MBIA offering $750 million in stock

Bond insurer MBIA Inc. said Wednesday it plans to sell $750 million in common stock as it tries to maintain its crucial "AAA" financial strength rating.

MBIA will offer about 50.3 million shares of common stock — at about $14.91 per share — to raise the funds, which it will place in reserve to cover potential future claims.

Warburg Pincus, which has already directly invested $500 million in MBIA, will backstop the offering in exchange for preferred stock, covering shares not sold in the sale.

MBIA also raised $1 billion through a private offering of surplus notes in January.

As the number of mortgage defaults has increased, ratings agencies have worried bonds backed by the troubled loans will also default, triggering an unmanageable amount of payments from bond insurers. Bond insurers pay claims when an issuer defaults.

On Tuesday, Fitch Ratings warned it might downgrade MBIA from "AAA," and Standard & Poor's placed MBIA on a negative watch last week. Other bond insurers — including Ambac Financial Group Inc., Security Capital Assurance Ltd. and Financial Guaranty Insurance Co. — were downgraded in recent weeks.

Bond insurers essentially need a "AAA" rating to book new business.

JPMorgan Securities Inc. and Lehman Brothers Inc. are underwriting the offering.

Separately, Armonk-based MBIA said it revised certain fourth-quarter charges, resulting in a $6.5 million decrease to the company's previously announced losses of $2.3 billion.

The adjustment in charges included increasing loss reserves for exposure to home equity products to $200 million from $100 million. That increase was offset by a $110 million reduction in write-downs the company took during the quarter.

Shares of MBIA rose $1.27, or 8.9 percent, to $15.55 in after-hours electronic trading, after shares fell 62 cents to close the regular session at $14.28.