NEW YORK (AP) -- Shares of MBIA Inc. soared Monday after the company said the New York State Supreme Court upheld an earlier decision that found that a 2009 plan to restructure the insurance company was legal.
THE SPARK: A group of banking institutions that held insurance policies MBIA issued had claimed the restructuring, which was approved by the New York State Insurance Department, was fraudulent. On Monday, MBIA said that while initially a group of 18 banks challenged the approval, by the end only two remained.
"After almost four years of court filings, discovery and hearings, we are pleased that the New York State Supreme Court has affirmed what was obvious all along — that the New York State Insurance Department's approval of our transformation was proper in all respects," said CEO Jay Brown, in a statement.
He added that the company is looking forward to resolving the remainder of its litigation.
BACKGROUND: MBIA writes financial guarantees, or insurance, for municipal bonds, structured finance and other finance and debt instruments. Like its peers, it was hit hard by the collapse in late 2007 and 2008 of many of the entities it backed.
The banks had argued that the restructuring left MBIA undercapitalized and potentially unable to pay out on future claims.
SHARE ACTION: Shares of MBIA jumped $2.22, or 21.5 percent, to $12.53 in afternoon trading. Earlier, the stock hit a 52-week high of $12.93.