MBIA Inc. Reports 10 Percent Increase in First Half Net Income Per Share; Operating Income Per Share up 6 Percent.ARMONK, N.Y. -- MBIA MBIA Montana Building Industry Association MBIA Municipal Bond Insurance Association MBIA Michigan Boating Industries Association MBIA Municipal Bond Investors Assurance MBIA Massachusetts Brain Injury Association MBIA Maryland Business Incubation Association Inc. (NYSE NYSE See: New York Stock Exchange : MBI MBI Management Buy-In MBI Moody Bible Institute MBI Mathematical Biosciences Institute MBI Modular Building Institute MBI Mechanical Breakdown Insurance MBI Molecular Biology Institute MBI Maslach Burnout Inventory (psychometrics) ), the holding company for MBIA Insurance Corporation, reported today that first half 2006 net income per share increased 10 percent to $3.08, compared to $2.79 in the first half of 2005. Net income for the first half was $420.4 million, up 9 percent compared to $386.5 million in the first half of 2005. For the first half of 2006, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. per share, which excludes the effects of net realized gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. and net gains and losses on derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. and foreign exchange, increased 6 percent to $2.95 from $2.79 in the first half of 2005. Excluding refundings, first half 2006 operating income per share rose 3 percent to $2.57 from $2.49 in the same period of 2005.
Diluted earnings per share information
--------------------------------------
Three Months Six Months
Ended June 30 Ended June 30
------------- -------------
2006 2005 2006 2005
---- ---- ---- ----
Net income $1.62 $ 1.27 $3.08 $ 2.79
Net realized gains 0.08 0.00 0.08 0.01
Net gains (losses) on derivative
instruments and foreign exchange 0.04 (0.11) 0.05 (0.01)
----- ------ ----- ------
Operating income (1) $1.50 $ 1.38 $2.95 $ 2.79
(1) Non-GAAP measure
In the second quarter of 2006, net income per share increased 28 percent to $1.62 from $1.27 during the same period of 2005. Net income for the second quarter was $221.4 million compared with $173.7 million in the same period last year, a 27 percent increase. Second quarter 2006 per share results were positively impacted by $0.12 per share of net gains versus net losses of $0.11 in the same period of 2005. For the second quarter of 2006, operating income per share increased 9 percent to $1.50 from $1.38 in the second quarter of 2005. Excluding refundings, second quarter 2006 operating income per share rose 4 percent to $1.29 from $1.24 during the same period of 2005. Gary Gary, city (1990 pop. 116,646), Lake co., NW Ind., a port of entry on Lake Michigan; inc. 1909. Gary was founded by the U.S. Steel Corporation, which purchased the land in 1905 and landscaped it for a city. Dunton Dunton is the name of more than one place. In the United Kingdom:
emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. banks. We remain focused on our commitment to create long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. value for our shareholders, pursuing only those business opportunities that meet our rigorous underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. and pricing discipline." Insurance Operations Adjusted direct premiums (ADP (1) (Automatic Data Processing) Synonymous with data processing (DP), electronic data processing (EDP) and information processing. (2) (Automatic Data Processing, Inc., Roseland, NJ, www.adp. ), a non-GAAP measure, which includes both upfront premiums written and the present value of estimated future installment premiums for new business writings and excludes premiums assumed or ceded, decreased 38 percent to $399.5 million in the first half of 2006 from $646.6 million in the first half of 2005. For the second quarter of 2006, ADP declined 14 percent to $283.5 million, compared to $329.0 million during the same period of 2005. In the second quarter, non-U non-U adj. Chiefly British Not characteristic of the upper class, especially in language usage. [non- + U2. .S. public finance and U.S. structured finance provided favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. comparisons over last year's second quarter, which were offset by weaker production in the U.S. public finance and non-U.S. structured finance business sectors.
Adjusted Direct Premiums
------------------------
(dollars in millions)
Three Months Six Months
Ended June 30 Ended June 30
------------- -------------
2006 2005 % Change 2006 2005 % Change
---- ---- -------- ---- ---- --------
Global Public Finance
United States $ 73.7 $143.8 (49%) $121.7 $285.6 (57%)
Non-United States 102.2 57.6 77% 102.2 65.1 57%
------ --------------- ------ ---------------
Total 175.9 201.4 (13%) 223.9 350.7 (36%)
Global Structured Finance
United States 73.8 33.3 122% 89.6 171.5 (48%)
Non-United States 33.8 94.3 (64%) 86.0 124.4 (31%)
------ --------------- ------ ---------------
Total 107.6 127.6 (16%) 175.6 295.9 (41%)
Total $283.5 $329.0 (14%) $399.5 $646.6 (38%)
MBIA's global public finance ADP decreased 36 percent in the first half of 2006 compared to the first half of 2005. Compared to last year's first half, U.S. public finance production was down 57 percent, impacted by a 15 percent decrease in overall market issuance and a 33 percent decline in insured volume, as well as a particularly competitive market environment. Non-U.S. public finance production, during the first half, increased 57 percent due to two significant international transactions that closed in early April. In global public finance, 84 percent of insured business written in the first half of 2006 had underlying ratings of Single-A or higher. MBIA's global structured finance ADP decreased 41 percent in the first half of 2006. U.S. structured finance ADP declined 48 percent compared to first half production in 2005, however, second quarter production more than doubled as a result of increased ADP from CDOs, Operating Assets Operating Assets Another term for working capital. and Residential Mortgage-Backed Mortgage-backed may refer to:
Scheduled earned premiums Earned premium is the portion of an insurance written premium which is considered "earned" by the insurer, based on the part of the policy period that the insurance has been in effect, and during which the insurer has been exposed to loss. in the first half of 2006 declined 5 percent to $336.8 million from $354.7 million in the first half of 2005. The decline was a result of early policy terminations of structured finance deals as well as the effect of refunding Reimbursing funds in restitution or repayment. The process of refinancing or borrowing money, ordinarily through the sale of bonds, to pay off an existing debt with the proceeds derived therefrom. activity in prior periods, which accelerated the earning of premiums into earlier periods. Earned premiums from refundings were a robust $85.8 million for the first half of 2006, up 23 percent from $69.6 million in the first half of 2005. While refunding par volume in the U.S. public finance market was down 52 percent for the first half of 2006, MBIA's earned premium from refunded issues was boosted by five refunded deals, including two international credits, that accounted for more than 25 percent of the refunded premiums earned for the first half. Pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta net investment income in the first half of 2006, excluding net realized gains, was $284.4 million, a 14 percent increase from $249.6 million in the same period of 2005. The increase was primarily due to the growth in interest income related to consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Variable Interest Entities (VIEs) and the growth of invested assets. While investment income for VIEs continues to be shown in net investment income, as of the first quarter of 2006, VIE interest expense has been reclassified to the interest expense line on the Company's income statement for the current and prior periods. Excluding the effects of VIE interest income, pre-tax net investment income would have increased by 8 percent. MBIA's fees and reimbursements (which had been labeled Advisory Fees until the first quarter of 2006) were up 15 percent in the first half of 2006 to $12.2 million from $10.6 million during the first half of 2005. Total insurance expenses were up 20 percent in the first half of 2006 to $178.1 million from $149.0 million in the first half of 2005. The increase resulted from the reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. of interest expense for VIEs and the lower deferral deferral - Waiting for quiet on the Ethernet. rate that the Company adopted during last year's third quarter for gross insurance expenses related to policy acquisition costs. Gross insurance expenses, which are prior to any expense deferrals, were down 3 percent for the first six months of this year versus the same period last year. The Company incurred $40.4 million in loss and loss adjustment expenses (LAE) in the first half of 2006, a 5 percent decrease compared to $42.6 million in last year's first half. Loss and LAE for both periods is based on the Company's formula of reserving 12 percent of scheduled earned premium. During the first half of 2006, MBIA experienced an $8.1 million increase to its unallocated loss reserve based on case loss reserve activity, which, combined with the additional loss and LAE expenses, boosted the Company's unallocated loss reserve by $47.9 million to $256.5 million at June June: see month. 30, 2006 from $208.6 million at December December: see month. 31, 2005. For the second quarter, there was an $18.7 million increase to the unallocated loss reserves from case loss reserve activity. The largest adjustment was $56.7 million for the Northwest For names and places containing the slightly longer word 'northwestern' (or variants), see . Northwest or north west is the ordinal direction halfway between north and west on a compass. It is the opposite of southeast. Airlines EETC EETC Enhanced Equipment Trust Certificate EETC Energy and Environment Technology Center EETC Early Education and Training Centre (Hong Kong) EETC Energy & Environmental Technologies Conference EETC Electronic Engineering Times - China exposure, for which the Company had established a $76.3 million case loss reserve in the fourth quarter of 2005. The adjustment resulted primarily from the sale of unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. claims, which provided unanticipated proceeds, as well as the sale of selected collateral collateral (kəlăt`ərəl), something of value given or pledged as security for payment of a loan. Collateral consists usually of financial instruments, such as stocks, bonds, and negotiable paper, rather than physical goods, although (aircraft) from one of the securitizations and an agreement to sell collateral from another securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. . There were also a number of credits that reduced the unallocated loss reserve during the second quarter of 2006. The largest adjustment came from a CDO (Collaborative Data Objects) A programming interface from Microsoft for accessing MAPI-based e-mail, calendaring and scheduling servers. Originally called "OLE Messaging" and "Active Messaging," CDO wraps the Enhanced MAPI library into a COM object that provides the transaction. During the second quarter, MBIA made a debt service payment of $6.0 million on a policy issued for New Orleans For New Orleans: A Benefit For The Musicians' Village Habitat For Humanity is an American benefit double-disc CD, with tracks from Minnesota artists, and national artists. Regional Transit Authority Regional Transit Authority may refer to:
renal tubular acidosis. RTA Renal tubular acidosis, see there ), a credit adversely affected by Hurricane Katrina  Editing of this page by unregistered or newly registered users is currently disabled due to vandalism. . MBIA expects to
be fully reimbursed for the payment and has $24.1 million net par
outstanding for the RTA. The Company continues to closely monitor the
performance of MBIA-insured credits impacted by Hurricane Katrina last
year. The Company does not expect to incur To become subject to and liable for; to have liabilities imposed by act or operation of law.Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. an ultimate loss, other than immaterial Not essential or necessary; not important or pertinent; not decisive; of no substantial consequence; without weight; of no material significance. immaterial adj. loss adjustment expenses, on its Hurricane Katrina exposure. Additionally, MBIA has approximately $1.5 billion net par outstanding for Eurotunnel Eurotunnel plc (in the UK) and Eurotunnel SA (in France) make up the Eurotunnel Group, founded in August 1986, which manages and operates the Channel Tunnel between the UK and France. as of June 30, 2006. Eurotunnel has petitioned for protection under the Paris commercial court for a safeguard procedure, a new procedure under French law with limited similarities to a U.S. Chapter 11 reorganization. At the July July: see month. 25 hearing, the commercial court decided to delay its decision until August 2. In addition, Eurotunnel has indicated it will continue to make payments on its debt obligations pending the court decision. Debt restructuring Debt Restructuring A method used by companies with outstanding debt obligations to alter the terms of the debt agreements in order to achieve some advantage. Notes: talks are ongoing and MBIA continues to work with the creditors committee toward a consensual CONSENSUAL, civil law. This word is applied to designate one species of contract known in the civil laws; these contracts derive their name from the consent of the parties which is required in their formation, as they cannot exist without such consent. 2. restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). plan to be approved by all Eurotunnel stakeholders Stakeholders All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. . The Company believes that it will not incur an ultimate loss on its Eurotunnel exposure and there has been no case loss reserve established for the credit. MBIA's pre-tax operating income from insurance operations, which excludes the effects of net realized gains and net gains and losses on derivative instruments and foreign exchange, increased 1 percent to $541.1 million in the first half of 2006 compared to $535.4 million in the same period of 2005. Investment Management Services The market value of year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. average fixed-income assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. , excluding conduits, was $49.1 billion in the first half of 2006, up 15 percent from $42.8 billion in the first half of last year. Pre-tax operating income from MBIA's investment management business, which excludes the effects of net realized gains and net gains and losses on derivative instruments and foreign exchange, increased 17 percent in the first half of 2006 to $49.8 million from $42.7 million in the first half of 2005 driven by strong demand for the Company's asset/liability products. Corporate The pre-tax operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. for the corporate segment decreased 6 percent for the first half of 2006 to $38.9 million from $41.4 million in the same period last year. The decrease was primarily due to lower interest expense and lower corporate expenses, which were partially offset by reduced net investment income. Part of the decline in corporate expenses reflects a decline in legal and consulting expenses related to the regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. investigations. Gains and Losses In the first half of 2006, MBIA recorded net realized gains of $16.8 million for all business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets , compared to net realized gains of $1.3 million in the first half of 2005. Net realized gains for the first half of 2006 included a $13.9 million write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. during the first quarter of a receivable balance that the Company obtained under salvage salvage, in maritime law, the compensation that the owner must pay for having his vessel or cargo saved from peril, such as shipwreck, fire, or capture by an enemy. Salvage is awarded only when the party making the rescue was under no legal obligation to do so. and subrogation The substitution of one person in the place of another with reference to a lawful claim, demand, or right, so that he or she who is substituted succeeds to the rights of the other in relation to the debt or claim, and its rights, remedies, or Securities. rights, partly offset by a $10.5 million gain during the second quarter related to the sale of the Company's common stock investment in Ram Re. The Company recorded pre-tax mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. net gains on derivative instruments and foreign exchange of $9.5 million for all business operations in the first half of 2006, compared to pre-tax mark-to-market net losses of $1.9 million in the first half of 2005. Book Value and Adjusted Book Value MBIA's book value per share at the end of the first half of 2006 increased $0.31 to $49.48, from December 31, 2005. The increase in book value per share was driven by an increase in retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. , which was partially offset by a reduction in unrealized appreciation of investment securities. Adjusted book value (ABV ABV Above ABV Alcohol By Volume ABV Abuja, Nigeria (airport code) ABV Assault Breacher Vehicle ABV Accredited Business Valuation specialist ABV Auxiliary Building Ventilation ABV Annual Buy Value ABV Air Bleed Valve ) per share, a non-GAAP measure, at June 30, 2006 rose 2 percent to $72.32 from $70.62 at December 31, 2005. ABV includes the after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. effects of deferred premium revenue less prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. premiums and deferred
acquisition costs, the present value of installment premiums, the
present value of the net spread of asset/liability products and a
provision for loss and loss adjustment expenses.Conference Call MBIA will host a conference call for investors today at 11 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . The conference call will consist of brief comments by Mr. C Mr C (aka Mr. Chuggs, born Richard West on January 2 1964) is a British DJ, musician and rapper. Best known for fronting The Shamen during their most commercially successful era, Mr C is also an acclaimed house music DJ and co-owner/co-founder of London's The End nightclub . Edward Edward killed his father at his mother’s instigation. [Br. Balladry: Edward in Benét, 302] See : Patricide Chaplin, MBIA Chief Financial Officer, followed by a question and answer session with Mr. Chaplin. The dial-in number for the call is (877) 694-4769 in the U.S. and (973) 582-2849 from outside the U.S. The conference call code is 7388808. The call will also be broadcast live on MBIA's Web site at www.mbia.com. Those who are unable to participate in the conference call may listen to a replay by dialing (877) 519-4471 in the U.S. and (973) 341-3080 from outside the U.S. The replay code is also 7388808. The replay will be available on MBIA's Web site approximately two hours after the end of the conference call. MBIA Inc., through its subsidiaries, is a leading financial guarantor guarantor n. a person or entity that agrees to be responsible for another's debt or performance under a contract, if the other fails to pay or perform. (See: guarantee) GUARANTOR, contracts. He who makes a guaranty. 2. and provider of specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. . MBIA's innovative and cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. products and services meet the credit enhancement Credit Enhancement A method whereby a company attempts to improve its debt or credit worthiness. Notes: Credit enhancements take many different forms. An example of a credit enhancement would be conversion rights added on to a debt instrument in order to lower the issuing , financial and investment needs of its public and private sector clients, domestically and internationally. MBIA Inc.'s principal operating subsidiary An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. , MBIA Insurance Corporation, has a financial strength rating of Triple-A from Moody's Investors Service Moody's Investors Service A leading global credit rating, research and risk analysis firm. Moody's Investors Service A leading firm engaged in credit rating, risk analysis, and research of fixed-income securities and their issuers. , Standard & Poor's Ratings Services Ratings Service A company, such as Moody's or Standard & Poor's, that rates various debt and preferred stock issues for safety of payment of principal, interest, or dividends. , Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. , and Rating and Investment Information, Inc. Please visit MBIA's Web site at www.mbia.com. This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Important factors such as general market conditions and the competitive environment could cause actual results to differ materially from those projected in these forward-looking statements. The Company undertakes no obligation to revise or update any forward-looking statements to reflect changes in events or expectations. Explanation of Non-GAAP Financial Measures The following are explanations of why MBIA believes that the non-GAAP financial measures typically used in the Company's press releases, which serve to supplement GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). information, are meaningful to investors. Operating Income (Loss): The Company believes operating income is a useful measurement of performance because it measures income from operations, unaffected by investment portfolio realized gains and losses, gains and losses on derivative instruments and foreign exchange and other non-operating items. Operating income (loss) is also provided to assist research analysts and investors who use this information in their analysis of the Company. Adjusted Direct Premiums: The Company believes adjusted direct premiums are a meaningful measure of the total value of the insurance business written during a reporting period since they represent the present value of all premiums collected and expected to be collected on policies closed during the period. As such, it gives investors an opportunity to measure the value of new business activities in a given period and compare it to new business activities in other periods. Other measures, such as premiums written and premiums earned, include the value of premiums resulting from business closed in prior periods and do not provide the same information to investors. Adjusted Book Value (ABV): The Company believes the presentation of adjusted book value, which includes items that are expected to be realized in future periods, provides additional information that gives a comprehensive measure of the value of the Company. Since the Company expects these items to affect future results and, in general, they do not require any additional future performance obligation on the Company's part, ABV provides an indication of the Company's value in the absence of any new business activity. ABV is not a substitute for GAAP book value but does provide investors with additional information when viewed in conjunction with GAAP book value.
MBIA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
June 30, December 31,
2006 2005
-------- ------------
Assets
------
Investments:
Fixed-maturity securities held as available-
for-sale, at fair value (amortized cost
$25,510,087 and $23,189,684) $25,440,302 $23,747,204
Investments held-to-maturity, at amortized
cost (fair value $4,553,735 and $5,734,335) 4,588,155 5,765,182
Investment agreement portfolio pledged as
collateral, at fair value (amortized cost
$577,209 and $712,054) 559,450 729,072
Short-term investments, at amortized cost
(which approximates fair value) 2,187,705 1,678,281
Other investments 240,736 234,927
----------- ------------
Total investments 33,016,348 32,154,666
Cash and cash equivalents 221,502 233,046
Accrued investment income 446,821 396,048
Deferred acquisition costs 434,020 427,111
Prepaid reinsurance premiums 385,704 407,614
Reinsurance recoverable on unpaid losses 44,472 58,965
Goodwill 79,406 79,406
Property and equipment (net of accumulated
depreciation) 107,356 109,275
Receivable for investments sold 74,108 74,787
Derivative assets 600,158 326,867
Other assets 221,682 293,609
----------- ------------
Total assets $35,631,577 $34,561,394
=========== ============
Liabilities and Shareholders' Equity
-------------------------------------
Liabilities:
Deferred premium revenue $ 3,123,086 $ 3,185,200
Loss and loss adjustment expense reserves 708,293 721,502
Investment agreements 11,801,633 10,806,277
Commercial paper 753,594 859,997
Medium-term notes 7,806,665 7,542,416
Variable interest entity floating rate notes 1,228,760 1,280,160
Securities sold under agreements to
repurchase 508,154 646,343
Short-term debt 40,898 58,745
Long-term debt 1,219,962 1,210,405
Deferred income taxes, net 379,226 569,536
Deferred fee revenue 17,680 20,379
Payable for investments purchased 372,322 83,369
Derivative liabilities 483,499 384,611
Other liabilities 519,872 600,810
----------- ------------
Total liabilities 28,963,644 27,969,750
Shareholders' Equity:
Common stock 157,539 156,602
Additional paid-in capital 1,467,493 1,435,590
Retained earnings 6,084,005 5,747,171
Accumulated other comprehensive income 120,262 399,381
Treasury stock (1,161,366) (1,147,100)
----------- ------------
Total shareholders' equity 6,667,933 6,591,644
Total liabilities and shareholders' equity $35,631,577 $34,561,394
=========== ============
MBIA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Six Months Ended
June 30 June 30
----------------------- ----------------------
2006 2005 2006 2005
--------- ---------- ---------- ---------
Insurance operations
Revenues:
Gross premiums
written $251,476 $ 248,965 $ 424,348 $531,584
Ceded premiums (27,166) (31,622) (51,071) (63,748)
--------- ---------- ---------- ---------
Net premiums
written 224,310 217,343 373,277 467,836
Scheduled premiums
earned 169,130 180,902 336,845 354,662
Refunding premiums
earned 47,606 32,483 85,790 69,568
--------- ---------- ---------- ---------
Premiums earned 216,736 213,385 422,635 424,230
Net investment
income 144,390 126,113 284,402 249,563
Fees and
reimbursements 4,019 4,214 12,193 10,639
Net realized gains
(losses) 17,085 996 10,073 1,207
Net gains (losses)
on derivative
instruments and
foreign exchange 1,305 4,002 6,062 (2,070)
--------- ---------- ---------- ---------
Total insurance
revenues 383,535 348,710 735,365 683,569
Expenses:
Losses and loss
adjustment 20,295 21,708 40,421 42,559
Amortization of
deferred acquisition
costs 17,122 16,858 33,388 33,515
Operating 35,889 32,268 72,616 61,434
Interest expense 18,786 6,104 31,704 11,504
--------- ---------- ---------- ---------
Total insurance
expenses 92,092 76,938 178,129 149,012
Insurance income 291,443 271,772 557,236 534,557
--------- ---------- ---------- ---------
Investment management
services
Revenues 294,299 206,543 552,505 392,778
Net realized gains
(losses) (295) (1,478) 5,233 1,716
Net gains (losses) on
derivative instruments
and foreign exchange 6,258 (27,395) 3,308 26
--------- ---------- ---------- ---------
Total investment
management services
revenues 300,262 177,670 561,046 394,520
Interest expense 249,921 167,164 466,668 316,582
Expenses 18,461 19,090 36,051 33,467
--------- ---------- ---------- ---------
Total investment
management services
expenses 268,382 186,254 502,719 350,049
--------- ---------- ---------- ---------
Investment management
services income 31,880 (8,584) 58,327 44,471
--------- ---------- ---------- ---------
Municipal services
Revenues 5,399 5,398 11,010 10,934
Net realized gains
(losses) -- -- -- (85)
Net gains (losses) on
derivative instruments
and foreign exchange 11 6 40 136
--------- ---------- ---------- ---------
Total municipal
services revenues 5,410 5,404 11,050 10,985
Expenses 4,324 5,108 9,449 10,513
--------- ---------- ---------- ---------
Municipal services
income 1,086 296 1,601 472
--------- ---------- ---------- ---------
Corporate
Net investment income 3,508 5,776 7,072 13,703
Net realized gains
(losses) 841 81 1,467 (1,527)
Net gains (losses) on
derivative instruments
and foreign exchange 138 -- 138 --
Interest expense 20,170 22,040 40,301 44,061
Corporate expenses 3,357 7,398 5,659 11,079
--------- ---------- ---------- ---------
Corporate loss (19,040) (23,581) (37,283) (42,964)
--------- ---------- ---------- ---------
Income before income
taxes 305,369 239,903 579,881 536,536
Provision for income
taxes 84,007 66,229 159,525 150,055
--------- ---------- ---------- ---------
Net income $221,362 $ 173,674 $ 420,356 $ 86,481
========= ========== ========== =========
Net income per common
share:
Basic $ 1.67 $ 1.30 $ 3.17 $ 2.85
Diluted $ 1.62 $ 1.27 $ 3.08 $ 2.79
Weighted-average number
of common shares
outstanding:
Basic 132,765,468 133,938,175 132,741,516 135,589,284
Diluted 136,634,382 136,886,153 136,658,183 138,680,637
MBIA INC. AND SUBSIDIARIES
Reconciliation of Adjusted Direct Premiums to Gross Premiums Written
--------------------------------------------------------------------
(dollars in millions)
Three Months Ended Six Months Ended
June 30 June 30
------------------ ----------------
2006 2005 2006 2005
-------- -------- -------- --------
Adjusted direct premiums (1) $ 283.5 $ 329.0 $ 399.5 $ 646.6
Adjusted premiums assumed 0.0 1.0 0.0 1.0
-------- -------- -------- --------
Adjusted gross premiums 283.5 330.0 399.5 647.6
Present value of estimated future
installment premiums (2) (156.5) (200.8) (224.2) (376.6)
-------- -------- -------- --------
Gross upfront premiums written 127.0 129.2 175.3 271.0
Gross installment premiums
received 124.5 119.8 249.0 260.6
-------- -------- -------- --------
Gross premiums written $ 251.5 $ 249.0 $ 424.3 $ 531.6
======== ======== ======== ========
(1) A non-GAAP measure.
(2) At June 30, 2006 and March 31, 2006 the discount rate was 5.00%
and 5.02%, repsectively, and at June 30, 2005 and March 31, 2005
the discount rate was 4.99% and 4.84%, respectively.
Components of Net Income per Share
-----------------------------------
Three Months Ended Six Months Ended
June 30 June 30
------------------ ----------------
2006 2005 2006 2005
-------- -------- -------- --------
Net income $ 1.62 $ 1.27 $ 3.08 $ 2.79
Net realized gains 0.08 0.00 0.08 0.01
Net gains (losses) on derivative
instruments and foreign exchange 0.04 (0.11) 0.05 (0.01)
-------- -------- -------- --------
Operating income (1) $ 1.50 $ 1.38 $ 2.95 $ 2.79
======== ======== ======== ========
(1) A non-GAAP measure.
MBIA INC. AND SUBSIDIARIES
Components of Adjusted Book Value per Share
-------------------------------------------
June 30, 2006 December 31, 2005
--------------- -----------------
Book value $ 49.48 $ 49.17
After-tax value of:
Deferred premium revenue 15.07 15.45
Prepaid reinsurance premiums (1.86) (1.98)
Deferred acquisition costs (2.09) (2.07)
------ ------
Net deferred premium revenue 11.12 11.40
Present value of installment
premiums (1) 10.44 10.53
Asset/liability products adjustment 4.12 2.40
Loss provision (2) (2.84) (2.88)
---------- ----------
Adjusted book value (3) $ 72.32 $ 70.62
========== ==========
(1) At June 30, 2006 and December 31, 2005 the discount rate was
5.00%, respectively.
(2) The loss provision is calculated by applying 12% to the following
items on an after-tax basis: (a) deferred premium revenue; (b)
prepaid reinsurance premiums; and, (c) the present value of
installment premiums.
(3) A non-GAAP measure.
CONSOLIDATED INSURANCE OPERATIONS
Selected Financial Data Computed on a Statutory Basis
-----------------------------------------------------
(dollars in millions)
June 30, December 31,
2006 2005
----------- -----------
Capital and surplus $ 4,344.0 $ 3,800.4
Contingency reserve 2,382.1 2,769.0
----------- -----------
Capital base 6,726.1 6,569.4
Unearned premium reserve 3,475.7 3,508.1
Present value of installment premiums (1) 2,163.6 2,171.1
----------- -----------
Premium resources 5,639.3 5,679.2
Loss and loss adjustment expense reserves 270.4 317.8
Soft capital credit facilities 850.0 850.0
----------- -----------
Total claims-paying resources $ 13,485.8 $ 13,416.4
=========== ===========
Net debt service outstanding $895,271.7 $889,018.9
Capital ratio (2) 133:1 135:1
Claims-paying ratio (3) 78:1 78:1
(1) At June 30, 2006 and December 31, 2005 the discount rate was
5.00%, respectively.
(2) Net debt service outstanding divided by the capital base.
(3) Net debt service outstanding divided by the sum of the capital
base, unearned premium reserve (after-tax), present value of
installment premiums (after-tax), loss and loss adjustment expense
reserves and soft capital credit facilities.
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