MBIA Inc. Reports 23 Percent Increase in 1998 First Quarter Net Income Excluding $19.2 Million After-tax Charge as a Result of CapMAC Merger.ARMONK, N.Y.--(BUSINESS WIRE)--May 5, 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) ), the 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, today reported that 1998 first quarter net income rose 23 percent to $119.4 million, excluding a $19.2 million 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. charge for CapMAC merger-related expenses, from $96.9 million in the first quarter of 1997. Including the merger-related charge, first quarter net income increased 4 percent to $100.3 million. 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 , including merger-related expenses, were $1.01, the same as last year s first quarter. Excluding the $0.19 per share merger-related charge, first quarter diluted earnings per share increased 19 percent to $1.20 from $1.01. 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 , which exclude merger-related expenses and capital gains, were $1.12 per share in the first quarter, up 14 percent from $0.98. On February February: see month. 17, 1998, MBIA completed its merger with CapMAC Holdings Inc. Accordingly, 1997 financial results have been restated to reflect the merger, which has been 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. ." MBIA's first quarter diluted core earnings were $1.03 per share, a 14 percent increase over the $0.90 reported in the same period last year. Core earnings exclude the net income effects of capital gains, premiums earned from refunded issues and the nonrecurring Non`re`cur´ring a. 1. Nonrecurrent; as, the costs of a layoff are considered as a nonrecurring expense s>. merger-related charge. Book value per share as of March 31, 1998 rose 20 percent to $35.13 from $29.19 a year ago. MBIA's adjusted book value per share increased 14 percent in the same period to $49.43 from $43.21. Adjusted book value includes the after-tax effects of net deferred premiums less deferred acquisition costs, the present value of future installment Regular, partial portion of the same debt, paid at successive periods as agreed by a debtor and creditor. An installment loan is designed to be repaid in certain specified, ordinarily equal amounts over a designated period, such as a year or a number of months. premiums and the unrealized gain Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. on investment contract liabilities. 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 reported strong financial and operating results in the first quarter. We are particularly pleased that the integration of CapMAC is proceeding smoothly and has enhanced our competitive position in the growing global structured finance market. Looking ahead, we are well positioned to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. dynamic growth prospects in our financial guarantee insurance markets and to continue the expansion of our 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. activities." Insurance Operations New issuance in the municipal market was $65.1 billion for the first quarter of 1998, up 84 percent from $35.3 billion in the first quarter of last year. MBIA insured $10.0 billion of par value in the domestic new issue and secondary municipal bond markets in the first quarter, a 16 percent increase from the $8.6 billion insured in the same period last year. The insured portion of the new issue market was 51 percent in the first quarter of 1998. MBIA continued as the nation's leading municipal bond insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. with 32 percent of the insured new issue market. In the domestic new issue and secondary structured finance markets, which include mortgage-backed Mortgage-backed may refer to:
In addition, MBIA insured $2.4 billion of securities internationally in the first quarter compared with $0.4 billion in 1997's first quarter. 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 first quarter increased 11 percent to $120.9 million from $108.8 million a year ago. Gross premiums written reflect upfront premiums received for business originated in the current period, assumed premiums 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 future installment premiums from new business writings, increased 9 percent in the first quarter to $138.4 million from $127.5 million in the same 1997 period. Premiums earned in the first quarter were $99.1 million, up 19 percent from $83.4 million in the comparable 1997 period. Premiums earned during the first quarter included $15.8 million from refundings of previously insured issues compared with $13.5 million a year ago. 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 $0.09 per share for the first quarter of 1998 compared with $0.08 per share in 1997's first quarter. As a result of the CapMAC merger, the company collects fee revenues in conjunction with certain structured finance transactions. In the first quarter of 1998, fee revenues recognized rose 55 percent to $6.2 million from $4.0 million. Certain fees are deferred and earned over the life of the transactions. 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 $9.1 billion in the first quarter, compared with $8.0 billion in 1997's first quarter. 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 $5.4 billion as of March 31. Revenues generated from the company's investment management business, excluding 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. , rose to $7.5 million, a 4 percent increase over last year's first quarter. 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: Financial Results Net investment income from MBIA's insurance investment portfolio, excluding net realized capital gains, increased 15 percent to $82.3 million in the quarter from $71.8 million in 1997's first quarter. As of March 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 to $9.3 billion compared with $7.9 billion a year ago. The investment agreement portion as of March 31, 1998 increased to $3.6 billion from $3.2 billion a year ago. The average credit quality of all fixed-income investments was Double-A. Total revenues rose 26 percent to $218.5 million from $173.6 million in the first quarter of last year. Total expenses were $90.2 million in the first quarter of 1998 compared to $50.9 million in last year's first quarter. The increase in expenses for the 1998 first quarter is largely a result of the $29.5 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charge, recorded as a component of Other Expenses, related to the CapMAC merger, which includes investment banking and legal fees, and severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when expenses. Computed on a statutory basis, as of March 31, MBIA's insurance operations had a combined unearned premium reserve of $2.2 billion and a capital base (consisting of capital, surplus and contingency contingency n. an event that might not occur. reserves) of $3.3 billion. Aggregate policyholders' reserves of $5.5 billion were up 16 percent from $4.7 billion a year ago. 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. 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.
MBIA INC. AND SUBSIDIARIES(1)(2)
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands except per share amounts)
Three Months Ended
March 31
1998 1997
Revenues
Insurance:
Gross premiums written $120,878 $108,807
Ceded premiums (14,333) (10,328)
Net premiums written 106,545 98,479
Increase in deferred premium revenue (7,412) (15,099)
Premiums earned 99,133 83,380
Net investment income 82,268 71,788
Net realized gains 6,090 2,659
Advisory fees 6,216 4,016
Investment management services:
Income 7,467 7,190
Net realized gains 6,446 1,609
Other 10,851 2,993
Total revenues 218,471 173,635
Expenses
Insurance:
Losses and loss adjustment 5,241 4,978
Policy acquisition costs, net 9,440 9,647
Operating 19,127 18,773
Investment management services 4,313 4,037
Interest 10,420 8,858
Other 41,684 4,597
Total expenses 90,225 50,890
Income before income taxes 128,246 122,745
Provision for income taxes 27,973 25,884
Net income $100,273 $ 96,861
Net income per common share:
Basic $ 1.03 $ 1.03
Diluted $ 1.01 $ 1.01
Weighted average number of
common shares outstanding:
Basic 97,498,541 94,162,912
Diluted 98,864,747 95,897,960
(1) All data retroactively adjusted to reflect the merger with
CapMAC Holdings, Inc. effective February 17, 1998.
(2) Common share data retroactively adjusted to reflect the
two-for-one stock split effective October 1, 1997 and FAS 128.
MBIA INC. AND SUBSIDIARIES(1)(2)
CONSOLIDATED BALANCE SHEETS
(dollars in thousands except per share amounts)
March 31, 1998 December 31, 1997 March 31, 1997
Assets
Investments:
Fixed-maturity
Securities
held as
available-for-
sale at fair
value (amortized
cost $5,088,306,
$4,936,822 and
$4,312,394) $5,350,713 $5,211,311 $4,381,019
Short-term
investments 304,045 303,898 243,474
Other investments 51,682 51,693 50,626
5,706,440 5,566,902 4,675,119
Municipal investment
agreement portfolio
held as available-
for-sale at fair
value (amortized
cost $3,548,474,
$3,241,703 and
$3,221,883) 3,641,358 3,341,394 3,202,907
Total investments 9,347,798 8,908,296 7,878,026
Cash and cash
equivalents 28,749 24,716 31,827
Securities borrowed
or purchased under
agreements to resell 643,963 472,963 229,000
Accrued investment
income 114,628 121,070 105,661
Deferred acquisition
costs 222,026 216,165 203,151
Prepaid reinsurance
premiums 288,174 289,508 231,203
Goodwill - net 127,095 120,326 117,971
Property and equipment
net 61,901 60,238 52,844
Receivable for
investments sold 8,605 13,435 15,086
Other assets 163,401 150,922 103,768
Total assets $11,006,340 $10,377,639 $8,968,537
Liabilities and Shareholders' Equity
Liabilities:
Deferred premium
revenue $ 2,096,303 $ 2,090,460 $ 1,862,986
Loss and loss
adjustment
expense
reserves (3) 107,808 103,061 74,830
Municipal
investment
agreements 2,370,312 1,974,165 2,074,293
Municipal repurchase
agreements 1,091,042 1,177,022 1,062,540
Long-term debt 488,908 488,878 389,037
Short-term debt 20,000 20,000 40,000
Securities loaned
or sold under
agreements to
repurchase 716,263 606,263 310,700
Deferred income
taxes 294,690 298,498 175,890
Deferred fee revenue 45,781 48,126 38,586
Payable for
investments
purchased 152,934 44,007 27,496
Other liabilities 194,412 171,989 162,219
Total liabilities 7,578,453 7,022,469 6,218,577
Shareholders' Equity:
Common stock 97,721 97,563 94,402
Additional paid-
in capital 1,135,797 1,128,799 982,423
Retained earnings 1,982,479 1,901,608 1,652,711
Cumulative
translation
adjustment (11,332) (9,040) (5,914)
Unrealized
appreciation - net 232,641 245,135 32,425
Unallocated ESOP
shares (4,083) (4,083) (5,138)
Unearned
compensation
restricted stock (5,336) (4,812) (949)
Total shareholders'
equity 3,427,887 3,355,170 2,749,960
Total liabilities
and shareholders'
equity $11,006,340 $10,377,639 $8,968,537
Book value per
share $ 35.13 $ 34.44 $ 29.19
(1) All data retroactively adjusted to reflect the merger with
CapMAC Holdings, Inc. effective February 17, 1998.
(2) Common share data retroactively adjusted to reflect the
two-for-one stock split effective October 1, 1997 and FAS 128.
(3) Includes net
case reserves $33,102 $25,215 $19,249
MBIA INC. AND SUBSIDIARIES(1)(2)
Components of core earnings per share(3)
Three Months Ended
March 31
1998 1997
Reported earnings per share $1.01 $1.01
Realized gains 0.09 0.03
One-time merger charge (0.19) ---
Operating earnings per share (4) 1.12 0.98
Earnings from refunded issues 0.09 0.08
Core earnings per share (4) $1.03 $0.90
Components of adjusted book value per share
March 31, December 31, March 31,
1998 1997 1997
Book value $35.13 $34.44 $29.19
After-tax value of:
Net deferred
premium revenue,
net of DAC 10.56 10.57 9.85
Present value of
future installment
premiums 3.59 3.58 3.34
Unrealized gain
on investment
contract
liabilities 0.15 0.12 0.83
Adjusted book value $49.43 $48.71 $43.21
(1) All data retroactively adjusted to reflect the merger with
CapMAC Holdings, Inc. effective February 17, 1998.
(2) Common share data retroactively adjusted to reflect the two-for-
one stock split effective October 1, 1997 and FAS 128.
(3) Based on weighted average diluted common shares.
(4) Amounts may not add due to rounding.
MBIA INC. AND SUBSIDIARIES
Combined Insurance Operations (1)
Selected Financial Data Computed on a Statutory Basis:
(dollars in millions)
March 31, 1998 December 31, 1997 March 31, 1997
Capital and
surplus $ 2,010.4 $ 1,951.5 $ 1,724.4
Contingency reserve 1,252.1 1,187.9 1,011.2
Capital base 3,262.5 3,139.4 2,735.6
Unearned premium
reserve 2,205.2 2,193.4 1,977.9
Loss and loss
adjustment expense
reserves 22.9 15.2 8.9
Total
policyholders'
reserves 5,490.6 5,348.0 4,722.4
Present value of
installment premiums 539.1 536.9 484.1
Standby line of
credit/stop loss 900.0 900.0 800.0
Total claims-
paying
resources $ 6,929.7 $ 6,784.9 $ 6,006.5
Net debt service
outstanding $531,124.7 $513,735.9 $446,446.2
Capital ratio (2) 163:1 164:1 163:1
Claims-paying ratio (3) 89:1 88:1 87:1
(1) Represents MBIA Insurance Corporation Consolidated and Capital
Markets Assurance Corporation combined.
(2) Net debt service outstanding divided by capital base.
(3) 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.
CONTACT: 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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