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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: MBI), the holding company for MBIA Insurance Corporation, today reported that 1998 first quarter net income rose 23 percent to $119.4 million, excluding a $19.2 million after-tax 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, 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 operating earnings, 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 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."

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 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 premiums and the unrealized gain on investment contract liabilities.

David H. Elliott, 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 dynamic growth prospects in our financial guarantee insurance markets and to continue the expansion of our financial services 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 with 32 percent of the insured new issue market.

In the domestic new issue and secondary structured finance markets, which include mortgage-backed and asset-backed transactions, MBIA-insured $8.8 billion of par value in the first quarter, an increase of 12 percent from the $7.9 billion insured in the same period last year.

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 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 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 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 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, rose to $7.5 million, a 4 percent increase over last year's first quarter.

Consolidated 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 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 charge, recorded as a component of Other Expenses, related to the CapMAC merger, which includes investment banking and legal fees, and severance 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 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 financial guarantor and a leading provider of specialized financial services. MBIA provides innovative and cost-effective products and services that meet the credit enhancement, 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, Standard & Poor's Ratings Services and Fitch IBCA. 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 C. Ballinger

(914) 765-3893
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