MBIA Inc. Reports 20 Percent Increase In Fourth Quarter Net Income.ARMONK, N.Y.--(BUSINESS WIRE)--Feb. 3, 1998--MBIA Inc. (NYSE NYSESee: 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) ), holding company for 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 Insurance Corporation, reported today that 1997 fourth quarter net income increased 20 percent to $97.7 million compared with $81.5 million for the fourth quarter of 1996. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of rose 16 percent to $1.08 from $0.93. Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before grew 13 percent to $1.04 a share from $0.92. MBIA's 1997 net income increased 16 percent to $374.2 million from $322.2 million. Diluted earnings per share rose 13 percent to $4.22 per share from $3.72. Diluted operating earnings for 1997 were $4.06 per share, an increase of 12 percent over $3.61 in 1996. The per share results include the effect of a two-for-one stock split which was effective October October: see month. 1, 1997. In addition, during the quarter, the company adopted Statement of Financial Accounting Standards No. 128 -- Earnings Per Share, and restated previously reported per share amounts to conform with the new standard. Fourth quarter diluted core earnings, which exclude the net income effects of capital gains, premiums earned from refunded issues and nonrecurring Non`re`cur´ring a. 1. Nonrecurrent; as, the costs of a layoff are considered as a nonrecurring expense s>. items such as accounting changes, were $0.96 per share, an increase of 12 percent over $0.86 in the same quarter of 1996. For 1997, diluted core earnings rose 13 percent to $3.73 per share from $3.31. Book value per share as of December December: see month. 31 grew 19 percent to $34.07 from $28.64 a year ago. MBIA's adjusted book value per share for the same period increased 16 percent to $48.07 from $41.47. Adjusted book value 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 both net deferred premiums, less deferred acquisition costs, and the present value of future installment premiums. David H. Elliott Elliott may refer to: possessing the best body in the whole world. like the hottest, sexiest body ever! the feeling of his skin kills me and sends me straight to heaven. , chairman and chief executive officer, said, "MBIA's financial and operating results for the fourth quarter and year were very strong. Par value insured and gross premiums written When a non-life insurance company closes a contract to provide insurance against loss, the revenues (premiums) expected to be received over the life of the contract are called gross premiums written. for the year were the highest in the company's history as we strengthened our leadership position in the municipal bond and structured finance markets. With continuing favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. market conditions, we expect solid earnings growth and robust demand for all of our products in 1998." Insurance Operations Total new issue municipal market for the fourth quarter was $55.7 billion, a 17 percent increase from $47.5 billion in 1996's fourth quarter. The insured portion of the new issue market was 49 percent, with MBIA capturing 27 percent of the insured market. For 1997, new issue municipal volume was $193.8 billion, a 20 percent increase from $162.0 billion in 1996. The insured portion of the new issue market was a record 54 percent. MBIA was the market share leader for the sixteenth consecutive year, insuring 42 percent of all insured new issue volume. For the fourth quarter, MBIA insured $13.4 billion of par value, on a closing date basis, in the domestic new issue and secondary municipal markets, a 9 percent increase from $12.3 billion insured in the 1996 fourth quarter. For the year, MBIA insured $48.1 billion of municipal bonds in the new issue and secondary markets, a 23 percent increase from $39.2 billion in 1996. In the domestic new issue and secondary structured finance markets, which include mortgage-backed Mortgage-backed may refer to:
In addition, MBIA insured $1.0 billion of securities internationally in the fourth quarter compared with $1.3 billion in 1996's fourth quarter. For the year, MBIA's international volume was $3.3 billion compared with $3.8 billion in 1996. Gross premiums written for the fourth quarter were $161.9 million compared with $126.2 million a year earlier, a 28 percent increase. For the year, gross premiums written rose 18 percent to a record $543.0 million from $460.7 million written in 1996. Gross premiums written reflect upfront premiums received for business originated in the current period, assumed premiums for international and other 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. transactions, and installment premiums received for current and prior-period business. Adjusted gross premiums, which include both upfront premiums written and the present value of estimated installment premiums for new business writings, were $170.2 million in the fourth quarter of 1997 compared with $164.2 million in the same 1996 period. Adjusted gross premiums for the year increased 11 percent to a record $603.9 million from $543.8 million in 1996. Premiums earned during the fourth quarter were $78.6 million compared with $64.8 million in the same period in 1996. These amounts included $12.6 million and $9.0 million, respectively, of premiums earned from refundings. For 1997, premiums earned were $297.4 million compared with $251.7 million in 1996, including $50.9 million and $44.4 million, respectively, of premiums earned from refundings. On a per share basis, the net income 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, including related expense recognition, was $0.08 for the 1997 fourth quarter compared with $0.06 in the same quarter of 1996. For the year, the impact was $0.34 compared with $0.30 in 1996. Investment Management Services Average 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. for the company's investment management businesses rose 14 percent to $7.7 billion in the fourth quarter compared with $6.8 billion in 1996's fourth quarter. For the year ending December 31, 1997, average assets under management were $7.7 billion, an increase of 26 percent over 1996. These assets include municipal investment agreements, pooled public funds See Fund, 3. See also: Public and third-party accounts, but exclude MBIA's insurance-related investment portfolio, which at amortized cost was $4.8 billion as of December 31. Consolidated Financial Results Net investment income, excluding net realized capital gains and amounts earned from the company's municipal investment agreement business, increased 18 percent for the fourth quarter to $75.6 million from $64.0 million in 1996's fourth quarter. For 1997, net investment income increased 14 percent to $281.5 million from $247.6 million in 1996. As of December 31, MBIA's investment portfolio, including fixed-income securities Fixed-income securities Investments that have specific interest rates, such as bonds. related to its municipal investment agreement business, increased 11 percent to $8.5 billion compared with $7.6 billion a year earlier. As of December 31, assets supporting the investment agreement business remained constant at $3.3 billion from a year earlier. The average quality of all fixed-income investments continues to be Double-A. Total revenues for the fourth quarter rose 29 percent to $180.4 million from $140.3 million in the fourth quarter of 1996. For the year, total revenues were $654.0 million, up 20 percent from $545.5 million in 1996. Revenues are the sum of premiums earned, total investment income, investment management services income and other revenues. Total expenses for the fourth quarter and the year were $50.2 million and $174.4 million, respectively, compared with $36.8 million and $137.4 million in the same 1996 periods. Computed on a statutory basis as of December 31, MBIA Insurance Corporation's unearned premium reserve was $2.1 billion, and its capital base (consisting of capital, surplus and contingency contingency n. an event that might not occur. reserve) was $2.9 billion. Aggregate policyholders' reserves were $5.0 billion compared with $4.3 billion a year earlier. Other Corporate Developments On November November: see month. 14, MBIA Inc. and CapMAC Holdings Inc. (NYSE: KAP) jointly announced the signing of a definitive agreement to merge in a stock transaction. Structured as a tax-free exchange tax-free exchange An exchange of assets between taxpayers in which any gain or loss is not recognized in the period during which the exchange takes place. Rather, taxpayers are required to adjust the basis of assets exchanged. and accounted for as a "pooling of interests Pooling of Interests An accounting method, used in mergers and acquisitions, where the balance sheet items of the two companies are simply added together. Notes: The opposite of pooling of interests is the purchase acquisition method. ," the transaction is expected to be accretive to MBIA's earnings per share in 1998, excluding a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charge associated with the merger. On January January: see month. 16, MBIA Inc. and CapMAC Holdings Inc. announced the revision of their merger agreement to reduce the exchange ratio for determining the number of shares of MBIA common stock to be received in the merger by holders of CapMAC common stock. Under the revised merger terms, each share of CapMAC common stock will be converted into the right to receive the number of shares of MBIA common stock obtained by dividing $31, rather than $35 as originally provided, by the average of the closing price of MBIA common stock for the 15 trading days In Business, the trading day is the time span that a particular stock exchange is open. For example, the New York Stock Exchange is, as of 2006, open from 09:30AM to 4:00PM. Trading days never take place on weekends. preceding the third trading day prior to the effective time of the merger. The transaction, which is subject to approval by CapMAC Holdings Inc. shareholders and other 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. approvals, is expected to be completed by mid- mid- pref. Middle: midbrain. to late-February. MBIA Inc., through its subsidiaries, is the world's preeminent pre·em·i·nent or pre-em·i·nent adj. Superior to or notable above all others; outstanding. See Synonyms at dominant, noted. [Middle English, from Latin prae 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 a leading 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 provides 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 that 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 clients, domestically and internationally. MBIA Insurance Corporation has a claims- paying 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. and Fitch fitch: see polecat. IBCA IBCA International Braille Chess Association IBCA Institute of Burial and Cremation Administration IBCA Integrated Business Communications Alliance IBCA International Barbeque Cookers Association IBCA Department of Interior Board of Contract Appeals . Please visit MBIA's web site at http://www.mbia.com. -0-
MBIA INC. AND SUBSIDIARIES (1)
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands except per share amounts)
Three Months Ended Years Ended
December 31 December 31
1997 1996 1997 1996
Revenues
Insurance:
Gross premiums
written $161,891 $126,165 $543,016 $460,675
Ceded premiums (34,764) (19,187) (79,781) (54,852)
Net premiums
written 127,127 106,978 463,235 405,823
Increase in
deferred premium
revenue (48,555) (42,222) (165,858) (154,111)
Premiums earned 78,572 64,756 297,377 251,712
Net investment
income 75,627 63,998 281,459 247,561
Net realized
gains 4,504 2,038 17,478 11,740
Investment management
services:
Income 6,556 7,120 26,668 26,663
Net realized gains 1,374 109 3,416 2,572
Other 13,790 2,270 27,584 5,289
Total revenues 180,423 140,291 653,982 545,537
Expenses
Insurance:
Losses and
loss adjustment 5,523 4,980 18,673 15,334
Policy
acquisition costs,
net 7,261 6,366 27,873 24,660
Operating 13,181 12,029 49,947 46,654
Investment
management services 4,677 4,244 16,761 14,583
Interest 10,136 8,479 37,450 33,462
Other 9,394 725 23,709 2,714
Total expenses 50,172 36,823 174,413 137,407
Income before
income taxes 130,251 103,468 479,569 408,130
Provision for
income taxes 32,599 21,988 105,393 85,967
Net income $ 97,652 $ 81,480 $374,176 $322,163
Net income per
common share:
Basic $ 1.09 $ 0.94 $ 4.26 $ 3.75
Diluted $ 1.08 $ 0.93 $ 4.22 $ 3.72
Weighted average number of
common shares outstanding:
Basic 89,384,043 86,499,304 87,912,615 85,856,258
Diluted 90,258,049 87,297,470 88,747,388 86,696,096
(1) Common share data retroactively adjusted to reflect the
two-for-one stock split effective October 1, 1997.
MBIA INC. AND SUBSIDIARIES (1)
CONSOLIDATED BALANCE SHEETS
(dollars in thousands except per share amounts)
December 31, 1997 December 31, 1996
Assets
Investments:
Fixed-maturity
securities held
as available-
for-sale at fair
value (amortized
cost $4,600,528
and $4,001,562) $4,867,254 4,149,700
Short-term investments 245,029 176,088
Other investments 16,802 14,851
5,129,085 4,340,639
Municipal investment
agreement portfolio
held as available-
for-sale at fair value
(amortized cost
$3,241,703 and $3,263,211) 3,341,394 3,293,298
Total investments 8,470,479 7,633,937
Cash and cash equivalents 23,181 7,356
Securities borrowed or
purchased under agreements
to resell 472,963 217,000
Accrued investment income 115,971 104,725
Deferred acquisition costs 154,100 147,750
Prepaid reinsurance premiums 252,893 216,846
Goodwill - net 120,326 105,138
Property and equipment -
net 60,238 50,923
Receivable for investments sold 13,435 980
Other assets 127,176 77,360
Total assets $9,810,762 $8,562,015
Liabilities and Shareholders' Equity
Liabilities:
Deferred premium revenue $1,984,104 $1,785,875
Loss and loss adjustment
expense reserves (2) 78,872 59,314
Municipal investment
agreements 1,974,165 2,290,609
Municipal repurchase
agreements 1,177,022 968,671
Long-term debt 473,878 374,010
Short-term debt 20,000 29,100
Securities loaned or sold
under agreements to repurchase 606,263 217,000
Deferred income taxes 286,402 206,492
Payable for investments
purchased 44,007 52,029
Other liabilities 117,796 99,218
Total liabilities 6,762,509 6,082,318
Shareholders' Equity:
Common stock 89,461 86,588
Additional paid-in capital 906,744 759,784
Retained earnings 1,825,333 1,518,994
Cumulative translation
adjustment (8,558) (1,042)
Unrealized appreciation - net 240,085 116,424
Unearned compensation -
restricted stock (4,812) (1,051)
Total shareholders'
equity 3,048,253 2,479,697
Total liabilities
and shareholders' equity $9,810,762 $8,562,015
Book value per share $ 34.07 $ 28.64
(1) Common share data retroactively adjusted to reflect the
two-for-one stock split effective October 1, 1997.
(2) Includes net case reserves of $24,934 and $20,248 at
December 31, 1997 and December 31, 1996, respectively.
MBIA INC. AND SUBSIDIARIES (1)
Three Months Ended Years Ended
December 31 December 31
1997 1996 1997 1996
Components of core earnings per share (2)
Reported earnings
per share $1.08 $0.93 $4.22 $3.72
Realized gains 0.04 0.02 0.15 0.10
Operating earnings
per share(3) 1.04 0.92 4.06 3.61
Earnings from
refunded issues 0.08 0.06 0.34 0.30
Core earnings
per share(3) $0.96 $0.86 $3.73 $3.31
December 31, December 31,
1997 1996
Components of adjusted
book value per share
Book value $34.07 $28.64
After-tax value of:
Net deferred premium
revenue, net of DAC 11.46 10.67
Present value of future
installment premiums 2.54 2.16
Adjusted book value $48.07 $41.47
(1) Common share data retroactively adjusted to reflect the
two-for-one stock split effective October 1, 1997.
(2) Based on weighted average diluted common shares.
(3) Amounts may not add due to rounding.
MBIA INSURANCE CORPORATION CONSOLIDATED
(wholly owned subsidiary of MBIA Inc.)
Selected Financial Data Computed on a Statutory Basis:
(dollars in millions)
December 31, 1997 December 31, 1996
Capital and surplus $ 1,760.2 $ 1,467.0
Contingency reserve 1,094.1 892.8
Capital base 2,854.3 2,359.8
Unearned premium reserve 2,118.6 1,918.3
Loss and loss adjustment
expense reserves 15.2 10.3
Total policyholders'
reserves 4,988.1 4,288.4
Present value of installment
premiums 349.6 288.0
Standby line of credit 825.0 725.0
Total claims-paying
resources $ 6,162.7 $ 5,301.4
Net debt service outstanding $482,653.2 $411,106.1
Capital ratio (1) 169:1 174:1
Claims-paying ratio (2) 91:1 91:1
(1) Net debt service outstanding divided by capital base.
(2) Net debt service outstanding divided by the sum of
capital base, unearned premium reserve (after tax), loss and
loss adjustment expense reserves, present value of
installment premiums (after-tax) and standby line of credit.
MBIA INC. AND SUBSIDIARIES
Earnings per Share Data Under Old and New Accounting Standards(1)
Under the new accounting standards that went into effect for
year end 1997, companies must now report "basic" and
"diluted" earnings per share (eps). Basic eps is determined
by dividing net income by the weighted average number of
common shares outstanding for the period. Diluted eps
reflects the potential dilution that would occur if
securities, such as employee stock options, were exercised.
As the table below shows, MBIA diluted eps equals MBIA
primary eps (as previously calculated in accordance with APB
#15).
1997 1996
1Q 2Q 3Q 4Q Year(2) 1Q 2Q 3Q 4Q Year(2)
Reported:
Basic(3) $1.05 $1.03 $1.09 $1.09 $4.26 $0.91 $0.93 $0.97 $0.94 $3.75
Diluted(3) 1.04 1.02 1.08 1.08 4.22 0.90 0.92 0.96 0.93 3.72
Primary(4) 1.04 1.02 1.08 1.08 4.22 0.90 0.92 0.96 0.93 3.72
Operating:
Basic(3) $1.00 $1.01 $1.04 $1.05 $4.10 $0.89 $0.90 $0.93 $0.93 $3.65
Diluted(3) 1.00 1.00 1.03 1.04 4.06 0.88 0.89 0.92 0.92 3.61
Primary(4) 1.00 1.00 1.03 1.04 4.06 0.88 0.89 0.92 0.92 3.61
Core:
Basic(3) $0.91 $0.92 $0.96 $0.97 $3.76 $0.81 $0.82 $0.85 $0.86 $3.34
Diluted(3) 0.90 0.92 0.95 0.96 3.73 0.80 0.81 0.84 0.86 3.31
Primary(4) 0.90 0.92 0.95 0.96 3.73 0.80 0.81 0.84 0.86 3.31
(1) Common share data retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin adjusted to reflect the two-for-one stock split effective October 1, 1997. (2) Due to the changes in the number of shares outstanding, quarterly per share amounts may not add to the totals for the years. (3) Calculated using SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System #128. (4) Calculated using APB APB See Accounting Principles Board (APB). #15. CONTACT: MBIA Inc., Armonk Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. C. Ballinger Ballinger may refer to:
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