MBIA Inc. (MBI) reported first quarter 2013 net income of 84 cents per share in the first quarter of 2013, substantially higher than 5 cents per share in the first quarter of 2012. The improvement came on the back of reduction in losses, absence of other-than-temporary impairments in the quarter and lower operating expenses.
MBIA reported an adjusted pretax loss of 10 cents per share during the quarter, narrower than $2.82 per share reported in the prior-year quarter. The lower losses in the quarter resulted from lower net losses on insured exposures, absence of net investment losses related to other-than-temporary impairments, gains on sales of investments and lower operating expenses owing to significantly lower legal and litigation-related costs.
Including all non-recurring one time items, MBIA reported pretax income of $215 million in the quarter, compared to $21 million in the year-ago period.
Quarterly Operational Update
Total revenue in the quarter declined 42.8% year over year to $219 million from $383. the decline in revenues resulted from a decline in premiums earned (down 12.4% year over year) and net investment income (down 38.7% year over year).
Total expenses of MBIA in the reported quarter declined substantially to $4 million from $362 million in the prior-year quarter due to significantly lower legal and litigation-related costs.
Quarterly Segment Update
The U.S. Public Finance Insurance segment is managed by its subsidiary National Public Finance, set up in February 2009.
Total premiums earned in the U.S. public finance insurance segment were $103 million, down 3% year over year due to decrease in scheduled premiums earned.
Pretax income was $142 million compared with $55 million in the prior-year quarter.
The Structured Finance and International Insurance business operations are managed by MBIA Corp. The segment reported a pre-tax income of $136 million compared with a pre-tax income of $102 million in the prior-year quarter.
Premiums earned, net investment income, fees and reimbursements, and premiums and fees on insured derivatives amounted to $95 million in the quarter.
The Advisory Services are managed by Cutwater Asset Management. In the first quarter of 2013, Cutwater recorded a pre-tax loss of $1 million compared with a pre-tax loss of $4 million in the year-ago quarter as lower operating expenses more than offset the impact of lower fees and reimbursements.
The Corporate segment reported a pretax loss of $46 million in the first quarter of 2013, compared to a loss of $10 million in the year-ago quarter. Higher legal and litigation related expenses partially mitigated by higher fees from affiliates and a decline in interest expense due to repurchase of a portion of outstanding senior notes of MBIA resulted in the increase in losses.
The Wind-down Operations reported a pretax loss of $19 million compared to a loss of $147 million in the year-ago quarter. Negative net interest spread in the ALM business, losses related to fair valuing financial instruments and a $10 million fee paid to the Corporate segment partially mitigated by favorable foreign exchange, led to the pretax loss in the reported quarter.
Cash and cash equivalents of MBIA stood at $862 million at Mar 31, 2013, up 5.9% from $814 million at Dec 31, 2012.
Total assets of MBIA at Mar 31, 2013 were $21.6 billion, down 0.6% from $21.7 billion at year-end 2012.
Adjusted book value per share (a non-GAAP measure) declined to $30.56 per share as of Mar 31, 2012, compared with $30.68 as of Dec 31, 2012.
MBIA Corp.'s statutory capital stood at $1.3 billion at Mar 31, 2013 and claims-paying resources were $5.34 billion.
Long-term debt of MBIA declined 0.06% from 2012 end level to $1.7 billion as of Mar 31, 2013. Debt-to-capital ratio of MBIA improved 80 basis points to 33.4% as of Mar 31, 2013 from 34.2% as of Dec 31, 2012.
Performance of Other Stocks
Genworth Financial Inc. (GNW) reported first-quarter 2013 net operating income of 30 cents per share. The result surpassed the Zacks Consensus Estimate of 27 cents and was much above year ago level of 3 cents.
MGIC Investment Corporation (MTG) reported first quarter 2013 operating loss of 31 cents per share, substantially worse than the Zacks Consensus Estimate of a loss of 20 cents per share. MGIC had reported an operating loss of 10 cents per share in the year-ago quarter.
Cigna Corp.’s (CI) first-quarter 2013 net operating earnings of $1.72 per share outpaced the Zacks Consensus Estimate of $1.43 per share. Moreover, the results surged nearly 39% year over year.
MBIA currently carries a Zacks Rank #3 (Hold).
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