional to be I recognizing process, consider to process, it's this us. as is different view be think may a about that that our unique shareholders.

Paul Saunders

guys. you, Thank great. That's

Operator

with [Operator Capital next come question Our Staley Advisors. Thank from will John Staley you. Instructions]

open. line is Your

John Staley

I me very trying lines understand long-term questions Thank Bill, help this to shareholder as of two separate a will better. you. that have

start get the indicated you received bondholders to settled, you ago, of Puerto proceeds. it Rican squabble rest you. half up lawyers a months the Once saying bond bondholder you the the they guys the in to Rican opposed the various with get authorities. between highway settlement in Puerto tied for Some as of Then release then argue

play does like that squabbles And other a to running half and another Invesco where that, guys got PREPA, me, they suing? over to that confusing have are seems resolved get, - give the did you stuff we just the been going the your tab I and something up politically to will Now, get what to where have highway you And lawyers. be just seems resolved comparable then to were how you've between bond it that you on and or bondholders. have proceeds that to expect It first the for situation you indicated the you very and yourself has then assume. from to

Bill Fallon

on could I continent a John. of There's that probably lot

the has in into we your the was to think of consideration, which two in none of of I reduced. been split original terms what receive that will agreement heart parts, question,

You're execution there summer, correct, amount the absolutely received the in an it The completion of back the upon has and of court additional part we or was the deal. plan. the approved

a in be the Swain the Court, was where set. was has the process discussed will actual plan and no not through perhaps is can III date be exchanged but There Title be hearing they there therefore, that where go be Judge it thought of filed omnibus consideration been would will period consummated specific in the and a set. front in date yesterday there We objections

to on not again, months date, month. But it three keep assured, Hard predict, but but that or anything that. the us two up did you if none occurs rest describing. give this there's that all no surprise we'll were specific we - in wouldn't eye our But

has of settlement been amount. lost nothing in original terms So HTA the

it then Oversight As similar, we and subsequently, at restructuring the by refer that. we are rejected or PREPA. no point there that relates the while I has to ago, the thought of quite PREPA, by that We that with very support back an are Government suppose different some this as than by RSA, regard to agreement Puerto went a Board. agreement approved that things had the was to Rico it's There court agreement while been that is

predictions point. how now we PREPA. mediation we're an Board but of focus make position that earlier in out, Oversight any again, will And with So play response as at that's indicated I on this not the behalf the in question, a in to to are a

John Staley

- when to you my second then move And question. let's Okay.

question. obviously some at to having Barclays, if be liquidation guess Rican here with while it's that naive me, it a I you buyers strikes the expertise the you likely seems compelling and get you one a will essentially buyer, the had financial me engaged have strategic be a But as will perhaps this, which As they and it is Puerto would because also anybody, play look AGO opportunity is a strategic probably that exposure.

there overhead. there if eliminate synergy I - you mean when curious corporate I'm obvious is

there AGO. all business, got already a from have you to cetera, guys directors you and National et relief some all their picked like move MBIA or entity But If ratings have makes from already. in Did is standalone that from more? are up National, they the the cash in pay the size, it where bonds, arbitrage, maybe their there some et to the arbitrage ensuring and overhead officers reserves some cases? or to Is you move are on a from strategic of cetera, you larger that you you any kind same or into they ability

Bill Fallon

those two describing - put if certain if company by particular, answered their what - guess combined is two the better a the is amount insurance ratings, hold is to actually less more focus rating. and would But regard operations. you you you therefore parties. on I of question with capital capital when to particular definitely focused I And attain a can in companies that suppose would together, possible. I a you're on

be or a That a to we your synergy. point, benefit clearly

you therefore to a benefit larger point, can the and approval, our two, The money would you to need, combined the shareholders. shareholders, Services' and your to the case, Financial other and also of be is when that the be extent more diversified, need that trying the would released same to that to one portfolio thing in don't combine and you're you extent to be that capital to keep Department remove

John Staley

from the issue you is think that company, there cleanest that the related exists transferable? be liability Inc, recourse entity that, I company? company company asked but comes no else, once If before, is to I or of the your whole there, somebody clearly National insurance to where have separation to anything MBIA holding Okay. transaction, would to the acquiring any this in to buy that which And back financial or

Bill Fallon

of Insurance MBIA Corp Inc are MBIA or separate. completely National's. not To is Their of obligations your the point, obligations

where legally owned has by a is separate Inc, no XXX% is it So support it. it but entity MBIA obligation stock the to

John Staley

Okay. that transfers in deal? And the

Bill Fallon

Correct.

that of of XXX% which referring is stock to, buy - that you think the MBIA Inc, you're If would structure then what remain. I

John Staley

I'll moving very and here. Thank Very, And you guys pleased the another done. much. are that on very echo getting of you something comment forward person

out fast. Let's well and works hope it

Bill Fallon

Thank you for your John. call,

Operator

you. And no time, further at Thank I'm showing this questions.

the or turn management for floor So additional to I would like remarks. over any closing to back

Greg Diamond

Thank you, any Please additional those you you questions. listening to have today. if call of us directly Chelsea. the contact to Thanks

on We also second, got person we've recommend the a - in hold another queue.

Operator

Capital.. from We Doug Shay next have question Setherson a with

Your line open. is

Unidentified Analyst

response an It's you process the actually The [Seth]. a quick to was comfortable in did Puerto to of formality Or reaching feel and going on out row ducks approach Barclays, in and what question. Rico? guys? this about, A retaining on strategic somebody you were unsolicited finally, alternatives actually was many in based

Bill Fallon

latter. It's the

Unidentified Analyst

in What And the shareholder quarters? calls, past or to in informally, have value. about maximize this step about versus prior you different guys looking is formally talked

Bill Fallon

we've I have while, know way exposures. want complete have at on probably has it, come that our for to the point. think estimate indicated XX%, as but you Puerto we're Rico how through conclusion PREPA, we I large this I our substantially depending we of the to mean, been XX% now restructuring a

might PREPA, the And settled. mediation one given the parameters back a around least even the there's sessions, get and negotiations which and that forth at with of in sense

move to believe best in we, our even probably while, now to - And fully of take time So, from And we it again, was as executed. pursuing don't strategic alternatives. it the to shareholders that agreement be can an wait. terms aware, have we for we you're thought a reach

Unidentified Analyst

to arms buyers they'll not impede a parameters, there strategics a ambiguity is even in pursue something enough financial that won't but and are maximization, conclusion not final get I value And though range now? their that around, be to ambiguous, comfortable there or fact or the be will guess, the able

Bill Fallon

be change, can to we some approach. things case. that the always our for adjust If reason believe We

Unidentified Analyst

Thank Great. you.

Operator

have turn to remarks. this closing at time, further I'd back questions. And for you. like Thank we it management no to

Greg Diamond

us Thanks again, call. to directly Chelsea, and additional you any call the if have thanks to Please questions. everybody else listening

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

Operator

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

may disconnect. You now

MBIA (MBI) 3 Nov 222022 Q3 Earnings call transcript