EDGAR 10-K Filing

Company CIK: 814585
Filing Year: 2025
Filename: 814585_10-K_2025_0000950170-25-029081.json

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ITEM 1. BUSINESS
Item 1. Business
As used in this Annual Report on Form 10-K, (i) “MBIA,” the “Company,” “we,” “our” and “us” refer to MBIA Inc., a Connecticut corporation incorporated in 1986, together with its subsidiaries, and (ii) unless otherwise indicated or the context otherwise requires, references to “MBIA Corp.” are to MBIA Insurance Corporation together with MBIA Mexico S.A. de C.V. (“MBIA Mexico”).
OVERVIEW
The Company’s operating subsidiaries are running off their insured portfolios. Today, the Company’s primary objectives are ensuring that adequate liquidity exists at the holding company to satisfy all of its outstanding obligations, mitigating losses at National Public Finance Guarantee Corporation (“National”) and MBIA Corp., and maximizing recoveries on paid insurance claims. We do not expect National or MBIA Corp. to write new financial guarantee policies outside of remediation related activities.
MBIA’s primary business has been to provide financial guarantee insurance to the United States’ public finance markets through our indirect, wholly-owned subsidiary, National, whose financial guarantee insurance policies provide investors with unconditional and irrevocable guarantees of the payment of the principal, interest or other amounts owing on insured obligations when due. National ceased pursuing the writing of new financial guarantee insurance policies in 2017, and its primary activity today is to provide ongoing surveillance, including remediation activity where warranted, of its existing insured portfolio of $25.3 billion gross par outstanding as of December 31, 2024. The Company has also provided financial guarantee insurance in the international and structured finance markets through its subsidiary MBIA Corp. As of December 31, 2024, MBIA Corp.’s total insured gross par outstanding was $2.3 billion. As a result of MBIA Corp.’s capital structure and business prospects, we do not expect its financial performance to have a material economic impact on MBIA Inc. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources” in Part II, Item 7 of this Form 10-K for a further discussion of MBIA Corp.’s insurance statutory capital.
MBIA Services Corporation (“MBIA Services”), also owned by MBIA Inc., is a service company which provides support services such as surveillance, risk management, legal, accounting, treasury and information technology, among others, to our businesses on a fee-for-service basis.
MBIA Inc. Capital Management
The Company manages its capital and liquidity in order to ensure that it can service its debt and other financial obligations and pay its operating expenses while maintaining an adequate cushion against potential adverse events. MBIA Inc. has received both annual and special dividends from National. The Company maintains a stable liquidity position which is expected to allow it to service its obligations over the next several years without needing to access the capital markets. Our capital management strategies include (i) retiring our unsecured and MBIA Global Funding, LLC (“GFL”) debt through calls and repurchases at prices that create economic benefit to the Company and (ii) having the Company or National purchase or repurchase outstanding MBIA Inc. common shares to enhance shareholder value when permissible, authorized, and when management deems such actions are appropriate, taking into account regulatory capacity constraints, the price of the stock, anticipated liquidity needs, and other relevant factors.
On May 3, 2023, the Company’s Board of Directors approved a share repurchase program authorizing the Company and/or National to purchase up to $100 million of the Company’s shares in open market transactions, in privately negotiated transactions or by any other legal means. Neither MBIA Inc. nor National repurchased or purchased any MBIA Inc. common shares during 2024 or 2022. During 2023, National and MBIA Inc. purchased or repurchased a total of 3.6 million shares at an average price per share of $8.12. As of December 31, 2024, the remaining authorization under this share repurchase program was $71 million.
Item 1. Business (continued)
As of December 31, 2024, $718 million of unsecured debt, issued from our corporate segment, which includes MBIA Inc.’s senior notes ("Debentures") and medium-term notes (“MTNs”) issued by its subsidiary, GFL, was outstanding. During 2024, MBIA Inc. repurchased $16 million principal amount of its Debentures and repurchased $63 million par value outstanding of GFL MTNs with maturities in 2024 and 2025 at a discount. During 2023, the Company repurchased $11 million par value outstanding of GFL MTNs with maturity in 2024 at a discount. During 2022, MBIA Corp. purchased $24 million principal amount of MBIA Inc. 6.625% Debentures due 2028, $4 million principal amount of MBIA Inc. 7.150% Debentures due 2027, $0.6 million principal amount of MBIA Inc. 7.000% Debentures due 2025 and the Company repurchased $30 million par value outstanding of GFL MTNs.
In the fourth quarters of 2024 and 2023, National declared and paid as-of-right dividends of $69 million and $97 million, respectively, to its ultimate parent, MBIA Inc. Additionally, on December 7, 2023, National paid a $550 million special dividend that was approved by the New York State Department of Financial Services (“NYSDFS”) to its ultimate parent, MBIA Inc.
Also on December 7, 2023, the Company's Board of Directors declared an extraordinary cash dividend on MBIA’s common stock of $8.00 per share. The dividend was paid on December 22, 2023 to shareholders of record as of the close of business on December 18, 2023.
National Risk Mitigation
National’s most significant risk is credit risk in its large and diverse insured portfolio of domestic public finance credits. National’s risk mitigation strategy is premised on proactive portfolio management, including surveillance of financial performance and covenant compliance, the exercise of creditor rights, remediation, and in select cases, workouts of distressed credits. National’s approach generally focuses on the early detection of stress and proactive intervention, though its rights and its ability to take certain actions on a particular credit will always be case-specific. As part of its remediation efforts, National may elect to facilitate and participate in refinancings of existing credit exposures where the new transaction will have the anticipated effect of improving the issuer’s ability to service its debt and strengthen National’s legal security or covenant package. National may also seek to purchase its own insured obligations as part of an overall risk mitigation strategy, subject to internal and regulatory limitations.
Presently, the most distressed credit in National’s portfolio is the Puerto Rico Electric Power Authority (“PREPA”) which is in a bankruptcy-like process under Title III of the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”). The Commonwealth of Puerto Rico itself, as well as the Puerto Rico Sales Tax Financing Corporation (“COFINA”), the Public Building Authority (“PBA”), and the Puerto Rico Highways and Transportation Authority (“PRHTA”) have each exited the bankruptcy-like process and National’s exposures to these credits have been reduced to zero. For additional information relating to the risks arising from National’s remaining Puerto Rico exposure, refer to the “Insured Portfolio Loss Related Risk Factors” section in Part I, Item 1A of this Form 10-K.
MBIA Corp. Risk Mitigation
MBIA Corp.’s strategy is focused primarily on recovering losses on insured transactions, reducing future expected economic losses in the insured portfolio through commutations and other risk mitigation strategies, and managing liquidity primarily for the benefit of its policyholders and senior creditors. Refer to “Note 6: Loss and Loss Adjustment Expense Reserves” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for further information regarding loss reserves and recoveries.
Item 1. Business (continued)
Our liquidity and capital forecasts, and projected collections of recoveries for MBIA Corp., reflect resources that we expect to be adequate to pay expected insurance claims over the next several years. However, there can be no assurance that MBIA Corp. will realize its expected recoveries in full or on its projected timeframe. Refer to “Risk Factors-MBIA Corp. Risk Factors-Continuing elevated loss payments and delay or failure in realizing expected recoveries on insured transactions may materially and adversely affect MBIA Corp.’s statutory capital and its ability to meet liquidity needs and could cause the NYSDFS to put MBIA Insurance Corporation into a rehabilitation or liquidation proceeding if the NYSDFS concludes that MBIA Insurance Corporation will not be able to pay expected insurance claims,” in Part I, Item 1A of this Form 10-K. Given the separation of MBIA Inc. and MBIA Corp. as distinct legal entities, the absence of any cross defaults between the entities, and the lack of reliance by MBIA Inc. on MBIA Corp. for the receipt of dividends, we do not believe that a rehabilitation or liquidation proceeding of MBIA Insurance Corporation by the NYSDFS would have any material economic impact on MBIA Inc.
OUR INSURANCE OPERATIONS
Our U.S. public finance insurance portfolio is managed through National, and our international and structured finance insurance portfolios are managed through MBIA Corp. We do not expect National or MBIA Corp. to write new financial guarantee policies outside of remediation related activities. We have been compensated for our insurance policies by insurance premiums that were paid upfront or on an installment basis. Our financial guarantee insurance was offered in both the new issue and secondary markets. In addition, we have provided financial guarantees or sureties to debt service reserve funds. The primary risk in our insurance operations is that of adverse credit performance in the insured portfolio. When writing new business we sought to maintain a diversified insured portfolio with the aim of managing and diversifying risk based on a variety of criteria including revenue source, issue size, type of asset, industry concentrations, type of bond and geographic location. Despite this objective, there can be no assurance that we will avoid losses on multiple credits as a result of a single event or series of events. In addition, as National's insurance portfolio runs off, a change in the diversification of the criteria noted above may subject National to higher concentrations of certain risks.
Because we generally guarantee to the holder of an insured obligation the timely payment of amounts due in accordance with its insurance policy terms, in the case of a default by an issuer or other triggering event, payments under the insurance policy generally cannot be accelerated against us unless we consent to the acceleration. In the event of a default, however, we may have the right, in our sole discretion, to accelerate the obligations and pay them in full. Otherwise, we are required to pay principal, interest or other amounts only as scheduled payments come due, even if the holders are permitted by the terms of the insured obligations to have the full amount of principal, accrued interest or other amounts due, declared due and payable immediately in the event of a default.
Our payment obligations after a default vary by deal and by insurance type. Our public finance insurance generally insures scheduled interest and principal. Our structured finance policies generally insure (i) timely interest and ultimate principal; (ii) ultimate principal only at final maturity; or, (iii) payments upon settlement of individual collateral losses as they occur after any deductible or subordination has been exhausted.
In the event of a default in the payment of principal, interest or other insured amounts by an issuer, the insurance company will make funds available in the insured amount generally within one to three business days following notification. Longer time frames may apply for international transactions. Generally, our insurance companies provide for this payment upon receipt of proof of ownership of the obligations due, as well as upon receipt of instruments appointing the insurer as agent for the holders and evidencing the assignment of the rights of the holders with respect to the payments made by the insurer or other appropriate documentation.
National Insured Portfolio
National’s insured portfolio consists of municipal bonds, including tax-exempt and taxable indebtedness of U.S. political subdivisions and territories, as well as utilities, airports, health care institutions, higher educational facilities, housing authorities and other similar agencies and obligations issued by private entities that finance projects that serve a substantial public purpose. Municipal bonds and privately issued bonds used for the financing of public purpose projects are generally supported by taxes, assessments, user fees or tariffs related to the use of these projects, lease payments or other similar types of revenue streams.
As of December 31, 2024, National had $25.3 billion of insured gross par outstanding on U.S. public finance obligations covering 1,349 policies and diversified among 885 “credits,” which we define as any insured obligations secured by the same revenue source. Insurance in force, which includes all gross insured debt service, as of December 31, 2024 was $51.2 billion.
Item 1. Business (continued)
All of the policies were underwritten on the assumption that the insurance will remain in force until maturity or early retirement of the insured obligations. National estimates that the average life of its domestic public finance insurance policies in force as of December 31, 2024 is 8 years. The average life was determined by applying a weighted average calculation, using the remaining years to contractual maturity and weighting them on the basis of the remaining debt service insured. No assumptions were made for any future refundings, early redemptions or terminations of insured issues. Average annual insured debt service on the portfolio as of December 31, 2024 was $3.9 billion. National’s underwriting guidelines limited the insurance in force for any one insured credit, and for other categories such as geography. In addition, National is subject to regulatory single-risk limits with respect to any insured bond issue. See the “Insurance Regulation” section below for a description of these regulatory requirements. As of December 31, 2024, National’s gross par amount outstanding for its ten largest insured U.S. public finance credits totaled $7.6 billion, representing 30.0% of National’s total U.S. public finance gross par amount outstanding. Refer to “Note 12: Insurance in Force” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for further information regarding the Company’s operating companies' insured portfolios.
MBIA Corp. Insured Portfolio
MBIA Corp.’s insured portfolio consists of policies that insure various types of international public finance and global structured finance obligations that were sold in the new issue and secondary markets. International public finance obligations include bonds and loans extended to entities located outside of the U.S., including utilities, infrastructure projects and sovereign-related and sub-sovereign issuers, such as regions, authorities or their equivalent as well as sovereign owned entities that might be supported by a sovereign state, region or authority. Global structured finance obligations include asset-backed transactions and financing of commercial activities that are typically secured by undivided interests or collateralized by the related assets or cash flows.
As of December 31, 2024, MBIA Corp. had 153 policies outstanding in its insured portfolio. In addition, MBIA Corp. had 25 insurance policies outstanding relating to liabilities issued by MBIA Inc. and its subsidiaries, which are described further under the section “Affiliated Financial Obligations Insured by MBIA Corp.” below. MBIA Corp.’s total policies in its insured portfolio are diversified among 116 credits.
As of December 31, 2024, the gross par amount outstanding of MBIA Corp.’s insured obligations (excluding $0.6 billion of insured affiliated financial obligations and $16.5 billion of U.S. public finance debt ceded to National), was $2.3 billion. Insurance in force for the above portfolio, which includes all gross insured debt service, as of December 31, 2024 was $3.1 billion.
MBIA Corp. estimates that the average life of its international and structured finance insurance policies in force as of December 31, 2024 is 6 years. The average life was determined by applying a calculation using the remaining years to contractual maturity for international public finance obligations and estimated maturity for structured finance obligations and weighting them on the basis of the remaining debt service insured. No assumptions were made for any future refundings, early redemptions or terminations of insured issues. Average annual insured debt service on the portfolio as of December 31, 2024 was $0.3 billion. Refer to “Note 12: Insurance in Force” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for further information regarding the Company’s operating companies' insured portfolios.
Affiliated Financial Obligations Insured by MBIA Corp.
Prior to 2008, MBIA Inc. provided customized investment agreements and one of its subsidiaries, GFL, issued MTNs with varying maturities. Each of these obligations is guaranteed by MBIA Corp. GFL lent the proceeds of its GFL MTN issuances to MBIA Inc. As a result of ratings downgrades of MBIA Corp., MBIA Inc. is required to post collateral for the remaining investment agreements. Since the ratings downgrades of MBIA Corp. that began in 2008, we have not issued new MTNs or investment agreements. The investment agreements are currently fully collateralized with high quality assets. We believe the outstanding investment agreements and MTNs and corresponding asset balances will continue to decline over time as the liabilities mature, terminate, or are repurchased by the Company.
Item 1. Business (continued)
Risk Management
Our largest risk is the credit exposure in our insured portfolio. The Company’s credit risk management and remediation functions are managed through committees and units that oversee risks in ongoing portfolio surveillance and remediation. The Company’s Insured Portfolio Management Divisions (“IPM”) monitor and remediate domestic and international public finance and structured risks. In addition, National and MBIA Corp. each has its own risk oversight committee that, as appropriate, reviews certain portfolio decisions. Additionally, each subsidiary has its own investment committee that reviews its respective investment portfolio and investment-related decisions.
The Company’s Risk Oversight Committee (the “Risk Oversight Committee”) reviews material transactions and provides firm-wide review of policies and decisions related to credit, market, operational, legal, financial and business risks. The Company and its subsidiaries’ respective Loss Reserve Committees review loss reserving activity.
The Company’s Board of Directors and related Committees, including Audit, and Finance and Risk, oversee risks faced by the Company and its subsidiaries. The Board regularly evaluates and discusses emerging risks and risks associated with strategic initiatives. On an annual basis, the Board also evaluates and approves the Company’s risk tolerance policy. The purpose of the risk tolerance policy is to define the types and amounts of risks the Company is prepared to accept. The assessment includes risks associated with credit, capital adequacy, market, liquidity, legal, operations, cybersecurity and technology. This policy provides the basis upon which risk criteria and procedures are developed and seeks to have these applied consistently across the Company.
The Audit Committee oversees risks associated with financial and other reporting, auditing, legal and regulatory compliance, and risks that may otherwise result from the Company’s operations, including cybersecurity risk. The Audit Committee oversees these risks by monitoring (i) the integrity of the financial statements of the Company and of other material financial disclosures made by the Company, (ii) the qualifications, independence and performance of the Company’s independent auditor, (iii) the performance of the Company’s internal audit function, (iv) the Company’s compliance policies and procedures and its compliance with legal and regulatory requirements, and (v) the performance of the Company’s operational risk management function. In connection with its oversight of cybersecurity risk, the Audit Committee receives semi-annual, or more frequent as appropriate, briefings from the Company’s senior management and Enterprise Security Council Chair concerning, among other topics, the implementation of the Company’s Cybersecurity Policy, its ongoing strategy and associated training to prevent, identify and react to security incidents, internal and external vulnerability assessments results, and Internal Audit’s periodic reviews of MBIA’s data security policies and procedures. For additional information relating to cybersecurity, refer to the “Item 1C. Cybersecurity” section in Part I, Item 1C of this Form 10-K.
The Finance and Risk Committee oversees the Company’s credit risk governance framework, market risk, liquidity risk and other material financial risks. The Finance and Risk Committee oversees these risks by monitoring the Company’s: (i) capital and liquidity, (ii) proprietary investment portfolios, (iii) exposure to changes in the market value of assets and liabilities, (iv) credit exposures in the Insured Portfolios, and (v) financial risk policies and procedures, including regulatory requirements and limits.
The Company has a designated Model Governance Team. Given the significance of models in the Company’s surveillance and remediation activities, financial reporting and corporate treasury operations, the Company established a Model Governance Policy to enhance the consistency, reliability, maintenance and transparency of its models so that model risk can be mitigated on an enterprise-wide basis. The Model Governance Team is responsible for the Model Governance Policy, as well as other Model Governance related initiatives.
Item 1. Business (continued)
Insurance Surveillance and Remediation
We surveil and remediate our insured portfolios on an ongoing basis. Although our monitoring and remediation activities vary somewhat by sector and bond type, in all cases we focus on assessing event risk and potential losses under stress.
•U.S. Public Finance: For U.S. public finance, our ongoing credit surveillance focuses on economic and political trends, issuer or project debt and financial management, adequacy of historical and anticipated cash flows under stress, satisfactory legal structure and bond security provisions, viable tax and economic bases, including consideration of tax limitations and unemployment trends, adequacy of stressed loss coverage and project feasibility, including satisfactory reports from consulting engineers, traffic advisors and others, if applicable. Depending on the credit, specialized cash flow analyses may be conducted to understand loss sensitivity. In addition, specialized credit analysts consider the potential event risk of natural disasters or headline events on both single obligors/credits and across a sector, as well as regulatory issues. U.S. public finance credits/exposures are monitored by reviewing trustee, issuer and project financial and operating reports as well as reports provided by technical advisors and counsel. Projects may be periodically visited by MBIA personnel.
•International Public Finance: International public finance credits are monitored and remediated in a manner relatively consistent with U.S. public finance transactions. In addition, credit analysts consider country risk, including economic and political factors, the type and quality of local regulatory oversight, the strength of the legal framework in each country and the stability of the local institutional framework. Analysts also monitor local accounting and legal requirements, local financial market developments, the impact of exchange rates and local demand dynamics. Furthermore, exposures are reviewed periodically; the frequency and scope of review is often increased when an exposure is downgraded. MBIA personnel may periodically visit projects or issuers to meet with management.
•Global Structured Finance Transactions: For global structured finance credits, we focus on the historical and projected cash flows generated by the assets, the credit and operational strength of the originator, servicer, manager and/or operator of the assets, and the transaction’s structure (including the degree of protection from bankruptcy of the originator or servicer). We may use both probability modeling and cash flow sensitivity analysis (both at the transaction and asset specific levels) to test asset performance assumptions and performance covenants, triggers and remedies. In addition, IPM may use various quantitative tools and qualitative analyses to test for credit quality, correlation, liquidity and capital sensitivity within the insured portfolio.
A key to our ongoing monitoring is early detection of deterioration in either obligor credit quality or macroeconomic or market factors that could adversely impact an insured credit. If deterioration is detected, analysts generally evaluate possible remedial actions and, in the event of significant stress, we may develop and implement a remediation strategy. The nature of any remedial action is based on the type of insured issue and the nature and scope of the event giving rise to the remediation. In most cases, as part of any such remedial activity, we work with the issuer, trustee, legal counsel, financial advisors, servicer, other creditors, underwriters and/or other related parties to reduce chances of default and the potential severity of loss if a default should occur.
We use an internal credit rating system to rank credits, with frequency of review based on risk type, internal rating, performance and credit quality. Credits with performance issues are designated as “Caution List-Low,” “Caution List-Medium” or “Caution List-High” based on the nature and extent of our concerns, but these categories do not require establishment of any case basis reserves. In the event we determine that a claim for payment is expected with respect to an insured issue using probability-weighted cash flows, we place the issue on the “Classified List” and establish a case basis loss reserve for that insured issue. See “Losses and Reserves” below for information on our loss reserving process.
Item 1. Business (continued)
Credit Risk Models
We use credit risk models to test qualitative judgments, to design appropriate structures and to understand sensitivity within transactions and across broader portfolio exposure concentrations. Models are updated to reflect changes in both portfolio and transaction data and also in expectations of stressed future outcomes. For portfolio monitoring we use internal and third-party models based on individual transaction attributes and customized structures and these models are also used to determine case basis loss reserves and, where applicable, to mark-to-market any insured obligations as may be required for financial reporting. When using third-party models, we generally perform the same review and analyses of the collateral, transaction structure, performance triggers and cash flow waterfalls as when using our internal models. See “Risk Factors-Insured Portfolio Loss Related Risk Factors-Financial modeling involves uncertainty over ultimate outcomes which makes it difficult to estimate liquidity, potential claims payments, loss reserves and fair values” in Part I, Item 1A of this Form 10-K.
Market Risk Assessment
We measure and assess market risk on a consolidated basis as well as at the holding company and subsidiaries on a stand-alone basis. Key market risks include changes in interest rates, credit spreads and foreign exchange rates. We use various models and methodologies to test exposure under market stress scenarios, including parallel and non-parallel shifts in the yield curve, changes in credit spreads, and changes in foreign exchange rates. See “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A of this Form 10-K for additional information on our market risk exposure. We also analyze stressed liquidity scenarios. The analyses are used in testing investment portfolio guidelines. The Risk Oversight Committee and the Finance and Risk Committee of the Company’s Board of Directors receive periodic reports on market risk.
Operational Risk Assessment
The Operational Risk function assesses potential economic loss or reputational impact arising from processes and controls, systems, or staff actions and seeks to identify vulnerabilities to operational disruptions caused by external events. The Operational Risk framework is generally managed using a self-assessment process across our business units, with controls associated with the execution of key processes monitored through Internal Audit reviews. The Operational Risk function reports periodically to the Risk Oversight Committee and the Audit Committee of the Company’s Board of Directors. The Audit Committee reviews the Company’s operational risk profile, risk event activity and ongoing risk mitigation efforts.
Environmental & Social Responsibility Risk Management
MBIA recognizes and embraces its responsibilities to the environment and to the promotion of social welfare. The Company’s operations are analytical and administrative in nature and it has no other material locations or operations away from its headquarters in an Energy Star certified office complex in Purchase, New York. Thus, while we regularly assess the impact of environmental risk on our insured portfolios, and have demonstrated a strong commitment to environmental and social responsibility, we believe that the nature of our business, small size and current operations provide us with limited opportunities to improve upon that record. Our Risk Oversight Committee nevertheless regularly reviews and implements policies and decisions related to environmental and social governance risks.
As part of its Enterprise Risk Management framework, MBIA has identified climate change as an emerging risk to its insured portfolio of public finance credits. While the Company’s insurance subsidiaries are no longer writing new business and therefore do not need to assess climate risk in the context of underwriting decisions, its existing insured portfolios will take decades to run off and remain exposed to the impact of climate change.
The significant majority of MBIA’s outstanding insured exposure is to U.S. municipalities, which are subject to both direct and indirect effects of climate change including an increasing risk to severe weather events, flooding and droughts. The direct effects include costs to repair storm damage and flooding and to mitigate the impact of future events. Indirect impacts include potential deterioration of tax bases as populations move away from areas prone to severe weather and flooding. The impact of climate change on MBIA’s insured portfolio is real but likely to manifest itself over a long period of time. It is as yet unclear what impact attempts to reduce carbon emissions will have. The expense to municipalities of mitigating climate risk may result in financial strain depending upon the nature of the risk being mitigated and the availability of state and/or federal funding.
Item 1. Business (continued)
In response to these threats, MBIA’s risk management and insured portfolio management groups have identified the sectors of the insured portfolio that are particularly vulnerable to the impacts of climate change and factor these risks into internal ratings, frequency of review and potential remedial action. Sectors at increased risk to climate-driven events include water and sewer systems, single site/revenue generating assets, bridge and road infrastructure, electric utilities and housing.
MBIA is committed to promoting social welfare for its employees, the communities in which they live and work, and the citizens in the municipalities that benefit from its insurance. It is MBIA’s policy to ensure equal employment opportunity for all job applicants and employees with regard to all personnel-related matters, including, but not limited to recruitment, hiring, placement, promotion, compensation, benefits, transfers and training and all other terms and conditions of employment. In all such activities, MBIA prohibits and will not tolerate discrimination or harassment against any persons because of age, gender (including gender identity or gender expression), sex, race, color, religion, creed, marital status, sexual orientation, pregnancy, disability, national origin, alien or citizenship status, genetic predisposition or carrier status, military or veteran status, or any other characteristic protected by law.
MBIA’s Equal Employment Opportunity and Non-Discrimination and Anti-Harassment Policy applies to all applicants and employees, and other non-employee third-parties and individuals working for or on behalf of MBIA. It prohibits harassment, discrimination and retaliation whether engaged in by, or directed toward, fellow employees, a supervisor or manager, or third-parties. MBIA prohibits retaliation or adverse employment action against any individual who, in good faith, reports discrimination or harassment or participates in an investigation of such reports.
MBIA reasonably accommodates employees and applicants with disabilities (including temporary disabilities), those who are pregnant, nursing mothers, and those with sincerely held religious beliefs, in accordance with applicable law. If an employee suffers from a disability, is pregnant, or has a sincerely held religious belief that interferes with the employee’s ability to perform his or her job, the employee can contact Human Resources to inquire whether a reasonable accommodation may be available and appropriate under the circumstances. All employees are subject to the Company’s Standard of Conduct, which serves as a critical guide for the manner in which it conducts business. All employees are required to read the Standard of Conduct and complete an on-line compliance training program annually.
MBIA offers its employees a comprehensive compensation and benefits package that includes a competitive salary and an annual cash performance bonus, paid time-off benefits, health and welfare voluntary benefits that include medical and dental insurance, a health savings account that includes a company match to employee contributions, and supplemental life insurance. Senior management also receives an annual long-term incentive award linked to shareholders' interests. The Company also provides a qualified defined contribution pension, a qualified 401(k) plan and a voluntary non-qualified deferred compensation plan that accepts contributions that exceed limitations established by federal regulations. In addition, the Company provides paid and unpaid employee leave of absences such as Safe Time Leave, Family Medical Leave, Parental Leave, Bereavement Leave, Military and Jury Duty Leave.
MBIA‘s corporate mission has long included enhancing the strength and vitality of communities, whether through offering its insurance product, which reduces the borrowing cost of towns, cities and municipalities, or through the sponsorship of many diverse philanthropic efforts. In 2001, MBIA formed the MBIA Foundation, a 501(c)(3) tax-exempt organization, with a mission of helping to improve the quality of life in the communities where the Company conducts business and where its employees live and work. Since inception, the MBIA Foundation has paid out over $23 million in matching gifts, almost $16 million in grants to community organizations and over $450,000 in service grants in support of employees’ volunteer efforts. The MBIA Foundation has also been active in supporting disaster relief efforts through direct donations from the Foundation and by increasing the customary match of 2:1 to 4:1 to further encourage employees' donations. In connection with the run-off of the Company's businesses, the MBIA Foundation was legally wound down in 2024.
Additionally, MBIA promotes employee volunteerism through its annual company-wide days of service.
Item 1. Business (continued)
Losses and Reserves
Loss and loss adjustment expense (“LAE”) reserves are established by Loss Reserve Committees in each of our operating insurance companies and are reviewed by our executive Loss Reserve Committee, which consists of members of senior management. The Company’s loss and LAE reserves as of December 31, 2024 represent case basis reserves and estimates for LAE to be incurred. Case basis reserves represent the Company’s estimate of expected losses to be paid under its insurance contracts, net of potential recoveries and discounted using a current risk-free interest rate, for contracts where the estimated loss amount exceeds the unearned premium revenue on the related insurance contract. The Company estimates expected losses net of potential recoveries using the present value of probability-weighted estimated loss payments and recoveries, discounted at a rate equal to the risk-free rate applicable to the currency and weighted average remaining life of the insurance contract as required by accounting principles generally accepted in the United States for financial guarantee contracts. We record case basis loss reserves on insured obligations which have defaulted or are expected to default during the remaining life of the obligation.
For a further discussion of the methodology used by the Company for determining when a case basis reserve is established, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Estimates-Loss and Loss Adjustment Expense Reserves” in Part II, Item 7 and “Note 6: Loss and Loss Adjustment Expense Reserves” in the Notes to Consolidated Financial Statements in Part II Item 8 of this Form 10-K. Management believes that our reserves are adequate to cover the ultimate net cost of claims. However, because the reserves are based on management’s judgment and estimates, there can be no assurance that the ultimate liability will not exceed such estimates or that the timing of claims payments and the realization of recoveries will not create liquidity issues for the corresponding insurance company.
Reinsurance
We currently have third-party reinsurance agreements in place covering approximately 2.4% of our insured par outstanding. At this time we do not intend to utilize reinsurance to decrease the insured exposure in our portfolio; however, we may, from time to time, look to enter into transactions to reduce risks embedded in our insured portfolios on an individual and portfolio-wide basis.
Intercompany Reinsurance Arrangements
MBIA Corp. and National are parties to a reinsurance agreement pursuant to which National reinsures certain public finance financial guarantee policies originally written by MBIA Corp. In addition, National entered into a second-to-pay policy covering the reinsurance agreement.
Insurance Regulation
National and MBIA Insurance Corporation are incorporated in and subject to primary insurance regulation and supervision by the State of New York. MBIA Mexico is organized and subject to primary regulation and supervision in Mexico. We have commenced the process of dissolving this entity under Mexican law. The Company’s insurance subsidiaries are also licensed to issue financial guarantee policies in multiple jurisdictions as needed to conduct their business activities.
The extent of state and national insurance regulation and supervision varies by jurisdiction, but New York, Mexico and most other jurisdictions have laws and regulations prescribing minimum standards of solvency, including minimum capital requirements, and business conduct which must be maintained by insurance companies, and if our insurance companies fail to meet such requirements our regulators may impose certain remedial actions. Among other regulated conduct, these laws and regulations prescribe permitted classes and concentrations of investments. In addition, some state laws and regulations require the approval or filing of policy forms and rates. MBIA Insurance Corporation and National each are required to file detailed annual financial statements with the NYSDFS and similar supervisory agencies in each of the other jurisdictions in which it is licensed. The operations and accounts of the insurance companies are subject to examination by regulatory agencies at regular intervals. In addition to being subject to the insurance laws in the jurisdictions in which we operate, as a condition to obtaining required insurance regulatory approvals to enter into certain transactions and take certain other corporate actions, including the release of excessive contingency reserves in MBIA Insurance Corporation described below under “Contingency Reserves” and entry into the asset swap between MBIA Inc. and National described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources--Corporate Liquidity” in Part II, Item 7 of this Form 10-K, MBIA Inc. and its operating insurance subsidiaries have and may in the future agree to provide notice to the NYSDFS or other applicable regulators prior to entering into transactions or taking other corporate actions (such as paying dividends when applicable statutory tests are satisfied) that would not otherwise require regulatory approval.
Item 1. Business (continued)
New York Insurance Regulation
Our domestic insurance companies are licensed to provide financial guarantee insurance under Article 69 of the New York Insurance Law (the “NYIL”). Article 69 defines financial guarantee insurance to include any guarantee under which loss is payable upon proof of occurrence of financial loss to an insured as a result of certain events. These events include the failure of any obligor or any issuer of any debt instrument or other monetary obligation to pay principal, interest, premium, dividend or purchase price of or on such instrument or obligation when due. Under Article 69, our domestic insurance companies are permitted to transact financial guarantee insurance, surety insurance and credit insurance and such other kinds of business to the extent necessarily or properly incidental to the kinds of insurance which they are authorized to transact. In addition, they are empowered to assume or reinsure the kinds of insurance described above. Amendments to the statutes or regulations governing financial guarantee insurers are possible, but the adoption or timing of any such amendments is uncertain.
New York State Dividend Limitations
The laws of New York regulate the payment of dividends by National and MBIA Insurance Corporation and provide that a New York domestic stock property/casualty insurance company may not declare or distribute dividends except out of statutory earned surplus. New York law provides that the sum of (i) the amount of dividends declared or distributed during the preceding 12-month period and (ii) the dividend to be declared may not exceed the lesser of (a) 10% of policyholders’ surplus, as shown by the most recent statutory financial statement on file with the NYSDFS, or (b) 100% of adjusted net investment income for such 12-month period (the net investment income for such 12-month period plus the excess, if any, of net investment income over dividends declared or distributed during the two-year period preceding such 12-month period), unless the Superintendent of Financial Services of the State of New York (the “Superintendent”) approves a greater dividend distribution based upon a finding that the insurer will retain sufficient surplus to support its obligations and writings.
Due to its significant earned surplus deficit, MBIA Insurance Corporation has not had the statutory capacity to pay dividends since December 31, 2009, is not expected to have any statutory capacity to pay dividends, and has agreed that it will not pay any dividends without receiving prior approval from the NYSDFS in connection with certain prior approvals to release excessive contingency reserves. The foregoing dividend limitations are determined in accordance with statutory accounting principles (“U.S. STAT”).
Contingency Reserves
As financial guarantee insurers, our domestic insurance companies are required by the laws and regulations of New York and other states to maintain, as applicable, contingency reserves on their municipal bond, asset-backed securities (“ABS”) or other financial guarantee liabilities and reflect such reserves in their financial statements prepared in accordance with U.S. STAT. Under New York Insurance Law (the “NYIL”), a financial guarantee insurance company is required to contribute to contingency reserves 50% of premiums as they are earned on policies written prior to July 1, 1989 (net of reinsurance), and, with respect to policies written on and after July 1, 1989, such an insurer must make contributions over a period of 15 or 20 years (based on issue type), or until the contingency reserve for such insured issues equals the greater of 50% of premiums written for the relevant category of insurance or a percentage of the principal guaranteed, varying from 0.55% to 2.5%, depending upon the type of obligation guaranteed (net of collateral, reinsurance, refunding, refinancings and certain insured securities). Other states maintain similar requirements. The contribution to, and maintenance of, the contingency reserve limits the amount of earned surplus that might otherwise be available for the payment of dividends. In each state, our domestic insurance companies may apply for release of portions of their contingency reserves in certain circumstances. For policies which have exceeded the percentages in aggregate by category as required by NYIL, due to refunding and scheduled amortization, contributions are discontinued. These policies are monitored quarterly and if a deficit were to occur contributions would resume.
Pursuant to a non-disapproval from the NYSDFS, and in accordance with NYIL and U.S. STAT, MBIA Insurance Corporation released to surplus $32 million of excess contingency reserves during 2022. In accordance with this contingency reserve release, MBIA Insurance Corporation maintains a fixed $5 million contingency reserve.
Item 1. Business (continued)
Risk Limits
Insurance laws and regulations also limit both the aggregate and individual securities risks that our domestic insurance companies may insure on a net basis based on the type of obligations insured. The individual limits are generally on the amount of insured par and/or annual debt service for a given insured issue, entity or revenues source and stated as a percentage of the insurer’s policyholders’ surplus and contingency reserves. The aggregate risk limits limit the aggregate amount of insured par to a stated multiple of the insurer’s policyholders’ surplus and contingency reserves based on the types of obligations insured. The aggregate risk limits can range from 300:1 for certain municipal obligations to 50:1 for certain non-municipal obligations.
During 2024 and 2023, National and MBIA Insurance Corporation reported single risk limit overages to the NYSDFS due to changes in their statutory capital. National and MBIA Insurance Corporation were in compliance with their aggregate risk limits as of December 31, 2024 and 2023.
Holding Company Regulation
MBIA Inc., National and MBIA Insurance Corporation also are subject to regulation under NYIL. The requirements of holding company statutes vary from jurisdiction to jurisdiction but generally require insurance companies that are part of an insurance holding company system to register and file certain reports describing, among other information, their capital structure, ownership and financial condition. The holding company statutes also generally require prior approval of changes in control, of certain dividends and other inter-corporate transfers of assets, and of certain transactions between insurance companies, their parents and affiliates. The holding company statutes impose standards on certain transactions with related companies, which include, among other requirements, that all transactions be fair and reasonable and those transactions not in the ordinary course of business exceeding specified limits receive prior regulatory approval.
Change of Control
Prior approval by the NYSDFS is required for any entity seeking to acquire, directly or indirectly, “control” of National or MBIA Insurance Corporation. In many states, including New York, “control” is presumed to exist if 10% or more of the voting securities of the insurer are owned or controlled, directly or indirectly, by an entity, although the insurance regulator may find that “control” in fact does or does not exist when an entity owns or controls either a lesser or greater amount of securities. MBIA Insurance Corporation would require the prior approval of MBIA Mexico’s regulator in order to transfer the shares it currently holds in MBIA Mexico.
Insurance Guarantee Funds
National and MBIA Insurance Corporation are exempt from assessments by the insurance guarantee funds in the majority of the states in which they do business. Guarantee fund laws in most states require insurers transacting business in the state to participate in guarantee associations, which pay claims of policyholders and third-party claimants against impaired or insolvent insurance companies doing business in the state. In most states, insurers licensed to write only municipal bond insurance, financial guarantee insurance and other forms of surety insurance are exempt from assessment by these funds and their policyholders are prohibited from making claims on these funds.
INVESTMENTS AND INVESTMENT POLICY
Investment objectives, policies and guidelines related to the Company’s businesses are generally subject to review and approval by the Finance and Risk Committee of the Board of Directors. Investment objectives, policies and guidelines related to investment activity on behalf of our insurance companies are also subject to review and approval by the respective Investment Committee of their Boards of Directors or similar body.
Insight North America, LLC ("Insight Investment") manages the investment portfolios of the Company and its subsidiaries in accordance with the guidelines adopted for each such portfolio. The agreements with Insight Investment provide generally that Insight Investment will have the right to manage the fixed-income investment portfolios of the Company and its subsidiaries and guarantee certain minimum revenues thereunder. The agreements can be terminated with six-month notice by either party or as otherwise agreed to by the parties.
Item 1. Business (continued)
To continue to optimize capital resources and provide for claims-paying capabilities, the investment objectives and policies of our operations are tailored to reflect their various strategies and operating conditions. The investment objectives of National set preservation of capital as the primary objective, subject to an appropriate degree of liquidity, and optimization of after-tax income and total return as secondary objectives. The investment objectives of MBIA Corp. are primarily to maintain adequate liquidity to meet claims-paying and other corporate needs and secondarily to maximize after-tax income within defined investment risk limits. The investment objectives of the corporate segment are to provide sufficient liquidity to meet maturing liabilities and, in the case of the investment agreement business collateral posting obligations, while maximizing the total long-term return.
RATING AGENCIES
The Company does not maintain a contractual relationship with Moody’s Investor Services (“Moody’s”), Standard & Poor's Financial Services LLC, or Kroll Bond Rating Agency, other than a required contract that MBIA Mexico maintained with Moody’s. Moody’s, at its discretion and in the absence of a contract with the Company, continues to maintain ratings on MBIA Inc. and its other subsidiaries.
CAPITAL FACILITIES
The Company does not currently maintain a capital facility. For a discussion of the Company’s capital resources refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources” in Part II, Item 7 of this Form 10-K.
FINANCIAL INFORMATION
Refer to “Note 11: Business Segments” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for information on the Company’s financial information by segment and premiums earned by geographic location.
EMPLOYEES AND HUMAN CAPITAL MANAGEMENT
As of December 31, 2024, MBIA had 57 employees at our single corporate headquarters located at 1 Manhattanville Road, Purchase, New York, none of whom are covered by collective bargaining agreements. In recent years, we have experienced only modest employee turnover and consider our employee relations to be satisfactory. MBIA’s human capital focus has been on identifying and retaining key personnel as the Company runs off its portfolios. MBIA has a succession plan in place and has identified internal candidates that could fill senior management and mid-level management positions as the need arises. The Company’s senior management team and senior employee relations professionals work together on employee-related issues and initiatives, and on an annual basis conduct a full review of personnel to enable managers to provide meaningful feedback and growth opportunities, and to award promotions within the Company where warranted. The Company continues to rely on compensation components (such as salary, cash bonus awards and long-term incentive plan awards) to support employee retention. The Company incorporates performance metrics as part of the annual bonus offering with increased bonus potential for exceptional results. We utilize third-party benchmark data to establish market-based compensation levels. We believe that our current compensation and incentive levels reflect high performance expectations as part of our merit pay philosophy. The targeted use of long-term incentive plan awards for key talent is an important element of MBIA’s long-term retention strategy.
AVAILABLE INFORMATION
The Company maintains a website at www.mbia.com. The Company is not including the information on its website as a part of, nor is it incorporating such information by reference into, this Form 10-K. The Company makes available through its website under the “SEC Filings” tab, free of charge, all of its SEC filings, including annual reports on Form 10-K, quarterly filings on Form 10-Q, current reports on Form 8-K and amendments to those reports as soon as is reasonably practicable after these materials have been filed with or furnished to the SEC.
As a courtesy, the Company posts on its website under the section “Legal Proceedings,” selected information and documents in reference to selected legal proceedings in which the Company is the plaintiff or the defendant. The Company will not necessarily post all documents for each proceeding and undertakes no obligation to revise or update them to reflect changes in events or expectations. The complete official court docket can be publicly accessed by contacting the clerk’s office of the respective court where each litigation matter is pending.
Item 1. Business (continued)
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company and their present ages and positions with the Company as of February 27, 2025 are set forth below:
Name
Age
Position and Term of Office
William C. Fallon
Chief Executive Officer and Director (executive officer since July 2005)
Joseph R. Schachinger
Executive Vice President and Chief Financial Officer (executive officer since April 2024)
Daniel M. Avitabile
Assistant Vice President, and President and Chief Risk Officer of MBIA Corp. (executive officer since September 2017)
Adam T. Bergonzi
Assistant Vice President and Chief Risk Officer of National (executive officer since September 2017)
Christopher H. Young
Assistant Vice President, and Chief Financial Officer of National (executive officer since September 2017)
William C. Fallon was elected as a Director of the Company in May 2017, and appointed as Chief Executive Officer in September 15, 2017. Prior to being named Chief Executive Officer and Director, Mr. Fallon served as President, Chief Operating Officer, and Vice President of the Company and head of the Global Structured Finance Division. Mr. Fallon also serves as President and Chief Executive Officer of National. From July of 2005 to March 1, 2007, Mr. Fallon was Vice President of the Company and head of Corporate and Strategic Planning. Prior to joining the Company in 2005, Mr. Fallon was a partner at McKinsey & Company and co-leader of that firm’s Corporate Finance and Strategy Practice.
Joseph R. Schachinger was named Executive Vice President and Chief Financial Officer of MBIA Inc. on April 30, 2024. Mr. Schachinger was also appointed Chairman and Chief Financial Officer of MBIA Insurance Corporation on April 30, 2024. Prior to those appointments, Mr. Schachinger served as the Company’s Controller since May of 2017. Prior to being appointed the Company's Controller, he served as the Company's Deputy Controller. Prior to joining the Company, Mr. Schachinger was the Controller, Chief Trading Risk Officer, and Financial and Operations Principal at DNB US, New York.
Daniel M. Avitabile is an Assistant Vice President of the Company and President and Chief Risk Officer of MBIA Corp. Prior to being named Chief Risk Officer in 2016, Mr. Avitabile managed MBIA Corp.’s Special Situations Group, which was responsible for remediation and commutation activity. Mr. Avitabile has worked at MBIA since 2000, where he has held positions in insured portfolio management, remediation, corporate strategy and structured finance new business. Prior to joining MBIA, he held positions at The Chase Manhattan Bank and State Street Bank. The Board of Directors of MBIA Inc. and MBIA Insurance Corporation appointed Mr. Avitabile to the offices set forth opposite his name above on February 13, 2018, September 15, 2017 and March 11, 2016, respectively.
Adam T. Bergonzi is an Assistant Vice President of the Company and Chief Risk Officer of National, overseeing all of National’s risk and insured portfolio management activities. Prior to being named Chief Risk Officer of National in 2010 when he rejoined the Company, Mr. Bergonzi was employed at Municipal and Infrastructure Assurance Corporation, which he co-founded and served as its Chief Risk Officer, from 2008 to 2010. The Board of Directors of MBIA Inc. and National Public Finance Guarantee Corporation appointed Mr. Bergonzi to the offices set forth opposite his name above on May 3, 2016 and November 15, 2010, respectively.
Christopher H. Young is an Assistant Vice President of the Company and Chief Financial Officer of National. Prior to being named National’s Chief Financial Officer in March of 2009, Mr. Young worked at MBIA Insurance Corporation, from 2001 to 2009, in a variety of Structured Finance positions and in Corporate Strategy. The Board of Directors of MBIA Inc. and National Public Finance Guarantee Corporation appointed Mr. Young to the offices set forth opposite his name above on February 13, 2018 and March 5, 2009, respectively.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors
References in the risk factors to the “Company” are to MBIA Inc., together with its domestic and international subsidiaries. References to “we,” “our” and “us” are to MBIA Inc. or the Company, as the context requires. Our risk factors are grouped into categories and are presented in the following order: “Insured Portfolio Loss Related Risk Factors”, “Legal, Regulatory and Other Risk Factors”, “Capital, Liquidity and Market Related Risk Factors”, “MBIA Corp. Risk Factors”, and “General Risk Factors”. Risk Factors are generally listed in order of significance within each category.
Insured Portfolio Loss Related Risk Factors
Some of the state, local and territorial governments and finance authorities and other providers of public services, located in the U.S. or abroad, that issued public finance obligations we insured are experiencing fiscal stress that could result in increased credit losses or impairments on those obligations.
Certain issuers are reporting fiscal stress that has resulted in a significant increase in taxes and/or a reduction in spending or other measures in efforts to satisfy their financial obligations. In particular, certain jurisdictions have significantly underfunded pension liabilities which are placing additional stress on their finances and are particularly challenging to restructure either through negotiation or under Chapter 9 of the United States Bankruptcy Code. If the issuers of the obligations in our public finance portfolio are unable to raise taxes, or increase other revenues, cut spending, reduce liabilities, and/or receive state or federal assistance, we may experience losses or impairments on those obligations, which could materially and adversely affect our business, financial condition and results of operations. The financial stress experienced by certain municipal issuers could result in the filing of Chapter 9 proceedings in states where municipal issuers are permitted to seek bankruptcy protection. In these proceedings, which remain rare, the resolution of bondholder claims (and by extension, those of bond insurers) may be subject to legal challenge by other creditors.
In particular, while the Commonwealth of Puerto Rico has completed its court-ordered restructuring pursuant to the Puerto Rico Oversight, Management and Economic Stability Act (“PROMESA”), the Puerto Rico Electric Power Authority (“PREPA”) currently remains in a bankruptcy-like proceeding under PROMESA in the United States District Court for the District of Puerto Rico.
As of December 31, 2024, National had $745 million of debt service outstanding related to Puerto Rico. During 2024, PREPA defaulted on scheduled debt service for National insured bonds and National paid gross claims in the aggregate of $137 million. On January 1, 2025 PREPA also defaulted on scheduled debt service for National insured bonds and National paid gross claims in the aggregate of $13 million.
On January 29, 2024, the First Circuit Court of Appeals heard argument on the appeal of Judge Swain's ruling on the scope of the bondholder liens and the allowed amount of the under-secured portion of the bondholders' unsecured claim. On June 12, 2024, the First Circuit Court of Appeals reversed Judge Swain's prior rulings and supported bondholder liens and claim amounts (the "Appeal Decision"). On June 26, 2024, the Oversight Board filed a petition for a First Circuit panel rehearing, and the Unsecured Creditors Committee ("UCC") filed an en banc appeal. On November 13, 2024, the First Circuit affirmed the Appeal Decision. On November 27, 2024, the Oversight Board filed a petition for further rehearing, and on December 31, 2024, the First Circuit denied the rehearing request. Following a status conference held on July 10, 2024, the Court imposed a 60-day stay of all litigation and other filings related to the amended Plan, which stay was subsequently extended until March 24, 2025, and ordered the parties into mediation. Following the Appeal Decision, the Oversight Board informed the Court, National and other parties that it intended to modify National’s settlement in a forthcoming amended Plan. Thereafter, National provided notice to the Oversight Board that National did not support the board's actions and that such actions constituted a breach and termination of the PREPA RSA, as amended. There is no assurance that a plan that is substantially similar in the treatment of National's claims and rights will ultimately be confirmed and become effective.
Refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations--Results of Operations--U.S. Public Finance Insurance Puerto Rico Exposures” section in Part II, Item 7 of this Form 10-K for additional information on our Puerto Rico exposures.
Item 1A. Risk Factors (continued)
Loss reserve estimates and credit impairments are subject to additional uncertainties and loss reserves may not be adequate to cover potential claims.
Our insurance companies issued financial guarantee policies that insure the financial performance of the obligations guaranteed over a long period of time which are unconditional and irrevocable. Under substantially all of our policies, we do not have a right to cancel the policy. We do not use actuarial approaches that are customarily used by other types of insurance companies to determine our loss reserves. The establishment of the appropriate level of loss reserves is an inherently uncertain process involving numerous assumptions, estimates and subjective judgments by management, and therefore, there can be no assurance that future net claims in our insured portfolio will not exceed our loss reserves. If our loss reserves are not adequate to cover actual losses, our results of operations and financial condition could be materially and adversely affected. We use financial models to project future net claims on our insured portfolio, including insured derivatives, and to establish loss reserves and estimate impairments and related recoveries. There can be no assurance that the future loss projection and impairments based on these models will ultimately reflect the actual losses and impairment and recovery that we experience. Additionally, small changes in the assumptions underlying these estimates could significantly impact loss expectations. For example, our loss reserves are discounted to a net present value reflecting our general obligation to pay claims over time and not on an accelerated basis. Risk-free rates are used to discount our loss reserves under accounting principles generally accepted in the U.S., and the yield-to-maturity of each insurer’s investment fixed-income portfolio (excluding cash and cash equivalents and other investments not intended to defease long-term liabilities) as of year-end is used to discount each insurer’s loss reserves under statutory accounting principles. Accordingly, changes in the risk-free rates or the yield in our insurance companies’ fixed-income investment portfolios may materially impact loss reserves.
Political and economic conditions in the United States and elsewhere may materially adversely affect our business and results of operations.
As a financial guarantee company, our insured exposures and our results of operations can be materially affected by general political and economic conditions, both in the U.S. and around the world. General global unrest, including fraud, terrorism, catastrophic events, natural disasters, pandemics such as the novel coronavirus COVID-19, or similar events could disrupt the economy in the U.S. and other countries where we have insured exposure or operate our businesses. In certain jurisdictions outside the U.S., we face higher risks of governmental intervention through nationalization or expropriation of assets, changes in regulation, an inability to enforce our rights in court or otherwise and corruption, which may cause us to incur losses on the exposures we insure or reputational harm.
Budget deficits at all levels of government in the U.S., recessions, increases in corporate, municipal, sovereign, sub-sovereign or consumer default rates and other general economic conditions may adversely impact the performance of our insured portfolios and the Company’s investment portfolio. In addition, we are exposed to correlation risk as a result of the possibility that multiple credits will experience losses as a result of any such event or series of events, in particular exposures that are backed by revenues from business and personal travel, such as bonds backed by hotel taxes.
Financial modeling involves uncertainty over ultimate outcomes, which makes it difficult to estimate liquidity, potential claims payments, loss reserves and fair values.
The Company uses third-party and internal financial models to estimate liquidity, potential claims payments, loss reserves and fair values. We use internal financial models to conduct liquidity stress-scenario testing to ensure that we maintain cash and liquid securities sufficient to meet our payment requirements. These measurements are performed on a legal entity and operating segment basis. We also rely on financial models, generated internally and supplemented by models generated by third parties, to estimate factors relating to the highly complex securities we insure, including future credit performance of the underlying assets, and to evaluate structures, rights and our potential obligations over time. We also use internal models for ongoing insurance portfolio monitoring and to estimate case basis loss reserves and, where applicable, to report our obligations under our contracts at fair value. We may supplement such models with third-party models or use third-party experts to consult with our internal modeling specialists. Both internal and external models are subject to model risk and information risk, and there can be no assurance that the inputs into the models received from third parties will be accurate or that the models themselves are accurate or comprehensive in estimating our liquidity, potential future paid claims, related loss reserves and fair values or that they are similar to methodologies employed by our competitors, counterparties or other market participants. Estimates of our claims payments, in particular, may materially impact our liquidity position. We may make changes to our estimated claims payments, loss reserves or fair value models from time to time. These changes could materially impact our financial results.
Item 1A. Risk Factors (continued)
Our risk management policies and procedures may not adequately detect or prevent future losses.
We assess our risk management policies and procedures on a periodic basis. As a result of such assessment, we may take steps to change our internal risk assessment capabilities and procedures, portfolio management policies, systems and processes and our policies and procedures for monitoring and assessing the performance of our insured portfolio in changing market conditions. There can be no assurance, however, that these steps will be adequate to avoid future losses. In some cases, losses can be substantial, particularly if a loss occurs on a transaction in which we have a large notional exposure or on a transaction structured with large, bullet-type maturities.
Legal, Regulatory and Other Risk Factors
Regulatory change could adversely affect our businesses, and regulations could limit investors’ ability to affect a takeover or business combination that shareholders might consider in their best interests.
The financial guarantee insurance industry has historically been and will continue to be subject to the direct and indirect effects of governmental regulation, including insurance laws, securities laws, tax laws, legal precedents and accounting rules affecting asset-backed and municipal obligations, as well as changes in those laws. Failure to comply with applicable laws and regulations could expose our insurance companies and/or their constituents, to fines, the loss of their insurance licenses, and the inability to engage in certain business activity, as the case may be. These laws also limit investors’ ability to affect a takeover or business combination without the approval of our insurance regulators.
Changes to laws and regulations, or the interpretation thereof could subject our insurance companies to increased loss reserves and capital requirements or more stringent regulation generally, which could materially adversely affect our financial condition and results of operations. Finally, changes to accounting standards and regulations may require modifications to our accounting methodology, both prospectively and for prior periods; such changes could have an adverse impact on our reported financial results and/or make it more difficult for investors to understand the economics of our business and may thus influence the types or volume of business that we may choose to pursue.
Our insurance companies could become subject to regulatory action.
Our insurance companies are subject to various statutory and regulatory restrictions that require them to maintain qualifying investments to support their reserves and required minimum surplus. Furthermore, our insurance companies may be restricted from making commutation or other payments if doing so would cause them to fail to meet such requirements, and the New York State Department of Financial Services (“NYSDFS”) may impose other remedial actions on us as described further below to the extent our insurance companies do not meet such requirements.
Under New York Insurance Law (“NYIL”), the Superintendent of Financial Services (the “Superintendent”) may apply for an order directing the rehabilitation or liquidation of a domestic insurance company under certain circumstances, including upon the insolvency of the company, if the company has willfully violated its charter or the NYIL, or if the company is found, after examination, to be in such condition that further transaction of business would be hazardous to its policyholders, creditors or the public. The Superintendent may also suspend an insurer’s license, restrict its license authority, or limit the amount of premiums written in New York if, after a hearing, the Superintendent determines that the insurer’s surplus to policyholders is not adequate in relation to its outstanding liabilities or financial needs. If the Superintendent were to take any such action as to National, it could result in the reduction or elimination of the payment of dividends to MBIA Inc.
In addition to the Superintendent’s authority to commence a rehabilitation or liquidation proceeding, if the Superintendent finds that the liabilities of MBIA Insurance Corporation exceed its admitted assets, the Superintendent could use its authority under Section 1310 of the NYIL to order MBIA Insurance Corporation to cease making claims payments (a “1310 Order”). Continuing elevated loss payments and delay or failure in realizing expected recoveries as well as certain other factors may materially and adversely affect MBIA Insurance Corporation’s liquidity and its ability to timely meet its insurance obligations, and could cause the NYSDFS to put MBIA Insurance Corporation into a rehabilitation or liquidation proceeding, or issue a 1310 Order, if it does not believe MBIA Insurance Corporation will be able to pay expected claims. See Risk Factor “An MBIA Insurance Corporation rehabilitation or liquidation proceeding could accelerate certain of the Company’s other obligations and have other adverse consequences” under “MBIA Corp. Risk Factors” for the potential impacts of an MBIA Insurance Corporation rehabilitation or liquidation proceeding, or a 1310 Order.
Item 1A. Risk Factors (continued)
Private litigation claims could materially adversely affect our reputation, business, results of operations and financial condition.
As further set forth in “Note 18: Commitments and Contingencies” in the Notes to Consolidated Financial Statements of MBIA Inc. and Subsidiaries in Part II, Item 8 of this Form 10-K, the Company and/or its subsidiaries are named as defendants in certain litigations, and in the ordinary course of business, may be a defendant in or party to a new or threatened legal action. Although the Company intends to vigorously defend against any current or future action, there can be no assurance that it will prevail in any such action, and any adverse ultimate outcome could result in a loss and/or have a material adverse effect on our reputation, business, results of operations or financial condition.
An ownership change under Section 382 of the Internal Revenue Code could have materially adverse tax consequences.
In connection with transactions in our shares from time to time, we may in the future experience an “ownership change” within the meaning of Section 382 of the Internal Revenue Code. In general terms, an ownership change may result from transactions increasing the aggregate ownership of certain stockholders in our stock by more than 50 percentage points over a testing period (generally three years). If an ownership change were to occur, our ability to use certain tax attributes, including certain losses, credits, deductions or tax basis, may be limited. On May 2, 2018, MBIA Inc.’s shareholders ratified an amendment to the Company’s By-Laws, which had been adopted earlier by MBIA Inc.’s Board of Directors. The amendment places restrictions on certain acquisitions of Company stock that otherwise may have increased the likelihood of an ownership change within the meaning of Section 382. The amendment generally prohibits a person from becoming a “Section 382 five-percent shareholder” by acquiring, directly or by attribution, 5% or more of the outstanding shares of the Company’s common stock and will generally restrict existing “Section 382 five-percent shareholders” from increasing their ownership interest under Section 382 by more than one percentage point over their percentage stock ownership immediately prior to the effective date of the amendment or, if lower, their percentage thereafter. Nevertheless, there can be no assurance that MBIA Inc. will not undergo an ownership change at a time when these limitations could have a materially adverse effect on the Company's financial condition.
Changes in U.S. federal income tax law could materially adversely affect the value of the Company’s net deferred tax asset.
MBIA Inc. carries a net deferred tax asset whose value is calculated by application of the federal corporate taxation rates in effect at the time of determination. Changes in applicable U.S. tax laws and regulations, or their interpretation and application, including the possibility of retroactive effect, could affect our net deferred tax asset. As a result of the Company having established a full valuation allowance against its net deferred tax asset in 2017, any adjustment to the Company’s net deferred tax asset, will likely result in a corresponding change to the Company’s valuation allowance, resulting in no impact to the Company’s balance sheet or income statement.
Ineffective internal controls, including internal control over financial reporting, could materially and adversely affect our business, financial condition, results of operations and reputation.
We cannot be certain that we will not identify control deficiencies or material weaknesses in the future. Ineffective internal controls over entities (including any entities the Company controls, is affiliated with or exercises significant influence over as a result of the Zohar Recoveries or otherwise) could result in failure to ensure that such entities comply with applicable laws. If we fail to remediate a material weakness or fail to otherwise maintain effective internal control over financial reporting in the future, such failure could result in a material misstatement of our annual or quarterly financial statements that would not be prevented or detected on a timely basis and which could cause investors and other users to lose confidence in our financial statements, limit our ability to raise capital and have a negative effect on the trading price of our common stock. Additionally, failure to remediate a material weakness or otherwise failing to maintain effective internal control over financial reporting may materially and adversely affect our business, financial condition, results of operations and reputation, and could impair our ability to timely file our periodic reports with the SEC, subject us to litigation and regulatory actions and cause us to incur substantial additional costs in future periods relating to the implementation of remedial measures.
Item 1A. Risk Factors (continued)
Capital, Liquidity and Market Related Risk Factors
We are a holding company and rely to a significant degree on cash flow from National. A disruption in this cash flow or an inability to access third-party capital could materially and adversely affect our business, operating results and financial condition and ultimately adversely affect liquidity.
As a holding company, MBIA Inc. is largely dependent on dividends from National to pay principal and interest on our indebtedness and operating expenses, among other items. We expect that for the foreseeable future, National alone will be the source of dividends to the Company, and it is subject to various statutory and regulatory restrictions applicable to insurance companies generally, that limit the amount of cash dividends, loans and advances that it may pay. See “New York State Dividend Limitations” in Part 1, Item 1 and “Note 13: Insurance Regulations and Dividends” in the Notes to Consolidated Financial Statements of MBIA Inc. and Subsidiaries in Part II, Item 8 of this Form 10-K for a further discussion of dividends.
We may also from time to time seek to raise capital from external sources. The Company’s access to external sources of financing, as well as the cost of such financing would be influenced by various factors, which could include (i) the long-term debt ratings of the Company, (ii) expected dividends from National, (iii) the financial condition and business prospects of our insurance companies and (iv) the perceptions of the financial strength of MBIA Inc. and our insurance companies. There can be no assurance that an inability to obtain adequate capital on favorable terms, or at all, would not adversely affect our business, operating results and financial condition.
Consequently, National's inabilities to pay dividends or our inability to access capital from external sources on favorable terms could have an adverse impact on our ability to pay losses and debt obligations, to pay dividends on our capital stock, to pay principal and interest on our indebtedness, to pay our operating expenses and to make capital investments in our subsidiaries. In addition, future capital raises for equity or equity-linked securities could result in dilution to the Company's shareholders. Also, some securities that the Company could issue, such as preferred stock or securities issued by the Company's operating subsidiaries may have rights, preferences and privileges that are senior to those of its common shares.
MBIA Inc. has substantial indebtedness, and may incur additional indebtedness, which could adversely affect our financial condition, and/or our ability to obtain financing in the future, react to changes in our business and/or satisfy our obligations.
As of December 31, 2024, MBIA Inc. had $440 million of medium-term note liabilities, $278 million of Senior Notes liabilities and $204 million of investment agreement liabilities. Our substantial indebtedness and other liabilities could have material consequences because:
•we may be unable to obtain additional financing, should such a need arise, which may limit our ability to satisfy obligations with respect to our debt;
•a large portion of MBIA Inc.’s financial resources must be dedicated to the payment of principal and interest on our debt, thereby reducing the funds available to use for other purposes;
•it may be more difficult for us to satisfy our obligations to our creditors, resulting in possible defaults on, and acceleration of, such debt;
•we may be more vulnerable to general adverse economic and industry conditions;
•our ability to refinance debt may be limited or the associated costs may increase;
•our flexibility to adjust to changing market conditions could be limited; and
•we are exposed to the risk of fluctuations in interest rates and foreign currency exchange rates because a portion of our liabilities are at variable rates of interest or denominated in foreign currencies.
Adverse developments in the credit markets may materially and adversely affect MBIA Inc.’s ability to post collateral and meet other liquidity needs.
Currently, a significant portion of the cash and securities of MBIA Inc. are pledged against investment agreement liabilities, and intercompany financing arrangements, which limit its ability to raise liquidity through asset sales. If the market value or rating eligibility of the assets which are pledged against MBIA Inc.’s obligations were to decline, we would be required to pledge additional eligible assets in order to meet minimum required collateral amounts against these liabilities. In such an event, we may sell assets, potentially with substantial losses, finance unencumbered assets through intercompany facilities, or use free cash or other assets, although there can be no assurance that these strategies will be available or adequate to meet liquidity requirements.
Item 1A. Risk Factors (continued)
The level of interest rates and foreign currency exchange rates could materially and adversely affect our financial condition.
Increases in prevailing interest rate levels can adversely affect the value of our investment portfolios and, therefore, our financial condition. In the event that investments must be sold in order to make payments on insured exposures or other liabilities, such investments would likely be sold at discounted prices. Increases in interest rates also adversely affect the values of investments collateralizing our investment agreement liabilities in our corporate operations, which would require the Company to post additional collateral to its counterparties. In the insurance operations, with respect to credit risk, increasing interest rates could lead to increased stress on transactions in our insured portfolio with floating rate liabilities. Increasing interest rates could also result in a lower present value of salvage reserves while declining interest rates could result in a higher present value of future loss payments. Lower interest rates can result in lower net interest income since a substantial amount of assets are now held in cash and cash equivalents given the increased focus on liquidity.
In addition, the Company is exposed to foreign currency exchange rate fluctuation risk in respect of assets and liabilities denominated in currencies other than U.S. dollars. In addition to insured liabilities denominated in foreign currencies, some of the remaining liabilities in our corporate segment are denominated in currencies other than U.S. dollars and the assets of our corporate segment are predominantly denominated in U.S. dollars. Accordingly, the weakening of the U.S. dollar versus foreign currencies could substantially increase our potential obligations and statutory capital exposure. Conversely, the Company makes investments denominated in a foreign currency and the weakening of the foreign currency versus the U.S. dollar will diminish the value of such non-U.S. dollar denominated asset. Exchange rates have fluctuated significantly in recent periods and may continue to do so in the future, which could adversely impact the Company’s financial position, results of operations and cash flows.
MBIA Corp. Risk Factors
As described further and for the reasons stated herein, we believe that MBIA Corp. will not provide significant economic or shareholder value to MBIA Inc. For additional information on MBIA Corp., refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations-International and Structured Finance Insurance” in Part II, Item 7 of this Form 10-K. Additionally, also as described further herein, given the separation of MBIA Inc. and MBIA Corp. as distinct legal entities, the absence of any cross defaults between the entities, and the lack of reliance by MBIA Inc. on MBIA Corp. for the receipt of dividends, we do not believe that a rehabilitation or liquidation proceeding of MBIA Insurance Corporation by the NYSDFS would have any material economic impact on the financial condition or liquidity of MBIA Inc. However, there can be no assurance that the financial condition or a rehabilitation or liquidation proceeding of MBIA Insurance Corporation would not have an adverse impact on MBIA Inc. The risk factors described below with respect to MBIA Corp. are set forth for that reason, as well as for an independent understanding of the risks to MBIA Corp.
Continuing elevated loss payments and delay or failure in realizing expected recoveries on insured transactions may materially and adversely affect MBIA Insurance Corporation’s statutory capital and its ability to meet liquidity needs and could cause the NYSDFS to put MBIA Insurance Corporation into a rehabilitation or liquidation proceeding if the NYSDFS concludes that MBIA Insurance Corporation will not be able to pay expected claims.
MBIA Insurance Corporation is particularly sensitive to the risk that it will not have sufficient capital or liquid resources to meet contractual payment obligations when due or to make settlement payments in order to terminate insured exposures to avoid losses. While management’s expected liquidity and capital forecasts for MBIA Insurance Corporation reflect adequate resources to pay expected claims, there are risks to the capital and liquidity forecasts as MBIA Insurance Corporation’s remaining insured exposures and its expected salvage recoveries are potentially volatile. Such volatility exists in salvage that MBIA Insurance Corporation may collect, including in particular recoveries on loans and equity interests related to the claims it paid in respect of the insured notes issued by Zohar collateralized debt obligation (“CDO”) 2003-1, Limited and Zohar II 2005-1 CDO (collectively, the “Zohar Recoveries”), and the exposure in its remaining insured portfolio, which could deteriorate and result in significant additional loss reserves and claim payments, including claims on insured exposures that in some cases may require large bullet payments. In addition, if we fail to maintain effective internal controls over entities (including any entities the Company controls, is affiliated with or exercises significant influence over as a result of the Zohar Recoveries or otherwise), this could result in failure to ensure that such entities comply with applicable laws.
While MBIA Insurance Corporation believes that it will receive a substantial recovery on the Zohar Recoveries, there still remains significant uncertainty with respect to the realizable value of these assets.
Item 1A. Risk Factors (continued)
If the Zohar Recoveries fall below our expectations, MBIA Insurance Corporation would likely incur additional and potentially substantial losses, which could materially impair its statutory capital and liquidity. Further, MBIA Insurance Corporation believes that if the NYSDFS concludes at any time that MBIA Insurance Corporation will not be able to satisfy its obligations under its other issued policies, the NYSDFS would likely put MBIA Insurance Corporation into a rehabilitation or liquidation proceeding under Article 74 of the NYIL and/or take such other actions as the NYSDFS may deem necessary to protect the interests of MBIA Insurance Corporation’s policyholders. The determination to commence such a proceeding or take other such actions is within the exclusive control of the NYSDFS. The NYSDFS enjoys broad discretion in this regard, and any determination they may make would not be limited to consideration of the matters described above. As noted, however, given the separation of MBIA Inc. and MBIA Corp. as distinct legal entities, the absence of any cross defaults between the entities, and the lack of reliance by MBIA Inc. on MBIA Corp. for the receipt of dividends, we do not believe that a rehabilitation or liquidation proceeding of MBIA Insurance Corporation by the NYSDFS would have any material economic long-term liquidity impact on MBIA Inc.
MBIA Corp. insures certain transactions that continue to perform poorly and increased losses or a delay or failure in collecting expected recoveries may materially and adversely affect its financial condition and results of operations.
MBIA Corp. insures certain structured finance transactions that remain volatile and could result in additional losses, which could be substantial. MBIA Corp. has also recorded significant loss reserves on its residential mortgage-backed securities (“RMBS”), and there can be no assurance that these reserves will be sufficient, in particular if the economy deteriorates. These transactions are also subject to servicer risk, which relates to problems with the transaction’s servicer that could adversely affect performance of the underlying assets. As of December 31, 2024, MBIA Corp. recorded expected RMBS recoveries of $52 million, including recoveries related to consolidated VIEs, on our RMBS transactions, in reimbursement of our past and future expected claims. Of this amount, $23 million is included in “Insurance loss recoverable” and $29 million is included in “Loss and loss adjustment expense reserves” on the Company’s consolidated balance sheets. RMBS recoveries relate to structural features within the trust structures that allow for the Company to be reimbursed for prior claims paid. These reimbursements for specific trusts include recoveries that are generated from the excess spread of the transactions. Excess spread within insured RMBS securitizations is the difference between interest inflows on mortgage loan collateral and interest outflows on the insured RMBS notes. There can be no assurance that this recovery will be received in its entirety or in the expected timeframe.
An MBIA Insurance Corporation rehabilitation or liquidation proceeding could accelerate certain of the Company’s other obligations and have other adverse consequences.
As noted above, MBIA Insurance Corporation continues to face a number of significant risks and contingencies, which could, if realized, result in MBIA Insurance Corporation being placed into a rehabilitation or liquidation proceeding by the NYSDFS. In the event of an MBIA Insurance Corporation rehabilitation or liquidation proceeding, the Company may be subject to, among other things, the following:
•MTNs issued by MBIA Global Funding LLC (“GFL”), which are insured by MBIA Insurance Corporation, would accelerate. To the extent GFL failed to pay the accelerated amounts under the GFL MTNs, the MTN holders would have policy claims against MBIA Insurance Corporation for scheduled payments of interest and principal;
•An MBIA Insurance Corporation proceeding may accelerate certain investment agreements issued by MBIA Inc., including, in some cases, with make-whole payments. While the investment agreements are fully collateralized with high quality collateral, the settlements of these amounts could reduce MBIA Inc.’s liquidity resources, and to the extent MBIA Inc. fails to pay the accelerated amounts under these investment agreements or the collateral securing these investment agreements is deemed insufficient to pay the accelerated amounts due, the holders of the investment agreements would have policy claims against MBIA Insurance Corporation;
•The payment of installment premiums due to National from MBIA Insurance Corporation under the reinsurance agreement between National and MBIA Insurance Corporation (Refer to Item 1, “Our Insurance Operations”, “Reinsurance” for a description of the agreement) could be disrupted, delayed or subordinated to the claims of policyholders of MBIA Insurance Corporation;
•The rehabilitator or liquidator would replace the Board of Directors of MBIA Insurance Corporation and take control of the operations and assets of MBIA Insurance Corporation, which would result in the Company losing control of MBIA Insurance Corporation and possible changes to MBIA Insurance Corporation’s strategies and management; and
Item 1A. Risk Factors (continued)
•Unplanned costs on MBIA Inc., as well as significant additional expenses for MBIA Insurance Corporation arising from the appointment of a rehabilitator or liquidator, as receiver, and payment of the fees and expenses of the advisors to such rehabilitator or liquidator.
Revenues and liquidity would be adversely impacted by a decline in realization of installment premiums.
Due to the installment nature of a significant percentage of its premium income, MBIA Corp. has an embedded future revenue stream. The amount of installment premiums actually realized by MBIA Corp. could be reduced in the future due to factors such as early termination of insurance contracts, accelerated prepayments of underlying obligations, commutation of existing financial guarantee insurance policies or non-payment. Such a reduction would result in lower revenues and reduced liquidity.
General Risk Factors
Interruption in information technology and other operational systems, or a failure to maintain the security, confidentiality or privacy of sensitive data residing on such systems, could harm our business.
We depend heavily on our information technology and other operational systems and on the integrity and timeliness of data we use to run our businesses. These systems may fail to operate properly or become disabled as a result of events or circumstances wholly or partly beyond our control. Further, we face the risk of operational and technology failures by others, including various financial intermediaries, vendors and parties to which we outsource the provision of services or business operations. If this risk is realized, we may experience operational difficulties, increased costs and other adverse effects on our business.
Despite our implementation and maintenance of a cybersecurity program which includes a variety of security measures, our information technology systems, networks and data could be subject to cyber-attacks or physical break-ins, unauthorized tampering or other security breaches, resulting in a failure to maintain the security, confidentiality or privacy of sensitive information. For additional information relating to cybersecurity, refer to the “Item 1C. Cybersecurity” section in Part I, Item 1C of this Form 10-K.
Interruption in information technology and other operational systems, or a failure to maintain the security, confidentiality or privacy of sensitive data residing on such systems, whether due to actions or inactions by us or others, could delay or disrupt our ability to do business, harm our reputation, subject us to regulatory sanctions and other claims, lead to a loss of revenues and/or otherwise adversely affect our business.
The Company is dependent on key executives and the loss of any of these executives, or its inability to retain other key personnel, could adversely affect its business.
The Company’s success substantially depends upon its human capital management including its ability to retain qualified employees and upon the ability of its senior management and other key employees to implement its business strategy. The Company believes there are only a limited number of available qualified executives in the business lines in which the Company operates. The Company relies substantially upon the services of William C. Fallon, Chief Executive Officer, and other senior executives. There is no assurance that the Company will be able to retain the services of key executives. While the Company has a succession plan for key executives and does not expect the departure of any key executives to have a material adverse effect on its operations, there can be no assurance that the loss of the services of any of these individuals or other key members of the Company’s management team would not adversely affect the implementation of its business strategy.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments
The Company from time to time receives written comments from the staff of the SEC regarding its periodic or current reports under the Securities Exchange Act of 1934, as amended. There are no comments that remain unresolved that the Company received more than 180 days before the end of the year to which this report relates.

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ITEM 2. PROPERTIES
Item 2. Properties
The Company leases office space located in Purchase, New York, in which the Company has their headquarters. The Company also leases office space in Mexico City, Mexico. The Company generally believes that these facilities are adequate and suitable for its current needs.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings
For a discussion of the Company’s litigation and related matters, see “Note 18: Commitments and Contingencies” in the Notes to Consolidated Financial Statements of MBIA Inc. and Subsidiaries in Part II, Item 8. In the normal course of operating its businesses, MBIA Inc. may be involved in various legal proceedings. As a courtesy, the Company posts on its website under the section “Legal Proceedings,” selected information and documents in reference to selected legal proceedings in which the Company is the plaintiff or the defendant. The Company will not necessarily post all documents for each proceeding and undertakes no obligation to revise or update them to reflect changes in events or expectations. The complete official court docket can be publicly accessed by contacting the clerk’s office of the respective court where each litigation is pending.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
The Company’s common stock is listed on the New York Stock Exchange under the symbol “MBI.” As of February 20, 2025, there were 201 shareholders of record of the Company’s common stock. The Company did not pay cash dividends on its common stock during 2024. On December 7, 2023, the Company's Board of Directors declared an extraordinary cash dividend on MBIA’s common stock of $8.00 per share. The dividend was paid on December 22, 2023 to shareholders of record as of the close of business on December 18, 2023. For information on the ability for certain subsidiaries of the Company to transfer funds to the Company in the form of cash dividends or otherwise, refer to “Item 1. Business-Insurance Regulation” in this annual report.
On May 3, 2023, the Company’s Board of Directors approved a share repurchase program authorizing the Company and/or National to purchase up to $100 million of the Company’s shares in open market transactions, in privately negotiated transactions or by any other legal means. During 2024, the Company or National did not purchase or repurchase any shares. During 2023, National or the Company purchased or repurchased 3.6 million shares at an average price per share of $8.12. As of December 31, 2024, the remaining authorization under this share repurchase program was $71 million.
The table below presents repurchases made by the Company or National in each month during the fourth quarter of 2024. See “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” in Part III for a further discussion of securities authorized for issuance under long-term incentive plans.
Total Number
Maximum
Total
Average
of Shares
Amount That May
Number
Price
Purchased as
Be Purchased
of Shares
Paid Per
Part of Publicly
Under the Plan
Month
Purchased (1)
Share
Announced Plan
(in millions) (2)
October
3.48
-
$
November
4.94
-
December
6.41
-
(1) Represents shares repurchased in open market transactions as investments in the Company's non-qualified deferred compensation plan.
(2) On May 3, 2023, the Company's Board of Directors approved a share repurchase program authorizing the Company and/or National to purchase up to $100 million of the Company's shares in open market transactions, in privately negotiated, or by any other legal means.
As of December 31, 2024, 283,186,115 shares of Common Stock of the Company, par value $1 per share, were issued and 50,970,181 shares were outstanding.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities (continued)
Stock Performance Graph The following graph compares the cumulative total shareholder return (rounded to the nearest whole dollar) of our common stock, the S&P 500 Index (“S&P 500 Index”) and the S&P 500 Financials Sector Index (“S&P Financials Index”) for the last five fiscal years. The graph assumes a $100 investment at the closing price on December 31, 2024 and reinvestment of dividends in the security/index on the respective dividend payment dates without commissions. This graph does not forecast future performance of our common stock.
MBIA Inc. Common Stock
100.00
70.75
169.78
138.17
144.73
152.78
S&P 500 Index
100.00
118.39
152.34
124.72
157.48
196.85
S&P Financials Index
100.00
98.24
132.50
118.49
132.83
173.34
Source: Bloomberg Finance L.P.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. [Reserved]

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of financial condition and results of operations of MBIA Inc. should be read in conjunction with the other sections of this Form 10-K. In addition, this discussion and analysis of financial condition and results of operations includes statements of the opinion of MBIA Inc.’s management which may be forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. Refer to “Risk Factors” in Part I, Item 1A of this Form 10-K for a further discussion of risks and uncertainties.
This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023 results. Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 results not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
OVERVIEW
MBIA Inc., together with its consolidated subsidiaries, (collectively, “MBIA”, the “Company”, “we”, “us”, or “our”) operates within the financial guarantee insurance industry. MBIA manages its business within three operating segments: 1) United States (“U.S.”) public finance insurance; 2) corporate; and 3) international and structured finance insurance. Our U.S. public finance insurance portfolio is managed through National Public Finance Guarantee Corporation (“National”), our corporate segment is managed through MBIA Inc. and several of its subsidiaries, including our service company, MBIA Services Corporation (“MBIA Services”), and our international and structured finance insurance business is managed through MBIA Insurance Corporation and its subsidiaries (“MBIA Corp.”).
National’s primary objectives are to maximize the performance of its existing insured portfolio through effective surveillance and remediation activity and effectively manage its investment portfolio. Our corporate segment consists of general corporate activities, including providing support services to MBIA’s operating subsidiaries and asset and capital management. MBIA Corp.’s primary objectives are to satisfy all claims by its policyholders and to maximize future recoveries, if any, for its surplus note holders, and then its preferred stock holders. MBIA Corp. is executing this strategy by, among other things, taking steps to maximize the collection of recoveries and reducing and mitigating potential losses on its insurance exposures. We do not expect National or MBIA Corp. to write new financial guarantee policies outside of remediation related activities.
Economic Environment
U.S. economic activity indicators have continued to expand at a solid pace with the unemployment rate stabilizing at a low level and labor market conditions remaining solid. Inflation remains elevated. With the Federal Open Market Committee (“FOMC”) seeking to achieve maximum employment and 2% inflation over the longer run, at the most recent meeting, the FOMC maintained its federal funds rate target range at 4.25% to 4.50%. Economic and financial market trends could impact the Company’s financial results. Economic improvement at the state and local level strengthens the credit quality of the issuers of our insured municipal bonds, improves the performance of our insured U.S. public finance portfolio and could reduce the amount of National’s potential incurred losses. Higher interest rates could adversely affect the values of our Company’s investment portfolio, but increase investment portfolio yield and income, and decrease the present value of loss reserves.
Business Developments
The following is a summary of business developments:
Puerto Rico
•During 2024, the Puerto Rico Electric Power Authority (“PREPA”) defaulted on scheduled debt service for National insured bonds and National paid gross claims in the aggregate of $137 million. As of December 31, 2024, National had $670 million of debt service outstanding related to PREPA. On January 1, 2025, PREPA defaulted on scheduled debt service for National insured bonds and National paid gross claims in the aggregate of $13 million.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
OVERVIEW (continued)
•On January 31, 2023, National entered into a restructuring support agreement (“PREPA RSA”) with the Financial Oversight and Management Board for Puerto Rico (the “Oversight Board”), on behalf of itself and as the sole Title III representative of PREPA. A plan of adjustment for PREPA (the "Plan") and related disclosure statement was filed on February 9, 2023. Subsequently, both the Plan and PREPA RSA were amended. The Title III Court conducted confirmation hearings in March 2024. On June 12, 2024, the First Circuit Court of Appeals reversed Judge Swain's prior rulings and supported bondholder liens and claim amounts (the "Appeal Decision"). On June 26, 2024, the Oversight Board filed a petition for a First Circuit panel rehearing, and the Unsecured Creditors Committee ("UCC") filed an en banc appeal. On November 13, 2024, the First Circuit affirmed the Appeal Decision. On November 27, 2024, the Oversight Board filed a petition for further rehearing, and on December 31, 2024, the First Circuit denied the rehearing request. Following a status conference held on July 10, 2024, the Court imposed a 60-day stay of all litigation and other filings related to the amended Plan, which stay was subsequently extended until March 24, 2025, and ordered the parties into mediation. Following the Appeal Decision, the Oversight Board informed the Court, National and other parties that it intended to modify National’s settlement in a forthcoming amended Plan. Thereafter, National provided notice to the Oversight Board that National did not support the board's actions and that such actions constituted a breach and termination of the PREPA RSA, as amended. There is no assurance that a plan that is substantially similar in the treatment of National's claims and rights will ultimately be confirmed and become effective. In the event of a substantially different confirmed plan, National’s PREPA loss reserves and recoveries could be materially adversely affected.
Refer to the following “U.S. Public Finance Insurance Puerto Rico Exposures” section for additional information on our Puerto Rico exposures.
Zohar CDOs
Pursuant to a plan of liquidation that became effective in August of 2022, MBIA Corp.'s interest in the remaining collateral of the Zohar collateralized debt obligation (“CDO”) 2003-1, Limited (“Zohar I”) and Zohar II 2005-1, Limited (“Zohar II”) (collectively, the "Zohar CDOs") was distributed to MBIA Corp. either directly or in the form of interests in certain asset recovery entities. Since then, MBIA Corp. has sought to monetize these interests through sales. Refer to “Note 1: Business Developments and Risks and Uncertainties” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for a further discussion of the Zohar CDOs.
Dividends
In December of 2024 and November of 2023, National declared and paid as-of-right dividends of $69 million and $97 million, respectively, to its ultimate parent, MBIA Inc. In addition, on December 7, 2023, National paid a $550 million special dividend that was approved by the New York State Department of Financial Services (“NYSDFS”) to its ultimate parent, MBIA Inc. Also on December 7, 2023, the Company's Board of Directors declared an extraordinary cash dividend on MBIA’s common stock of $8.00 per share. The dividend was paid on December 22, 2023 to shareholders of record as of the close of business on December 18, 2023. Due to the absence of retained earnings for MBIA Inc., the Company accounted for the dividend as a return of capital that was paid from additional paid-in capital on the Company's consolidated balance sheet.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
RESULTS OF OPERATIONS
Summary of Consolidated Results
The following table presents a summary of our consolidated financial results for the years ended December 31, 2024, 2023 and 2022:
Years Ended December 31,
In millions except for per share, percentage and share amounts
Total revenues
$
$
$
Total expenses
Income (loss) from continuing operations before income taxes
(441
)
(484
)
(148
)
Provision (benefit) for income taxes
-
-
Net income (loss) from continuing operations
(441
)
(484
)
(149
)
Income (loss) from discontinued operations, net of income taxes
(3
)
(3
)
(54
)
Net income (loss)
(444
)
(487
)
(203
)
Less: Net income (loss) from discontinued operations attributable to noncontrolling interests
(8
)
Net income (loss) attributable to MBIA Inc.
$
(447
)
$
(491
)
(195
)
Net income (loss) per basic and diluted common share attributable to MBIA Inc.
$
(9.43
)
$
(10.18
)
$
(3.92
)
Adjusted net income (loss) (1)
$
(184
)
$
(169
)
$
(145
)
Adjusted net income (loss) per diluted share (1)
$
(3.90
)
$
(3.49
)
$
(2.90
)
Weighted average basic and diluted common shares outstanding
47,436,079
48,207,574
49,803,739
___________________
(1) - Adjusted net income (loss) and adjusted net income (loss) per diluted share are non-GAAP measures. Refer to the following Non-GAAP Adjusted Net Income (Loss) section for a discussion of adjusted net income (loss) and adjusted net income (loss) per diluted share and a reconciliation of GAAP net income (loss) to adjusted net income (loss) and GAAP net income (loss) per diluted share to adjusted net income (loss) per diluted share.
2024 vs. 2023 GAAP Results
Income (loss) from Continuing Operations Before Income Taxes
The increase in consolidated total revenues for 2024 compared with 2023 was principally due to favorable changes from net realized investment losses from sales of investments and revenues from consolidated VIEs. These favorable changes were partially offset by an increase in losses from fair valuing investments and a decrease in net investment income. Net realized investment losses from sales of investments for 2024 were $3 million compared with $76 million for 2023. In addition, 2024 and 2023 included $37 million and $70 million, respectively, of consolidated VIE losses primarily from the reclassification of credit risk losses from accumulated other comprehensive income ("AOCI") to net income (loss) due to early redemptions of VIE liabilities and losses from the deconsolidation of VIEs. 2024 included $49 million of losses from fair valuing investments compared with $6 million of gains for 2023. Net investment income decreased $32 million for 2024 compared with 2023 primarily due to a lower average asset base as a result of the extraordinary cash dividend payment on MBIA Inc.'s stock in December of 2023.
Consolidated total expenses for 2024 and 2023 included non-VIE interest expense of $208 million and $210 million, respectively, principally from MBIA Corp.'s surplus notes. Refer to the following “Interest Expense” section of the International and Structured Finance Insurance segment for additional information on MBIA Corp.'s surplus notes interest expense. In addition, consolidated total expenses for 2024 included $184 million of losses and LAE compared with $177 million for 2023, primarily related to PREPA. Refer to the following “Loss and Loss Adjustment Expenses” sections of the U.S. Public Finance Insurance and International and Structured Finance Insurance segments for additional information on our losses and LAE. Non-VIE operating expense decreased $18 million for 2024 compared with 2023. This decrease was primarily due to a decrease in compensation expense.
Provision for Income Taxes
For 2024 and 2023, our effective tax rate applied to our loss before income taxes was below the U.S. statutory tax rate of 21% due to the full valuation allowance on the changes in our net deferred tax asset, which included our net operating loss (“NOL”).
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
RESULTS OF OPERATIONS (continued)
As of December 31, 2024 and 2023, the Company’s valuation allowance against its net deferred tax asset was $1.4 billion and $1.2 billion, respectively. Notwithstanding the full valuation allowance on its net deferred tax asset, the Company believes that it may be able to use some of its net deferred tax asset before the expirations associated with that asset based upon expected earnings at National. Accordingly, the Company will continue to re-evaluate its net deferred tax asset on a quarterly basis. There is no assurance that the Company will reverse any of its valuation allowance on its net deferred tax asset in the future. Refer to “Note 10: Income Taxes” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for a further discussion of income taxes, including the valuation allowance against the Company’s net deferred tax asset and its accounting for tax uncertainties.
Income (loss) from discontinued operations, net of income taxes
The Company classifies certain portfolio companies that the Company acquired from the Zohar CDOs bankruptcy distribution as discontinued operations. Refer to “Note 1: Business Developments and Risks and Uncertainties” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for a further discussion of our discontinued operations.
Non-GAAP Adjusted Net Income (Loss)
In addition to our results prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), we also analyze the operating performance of the Company using adjusted net income (loss) and adjusted net income (loss) per diluted common share, both non-GAAP measures. Since adjusted net income (loss) is used by management to assess performance and make business decisions, we consider adjusted net income (loss) and adjusted net income (loss) per diluted common share fundamental measures of periodic financial performance which are useful in understanding our results. Adjusted net income (loss) and adjusted net income (loss) per diluted common share are not substitutes for net income (loss) and net income (loss) per diluted common share determined in accordance with GAAP, and our definitions of adjusted net income (loss) and adjusted net income (loss) per diluted common share may differ from those used by other companies.
Adjusted net income (loss) and adjusted net income (loss) per diluted common share include the after-tax results of the Company and remove the after-tax results of our international and structured finance insurance segment, comprising the results of MBIA Corp. and its discontinued operations net of noncontrolling interest and income taxes, which given MBIA Corp.’s capital structure and business prospects, we do not expect its financial performance to have a material economic impact on MBIA Inc., as well as adjusting the following:
•Mark-to-market gains (losses) on financial instruments - We remove the impact of mark-to-market gains (losses) on financial instruments such as interest rate swaps, investment securities and hybrid financial instruments. These amounts fluctuate based on market interest rates, credit spreads and other market factors.
•Foreign exchange gains (losses) - We remove foreign exchange gains (losses) on the remeasurement of certain assets and liabilities and transactions in non-functional currencies. Given the possibility of volatility in foreign exchange markets, we exclude the impact of foreign exchange gains (losses) to provide a measurement of comparability of adjusted net income (loss).
•Net realized investment gains (losses), impaired securities and extinguishment of debt - We remove realized gains (losses) on the sale of investments, net investment losses related to impairment of securities and net gains (losses) on extinguishment of debt since the timing of these transactions are subject to management’s assessment of market opportunities and conditions and capital liquidity positions.
•Income taxes -We apply a zero effective tax rate for federal income tax purposes to our pre-tax adjustments, if applicable, consistent with our consolidated effective tax rate.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
RESULTS OF OPERATIONS (continued)
The following table presents our adjusted net income (loss) and adjusted net income (loss) per diluted common share and provides a reconciliation of GAAP net income (loss) to adjusted net income (loss) for the years ended December 31, 2024, 2023 and 2022:
Year Ended December 31,
In millions except share and per share amounts
Net income (loss) attributable to MBIA Inc.
$
(447
)
$
(491
)
$
(195
)
Less: adjusted net income (loss) adjustments:
Income (loss) from discontinued operations, net of noncontrolling interest
(6
)
(7
)
(46
)
Income (loss) before income taxes of our international and structured finance insurance segment and eliminations
(265
)
(249
)
(20
)
Adjustments to income before income taxes of our U.S. public finance insurance and corporate segments:
Mark-to-market gains (losses) on financial instruments (1)
Foreign exchange gains (losses) (1)
(6
)
Net realized investment gains (losses)
(3
)
(72
)
(40
)
Net investment losses related to impairments of securities (2)
-
(8
)
(21
)
Other net realized gains (losses)
Adjusted net income adjustment to the (provision) benefit for income tax
-
-
(1
)
Adjusted net income (loss)
$
(184
)
$
(169
)
$
(145
)
Adjusted net income (loss) per diluted common share (3)
$
(3.90
)
$
(3.49
)
$
(2.90
)
___________________
(1) - Reported within “Net gains (losses) on financial instruments at fair value and foreign exchange” on the Company’s consolidated statements of operations.
(2) - Reported within “Other net realized gains (losses)” on the Company’s consolidated statements of operations.
(3) - Adjusted net income (loss) per diluted common share is calculated by taking adjusted net income (loss) divided by the GAAP weighted average number of diluted common shares outstanding.
Book Value Adjustments Per Share
In addition to GAAP book value per share, for internal purposes management also analyzes adjusted book value (“ABV”) per share, changes to which we view as an important indicator of financial performance. ABV is also used by management in certain components of management’s compensation. Since many of the Company’s investors and analysts continue to use ABV to evaluate MBIA’s share price and as the basis for their investment decisions, we present GAAP book value per share as well as the individual adjustments used by management to calculate its internal ABV metric.
Management adjusts GAAP book value to remove the book value of MBIA Corp., its discontinued operations, and for certain items which the Company believes will reverse from GAAP book value through GAAP earnings and comprehensive income, as well as add in the impact of certain items which the Company believes will be realized in GAAP book value in future periods. The Company has limited such adjustments to those items that it deems to be important to fundamental value and performance and for which the likelihood and amount can be reasonably estimated. The following provides a description of management’s adjustments to GAAP book value:
•Negative Book value of MBIA Corp. - We remove the negative book value of MBIA Corp., including its discontinued operations based on our view that given MBIA Corp.’s current financial condition, the regulatory regime in which it operates, the priority given to its policyholders, surplus note holders and preferred stock holders with respect to the distribution of assets, and its legal structure, it is not and will not likely be in a position to upstream any economic benefit to MBIA Inc. Further, MBIA Inc. does not face any material financial liability arising from MBIA Corp.
•Net unrealized (gains) losses on available-for-sale (“AFS”) securities excluding MBIA Corp. - We remove net unrealized gains and losses on AFS securities recorded in accumulated other comprehensive income since they will reverse from GAAP book value when such securities mature. Gains and losses from sales and impairments of AFS securities are recorded in book value through earnings.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
RESULTS OF OPERATIONS (continued)
•Net unearned premium revenue in excess of expected losses of National - We include net unearned premium revenue in excess of expected losses. Net unearned premium revenue in excess of expected losses consists of the financial guarantee unearned premium revenue of National in excess of expected insurance losses, net of reinsurance and deferred acquisition costs. In accordance with GAAP, a loss reserve on a financial guarantee policy is only recorded when expected losses exceed the amount of unearned premium revenue recorded for that policy. As a result, we only add to GAAP book value the amount of unearned premium revenue in excess of expected losses for each policy in order to reflect the full amount of our expected losses. The Company’s net unearned premium revenue will be recognized in GAAP book value in future periods, however, actual amounts could differ from estimated amounts due to such factors as credit defaults and policy terminations, among others.
Since the Company has a full valuation allowance against its net deferred tax asset and a zero consolidated effective tax rate, the book value per share adjustments reflect a zero effective tax rate.
The following table provides the Company’s GAAP book value per share and management’s adjustments to book value per share used in our internal analysis:
As of December 31,
As of December 31,
In millions except share and per share amounts
Total shareholders' equity of MBIA Inc.
$
(2,089
)
$
(1,657
)
Common shares outstanding
50,970,181
50,862,931
GAAP book value per share
$
(40.99
)
$
(32.56
)
Management's adjustments described above:
Remove negative book value per share of MBIA Corp.
(49.48
)
(44.91
)
Remove net unrealized gains (losses) on available-for-sale securities included in other comprehensive income (loss)
(2.87
)
(2.40
)
Include net unearned premium revenue in excess of expected losses
2.43
2.91
U.S. Public Finance Insurance Segment
Our U.S. public finance insurance portfolio is managed through National. The financial guarantees issued by National provide unconditional and irrevocable guarantees of the payment of the principal of, and interest or other amounts owing on, insured obligations when due or, in the event National has exercised, at its discretion, the right to accelerate the payment under its policies upon the acceleration of the underlying insured obligations due to default or otherwise. National’s guarantees insure municipal bonds, including tax-exempt and taxable indebtedness of U.S. political subdivisions, as well as utility districts, airports, healthcare institutions, higher educational facilities, housing authorities and other similar agencies and obligations issued by private entities that finance projects that serve a substantial public purpose. Municipal bonds and privately issued bonds used for the financing of public purpose projects are generally supported by taxes, assessments, user fees or tariffs related to the use of these projects, lease payments or other similar types of revenue streams. As of December 31, 2024, National had total insured gross par outstanding of $25.3 billion.
National continues to monitor and remediate its existing insured portfolio and has pursued and may continue to pursue other transactions that could enhance shareholder value, including receiving NYSDFS approval of a $550 million special dividend that was paid to its ultimate parent, MBIA Inc., in 2023. Regarding its insured portfolio, some state and local governments and territory obligors that National insures are experiencing financial and budgetary stress which could lead to an increase in defaults by such entities on the payment of their obligations and, while such stress has not yet occurred materially, losses or impairments on a greater number of the Company’s insured transactions. In particular, PREPA had been experiencing significant fiscal stress and constrained liquidity. Refer to the “U.S. Public Finance Insurance Puerto Rico Exposures” section for additional information on our PREPA exposures. We continue to monitor and analyze these situations and other stressed credits closely, and the overall extent and duration of stress affecting our insured credits remains uncertain.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
RESULTS OF OPERATIONS (continued)
The following table presents our U.S. public finance insurance segment results for the years ended December 31, 2024, 2023 and 2022:
Years Ended December 31,
Percent Change
In millions
2024 vs. 2023
2023 vs. 2022
Net premiums earned
$
$
$
-
%
%
Net investment income
%
%
Net realized investment gains (losses)
(3
)
(39
)
(30
)
%
%
Net gains (losses) on financial instruments at fair value and foreign exchange
(47
)
%
%
Fees and reimbursements
%
%
Other net realized gains (losses)
-
(8
)
(19
)
%
%
Total revenues
%
%
Losses and loss adjustment
%
%
Amortization of deferred acquisition costs
-
%
%
Operating
%
%
Total expenses
%
%
Income (loss) from continuing operations before income taxes
$
(138
)
$
(131
)
$
(160
)
%
%
NET PREMIUMS EARNED Net premiums earned on financial guarantees represent gross premiums earned net of premiums ceded to reinsurers, and include scheduled premium earnings and premium earnings from refunded issues. Refunding activity over the past several years has accelerated premium earnings in prior years and reduced the amount of scheduled premiums that would have been earned in the current year. Refunding activity can vary significantly from period to period based on issuer refinancing behavior. For 2024 and 2023, scheduled premiums earned were $26 million and $28 million, respectively, and refunded premiums earned were $4 million and $2 million, respectively.
NET INVESTMENT INCOME The decrease in net investment income for 2024 compared with 2023 was primarily due to a lower average invested asset base as a result of the dividend payments to National's ultimate parent, MBIA Inc., in 2023. This decrease was partially offset by higher yields on investments.
NET REALIZED INVESTMENT GAINS (LOSSES) The net realized investment losses for 2023 related to sales of securities from the ongoing management of our U.S. public finance investment portfolio, including to generate liquidity to pay dividends and claims.
NET GAINS (LOSSES) ON FINANCIAL INSTRUMENTS AT FAIR VALUE AND FOREIGN EXCHANGE For 2023, net gains on financial instruments at fair value and foreign exchange were driven by fair value gains on investments for which the fair value option was elected primarily due to a decrease in interest rates.
OTHER NET REALIZED GAINS (LOSSES) For 2023, other net realized losses were primarily related to impairments of certain investments that were in an unrealized loss position and which we intended to sell before their values recovered to their amortized cost basis.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
RESULTS OF OPERATIONS (continued)
LOSSES AND LOSS ADJUSTMENT EXPENSES For 2024, losses and LAE incurred primarily related to changes in PREPA reserves as a result of current developments in the PREPA remediation and extending the timing of a resolution. For 2023, losses and LAE incurred related to updating PREPA scenarios to reflect the then Amended Plan Support Agreement with PREPA and extending the timing of a resolution.
The following table presents information about our U.S. public finance insurance loss recoverable asset and loss and LAE reserves liabilities as of December 31, 2024 and 2023:
December 31,
December 31,
Percent
In millions
Change
Assets:
Insurance loss recoverable
$
$
%
Reinsurance recoverable on paid and unpaid losses (1)
%
Liabilities:
Loss and LAE reserves
%
Insurance loss recoverable - ceded (2)
%
Net reserve (salvage)
$
$
%
(1) - Reported within "Other assets" on our consolidated balance sheets.
(2) - Reported within "Other liabilities" on our consolidated balance sheets.
The changes to the insurance loss recoverable and loss and LAE reserves as of December 31, 2024 compared with December 31, 2023, were primarily due to PREPA as discussed above. In addition, the increase in loss and LAE reserves included reserves on a leased-back transaction and was partially offset by the January and July of 2024 PREPA claim payments.
Refer to “Note 6: Loss and Loss Adjustment Expense Reserves” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for additional information related to the Company’s loss reserves and recoveries and loss reserving process.
POLICY ACQUISITION COSTS AND OPERATING EXPENSES U.S. public finance insurance segment expenses for the years ended December 31, 2024, 2023 and 2022 are presented in the following table:
Years Ended December 31,
Percent Change
In millions
2024 vs. 2023
2023 vs. 2022
Gross expenses
$
$
$
%
%
Amortization of deferred acquisition costs
$
$
$
-
%
%
Operating
%
%
Total insurance operating expenses
$
$
$
%
%
Gross expenses represent total insurance expenses before the deferral of any policy acquisition costs.
When an insured obligation refunds, we accelerate to expense any remaining deferred acquisition costs associated with the policy covering the refunded insured obligation. We did not defer a material amount of policy acquisition costs during 2024 or 2023 as we did not write any new insurance business in those years.
INSURED PORTFOLIO EXPOSURE Financial guarantee insurance companies use a variety of approaches to assess the underlying credit risk profile of their insured portfolios. National uses both an internally developed credit rating system as well as third-party rating sources in the analysis of credit quality measures of its insured portfolio. In evaluating credit risk, we obtain, when available, the underlying rating(s) of the insured obligation before the benefit of National’s insurance policy from nationally recognized rating agencies, Moody’s Investor Services (“Moody’s”) and Standard & Poor’s Financial Services LLC (“S&P”). Other companies within the financial guarantee industry may report credit quality information based upon internal ratings that would not be comparable to our presentation. We maintain internal ratings on our entire portfolio, and our ratings may be higher or lower than the underlying ratings assigned by Moody’s or S&P.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
RESULTS OF OPERATIONS (continued)
The following table presents the credit quality distribution of National’s U.S. public finance outstanding gross par insured as of December 31, 2024 and 2023. Capital appreciation bonds are reported at the par amount at the time of issuance of the insurance policy. All ratings are as of the period presented and represent S&P underlying ratings, where available. If transactions are not rated by S&P, a Moody’s equivalent rating is used. If transactions are not rated by either S&P or Moody’s, an internal equivalent rating is used.
Gross Par Outstanding
In millions
December 31, 2024
December 31, 2023
Rating
Amount
%
Amount
%
AAA
$
1,022
4.1
%
$
1,283
4.5
%
AA
10,574
41.8
%
11,919
42.0
%
A
10,023
39.6
%
10,539
37.1
%
BBB
1,740
6.9
%
2,394
8.5
%
Below investment grade
1,931
7.6
%
2,242
7.9
%
Total
$
25,290
100.0
%
$
28,377
100.0
%
U.S. Public Finance Insurance Puerto Rico Exposures
On May 3, 2017, the Oversight Board certified and filed a petition under Title III of the Puerto Rico Oversight, Management, and Economic Stability Act for Puerto Rico with the District Court of Puerto Rico thereby commencing a bankruptcy-like case for the Puerto Rico Commonwealth GO ("GO"). Under separate petitions, the Oversight Board subsequently commenced Title III proceedings for the Puerto Rico Sales Tax Financing Corporation (“COFINA”), Puerto Rico Highway and Transportation Authority ("HTA"), PREPA and the Public Buildings Authority (“PBA”) on May 5, 2017, May 21, 2017, July 2, 2017 and September 27, 2019, respectively. On February 4, 2019, the District of Puerto Rico entered the order confirming the Third Amended Title III Plan of Adjustment for COFINA. The Title III cases for GO and PBA were confirmed on January 18, 2022, and became effective on March 15, 2022. The confirmation hearing for the HTA Title III case was completed on August 17, 2022, and the confirmation order was entered on October 12, 2022, which became effective on December 6, 2022.
As a result of prior defaults, various stays and the Title III cases, Puerto Rico failed to make certain scheduled debt service payments for National insured bonds. As a consequence, National has paid gross claims in the aggregate amount of $3.1 billion relating to GO, PBA, PREPA and HTA bonds through December 31, 2024, inclusive of the commutation payment and the additional payment in the amount of $66 million in 2019 related to COFINA and the GO and HTA acceleration and commutation payments of $277 million and $556 million, respectively, in 2022.
Status of Puerto Rico’s Fiscal Plans
On June 23, 2023, the Oversight Board filed a fiscal plan for PREPA for fiscal year 2023, which provided for approximately $2.4 billion of distributions to PREPA bondholders. The University of Puerto Rico (the "University") is not a debtor in Title III and continues to be current on its debt service payment. However, the University is subject to a standstill agreement with its senior bondholders, which has been extended to May 31, 2025. National is not a party to the standstill agreement. As of December 31, 2024, National had $62 million of debt service outstanding related to the University.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
RESULTS OF OPERATIONS (continued)
PREPA
National’s largest remaining exposure to Puerto Rico, by gross par outstanding, is to PREPA.
On January 31, 2023, National entered into the PREPA RSA with the Oversight Board, on behalf of itself and as the sole Title III representative of PREPA. The Plan and related disclosure statement was filed on February 9, 2023. Subsequently, both the Plan and PREPA RSA were amended. The Title III Court conducted confirmation hearings in March 2024. On June 12, 2024, the First Circuit Court of Appeals reversed Judge Swain's prior rulings and supported bondholder liens and claim amounts (the "Appeal Decision").The Oversight Board informed the Court that it intended to file an amendment to the Plan it believed would account for the changes required by the First Circuit opinion. On June 26, 2024, the Oversight Board filed a petition for a First Circuit panel rehearing, and the UCC filed an en banc appeal. On November 13, 2024, the First Circuit affirmed the Appeal Decision. On November 27, 2024, the Oversight Board filed a petition for further rehearing, and on December 31, 2024, the First Circuit denied the rehearing request. Following a status conference held on July 10, 2024, the Court imposed a 60-day stay of all litigation and other filings related to the amended Plan, which stay was subsequently extended until March 24, 2025, and ordered the parties into mediation. Following the Appeal Decision, the Oversight Board informed the Court, National and other parties that it intended to modify National’s settlement in a forthcoming amended Plan. Thereafter, National provided notice to the Oversight Board that National did not support the board's actions and that such actions constituted a breach and termination of the PREPA RSA, as amended.
On June 22, 2020, the Oversight Board and the Puerto Rico P3 Authority announced an agreement and contract with LUMA Energy, LLC (“LUMA”) which calls for LUMA to take full responsibility for the operation and maintenance of PREPA’s transmission and distribution system; the contract runs for 15-years following a transition period. PREPA retains ownership of the system as well as responsibility for the power generation system. LUMA assumed responsibility for operations on June 1, 2021.
On September 18, 2020, FEMA and the PR COR3 Authority announced the commitment by FEMA to provide approximately $11.6 billion (net of the required 10% cost share) to fund projects built by PREPA and the PR Department of Education; approximately $9.4 billion (net) of this amount is designated for PREPA. LUMA is now involved in the planning of the related projects as well as proceedings related thereto in front the PR Energy Bureau as well as PR-COR3.
On January 25, 2023, the Oversight Board and Puerto Rico P3 Authority announced an agreement and contract with Genera PR LLC (“Genera”) which calls for Genera to take full responsibility of the operation and maintenance of the existing power generation assets owned by PREPA; the contract will run for 10-years following a transition period. PREPA retains ownership of the assets.
The following table presents our scheduled gross debt service due on our PREPA insured exposures as of December 31, 2024, for each of the subsequent five years ending December 31, and thereafter:
In millions
Thereafter
Total
Puerto Rico Electric Power Authority (PREPA)
$
$
$
$
$
$
$
Corporate Segment
Our corporate segment consists of general corporate activities, including providing support services to MBIA Inc.’s subsidiaries and asset and capital management. Support services are provided by our service company, MBIA Services, and include, among others, management, legal, accounting, treasury, information technology, and insurance portfolio surveillance, on a fee-for-service basis. MBIA Services is compensated for services at cost and its net revenues and expenses are generally managed to break-even. Capital management includes activities related to servicing obligations issued by MBIA Inc. and its subsidiary, MBIA Global Funding, LLC (“GFL”). MBIA Inc. issued debt to finance the operations of the MBIA group. GFL raised funds through the issuance of medium-term notes (“MTNs”) with varying maturities, which were in turn guaranteed by MBIA Corp. GFL lent the proceeds of these MTN issuances to MBIA Inc. MBIA Inc. provided customized investment agreements, guaranteed by MBIA Corp., for bond proceeds and other public funds for such purposes as construction, loan origination, escrow and debt service or other reserve fund requirements. The Company ceased issuing new MTNs and investment agreements and the outstanding liability balances and corresponding asset balances have declined over time as liabilities matured, terminated, were called or repurchased. All of the debt within the corporate segment is managed collectively and is serviced by available liquidity.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
RESULTS OF OPERATIONS (continued)
The following table summarizes the consolidated results of our corporate segment for the years ended December 31, 2024, 2023 and 2022:
Years Ended December 31,
Percent Change
In millions
2024 vs. 2023
2023 vs. 2022
Net investment income
$
$
$
%
%
Net realized investment gains (losses)
-
(33
)
(10
)
%
n/m
Net gains (losses) on financial instruments at fair value and foreign exchange
%
%
Fees
-
%
%
Other net realized gains (losses)
%
%
Total revenues
%
%
Operating
%
%
Interest
%
-
%
Total expenses
%
%
Income (loss) from continuing operations before income taxes
$
(37
)
$
(102
)
$
%
n/m
____________________
n/m - Percent change not meaningful.
NET INVESTMENT INCOME The increase in net investment income for 2024 compared with 2023 was primarily due to rebalancing the investment portfolio into higher yielding investments.
NET REALIZED INVESTMENT GAINS (LOSSES) The net realized investment losses for 2023 related to the sales of securities to generate liquidity to terminate interest rate swaps.
NET GAINS (LOSSES) ON FINANCIAL INSTRUMENTS AT FAIR VALUE AND FOREIGN EXCHANGE Net gains (losses) on financial instruments at fair value and foreign exchange were primarily driven by changes in market values on interest rate swaps, changes in the revaluation of euro-denominated liabilities and changes in fair value on investments for which the fair value option was elected. 2023 included fair value net gains of $14 million on interest rate swaps with no comparable amounts for 2024. The 2023 gains were due to an increase in interest rates on swaps for which we received floating rates. Substantially all of the interest rates swaps were terminated in the second half of 2023. In addition, 2024 included foreign currency gains of $8 million on euro-denominated liabilities compared with foreign currency losses of $6 million on these liabilities for 2023. This change was due to the U.S. dollar strengthening against the euro in 2024 compared with the U.S. dollar weakening against the euro in 2023. Also, 2024 included $6 million of fair value gains on investments for which the fair value option was elected compared with $4 million of fair value gains in 2023.
OPERATING EXPENSE Operating expense decreased for 2024 compared with 2023 primarily due to a decrease in compensation expense primarily related to restricted stock expense. Refer to “Note 14: Benefit Plans” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for additional information related to the Company’s restricted stock expense.
International and Structured Finance Insurance Segment
Our international and structured finance insurance portfolio is managed through MBIA Corp. The financial guarantees issued by MBIA Corp. generally provide unconditional and irrevocable guarantees of the payment of the principal of, and interest or other amounts owing on, non-U.S. public finance and global structured finance insured obligations when due or, in the event MBIA Corp. has the right, at its discretion, to accelerate insured obligations upon default or otherwise.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
RESULTS OF OPERATIONS (continued)
MBIA Corp. insures sovereign-related and sub-sovereign bonds, utilities, privately issued bonds used for the financing of projects that include toll roads, bridges, public transportation facilities, and other types of infrastructure projects serving a substantial public purpose. MBIA Corp. also insures structured finance and asset-backed obligations repayable from expected cash flows generated by a specified pool of assets, such as residential and commercial mortgages, consumer loans and structured settlements. MBIA Insurance Corporation insures the investment agreements written by MBIA Inc., and if MBIA Inc. were to have insufficient assets to pay amounts due upon maturity or termination, MBIA Insurance Corporation would be required to make such payments under its insurance policies. MBIA Insurance Corporation also insures debt obligations of GFL and obligations under certain types of derivative contracts. As of December 31, 2024, MBIA Corp.’s total insured gross par outstanding was $2.3 billion. In addition, MBIA Corp. consolidates insured transactions as VIEs if it determines it is the primary beneficiary, and deconsolidates such VIEs when it is no longer the primary beneficiary.
MBIA Corp. has contributed to the Company’s NOL carryforward, which is used in the calculation of our consolidated income taxes. If MBIA Corp. becomes profitable, it is not expected to make any tax payments under our tax sharing agreement. Based on MBIA Corp.’s current projected earnings and our expectation that it will not write new business outside of remediation activities, we believe it is unlikely that MBIA Corp. will generate significant income in the near future. As a result of MBIA Corp.’s capital structure and business prospects, we do not expect its financial performance to have a material economic impact on MBIA Inc.
The following table presents our international and structured finance insurance segment results for the years ended December 31, 2024, 2023 and 2022:
Years Ended December 31,
Percent Change
In millions
2024 vs. 2023
2023 vs. 2022
Net premiums earned
$
$
$
%
%
Net investment income
%
%
Net realized investment gains (losses)
-
(4
)
(1
)
%
n/m
Net gains (losses) on financial instruments at fair value and foreign exchange
(57
)
(12
)
(7
)
n/m
%
Fees and reimbursements
%
%
Other net realized gains (losses)
(1
)
%
%
Revenues of consolidated VIEs:
Net gains (losses) on financial instruments at fair value and foreign exchange
(23
)
(45
)
(14
)
%
n/m
Other net realized gains (losses)
(14
)
(25
)
%
n/m
Total revenues
(67
)
(43
)
%
n/m
Losses and loss adjustment
(7
)
(105
)
n/m
%
Amortization of deferred acquisition costs
%
%
Operating
%
-
%
Interest
%
%
Expenses of consolidated VIEs:
Operating
%
%
Interest
-
%
%
Total expenses
%
n/m
Income (loss) from continuing operations before income taxes
$
(266
)
$
(250
)
$
(21
)
%
n/m
_______________
n/m - Percent change not meaningful.
NET PREMIUMS EARNED Our international and structured finance insurance segment generates net premiums from insurance policies accounted for as financial guarantee contracts. Net premiums earned represent gross premiums earned net of premiums ceded to reinsurers, and include scheduled premium earnings and premium earnings from refunded issues. Certain premiums may be eliminated in our consolidated financial statements as a result of the Company consolidating VIEs. Net premiums earned were primarily non-U.S.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
RESULTS OF OPERATIONS (continued)
NET INVESTMENT INCOME The decrease in net investment income for 2024 compared with 2023 was primarily due to the acceleration of accretion to par value in 2023 upon the redemption of securities that were purchased at a discount.
NET GAINS (LOSSES) ON FINANCIAL INSTRUMENTS AT FAIR VALUE AND FOREIGN EXCHANGE The net losses for 2024 were primarily due to fair value losses on investments for which the fair value option was elected. The net losses for 2023 were primarily driven by foreign exchange losses on non-U.S. dollar insurance balances and fair value losses on investments for which the fair value option was elected.
REVENUES OF CONSOLIDATED VIEs The net losses of consolidated VIE revenues for 2024 and 2023 were primarily driven by recognizing credit risk losses from the early redemptions of VIE liabilities and losses from the deconsolidation of VIEs. For 2024 and 2023, net losses of consolidated VIE revenues included the reclassification of $28 million and $45 million, respectively, of credit risk losses from AOCI to net income (loss). In addition, 2023 included a loss of $7 million from the deconsolidation of a VIE.
LOSSES AND LOSS ADJUSTMENT EXPENSES For 2024, the losses and LAE incurred benefit primarily related to an increase in risk-free rates in 2024, which caused the present value of loss reserves, net of recoveries, to decline on our insured RMBS loss reserves. This was partially offset by accretion and an increase in the secured overnight financing rate ("SOFR"), which increased loss reserves on insured RMBS floating rate liabilities.
For 2023, losses and LAE incurred primarily related to the termination of a first-lien RMBS insured transaction for which claim payments were higher than previous reserves.
As a result of the consolidation of VIEs, loss and LAE excludes losses and LAE of $21 million and a losses and LAE benefit of $30 million for 2024 and 2023, respectively, as VIE losses and LAE activity is eliminated in consolidation.
The following table presents information about our insurance loss recoverable and loss and LAE reserves as of December 31, 2024 and 2023.
December 31,
December 31,
Percent
In millions
Change
Assets:
Insurance loss recoverable
$
$
%
Reinsurance recoverable on paid and unpaid losses (1)
-
%
Liabilities:
Loss and LAE reserves
%
Net reserve (salvage)
$
$
%
_______________
(1) - Reported within "Other assets" on our consolidated balance sheets.
The insurance loss recoverable primarily relates to reimbursement rights arising from the payment of claims on MBIA Corp.’s policies insuring certain RMBS transactions. Such payments also entitle MBIA Corp. to exercise certain rights and remedies to seek recovery of its reimbursement entitlements. The decrease in MBIA Corp.’s loss and LAE reserves from 2023 was primarily due to claim payments and an increase in risk-free rates in 2024, which caused the present value of reserves, net of recoveries, to decline. This decrease was partially offset by an increase in SOFR, which increased reserves on floating rate liabilities, and accretion, primarily on our insured RMBS transactions.
Refer to "Note 6: Loss and Loss Adjustment Expense Reserves" in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for a description of the Company’s loss reserving policy and additional information related to its loss reserves and recoverables.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
RESULTS OF OPERATIONS (continued)
POLICY ACQUISITION COSTS AND OPERATING EXPENSES International and structured finance insurance segment expenses for the years ended December 31, 2024, 2023 and 2022 are presented in the following table:
Years Ended December 31,
Percent Change
In millions
2024 vs. 2023
2023 vs. 2022
Gross expenses
$
$
$
-
%
%
Amortization of deferred acquisition costs
$
$
$
%
%
Operating
%
-
%
Total insurance operating expenses
$
$
$
%
%
Gross expenses represent total insurance expenses before the deferral of any policy acquisition costs. We did not defer a material amount of policy acquisition costs during 2024 or 2023 as no new business was written. Policy acquisition costs in these periods were primarily related to ceding commissions and premium taxes on installment policies written in prior periods.
INTEREST EXPENSE Interest expense relates to MBIA Corp.’s surplus notes that are indexed to 3-month SOFR. During 2023, the Company transitioned from the previously indexed 3-month London Interbank Offered Rate (“LIBOR”) rate to the 3-month SOFR plus 0.26161%. Refer to the following “Liquidity and Capital Resources” section for more information about MBIA Corp.’s surplus notes.
EXPENSES OF CONSOLIDATED VIEs The increase in expenses of consolidated VIEs for 2024 compared with 2023 was primarily due to an increase in legal expenses related to a consolidated VIE.
International and Structured Finance Insurance Portfolio Exposures
Credit Quality
The credit quality of our international and structured finance insured portfolio is assessed in the same manner as our U.S. public finance insured portfolio. As of December 31, 2024 and 2023, 24% and 26%, respectively, of our international and structured finance insured portfolio was rated below investment grade, before giving effect to MBIA’s guarantees, based on MBIA’s internal ratings, which are generally more current than the underlying ratings provided by S&P and Moody’s for this subset of our insured portfolio. Below investment grade insurance policies primarily included our first-lien RMBS and CDO exposures.
Selected Portfolio Exposures
MBIA Corp. insures RMBS backed by residential mortgage loans, including first-lien alternative A-paper and subprime mortgage loans directly through RMBS securitizations. As of December 31, 2024 and 2023, MBIA Corp. had $554 million and $596 million, respectively, of first-lien RMBS gross par outstanding. These amounts include the gross par outstanding related to transactions that the Company consolidates under accounting guidance for VIEs and includes international exposure of $36 million and $39 million, as of December 31, 2024 and 2023, respectively. During 2024, MBIA Corp. terminated all of its remaining ABS CDO exposure. As of December 31, 2023, MBIA Corp. insured $117 million of ABS CDOs.
We may experience considerable incurred losses in certain of the above RMBS sectors. There can be no assurance that the loss reserves recorded in our financial statements will be sufficient or that we will not experience losses on transactions on which we currently have no loss reserves, in particular if the economy deteriorates. We may seek to purchase, directly or indirectly, obligations guaranteed by MBIA Corp. or seek to commute policies. The amount of insurance exposure reduced, if any, and the nature of any such actions will depend on market conditions, pricing levels from time to time, and other considerations. In some cases, these activities may result in a reduction of loss reserves, but in all cases they are intended to limit our ultimate losses and reduce the future volatility in loss development on the related policies. Our ability to purchase guaranteed obligations and to commute policies will depend on management’s assessment of available liquidity.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
RESULTS OF OPERATIONS (continued)
Effective in the first quarter of 2022, MBIA Corp. was granted a permitted practice by the NYSDFS related to the purchase of certain MBIA Corp.-insured securities with gross case base loss reserves (“Remediation Securities”). The Remediation Securities are being acquired with the intent to terminate or commute the related insurance policies. MBIA Corp. may elect to sell the Remediation Securities to facilitate a termination or commutation.
U.S. Public Finance and International and Structured Finance Reinsurance
Reinsurance enables the Company to cede exposure for purposes of syndicating risk. The Company generally retains the right to reassume the business ceded to reinsurers under certain circumstances, including a reinsurer’s rating downgrade below specified thresholds. Currently, we do not intend to use reinsurance to decrease the insured exposure in our portfolio. Refer to “Note 12: Insurance in Force” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for a further discussion about reinsurance agreements.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
We use a liquidity risk management framework, the primary objective of which is to match liquidity resources to needs. We monitor our cash and liquid asset resources using cash forecasting and stress-scenario testing. Members of MBIA’s senior management meet regularly to review liquidity metrics, discuss contingency plans and establish target liquidity levels. We evaluate and manage liquidity on a legal-entity basis to take into account the legal, regulatory and other limitations on available liquidity resources within the enterprise.
Consolidated Cash Flows
Information about our consolidated cash flows by category is presented on our consolidated statements of cash flows. The following table summarizes our consolidated cash flows for the years ended December 31, 2024, 2023 and 2022:
Years Ended December 31,
Percent Change
In millions
2024 vs 2023
2023 vs 2022
Statement of cash flow data:
Net cash provided (used) by:
Operating activities
$
(176
)
$
(195
)
$
(418
)
%
%
Investing activities
%
%
Financing activities
(132
)
(542
)
(285
)
%
%
Effect of exchange rate changes on cash and cash equivalents
-
-
(2
)
-
%
%
Cash and cash equivalents - beginning of period
%
%
Cash and cash equivalents - end of period
$
$
$
%
%
Operating activities
Net cash used by operating activities decreased for 2024 compared with 2023 primarily due to a decrease in losses and LAE and operating expenses paid in 2024, partially offset by higher net investment income and other proceeds from VIEs in 2023.
Investing activities
Net cash provided by investing activities decreased for 2024 compared with 2023 primarily due to higher net proceeds from the sales of investments in 2023 related to generating liquidity to pay the extraordinary dividend and to pay claims.
Financing activities
Net cash used by financing activities decreased for 2024 compared with 2023 primarily due to the extraordinary cash dividend payment of $409 million to shareholders in 2023 and a net decrease in VIE-related cash activity of $29 million, partially offset by an increase of $41 million of principal paydowns of non-VIE related debt for 2024 compared with 2023.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
LIQUIDITY AND CAPITAL RESOURCES (continued)
Consolidated Investments
The following discussion of investments, including references to consolidated investments, excludes investments reported under “Assets of consolidated variable interest entities” on our consolidated balance sheets. Investments of VIEs support the repayment of VIE obligations and are not available to settle obligations of MBIA. Fixed-maturity securities purchased by the Company are generally designated as AFS. Our AFS investments comprise high-quality fixed-income securities and short-term investments.
The credit quality distribution of the Company’s AFS fixed-maturity investment portfolios, excluding short-term investments, are primarily based on ratings from Moody’s. Alternate ratings sources, such as S&P or the best estimate of the ratings assigned by the Company, have been used for a small percentage of securities that are not rated by Moody’s. As of December 31, 2024, the weighted average credit quality rating of the Company’s AFS fixed-maturity investment portfolio, excluding short-term investments, was Aa and 95% of the investments were investment grade.
The fair values of securities in the Company’s AFS fixed-maturity investment portfolio are sensitive to changes in interest rates. Decreases in interest rates generally result in increases in the fair values of fixed-maturity securities and increases in interest rates generally result in decreases in the fair values of fixed-maturity securities.
Refer to “Note 2: Significant Accounting Policies” and “Note 8: Investments” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for further information about our accounting policies and investments.
Insured Investments
MBIA’s consolidated investment portfolio includes investments that are insured by various financial guarantee insurers (“Insured Investments”), including investments insured by National and MBIA Corp. (“Company-Insured Investments”). When purchasing Insured Investments, the Company’s third-party portfolio manager independently assesses the underlying credit quality, structure and liquidity of each investment, in addition to the creditworthiness of the insurer. Insured Investments are diverse by sector, issuer and size of holding. The third-party portfolio manager assigns underlying ratings to Insured Investments without giving effect to financial guarantees based on underlying ratings assigned by Moody’s, or S&P when a rating is not published by Moody’s. When a Moody’s or S&P underlying rating is not available, the underlying rating is based on the portfolio manager’s best estimate of the rating of such investment. If the Company determines that declines in the fair values of third-party Insured Investments are related to credit loss, the Company will establish an allowance for credit losses and recognize the credit component through earnings.
As of December 31, 2024, Insured Investments at fair value represented $137 million or 8% of consolidated investments, of which $128 million or 8% of consolidated investments were Company-Insured Investments. As of December 31, 2024, based on the actual or estimated underlying ratings of our consolidated investment portfolio, without giving effect to financial guarantees, the weighted average rating of only the Insured Investments in the investment portfolio would be in the below investment grade range. Without giving effect to the National and MBIA Corp. guarantees of the Company-Insured Investments in the consolidated investment portfolio, as of December 31, 2024, based on actual or estimated underlying ratings, the weighted average rating of the consolidated investment portfolio was in the Aa range. The weighted average rating of only the Company-Insured Investments was in the below investment grade range, and investments rated below investment grade in the Company-Insured Investments were 7% of the total consolidated investment portfolio.
National Liquidity
The primary sources of cash available to National are:
•principal and interest receipts on assets held in its investment portfolio, including proceeds from the sale of assets;
•recoveries associated with insurance loss payments; and
•installment premiums.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
LIQUIDITY AND CAPITAL RESOURCES (continued)
The primary uses of cash by National are:
•loss and LAE payments on insured transactions;
•payments of dividends;
•payments of operating expenses;
•investment portfolio asset purchases; and
•funding share repurchases.
As of December 31, 2024 and 2023, National held cash and investments of $1.2 billion and $1.3 billion, respectively, of which $56 million and $75 million, respectively, were cash and cash equivalents or short-term investments comprised of highly rated commercial paper, money market funds and municipal, U.S. agency and corporate bonds.
The insurance policies issued or reinsured by National provide unconditional and irrevocable guarantees of payments of the principal of, and interest or other amounts owing on, insured obligations when due. In the event of a default in payment of principal, interest or other insured amounts by an issuer, National generally promises to make funds available in the insured amount within one to three business days following notification. In some cases, the amount due can be substantial, particularly if the default occurs on a transaction to which National has a large notional exposure or on a transaction structured with large, bullet-type principal maturities. The U.S. public finance insurance segment’s financial guarantee contracts generally cannot be accelerated by a party other than the insurer which helps to mitigate liquidity risk in this segment.
As of December 31, 2024, National has a stand-alone NOL carryforward of $592 million. If National becomes profitable, it is not expected to make any tax payments under our tax sharing agreement until it fully utilizes the available stand-alone NOL.
Corporate Liquidity
The primary sources of cash available to MBIA Inc. are:
•dividends from National;
•available cash and liquid assets not subject to collateral posting requirements;
•principal and interest receipts on assets held in its investment portfolio, including proceeds from the sale of
assets; and
•access to capital markets.
The primary uses of cash by MBIA Inc. are:
•servicing outstanding unsecured corporate debt obligations and MTNs;
•meeting collateral posting requirements under investment agreements;
•payments of operating expenses;
•funding share repurchases and debt buybacks; and
•payment of dividends to shareholders.
As of December 31, 2024 and 2023, the liquidity positions of MBIA Inc. were $380 million and $411 million, respectively, and included cash and cash equivalents and other investments comprised of highly rated commercial paper and U.S. government and asset-backed bonds.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
LIQUIDITY AND CAPITAL RESOURCES (continued)
During 2024, National declared and paid an as-of-right dividend of $69 million to its ultimate parent, MBIA Inc. During 2023, National declared and paid an as-of-right dividend of $97 million to its ultimate parent, MBIA Inc. In addition, in 2023, National paid a $550 million special dividend that was approved by the NYSDFS to its ultimate parent, MBIA Inc. Based on our projections of National’s and MBIA Corp.’s future earnings and losses, we expect that for the foreseeable future National will be the primary source of payments to MBIA Inc. There can be no assurance as to the amount and timing of any future dividends from National. We expect that National will continue to seek approval to pay additional special dividends to MBIA in future years. However, there can be no assurance whether or when the NYSDFS will approve such requests and, if the NYSDFS does approve such dividends, in what amounts.
On December 7, 2023, the Company's Board of Directors declared an extraordinary cash dividend on MBIA’s common stock of $8.00 per share. The dividend was paid on December 22, 2023 to shareholders of record as of the close of business on December 18, 2023. Any future dividend payments by MBIA Inc. to shareholders are within the absolute discretion of our board of directors and will depend on, among other things, the receipt of additional special dividends from National, our results of operations, working capital requirements, capital expenditure requirements, financial condition, level of indebtedness, contractual restrictions with respect to the payment of dividends, business opportunities, anticipated cash needs, provisions of applicable law and other factors that our board of directors may deem relevant. Refer to the following “Liquidity and Capital Resources-Capital Resources” section for additional information on payments of dividends. We do not expect MBIA Inc. to receive dividends from MBIA Corp.
Currently, a portion of the cash and securities held by MBIA Inc. is pledged against investment agreement liabilities, the Asset Swap (simultaneous repurchase and reverse repurchase agreement), which limits its ability to raise liquidity through asset sales of these securities. As the market value or rating eligibility of the assets pledged against MBIA Inc.’s obligations declines, we are required to pledge additional eligible assets in order to meet minimum required collateral amounts against these liabilities. To mitigate these risks, we seek to maintain cash and liquidity resources that we believe will be sufficient to make all payments due on our obligations and to meet other financial requirements, such as posting collateral. Contingent liquidity resources include sales of invested assets exposed to credit spread stress risk, which may occur at losses, and accessing the capital markets. These actions, if taken, are expected to result in either additional liquidity or reduced exposure to adverse credit spread movements. There can be no assurance that these actions will be sufficient to fully mitigate this risk.
MBIA Corp. Liquidity
The primary sources of cash available to MBIA Corp. are:
•recoveries associated with insurance loss payments;
•principal and interest receipts on assets held in its investment portfolio, including the proceeds from the sale of assets; and
•installment premiums and fees.
The primary uses of cash by MBIA Corp. are:
•loss and LAE or commutation payments on insured transactions; and
•payments of operating expenses.
As of December 31, 2024 and 2023, MBIA Corp. held cash and investments of $243 million and $323 million, respectively, of which $27 million and $41 million were cash and cash equivalents or liquid investments comprised of money market funds and municipal, U.S. Treasury and corporate bonds that were immediately available to MBIA Insurance Corporation.
Insured transactions that require payment of scheduled debt service payments insured when due or payment in full of the principal insured at maturity could present liquidity risk for MBIA Corp., as any salvage recoveries from such payments could be recovered over an extended period of time after the payment is made. MBIA Corp. is generally required to satisfy claims within one to three business days, and as a result seeks to identify potential claims in advance through our monitoring process. In order to monitor liquidity risk and maintain appropriate liquidity resources, we use the same methodology as we use to monitor credit quality and losses within our insured portfolio, including stress scenarios.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
LIQUIDITY AND CAPITAL RESOURCES (continued)
Advances Agreement
MBIA Inc., National, MBIA Insurance Corporation and certain other affiliates are party to an intercompany advances agreement (the “MBIA Advances Agreement”). The MBIA Advances Agreement permits National to make advances to MBIA Inc. and other MBIA group companies that are party to the agreement at a rate per annum equal to SOFR plus 0.51161%. The agreement also permits other affiliates to make advances to National or MBIA Insurance Corporation at a rate per annum equal to SOFR plus 0.16161%. Advances by National cannot exceed 3% of its net admitted assets as of the last quarter end. As of December 31, 2024 and 2023, there were no amounts drawn under the agreement.
Contractual Obligations
The following table summarizes the Company’s future estimated cash payments relating to contractual obligations as of December 31, 2024. Estimating these payments requires management to make estimates and assumptions regarding these obligations. The estimates and assumptions used by management are described below. Since these estimates and assumptions are subjective, actual payments in future periods may vary from those reported in the following table. Refer to the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for additional information about these contractual obligations, including “Note 6: Loss and Loss Adjustment Expense Reserves” and “Note 12: Insurance in Force” for additional information about our insurance claim obligations and exposures under our insurance contracts.
Due Within
In millions
Total
1 Year
U.S. public finance insurance segment:
Gross insurance claim obligations (1)
$
$
Lease liability
Corporate segment:
Long-term debt
Investment agreements
Medium-term notes
International and structured finance insurance segment:
Gross insurance claim obligations (1)
Surplus notes
3,685
1,643
Total
$
6,112
$
1,913
________________
(1) - Amounts exclude any recoveries the Company expects to receive related to these estimated payments or to prior paid claims.
Gross insurance claim obligations represent the future value of probability-weighted payments the Company’s insurance companies expect to make (before reinsurance and the consolidation of VIEs) under insurance policies for which the Company has recorded loss reserves. Certain probability-weighted payments incorporate commutation and/or acceleration of specific exposures and, therefore, expected payments may differ from those the Company is contractually obligated to make. Also, these amounts exclude any recoveries National or MBIA Corp. expect to receive related to these estimated payments or to claims paid in prior periods. For certain of our estimated future payments, the amount of recoveries expected to be received in the future will offset some or all of the payments.
Estimated potential insurance claim payments for obligations issued by VIEs consolidated in our international and structured finance insurance segment are included within “Gross insurance claim obligations” in the preceding table. Obligations of these VIEs are collateralized by assets held by the VIEs, and investors in such obligations do not have recourse to the general credit of MBIA. As of December 31, 2024, VIE notes issued by issuer-sponsored consolidated VIEs totaled $31 million and are not considered contractual obligations of MBIA beyond MBIA’s insurance claim obligation. The Company’s involvement with VIEs is continually reassessed as required by consolidation guidance, and may result in consolidation or deconsolidation of VIEs in future periods. As the Company consolidates and deconsolidates VIEs, the amount of VIE debt obligations recorded on its balance sheet may change significantly.
Long-term debt, investment agreements, MTNs and surplus notes include principal and interest and exclude premiums or discounts. Liabilities issued at discounts reflect principal due at maturity. Interest payments on floating rate obligations are estimated using applicable forward rates. Principal and interest on callable obligations or obligations that allow investors to withdraw funds prior to legal maturity are based on the expected call or withdrawal dates of such obligations. Liabilities denominated in foreign currencies are presented in U.S. dollars using applicable exchange rates as of December 31, 2024. Principal payments under investment agreements are based on contractual maturity and exclude puttable options.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
LIQUIDITY AND CAPITAL RESOURCES (continued)
All other principal payments are based on contractual maturity dates. Refer to “Note 9: Debt” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for information about MBIA Inc.’s debt obligations.
Included in the international and structured finance insurance segment’s surplus notes due within one year is $1.6 billion of unpaid interest related to 2013 through 2024 interest payments for which MBIA Insurance Corporation’s requests for approval to pay was not approved by the NYSDFS. This deferred interest payment will be due on the first business day on or after which MBIA Insurance Corporation obtains approval to make such payment from the NYSDFS. No interest will accrue on the deferred interest. There can be no assurance that the NYSDFS will approve any subsequent payments, or that it will approve any payment by its scheduled interest payment date. Refer to “MBIA Insurance Corporation - Capital and surplus” section below for additional information on MBIA Insurance Corporation’s surplus notes and statutory capital.
Capital Resources
The Company manages its capital resources to minimize its cost of capital while maintaining appropriate claims-paying resources (“CPR”) for National and MBIA Corp. The Company’s capital resources consist of total shareholders’ equity, total debt issued by MBIA Inc. for general corporate purposes and surplus notes issued by MBIA Corp.
In addition to scheduled debt maturities, from time to time, we reduce unsecured debt through calls or repurchases. Also, MBIA Inc. may repurchase or National may purchase outstanding MBIA Inc. common shares when we deem it beneficial to our shareholders. Purchases or repurchases of debt and common stock may be made from time to time in the open market or in private transactions as permitted by securities laws and other legal requirements. We may also choose to redeem debt obligations where permitted by the relevant agreements. MBIA Inc. or National may acquire or redeem outstanding common shares of MBIA Inc. and outstanding debt obligations at prices when we deem it beneficial to our shareholders. Refer to "Note 16: Common and Preferred Stock" in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for information about MBIA Inc.'s share repurchases and National's share purchases. Also, refer to "Note 9: Debt" in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for information about debt repurchases or redemptions. We seek to maintain sufficient liquidity and capital resources to meet the Company’s general corporate needs and debt service. Based on MBIA Inc.’s debt service requirements and expected operating expenses, we expect that MBIA Inc. will have sufficient resources to satisfy its debt obligations and its general corporate needs over time from distributions from National; however, there can be no assurance that MBIA Inc. will have sufficient resources to do so. In addition, the Company may also consider raising third-party capital. Refer to “Capital, Liquidity and Market Related Risk Factors” in Part I, Item 1A of this Form 10-K and the “Liquidity and Capital Resources-Liquidity-Corporate Liquidity” section included herein for additional information about MBIA Inc.’s liquidity.
Insurance Statutory Capital
National and MBIA Insurance Corporation are incorporated and licensed in, and are subject to primary insurance regulation and supervision by the NYSDFS. MBIA Mexico is regulated by the Comisión Nacional de Seguros y Fianzas in Mexico. We have commenced the process of dissolving MBIA Mexico under Mexican law. National and MBIA Insurance Corporation each are required to file detailed annual financial statements, as well as interim financial statements, with the NYSDFS and similar supervisory agencies in each of the other jurisdictions in which it is licensed. These financial statements are prepared in accordance with New York State and with statutory accounting principles (“U.S. STAT”) and assist our regulators in evaluating minimum standards of solvency, including minimum capital requirements, and business conduct.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
LIQUIDITY AND CAPITAL RESOURCES (continued)
National - Statutory Capital and Surplus
National had statutory capital of $912 million and $1.1 billion as of December 31, 2024 and 2023, respectively. As of December 31, 2024, National’s policyholders' surplus was $602 million. For 2024 and 2023, National had statutory net loss of $133 million and $142 million, respectively. Refer to the “National - Claims - Paying Resources (Statutory Basis)” section below for additional information on National’s statutory capital.
In order to maintain its New York State financial guarantee insurance license, National is required to maintain a minimum of $65 million of policyholders’ surplus. National is also required to maintain contingency reserves to provide protection to policyholders in the event of extreme losses in adverse economic events. As of December 31, 2024, National was in compliance with its aggregate risk limits under New York Insurance Law (“NYIL”), but was not in compliance with certain of its single risk limits. Since National does not comply with certain of its single risk limits, the NYSDFS could prevent National from transacting any new financial guarantee insurance business.
NYIL regulates the payment of dividends by financial guarantee insurance companies and provides that such companies may not declare or distribute dividends except out of statutory earned surplus. Under NYIL, the sum of (i) the amount of dividends declared or distributed during the preceding 12-month period and (ii) the dividend to be declared may not exceed the lesser of (a) 10% of policyholders’ surplus, as reported in the latest statutory financial statements or (b) 100% of adjusted net investment income for such 12-month period (the net investment income for such 12-month period plus the excess, if any, of net investment income over dividends declared or distributed during the two-year period preceding such 12-month period), unless the Superintendent of the NYSDFS approves a greater dividend distribution based upon a finding that the insurer will retain sufficient surplus to support its obligations.
National had positive earned surplus as of December 31, 2024 from which it may pay dividends, subject to the limitations described above. During 2024, National declared and paid an as-of-right dividend of $69 million to its ultimate parent, MBIA Inc. During 2023, National paid a $550 million special dividend that was approved by the NYSDFS to its ultimate parent, MBIA Inc. In addition, in 2023, National declared and paid an as-of-right dividend of $97 million to its ultimate parent, MBIA Inc.
National - Claims-Paying Resources (Statutory Basis)
CPR is a key measure of the resources available to National to pay claims under its insurance policies. CPR consists of total financial resources and reserves calculated on a statutory basis. CPR has been a common measure used by financial guarantee insurance companies to report and compare resources and continues to be used by MBIA’s management to evaluate changes in such resources. We have provided CPR to allow investors and analysts to evaluate National using the same measure that MBIA’s management uses to evaluate National’s resources to pay claims under its insurance policies. There is no directly comparable GAAP measure. Our calculation of CPR may differ from the calculation of CPR reported by other companies.
National’s CPR and components thereto, as of December 31, 2024 and 2023 are presented in the following table:
As of December 31,
As of December 31,
In millions
Policyholders' surplus
$
$
Contingency reserves
Statutory capital
1,117
Unearned premiums
Present value of installment premiums (1)
Premium resources (2)
Net loss and LAE reserves (1)
Salvage reserves on paid claims (1)
Gross loss and LAE reserves
Total claims-paying resources
$
1,507
$
1,681
________________
(1) - Calculated using a discount rate of 4.78% and 4.67% as of December 31, 2024 and 2023, respectively.
(2) - Includes financial guarantee and insured derivative related premiums.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
LIQUIDITY AND CAPITAL RESOURCES (continued)
MBIA Insurance Corporation - Statutory Capital and Surplus
MBIA Insurance Corporation had statutory capital of $88 million and $152 million as of December 31, 2024 and 2023, respectively. As of December 31, 2024, MBIA Insurance Corporation’s policyholders’ surplus was $83 million. For 2024 and 2023, MBIA Insurance Corporation had statutory net losses of $64 million and $28 million, respectively. Refer to the “MBIA Insurance Corporation - Claims - Paying Resources (Statutory Basis)” section below for additional information on MBIA Insurance Corporation’s statutory capital.
In order to maintain its New York State financial guarantee insurance license, MBIA Insurance Corporation is required to maintain a minimum of $65 million of policyholders’ surplus. In addition, under NYIL, MBIA Insurance Corporation is required to invest its minimum surplus and contingency reserves and 50% of its loss reserves and unearned premium reserves in certain qualifying assets. As of December 31, 2024, MBIA Insurance Corporation maintained its minimum requirement of policyholders’ surplus but did not have enough qualifying assets to support its contingency reserves and 50% of its loss reserves and unearned premium reserves. As of December 31, 2024, MBIA Insurance Corporation was in compliance with its aggregate risk limits under the NYIL, but was not in compliance with certain of its single risk limits. Since MBIA Insurance Corporation does not comply with its single risk limits, the NYSDFS could prevent MBIA Insurance Corporation from transacting any new financial guarantee insurance business.
MBIA Insurance Corporation is also required to maintain contingency reserves to provide protection to policyholders in the event of extreme losses in adverse economic events. MBIA Corp. maintains a fixed $5 million of contingency reserves.
Due to its significant earned surplus deficit, MBIA Insurance Corporation has not had the statutory capacity to pay dividends since December 31, 2009. Based on estimated future income, MBIA Insurance Corporation is not expected to have any statutory capacity to pay dividends.
The NYSDFS has not approved MBIA Insurance Corporation’s requests to make interest payments on MBIA Insurance Corporation’s Surplus Notes due January 15, 2033 (the “Surplus Notes”) since, and including, the January 15, 2013 interest payment. The NYSDFS has cited both MBIA Insurance Corporation’s liquidity and financial condition, as well as the availability of “free and divisible surplus” as the basis for such non-approvals. As of January 15, 2025, the most recent scheduled interest payment date, there was $1.6 billion of unpaid interest on the par amount outstanding of $953 million of the Surplus Notes. Under Section 1307 of the NYIL and the Fiscal Agency Agreement governing the surplus notes, Surplus Note payments may be made only with the prior approval by the NYSDFS and if MBIA Insurance Corporation has sufficient “Eligible Surplus”, or as we believe, “free and divisible surplus” as an appropriate calculation of “Eligible Surplus.” As of December 31, 2024, MBIA Insurance Corporation had “free and divisible surplus” of $65 million. There is no assurance the NYSDFS will approve Surplus Note payments, notwithstanding the sufficiency of MBIA Insurance Corporation’s liquidity and financial condition. The unpaid interest on the Surplus Notes will become due on the first business day on or after which MBIA Insurance Corporation obtains approval to pay some or all of such unpaid interest. No interest has been accrued or will accrue on the deferred interest.
MBIA Insurance Corporation - Claims - Paying Resources (Statutory Basis)
CPR is a key measure of the resources available to MBIA Corp. to pay claims under its insurance policies. CPR consists of total financial resources and reserves calculated on a statutory basis. CPR has been a common measure used by financial guarantee insurance companies to report and compare resources, and continues to be used by MBIA’s management to evaluate changes in such resources. We have provided CPR to allow investors and analysts to evaluate MBIA Corp., using the same measure that MBIA’s management uses to evaluate MBIA Corp.’s resources to pay claims under its insurance policies. There is no directly comparable GAAP measure. Our calculation of CPR may differ from the calculation of CPR reported by other companies.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
LIQUIDITY AND CAPITAL RESOURCES (continued)
MBIA Corp.’s CPR and components thereto, as of December 31, 2024 and 2023 are presented in the following table:
As of December 31,
As of December 31,
In millions
Policyholders’ surplus
$
$
Contingency reserves
Statutory capital
Unearned premiums
Present value of installment premiums (1)
Premium resources (2)
Net loss and LAE reserves (1)
Salvage reserves on paid claims (1) (3)
Gross loss and LAE reserves
Total claims-paying resources
$
$
________________
(1) - Calculated using a discount rate of 5.42% and 5.48% as of December 31, 2024 and 2023, respectively.
(2) - Includes financial guarantee and insured derivative related premiums.
(3) - This amount primarily consists of expected recoveries related to the payment of claims on insured CDOs and RMBS. In addition, the December 31, 2023 amount includes salvage related to a permitted practice granted by NYSDFS.
CRITICAL ACCOUNTING ESTIMATES
We prepare our consolidated financial statements in accordance with GAAP, which requires the use of estimates and assumptions. Refer to “Note 2: Significant Accounting Policies” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for a discussion of our significant accounting policies and methods used in the preparation of our consolidated financial statements.
The following accounting estimates are viewed by management to be critical because they require significant judgment on the part of management. Management has discussed and reviewed the development, selection, and disclosure of critical accounting estimates with the Company’s Audit Committee. Financial results could be materially different if other methodologies were used or if management modified its assumptions.
Loss and Loss Adjustment Expense Reserves
Loss and LAE reserves are established by loss reserve committees in each of our major operating insurance companies (National and MBIA Insurance Corporation) and reviewed by our executive Loss Reserve Committee, which consists of members of senior management. Loss and LAE reserves include case basis reserves and accruals for LAE incurred with respect to non-derivative financial guarantees. Case basis reserves represent our estimate of expected losses to be paid under insurance contracts, net of expected recoveries, on insured obligations that have defaulted or are expected to default. These reserves require the use of judgment and estimates with respect to the occurrence, timing and amount of paid losses and recoveries on insured obligations. Given that the reserves are based on such estimates and assumptions, there can be no assurance that the actual ultimate losses will not be greater than or less than such estimates, resulting in the Company recognizing additional or reversing excess loss and LAE reserves through earnings.
We take into account a number of variables in establishing specific case basis reserves for individual policies that depend primarily on the nature of the underlying insured obligation. These variables include the nature and creditworthiness of the issuers of the insured obligations, expected recovery rates on unsecured obligations, the projected cash flow or market value of any assets pledged as collateral on secured obligations, and the expected rates of recovery, cash flow or market values on such obligations or other expected consideration. Factors that may affect the actual ultimate realized losses for any policy include economic conditions and trends, political developments, levels of interest rates, borrower behavior, the default rate and salvage values of specific collateral or other expected consideration, and our ability to enforce contractual rights through litigation and otherwise. Also, any adverse developments on macroeconomic factors could result in new or additional losses on insured obligations. Our remediation strategy for an insured obligation that has defaulted or is expected to default may also have an impact on our loss reserves.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
CRITICAL ACCOUNTING ESTIMATES (continued)
In establishing case basis loss reserves, we calculate the present value of probability-weighted estimated loss payments, net of estimated recoveries, using a discount rate equal to the risk-free rate applicable to the currency and the weighted average remaining life of the insurance contract. Yields on U.S. Treasury offerings are used to discount loss reserves denominated in U.S. dollars, which represent the majority of our loss reserves. Similarly, yields on foreign government offerings are used to discount loss reserves denominated in currencies other than the U.S. dollar.
Refer to “Note 6: Loss and Loss Adjustment Expense Reserves” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for further information on our loss reserves and recoveries, including critical accounting estimates used in the determination of these amounts.
Valuation of Financial Instruments
We have categorized our financial instruments measured at fair value into the three-level hierarchy according to accounting guidance for fair value measurements and disclosures based on the significance of pricing inputs to the measurement in its entirety. Fair value measurements of financial instruments that use quoted prices in active markets for identical assets or liabilities are generally categorized as Level 1, fair value measurements of financial instruments that use quoted prices in markets that are not active where significant inputs are observable are generally categorized as Level 2, and fair value measurements of financial instruments where significant inputs are not observable are generally categorized as Level 3. We categorize our financial instruments based on the lowest level category at which we can generate reliable fair values. The determination of reliability requires management to exercise judgment. The degree of judgment used to determine the fair values of financial instruments generally correlates to the degree that pricing is not observable.
The fair value measurements of financial instruments held or issued by the Company are determined through the use of observable market data when available. Market data is obtained from a variety of third-party sources, including dealer quotes. If dealer quotes are not available for an instrument that is infrequently traded, we use alternate valuation methods, including either dealer quotes for similar contracts or modeling using market data inputs. The use of alternate valuation methods generally requires considerable judgment in the application of estimates and assumptions and changes to these
variables may produce materially different values.
The fair value pricing of assets and liabilities is a function of many components which include interest rate risk, market risk, liquidity risk and credit risk. For financial instruments that are internally valued by the Company, as well as those for which the Company uses broker quotes or pricing services, credit risk is typically incorporated by using appropriate credit spreads or discount rates as inputs. Substantially all of the Company’s investments carried and reported at fair value are priced by independent third parties, including pricing services and brokers.
Instruments that trade infrequently and, therefore, have little or no price transparency are classified within Level 3 of the fair value hierarchy. Also included in Level 3 are financial instruments that have significant unobservable inputs deemed significant to the instrument’s overall fair value. Level 3 assets represented approximately 5% and 7% of total assets measured at fair value on a recurring basis as of December 31, 2024 and 2023, respectively. Level 3 liabilities represented approximately 99% of total liabilities measured at fair value on a recurring basis as of December 31, 2024 and 2023.
Refer to “Note 7: Fair Value of Financial Instruments” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for further information about our financial assets and liabilities that are accounted for at fair value, including valuation techniques and significant inputs used to estimate fair values.

---

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantit ative and Qualitative Disclosures About Market Risk
The Company’s market risk exposures relate to changes in interest rates, foreign exchange rates and credit spreads that affect the fair value of its financial instruments, primarily investment securities, MTNs and investment agreement liabilities. The Company’s investments are primarily U.S. dollar-denominated fixed-income securities including municipal bonds, U.S. government bonds, corporate bonds, MBS and asset-backed securities. In periods of rising and/or volatile interest rates, foreign exchange rates and credit spreads, profitability could be adversely affected should the Company have to liquidate these securities. The Company minimizes its exposure to interest rate risk, foreign exchange risk and credit spread movement through active portfolio management to ensure a proper mix of the types of securities held and to stagger the maturities of its fixed-income securities.
INTEREST RATE SENSITIVITY
Interest rate sensitivity can be estimated by projecting a hypothetical instantaneous increase or decrease in interest rates. The following table presents the estimated pre-tax change in fair value of the Company’s financial instruments as of December 31, 2024 from instantaneous shifts in interest rates:
Change in Interest Rates
300 Basis
200 Basis
100 Basis
100 Basis
200 Basis
300 Basis
Point
Point
Point
Point
Point
Point
In millions
Decrease
Decrease
Decrease
Increase
Increase
Increase
Estimated change in fair value
$
$
$
$
(37
)
$
(68
)
$
(93
)
FOREIGN EXCHANGE RATE SENSITIVITY
The Company is exposed to foreign exchange rate risk in respect of liabilities denominated in currencies other than U.S. dollars. Certain liabilities included in our corporate segment are denominated in currencies other than U.S. dollars. The majority of the Company’s foreign exchange rate risks is with the Euro. Foreign exchange rate sensitivity can be estimated by projecting a hypothetical instantaneous increase or decrease in foreign exchange rates. The following table presents the estimated pre-tax change in fair value of the Company’s financial instruments as of December 31, 2024 from instantaneous shifts in foreign exchange rates:
Change in Foreign Exchange Rates
Dollar Weakens
Dollar Strengthens
In millions
20%
10%
10%
20%
Estimated change in fair value
$
(14
)
$
(7
)
$
$
CREDIT SPREAD SENSITIVITY
Credit spread sensitivity can be estimated by projecting a hypothetical instantaneous increase or decrease in credit spreads. The following table presents the estimated pre-tax change in fair value of the Company’s financial instruments as of December 31, 2024 from instantaneous shifts in credit spread curves. It was assumed that all credit spreads move by the same amount. It is more likely that the actual changes in credit spreads will vary by security. The changes in fair value reflect partially offsetting effects as the value of the investment portfolios generally changes in an opposite direction from the liability portfolio:
Change in Credit Spreads
50 Basis
50 Basis
200 Basis
Point
Point
Point
In millions
Decrease
Increase
Increase
Estimated change in fair value
$
$
(36
)
$
(101
)

---

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements
MBIA INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
Consolidated Balance Sheets as of December 31, 2024 and 2023
Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2024, 2023 and 2022
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2024, 2023 and 2022
Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022
Notes to Consolidated Financial Statements
Note 1: Business Developments and Risks and Uncertainties
Note 2: Significant Accounting Policies
Note 3: Recent Accounting Pronouncements
Note 4: Variable Interest Entities
Note 5: Insurance Premiums
Note 6: Loss and Loss Adjustment Expense Reserves
Note 7: Fair Value of Financial Instruments
Note 8: Investments
Note 9: Debt
Note 10: Income Taxes
Note 11: Business Segments
Note 12: Insurance in Force
Note 13: Insurance Regulations and Dividends
Note 14: Benefit Plans
Note 15: Earnings Per Share
Note 16: Common and Preferred Stock
Note 17: Accumulated Other Comprehensive Income
Note 18: Commitments and Contingencies
Report of Independent Registere d Public Accounting Firm
To the Board of Directors and Shareholders of MBIA Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of MBIA Inc. and its subsidiaries (the “Company”) as of December 31, 2024 and 2023 and the related consolidated statements of operations, of comprehensive income (loss), of changes in shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes and financial statement schedules listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013 )issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Certain Loss and Loss Adjustment Expense (LAE) Reserves and Insurance Loss Recoverable - U.S. Public Finance Insurance
As described in Notes 1, 2 and 6 to the consolidated financial statements, management recognizes loss reserves on a contract-by-contract basis when the present value of probability-weighted expected net cash outflows to be paid under the contract discounted using a risk-free rate as of the measurement date exceeds the unearned premium revenue. In addition, management recognizes potential recoveries on paid claims based on probability-weighted cash inflows present valued at applicable risk-free rates as of the measurement date. Management estimates the likelihood of possible claim payments and possible recoveries using probability-weighted expected cash flows based on information available as of the measurement date, including market information. As of December 31, 2024, for U.S. Public Finance Insurance, the loss and LAE reserves were $299 million and the insurance loss recoverable was $165 million, both of which primarily relate to insured debt obligations of Puerto Rico. In formulating loss reserves and recoveries for its Puerto Rico exposures, estimates in management’s probability-weighted scenarios include assumptions related to the nature, value, and timing of net cash flows considering the following: environmental, economic, and political developments on the island; litigation and ongoing discussions with creditors and obligors on the Title III proceedings; contractual debt service payments; any existing settlement agreements or proposals and deviations from these proposals; the remediation strategy for insured obligations that have defaulted or are expected to default; and values of other obligations of the issuer.
The principal considerations for our determination that performing procedures relating to certain loss and LAE reserves and insurance loss recoverable for U.S. Public Finance Insurance is a critical audit matter are (i) the significant judgment by management in developing the estimates for the loss and LAE reserves and insurance loss recoverable, (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s aforementioned assumptions used in the cash flow models, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the development of the estimates for certain loss and LAE reserves and insurance loss recoverable for U.S. Public Finance Insurance, including controls over the cash flow models and the development of significant assumptions. These procedures also included, among others, (i) testing management’s process for developing the estimates for the loss and LAE reserves and insurance loss recoverable for U.S. Public Finance Insurance, (ii) evaluating the appropriateness of management’s cash flow models, (iii) testing the completeness and accuracy of data provided by management and used in management’s models, and (iv) the involvement of professionals with specialized skill and knowledge to assist in evaluating the reasonableness of the aforementioned assumptions used in certain of management’s cash flow models.
/s/ PricewaterhouseCoopers LLP
New York, New York
February 27, 2025
We have served as the Company’s auditor since at least 1986. We have not been able to determine the specific year we began serving as auditor of the Company.
MBIA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions except share and per share amounts)
December 31, 2024
December 31, 2023
Assets
Investments:
Fixed-maturity securities held as available-for-sale, at fair value (amortized cost $1,080 and $1,175)
$
$
1,043
Investments carried at fair value
Short-term investments, at fair value (amortized cost $492 and $548)
Other investments at amortized cost
Total investments
1,655
1,931
Cash and cash equivalents
Premiums receivable (net of allowance for credit losses of $- and $- )
Deferred acquisition costs
Insurance loss recoverable
Assets held for sale
Other assets
Assets of consolidated variable interest entities:
Cash
Investments carried at fair value
-
Loans receivable at fair value
Other assets
-
Total assets
$
2,168
$
2,606
Liabilities and Equity
Liabilities:
Unearned premium revenue
$
$
Loss and loss adjustment expense reserves
Long-term debt
2,741
2,585
Medium-term notes (includes financial instruments carried at fair value of $35 and $40)
Investment agreements
Liabilities held for sale
Other liabilities
Liabilities of consolidated variable interest entities:
Variable interest entity debt (includes financial instruments carried at fair value of $31 and $78)
Derivative liabilities
Total liabilities
4,244
4,253
Commitments and contingencies (Refer to Note 18)
Equity:
Preferred stock, par value $1 per share; authorized shares--10,000,000; issued and outstanding--none
-
-
Common stock, par value $1 per share; authorized shares--400,000,000; issued shares--283,186,115 and 283,186,115
Additional paid-in capital
2,492
2,515
Retained earnings (deficit)
(1,591
)
(1,144
)
Accumulated other comprehensive income (loss), net of tax of $7 and $7
(128
)
(139
)
Treasury stock, at cost--232,215,934 and 232,323,184 shares
(3,145
)
(3,172
)
Total shareholders' equity of MBIA Inc.
(2,089
)
(1,657
)
Preferred stock of subsidiary and noncontrolling interest held for sale
Total equity
(2,076
)
(1,647
)
Total liabilities and equity
$
2,168
$
2,606
The accompanying notes are an integral part of the consolidated financial statements.
MBIA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions except share amounts)
Years Ended December 31,
Revenues
Premiums earned:
Scheduled premiums earned
$
$
$
Refunding premiums earned
Premiums earned (net of ceded premiums of $1, $1, and $1)
Net investment income
Net realized investment gains (losses)
(3
)
(76
)
(41
)
Net gains (losses) on financial instruments at fair value and foreign exchange
(42
)
Fees and reimbursements
-
Other net realized gains (losses)
(4
)
(8
)
Revenues of consolidated variable interest entities:
Net gains (losses) on financial instruments at fair value and foreign exchange
(23
)
(45
)
(14
)
Other net realized gains (losses)
(14
)
(25
)
Total revenues
Expenses
Losses and loss adjustment
Amortization of deferred acquisition costs
Operating
Interest
Expenses of consolidated variable interest entities:
Operating
Interest
Total expenses
Income (loss) from continuing operations before income taxes
(441
)
(484
)
(148
)
Provision (benefit) for income taxes
-
-
Income (loss) from continuing operations
(441
)
(484
)
(149
)
Income (loss) from discontinued operations, net of income taxes
(3
)
(3
)
(54
)
Net income (loss)
(444
)
(487
)
(203
)
Less: Net income from discontinued operations attributable to noncontrolling interest
(8
)
Net income (loss) attributable to MBIA Inc.
$
(447
)
$
(491
)
$
(195
)
Net income (loss) per common share attributable to MBIA Inc. - basic and diluted
Continuing operations
$
(9.31
)
$
(10.03
)
$
(3.00
)
Discontinued operations
(0.12
)
(0.15
)
(0.92
)
Net income (loss) per common share attributable to MBIA Inc. - basic and diluted
$
(9.43
)
$
(10.18
)
$
(3.92
)
Weighted average number of common shares outstanding
Basic
47,436,079
48,207,574
49,803,739
Diluted
47,436,079
48,207,574
49,803,739
The accompanying notes are an integral part of the consolidated financial statements.
MBIA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In millions)
Years Ended December 31,
Net income (loss) attributable to MBIA Inc.
$
(447
)
$
(491
)
$
(195
)
Other comprehensive income (loss):
Available-for-sale securities with no credit losses:
Unrealized gains (losses) arising during the period
(19
)
(362
)
Reclassification adjustments for (gains) losses included in net income (loss)
(10
)
Foreign currency translation:
Foreign currency translation gains (losses)
(1
)
-
Instrument-specific credit risk of liabilities measured at fair value:
Unrealized gains (losses) arising during the period
-
(1
)
(31
)
Reclassification adjustments for (gains) losses included in net income (loss)
Total other comprehensive income (loss)
(383
)
Comprehensive income (loss) attributable to MBIA Inc.
$
(436
)
$
(347
)
$
(578
)
The accompanying notes are an integral part of the consolidated financial statements.
MBIA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In millions except share and per share amounts)
Years Ended December 31,
Common shares
Balance at beginning and end of year
283,186,115
283,186,115
283,186,115
Common stock amount
Balance at beginning and end of year
$
$
$
Additional paid-in capital
Balance at beginning of year
$
2,515
$
2,925
$
2,931
Cash dividends paid ($8.00 per common share)
-
(409
)
-
Share-based compensation
(23
)
(1
)
(6
)
Balance at end of year
$
2,492
$
2,515
$
2,925
Retained earnings (deficit)
Balance at beginning of year
$
(1,144
)
$
(653
)
$
(458
)
Net income (loss) attributable to MBIA Inc.
(447
)
(491
)
(195
)
Balance at end of year
$
(1,591
)
$
(1,144
)
$
(653
)
Accumulated other comprehensive income (loss)
Balance at beginning of year
$
(139
)
$
(283
)
$
Other comprehensive income (loss)
(383
)
Balance at end of year
$
(128
)
$
(139
)
$
(283
)
Treasury shares
Balance at beginning of year
(232,323,184
)
(228,333,444
)
(228,630,003
)
Treasury shares acquired under share repurchase program
-
(3,568,886
)
-
Other
107,250
(420,854
)
296,559
Balance at end of year
(232,215,934
)
(232,323,184
)
(228,333,444
)
Treasury stock amount
Balance at beginning of year
$
(3,172
)
$
(3,154
)
$
(3,169
)
Treasury shares acquired under share repurchase program
-
(29
)
-
Other
Balance at end of year
$
(3,145
)
$
(3,172
)
$
(3,154
)
Total shareholders' equity of MBIA Inc.
Balance at beginning of year
$
(1,657
)
$
(882
)
$
(313
)
Period change
(432
)
(775
)
(569
)
Balance at end of year
$
(2,089
)
$
(1,657
)
$
(882
)
Preferred stock of subsidiary shares
Balance at beginning and end of year
1,315
1,315
1,315
Preferred stock of subsidiary and noncontrolling interest held for sale
Balance at beginning of year
$
Period change
(7
)
Balance at end of year
$
$
$
Total equity
$
(2,076
)
$
(1,647
)
$
(876
)
The accompanying notes are an integral part of the consolidated financial statements.
MBIA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Years Ended December 31,
Cash flows from operating activities:
Premiums, fees and reimbursements received
$
$
$
Investment income received
Proceeds from litigation settlement
-
-
Financial guarantee losses and loss adjustment expenses paid
(157
)
(214
)
(1,108
)
Proceeds from recoveries and reinsurance, net of salvage paid to reinsurers
Operating expenses paid and other operating
(57
)
(71
)
(97
)
Other proceeds from consolidated variable interest entities
-
Interest paid, net of interest converted to principal
(53
)
(64
)
(43
)
Income taxes (paid) received
-
-
(1
)
Cash (used) provided by discontinued operations
(7
)
(7
)
Net cash provided (used) by operating activities
(176
)
(195
)
(418
)
Cash flows from investing activities:
Purchases of available-for-sale investments
(210
)
(366
)
(1,009
)
Sales of available-for-sale investments
1,100
Paydowns, maturities and other proceeds of available-for-sale investments
Purchases of investments at fair value
(114
)
(77
)
(148
)
Sales, paydowns, maturities and other proceeds of investments at fair value
Sales, paydowns and maturities (purchases) of short-term investments, net
(186
)
Paydowns and maturities of loans receivable
Consolidation/(deconsolidation) of variable interest entities
-
(2
)
(Payments) proceeds for derivative settlements
(1
)
(38
)
(10
)
Proceeds (payments) from discontinued operations
(9
)
Net cash provided (used) by investing activities
Cash flows from financing activities:
Proceeds from investment agreements
-
Principal paydowns of investment agreements
(5
)
(12
)
(54
)
Principal paydowns of medium-term notes
(62
)
(15
)
(74
)
Proceeds from variable interest entity debt
Principal paydowns/redemptions of variable interest entity debt
(59
)
(142
)
(135
)
Dividends paid
-
(409
)
-
Principal paydowns of long-term debt
(1
)
-
(29
)
Purchases of treasury stock
(4
)
(38
)
(3
)
Cash provided (used) by discontinued operations
(9
)
-
Net cash provided (used) by financing activities
(132
)
(542
)
(285
)
Effect of exchange rate changes on cash and cash equivalents
-
-
(2
)
Net increase (decrease) in cash and cash equivalents
(21
)
(82
)
Cash and cash equivalents - beginning of year
Cash and cash equivalents - end of year
$
$
$
Reconciliation of net income (loss) to net cash provided (used) by operating activities:
Net income (loss)
$
(444
)
$
(487
)
$
(203
)
Income (loss) from discontinued operations, net of income taxes
(3
)
(3
)
(54
)
Income (loss) from continuing operations
(441
)
(484
)
(149
)
Adjustments to reconcile net income (loss) from continuing operations to net cash provided (used) by operating activities:
Change in:
Premiums receivable
Unearned premium revenue
(33
)
(34
)
(56
)
Loss and loss adjustment expense reserves
(468
)
Insurance loss recoverable
(2
)
(46
)
Accrued interest payable
Other assets and liabilities
(1
)
(67
)
Net realized investment gains (losses)
Net (gains) losses on financial instruments at fair value and foreign exchange
(31
)
Other net realized (gains) losses
(11
)
Other operating
(17
)
Total adjustments to income (loss) from continuing operations
(269
)
Net cash provided (used) by operating activities
$
(176
)
$
(195
)
$
(418
)
Supplementary Disclosure of Consolidated Cash Flow Information:
Non-cash investing activities:
Loans receivable disposed of a variable interest entity
$
-
$
$
-
Other investments, received from sale of net assets held for sale
-
-
Fixed-maturity securities held as available-for-sale, received as salvage
-
-
Investments carried at fair value, received as salvage
-
-
Non-cash financing activities:
Variable interest entity notes disposed of upon deconsolidation
-
-
The accompanying notes are an integral part of the consolidated financial statements.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 1: Business Developments and Risks and Uncertainties
Summary
MBIA Inc., together with its consolidated subsidiaries, (collectively, “MBIA” or the “Company”) operates within the financial guarantee insurance industry. MBIA manages three operating segments: 1) United States (“U.S.”) public finance insurance; 2) corporate; and 3) international and structured finance insurance. The Company’s U.S. public finance insurance business is managed through National Public Finance Guarantee Corporation (“National”), the corporate segment is managed through MBIA Inc. and several of its subsidiaries, including its service company, MBIA Services Corporation (“MBIA Services”) and its international and structured finance insurance business is managed through MBIA Insurance Corporation and its subsidiaries (“MBIA Corp.”).
Refer to “Note 11: Business Segments” for further information about the Company’s operating segments.
Business Developments
PREPA
During 2024, the Puerto Rico Electric Power Authority (“PREPA”) defaulted on scheduled debt service for National insured bonds and National paid gross claims in the aggregate of $137 million. As of December 31, 2024, National had $670 million of debt service outstanding related to PREPA.
In January 1, 2025, PREPA defaulted on scheduled debt service for National insured bonds and National paid gross claims in the aggregate of $13 million.
On January 31, 2023, National entered into a restructuring support agreement (“PREPA RSA”) with the Financial Oversight and Management Board for Puerto Rico (the “Oversight Board”), on behalf of itself and as the sole Title III representative of PREPA.
A plan of adjustment for PREPA (the "Plan") and related disclosure statement was filed on February 9, 2023. Subsequently, both the Plan and PREPA RSA were amended. The Title III Court conducted confirmation hearings in March 2024. On June 12, 2024, the First Circuit Court of Appeals reversed Judge Swain's prior rulings and supported bondholder liens and claim amounts (the "Appeal Decision"). On June 26, 2024, the Oversight Board filed a petition for a First Circuit panel rehearing, and the Unsecured Creditors Committee ("UCC") filed an en banc appeal. On November 13, 2024, the First Circuit affirmed the Appeal Decision. On November 27, 2024, the Oversight Board filed a petition for further rehearing, and on December 31, 2024, the First Circuit denied the rehearing request. Following a status conference held on July 10, 2024, the Court imposed a 60-day stay of all litigation and other filings related to the amended Plan, which stay was subsequently extended until March 24, 2025, and ordered the parties into mediation. Following the Appeal Decision, the Oversight Board informed the Court, National and other parties that it intended to modify National’s settlement in a forthcoming amended Plan. Thereafter, National provided notice to the Oversight Board that National did not support the board's actions and that such actions constituted a breach and termination of the PREPA RSA, as amended. There is no assurance that a plan that is substantially similar in the treatment of National's claims and rights will ultimately be confirmed and become effective. In the event of a substantially different confirmed plan, National’s PREPA loss reserves and recoveries could be materially adversely affected. Refer to “Note 6: Loss and Loss Adjustment Expense Reserves” for a further discussion of the Company’s PREPA reserves and recoveries.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 1: Business Developments and Risks and Uncertainties (continued)
Zohar CDOs
Payment of claims on MBIA Corp.’s policies insuring the Class A-1 and A-2 notes issued by Zohar collateralized debt obligation (“CDO”) 2003-1, Limited (“Zohar I”) and Zohar II 2005-1, Limited (“Zohar II”) (collectively, the “Zohar CDOs”), entitled MBIA Corp. to reimbursement of such amounts plus interest and expenses and/or to exercise certain rights and remedies to seek recovery of such amounts. Pursuant to a plan of liquidation that became effective in August of 2022, all remaining loans made to, and equity interests in, portfolio companies, were distributed to MBIA Corp. either directly or in the form of interests in certain asset recovery entities. For those portfolio companies in which the Company does not have a majority of the voting interest, the Company recorded these assets as investments. For those portfolio companies in which the Company owns a majority of the voting interest, the Company consolidated the assets, liabilities, and financial results of these companies and classified these entities as discontinued operations and held for sale. Refer to “Note 2: Significant Accounting Policies” for the Company’s accounting policies related to its net assets held for sale and discontinued operations. In addition, certain of the Zohar debtors’ litigation claims were transferred into a litigation trust that the Company consolidated as a variable interest entity (“VIE”).
There still remains significant uncertainty with respect to the realizable value of the remaining loans to and equity interests in these portfolio companies and the litigation trust. Further, as the monetization of these assets unfolds, and new information concerning the financial condition of the portfolio companies is disclosed, the Company will continue to revise its expectations for recoveries.
Discontinued Operations
As of December 31, 2024 and 2023, the assets and liabilities of these entities are presented within “Assets held for sale” and “Liabilities held for sale” on the Company’s consolidated balance sheets. Additionally, the results of operations for these entities are classified as “Income from discontinued operations, net of income taxes” on the Company’s consolidated statements of operations for the years ended December 31, 2024, 2023 and 2022. During 2024, certain net assets of one of the Company's Zohar-related portfolio companies that were classified as held for sale were disposed. Any remaining assets and liabilities are being wound-down and were classified as held for use. Also, during 2023, certain net assets of another Zohar-related portfolio company that were classified as held for sale were disposed. The consideration received as part of these dispositions were approximate to the carrying values of the assets and liabilities sold.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 1: Business Developments and Risks and Uncertainties (continued)
The following table summarizes the components of assets and liabilities held for sale:
As of
In millions
December 31, 2024
December 31, 2023
Assets held for sale
Cash
$
-
$
Accounts receivable
Goodwill
Other assets
Loss on disposal group
(3
)
(44
)
Total assets held for sale
$
$
Liabilities held for sale
Accounts payable
$
$
Debt
Accrued expenses and other
Total liabilities held for sale
$
$
The results of operations from discontinued operations for the years ended December 31, 2024, 2023 and 2022 consist of the following:
Years Ended December 31,
In millions
Revenues:
Revenues
$
$
$
Cost of sales
Total revenues from discontinued operations
Expenses:
Operating
Interest
Increase (decrease) on loss on disposal group
-
(10
)
Total expenses from discontinued operations
Income (loss) before income taxes from discontinued operations
(3
)
(3
)
(54
)
Provision (benefit) for income taxes from discontinued operations
-
-
-
Income (loss) from discontinued operations, net of income taxes
$
(3
)
$
(3
)
$
(54
)
Dividends
In December of 2024 and November of 2023, National declared and paid as-of-right dividends of $69 million and $97 million, respectively, to its ultimate parent, MBIA Inc. In addition, on December 7, 2023, National paid a $550 million special dividend that was approved by the New York State Department of Financial Services (“NYSDFS”) to its ultimate parent, MBIA Inc. Also on December 7, 2023, the Company's Board of Directors declared an extraordinary cash dividend on MBIA’s common stock of $8.00 per share. The dividend was paid on December 22, 2023 to shareholders of record as of the close of business on December 18, 2023. Due to the absence of retained earnings for MBIA Inc., the Company accounted for the dividend as a return of capital that was paid from additional paid-in capital on the Company's consolidated balance sheet.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 1: Business Developments and Risks and Uncertainties (continued)
Risks and Uncertainties
The Company’s financial statements include estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. The outcome of certain significant risks and uncertainties could cause the Company to revise its estimates and assumptions or could cause actual results to differ materially from the Company’s estimates. The discussion below highlights the significant risks and uncertainties that could have a material effect on the Company’s financial statements and business objectives in future periods.
National’s Insured Portfolio
National continues to monitor and remediate its existing insured portfolio. Certain state and local governments and territory obligors that National insures are under financial and budgetary stress. This could lead to an increase in defaults by such entities on the payment of their obligations and losses or impairments on a greater number of National’s insured transactions. In particular, PREPA is currently in bankruptcy-like proceedings in the United States District Court for the District of Puerto Rico. Refer to the “PREPA” section above for further information. National monitors and analyzes these situations and other stressed credits closely, and the overall extent and duration of this stress is uncertain.
MBIA Corp.’s Insured Portfolio
MBIA Corp.’s primary objectives are to satisfy all claims by its policyholders and to maximize future recoveries, if any, for its surplus note holders, and then its preferred stock holders. MBIA Corp. is executing this strategy by, among other things, taking steps to maximize the collection of recoveries and by reducing and mitigating potential losses on its insurance exposures. MBIA Corp.’s insured portfolio performance could deteriorate and result in additional significant loss reserves and claim payments. MBIA Corp.’s ability to meet its obligations is limited by available liquidity and its ability to secure additional liquidity through financing and other transactions. There can be no assurance that MBIA Corp. will be successful in generating sufficient resources to meet its obligations.
Recoveries
In addition to the recoveries related to the Zohar CDOs, MBIA Corp. also projects to collect recoveries from prior claims associated with insured residential mortgage-backed securities (“RMBS”); however, the amount and timing of these collections are uncertain.
Failure to collect its expected recoveries could impede MBIA Corp.’s ability to make payments when due on other policies. MBIA Corp. believes that if the NYSDFS concludes at any time that MBIA Insurance Corporation will not be able to pay its policyholder claims, the NYSDFS would likely put MBIA Insurance Corporation into a rehabilitation or liquidation proceeding under Article 74 of the New York Insurance Law (“NYIL”) and/or take such other actions as the NYSDFS may deem necessary to protect the interests of MBIA Insurance Corporation’s policyholders. The determination to commence such a proceeding or take other such actions is within the exclusive control of the NYSDFS.
Given the separation of MBIA Inc. and MBIA Corp. as distinct legal entities, the absence of any cross defaults between the entities and the lack of reliance by MBIA Inc. on MBIA Corp. for dividends, the Company does not believe that a rehabilitation or liquidation proceeding with respect to MBIA Insurance Corporation would have any significant liquidity impact on MBIA Inc. Such a proceeding could have material adverse consequences for MBIA Corp., including the termination of derivative contracts for which counterparties may assert market-based claims, the acceleration of debt obligations issued by affiliates and insured by MBIA Corp., the loss of control of MBIA Insurance Corporation to a rehabilitator or liquidator, and unplanned costs.
Refer to “Note 6: Loss and Loss Adjustment Expense Reserves” for additional information about MBIA Corp.’s recoveries.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 2: Significant Accounting Policies
Basis of Presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. As additional information becomes available or actual amounts become determinable, the recorded estimates are revised and reflected in operating results. Certain amounts have been reclassified in prior years’ financial statements to conform to the current presentation.
Consolidation
The consolidated financial statements include the accounts of MBIA Inc., its wholly-owned subsidiaries and all other entities in which the Company has a controlling financial interest. All intercompany balances and transactions have been eliminated. The Company determines whether it has a controlling financial interest in an entity by first evaluating whether an entity is a voting interest entity or a VIE.
Voting interest entities are entities in which (i) the total equity investment at risk is sufficient to enable an entity to finance its activities independently and (ii) the equity holders have the obligation to absorb losses, the right to receive residual returns and the right to make decisions about the entity’s activities. Voting interest entities are consolidated when the Company has a majority voting interest.
VIEs are entities that lack one or more of the characteristics of a voting interest entity. The consolidation of a VIE is required if an entity has a variable interest (such as an equity or debt investment, a beneficial interest, a guarantee, a written put option or a similar obligation) and that variable interest or interests give it a controlling financial interest in the VIE. A controlling financial interest is present when an enterprise has both (a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The enterprise with the controlling financial interest, known as the primary beneficiary, is required to consolidate the VIE. The Company consolidates all VIEs in which it is the primary beneficiary. The Company may elect to apply the fair value option to the financial assets and financial liabilities of consolidated VIEs on a VIE-by-VIE basis. Refer to “Note 4: Variable Interest Entities” for additional information.
Investments
The Company classifies its fixed-maturity investments as available-for-sale (“AFS”), held-to-maturity or trading. AFS investments are reported in the consolidated balance sheets at fair value with non-credit related unrealized gains and losses, net of applicable deferred income taxes, reflected in accumulated other comprehensive income (loss) (“AOCI”) in shareholders’ equity. The specific identification method is used to determine realized gains and losses on AFS securities. Investments carried at fair value consist of equity instruments and fixed-maturity investments elected under the fair value option. Short-term investments include all fixed-maturity securities held as AFS with a remaining maturity of less than one year at the date of purchase, including commercial paper and money market securities.
Investment income is recorded as earned, which includes the current period interest accruals deemed collectible. Accrued interest income is recorded as part of “Other assets” on the Company’s consolidated balance sheets. Bond discounts and premiums are amortized using the effective yield method over the remaining term of the securities and reported in “Net investment income” on the Company’s consolidated statements of operations. However, premiums on certain callable debt securities are amortized to the next call date. For mortgage-backed securities ("MBS") and asset-backed securities (“ABS”), discounts and premiums are amortized using the retrospective or prospective method.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 2: Significant Accounting Policies (continued)
Changes in the fair values of investments carried at fair value are reflected in earnings as part of “Net gains (losses) on financial instruments at fair value and foreign exchange” on the Company’s consolidated statements of operations. For VIE investments carried at fair value, interest income is also recorded as part of fair value changes within “Net gains (losses) on financial instruments at fair value and foreign exchange”. Realized gains and losses from the sale and other dispositions of AFS investments are reflected in earnings as part of “Net realized investment gains (losses)” on the Company’s consolidated statements of operations.
Credit Losses
For AFS debt securities, the Company’s consolidated statements of operations reflect the full impairment (the difference between a security’s amortized cost basis and fair value) if the Company intends to sell or would more likely than not be required to sell before the expected recovery of the amortized cost basis. AFS debt securities in an unrealized loss position are evaluated on a quarterly basis to determine if credit losses exist. The Company considers that credit losses exist when the Company does not expect to recover the entire amortized cost basis of the debt security. The Company measures an allowance for credit losses on a security-by-security basis as the difference between the recorded investment and the present value of the cash flows expected to be collected, discounted at the instrument’s effective interest rate. Only the amounts of impairment associated with the credit losses are recognized as charges to earnings.
The carrying values of debt securities are presented net of any allowance for credit losses. For AFS debt securities, adjustments to the amortized cost basis are recorded if there is an intent to sell before recovery of the impairment. For debt securities with an allowance for credit loss, changes in credit losses including accretion of the allowance for credit losses are recognized in earnings through other net realized gains (losses) with a corresponding change to the allowance for credit losses.
Accrued interest income on debt securities is not assessed for credit losses since the Company reverses any past due accrued interest income through earnings as a charge against net investment income. Interest income is subsequently recognized to the extent cash is received.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, demand deposits, and deposits with banks with original maturities of less than three months.
Deferred Acquisition Costs
The Company deferred acquisition costs that were directly related to new or renewal insurance business. Acquisition costs are costs to acquire an insurance contract which result directly from and are essential to the insurance contract and would not have been incurred by the Company had the contract not occurred. Acquisition costs include compensation of employees involved in underwriting, certain rating agency fees, state premium taxes and certain other underwriting expenses, reduced by ceding commission income on premiums ceded to reinsurers. Acquisition costs also included ceding commissions paid by the Company in connection with assuming business from other financial guarantors. Acquisition costs, net of ceding commissions received, related to non-derivative insured financial guarantee transactions are deferred and amortized over the period in which the related premiums are earned. Since the cessation of new insurance business by the Company, new acquisition costs relate to installment-based policies written prior to such cessation.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 2: Significant Accounting Policies (continued)
Held For Sale Classification and Discontinued Operations
In connection with the Zohar CDOs' plan of liquidation and the acquisition of the related interests, the Company classifies the assets and liabilities of consolidated portfolio companies and the interests in certain nonconsolidated portfolio companies as held for sale since they met the held for sale criteria in accordance with Accounting Standards Codification (“ASC”) 360-10, Property, Plant, and Equipment. Additionally, since these consolidated portfolio companies met the one-year probable sale criteria on acquisition, and the remaining held for sale criteria within a short period following the acquisition, these companies were classified as discontinued operations in accordance with ASC 205-20, Presentation of Financial Statements-Discontinued Operations. For the net assets held for sale beyond the one-year probable sale criteria, the Company continues to meet exceptions permitting it to continue to record these net assets as held for sale. The Company continues to actively market its net assets held for sale and has identified interested parties, including having attained various stages of a sales or liquidation process. In addition, the Company has continued to (i) take necessary actions to respond to changes in circumstances, including recording a loss on disposal group; (ii) actively market the net assets at prices that are deemed reasonable; and (iii) meet the criteria for held for sale classification. The assets and liabilities of these companies are presented within “Assets held for sale” and “Liabilities held for sale” on the Company’s consolidated balance sheets. Also, the results of operations for these companies are classified as "Income from discontinued operations, net of income taxes" on the Company’s consolidated statements of operations. The Company consolidated the operating results of these portfolio companies on a two-month lag to allow for a more timely preparation of the Company's consolidated financial statements. Refer to “Note 1: Business Developments and Risks and Uncertainties” for further information about the Company’s held for sale assets and liabilities and discontinued operations.
Fair Value Measurements-Definition and Hierarchy
The Company carries certain financial instruments at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement of financial instruments held or issued by the Company are determined through the use of observable market data when available. Market data is obtained from a variety of third-party sources, including dealer quotes. If dealer quotes are not available for an instrument that is infrequently traded, the Company uses alternate valuation methods, including either dealer quotes for similar instruments or pricing models that use market data inputs. The use of alternate valuation methods generally requires considerable judgment in the application of estimates and assumptions and changes to such estimates and assumptions may produce materially different fair values. The Company considers its own nonperformance risk and the nonperformance risk of its counterparties when measuring fair value.
The accounting guidance establishes a fair value hierarchy that categorizes into three levels, the inputs used to measure fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available and reliable. Observable inputs are those that the Company believes market participants would use in pricing an asset or liability based on available market data. Unobservable inputs are those that reflect the Company’s beliefs about the assumptions market participants would use in pricing the asset or liability based on the best information available. The three levels of the fair value hierarchy are defined as follows:
•Level 1-Valuations based on quoted prices in active markets for identical assets or liabilities that the Company can access at the measurement date. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
•Level 2-Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Level 2 assets include debt securities with quoted prices that are traded less frequently than exchange-traded instruments, securities which are priced using observable inputs and derivative contracts whose values are determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.
•Level 3-Valuations based on inputs that are unobservable or supported by little or no market activity, and that are significant to the overall fair value measurement. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques where significant inputs are unobservable, as well as instruments for which the determination of fair value requires significant management judgment or estimation.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 2: Significant Accounting Policies (continued)
The availability of observable inputs can vary from financial instrument to financial instrument and period to period depending on the type of instrument, market activity, the approach used to measure fair value, and other factors. The Company categorizes a financial instrument within the fair value hierarchy based on the least observable input that is significant to the fair value measurement. When the inputs used to measure fair value of an asset or a liability are categorized within different levels based on the definition of the fair value hierarchy, the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
Refer to “Note 7: Fair Value of Financial Instruments” for additional fair value disclosures.
Loss and Loss Adjustment Expenses
The Company recognizes loss reserves on a contract-by-contract basis when the present value of probability-weighted expected net cash outflows to be paid under the contract discounted using a risk-free rate as of the measurement date exceed the unearned premium revenue. A loss reserve is subsequently remeasured each reporting period for expected increases or decreases due to changes in the likelihood of default and potential recoveries. Subsequent changes to the measurement of loss reserves are recognized as loss expense or benefit in the period of change. Measurement and recognition of loss reserves are reported gross of any reinsurance on the Company’s consolidated balance sheets. The Company estimates the likelihood of possible claim payments and possible recoveries of such claim payments using probability-weighted expected cash flows as of the measurement date based on information available, including market information. Accretion of the discounts on loss reserves and recoveries is included in loss expense. The Company considers its ability to collect contractual interest on claim payments when developing its expected inflows. The inclusion of such interest may result in the Company recording recoveries in excess of its actual or expected claim payments on a policy.
The Company recognizes potential recoveries on paid claims based on probability-weighted cash inflows present valued at applicable risk-free rates as of the measurement date. Such amounts are reported within “Insurance loss recoverable” on the Company’s consolidated balance sheets. To the extent the Company had recorded potential recoveries in its loss reserves previous to a claim payment, such recoveries are reclassified to “Insurance loss recoverable” upon payment of the related claim and remeasured at each reporting period.
The Company’s loss reserves, insurance loss recoverable, and accruals for loss adjustment expense (“LAE”) incurred are disclosed in “Note 6: Loss and Loss Adjustment Expense Reserves.”
Long-term Debt
Long-term debt, including VIE loans payable, is carried at the principal amount outstanding plus accrued interest and net of unamortized debt issuance costs and discounts. Interest expense is accrued at the contractual interest rate. Debt issuance costs and discounts are amortized and reported as interest expense.
For long-term debt issued by consolidated VIEs in which the Company's variable interest arises from financial guarantees written by its insurance operations, the Company has elected the fair value option on these instruments. Changes in fair value are reported within “Net gains (losses) on financial instruments at fair value and foreign exchange” under “Revenues of consolidated variable interest entities” on the Company’s consolidated statements of operations, except for the portion of the total change in fair value of financial liabilities caused by changes in the instrument-specific credit risk which is presented separately in AOCI in shareholders' equity.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 2: Significant Accounting Policies (continued)
Medium-Term Notes and Investment Agreements
Medium-term notes ("MTNs") and investment agreements are carried at the principal amount outstanding plus accrued interest and net of unamortized discounts, or elected to be recorded at fair value for certain MTNs that are hybrid financial instruments given the complexity of bifurcating the embedded derivatives. For MTNs carried at fair value, changes in fair value are recorded in earnings, except for the portion of unrealized gains (losses) caused by a change in the instrument-specific credit risk which are recorded in AOCI. Interest expense is accrued at the contractual interest rate. Discounts are amortized and reported as interest expense.
Financial Guarantee Insurance Premiums
Unearned Premium Revenue and Receivable for Future Premiums
The Company recognized a liability for unearned premium revenue at the inception of financial guarantee insurance and reinsurance contracts on a contract-by-contract basis. Unearned premium revenue recognized at inception of a contract is measured at the present value of the premium due. For most financial guarantee insurance contracts, the Company received the entire premium due at the inception of the contract, and recognized an unearned premium revenue liability at that time. For certain other financial guarantee contracts, the Company receives premiums in installments over the term of the contract. Unearned premium revenue and a receivable for future premiums were recognized at the inception of each installment contract, and measured at the present value of premiums expected to be collected over the contract period or expected period using a risk-free discount rate. The expected period is used in the present value determination of unearned premium revenue and receivable for future premiums for contracts where (a) the insured obligation is contractually prepayable, (b) prepayments are probable, (c) the amount and timing of prepayments are reasonably estimable, and (d) a homogenous pool of assets is the underlying collateral for the insured obligation. Premiums receivable for policies that use the expected period of risk due to expected prepayments are adjusted in subsequent measurement periods when prepayment assumptions change using the risk-free discount rate as of the remeasurement date. The Company has determined that substantially all of its installment contracts meet the conditions required to be treated as expected period contracts. Premiums receivable also includes the current amount of premiums due from installment policies insuring consolidated VIEs when the premiums are payable by third-parties on behalf of the consolidated VIEs. The receivable for future premiums is reduced as installment premiums are collected. The Company reports the accretion of the discount on installment premiums receivable as premium revenue and discloses the amount recognized in “Note 5: Insurance Premiums.” As premium revenue is recognized, the unearned premium revenue liability is reduced.
Credit Losses on Premium Receivables
The Company evaluates the collectability of outstanding premium receivables on a quarterly basis and measures any allowance for credit losses as the difference between the recorded premium receivable amount and the current projected net present value of premiums expected to be collected, discounted at the effective interest rate, which is the applicable risk-free rate described in the preceding paragraph. Estimating the allowance for credit losses involves substantial judgment, including forecasting an insured transaction’s cash flows, such as the future performance of the transaction’s underlying assets and the impact of certain macro-economic factors, as well as incorporating any historical experience of uncollectible balances and a transaction’s liability structure, including the seniority of premium payments to the Company.
Premium Revenue Recognition
The Company recognizes and measures premium revenue over the period of the contract in proportion to the amount of insurance protection provided. Premium revenue is measured by applying a constant rate to the insured principal amount outstanding in a given period to recognize a proportionate share of the premium received or expected to be received on a financial guarantee insurance contract. A constant rate for each respective financial guarantee insurance contract is calculated as the ratio of (a) the present value of premium received or expected to be received over the period of the contract to (b) the sum of all insured principal amounts outstanding during each period over the term of the contract.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 2: Significant Accounting Policies (continued)
An issuer of an insured financial obligation may retire the obligation prior to its scheduled maturity through refinancing or legal defeasance in satisfaction of the obligation according to its indenture, which results in the Company’s obligation being extinguished under the financial guarantee contract. The Company recognizes any remaining unearned premium revenue on the insured obligation as refunding premiums earned in the period the contract is extinguished to the extent the unearned premium revenue has been collected.
Fee and Reimbursement Revenue Recognition
The Company collects insurance related fees for services performed in connection with certain transactions. Fees are earned when the related services are completed. Types of fees include waiver and consent and termination fees.
Stock-Based Compensation
The Company recognizes in earnings, generally over the vesting or service period of an award, the cost of all stock-based payment transactions using the fair value of the stock-based compensation provided. Refer to “Note 14: Benefit Plans” for a further discussion regarding the methodology utilized in recognizing employee stock compensation expense.
Foreign Currency Translation
Financial statement assets and liabilities denominated in foreign currencies are reported in U.S. dollars generally using rates of exchange prevailing as of the balance sheet date. Translation adjustments resulting from the translation of the financial statements of the Company’s non-U.S. operations from its functional currency into U.S. dollars are included in AOCI in shareholders’ equity. Operating results of the Company’s non-U.S. operations are translated at average rates of exchange prevailing during the year. Foreign currency remeasurement gains and losses resulting from transactions in non-functional currencies are recorded in earnings. The Company derecognizes the cumulative translation adjustment reported in AOCI and includes the amount as part of the gain or loss on the sale or liquidation of its investment in a foreign entity in the period in which the sale or liquidation occurs.
Income Taxes
Deferred income taxes are recorded with respect to temporary differences between the tax bases of assets and liabilities and the reported amounts in the Company’s financial statements that will result in deductible or taxable amounts in future years when the reported amounts of assets and liabilities are recovered or settled. Such temporary differences relate principally to net operating losses (“NOLs”), accrued surplus note interest, foreign tax credits, loss reserve deductions, premium revenue recognition, deferred acquisition costs, and unrealized gains and losses. Valuation allowances are established to reduce deferred tax assets to the amount that more likely than not will be realized. As of December 31, 2024 and 2023, the Company had a full valuation allowance on its net deferred tax asset. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates in the period in which changes are approved by the relevant authority.
MBIA Inc. and its eligible U.S. subsidiaries file a consolidated federal income tax return. The U.S. income taxes are allocated based on the provisions of the Company’s tax sharing agreement, which governs the intercompany settlement of tax obligations and benefits. The method of allocation between the members is based on calculations as if each member filed its separate tax return. Under the Company’s tax sharing agreement, each member with an NOL will receive the benefits of its tax losses and credits as it is able to earn them out in the future.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 2: Significant Accounting Policies (continued)
In establishing a liability for an unrecognized tax benefit (“UTB”), assumptions may be made in determining whether a tax position is more likely than not to be sustained upon examination by the taxing authority and also in determining the ultimate amount that is likely to be realized. A tax position is recognized only when, based on management’s judgment regarding the application of income tax laws, it is more likely than not that the tax position will be sustained upon examination. The amount of tax benefit recognized is based on the Company’s assessment of the largest amount of benefit that is more likely than not to be realized on ultimate settlement with the taxing authority. This measurement is based on many factors, including whether a tax dispute may be settled through negotiation with the taxing authority or is only subject to review in the courts. As new information becomes available, the Company evaluates its tax positions, and adjusts its UTB, as appropriate. If the tax benefit ultimately realized differs from the amount previously recognized, the Company recognizes an adjustment of the UTB.
Refer to “Note 10: Income Taxes” for additional information about the Company’s income taxes.
Note 3: Recent Accounting Pronouncements
Recently Adopted Accounting Standards
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07)
In November of 2023, the FASB issued ASU 2023-07, “Improvements to Reportable Segment Disclosures” which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. This ASU was effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. Upon the effective date, the amendments were applied retrospectively to all periods presented. The Company adopted the amendments of ASU 2023-07 for its fiscal year ending December 31, 2024. The adoption of ASU 2023-07 only impacted the segment disclosures within the Company's consolidated financial statements and did not impact amounts reported on the Company's balance sheet, statement of operations, statement of comprehensive income or statement of cash flows.
The Company has not adopted any other new accounting pronouncements that had a material impact on its consolidated financial statements.
Recent Accounting Developments
Income Taxes (Topic 740): Improvements to Income Tax Disclosure (ASU 2023-09)
In December of 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures” which requires disaggregated information about a reporting entity’s effective tax rate reconciliation, information on income taxes paid, and contain other disclosure requirements. This ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted. Upon the effective date, the amendments should be applied prospectively with retrospective application permitted. The Company is currently evaluating the potential impact of adopting ASU 2023-09.
Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03)
In November of 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statement Expenses" which requires to disclose the amounts of employee compensation, depreciation, intangible asset amortization, and certain other costs and expenses included in each relevant expense caption on the consolidated statements of operations and include certain amounts that are already required to be disclosed under current GAAP in the same disclosure. Additionally, ASU 2024-03 requires the disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively and the disclosure of the total amount of selling expenses. This ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. Upon the effective date, the amendments can be applied either prospectively or retrospectively. The Company is currently evaluating the potential impact of adopting ASU 2024-03.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 4: Variable Interest Entities
Primarily through MBIA’s international and structured finance insurance segment, the Company provides credit protection to issuers of obligations that may involve issuer-sponsored special purpose entities (“SPEs”). An SPE may be considered a VIE to the extent the SPE’s total equity at risk is not sufficient to permit the SPE to finance its activities without additional subordinated financial support or its equity investors lack any one of the following characteristics: (i) the power to direct the activities of the SPE that most significantly impact the entity’s economic performance or (ii) the obligation to absorb the expected losses of the entity or the right to receive the expected residual returns of the entity. A holder of a variable interest or interests in a VIE is required to assess whether it has a controlling financial interest, and thus is required to consolidate the entity as primary beneficiary. An assessment of a controlling financial interest identifies the primary beneficiary as the variable interest holder that has both of the following characteristics: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. The primary beneficiary is required to consolidate the VIE. An ongoing reassessment of controlling financial interest is required to be performed based on any substantive changes in facts and circumstances involving the VIE and its variable interests.
The Company evaluates issuer-sponsored SPEs initially to determine if an entity is a VIE, and is required to reconsider its initial determination if certain events occur. For all entities determined to be VIEs, MBIA performs an ongoing reassessment to determine whether its guarantee to provide credit protection on obligations issued by VIEs provides the Company with a controlling financial interest. Based on its ongoing reassessment of controlling financial interest, the Company determines whether a VIE is required to be consolidated or deconsolidated.
The Company makes its determination for consolidation based on a qualitative assessment of the purpose and design of a VIE, the terms and characteristics of variable interests of an entity, and the risks a VIE is designed to create and pass through to holders of variable interests. The Company generally provides credit protection on obligations issued by VIEs, and holds certain contractual rights according to the purpose and design of a VIE. The Company may have the ability to direct certain activities of a VIE depending on facts and circumstances, including the occurrence of certain contingent events, and these activities may be considered the activities that most significantly impact the VIE’s economic performance. The Company generally considers its guarantee of principal and interest payments of insured obligations, given nonperformance by a VIE, to be an obligation to absorb losses of the entity that could potentially be significant to the VIE. At the time the Company determines it has the ability to direct the activities of a VIE that most significantly impact the economic performance of the entity based on facts and circumstances, MBIA is deemed to have a controlling financial interest in the VIE and is required to consolidate the entity as primary beneficiary. The Company performs an ongoing reassessment of controlling financial interest that may result in consolidation or deconsolidation of any VIE.
Consolidated VIEs
The carrying amounts of assets and liabilities are presented separately in “Assets of consolidated variable interest entities” and “Liabilities of consolidated variable interest entities” on the Company’s consolidated balance sheets. VIEs are consolidated or deconsolidated based on an ongoing reassessment of controlling financial interest, when events occur or circumstances arise, and whether the ability to exercise rights that constitute power to direct activities of any VIE are present according to the design and characteristics of these entities. During the fourth, third and first quarters of 2024, the Company had no additional consolidations or deconsolidations of VIEs. During the second quarter of 2024, the Company did not consolidate any additional VIEs and deconsolidated one VIE due to the prepayment of outstanding notes and recorded losses of $14 million, of which $9 million was due to credit losses in AOCI that were released to earnings. During the third, second and first quarters of 2023, the Company deconsolidated one structured finance VIE each quarter due to the commutation of the credit enhancement on or prepayments of the outstanding notes of the VIEs that the Company insured and recorded losses of $7 million, $7 million and $15 million, respectively. There were no consolidations or deconsolidations in the fourth quarter of 2023. Consolidation and deconsolidation gains and losses, if any, are recorded within “Other net realized gains (losses)” under “Revenues of consolidated variable interest entities” on the Company’s consolidated statements of operations.
Holders of insured obligations of issuer-sponsored VIEs do not have recourse to the general assets of the Company. In the event of nonpayment of an insured obligation issued by a consolidated VIE, the Company is obligated to pay principal and interest, when due, on the respective insured obligation only. The Company’s exposure to consolidated VIEs is limited to the credit protection provided on insured obligations and any additional variable interests held by the Company.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 4: Variable Interest Entities (continued)
Nonconsolidated VIEs
The following tables present the Company’s maximum exposure to loss for nonconsolidated VIEs and carrying values of the assets and liabilities for its interests in these VIEs in its insurance operations as of December 31, 2024 and 2023. The maximum exposure to loss as a result of MBIA’s variable interests in VIEs is represented by insurance in force. Insurance in force is the maximum future payments of principal and interest which may be required under commitments to make payments on insured obligations issued by nonconsolidated VIEs. The Company has aggregated nonconsolidated VIEs based on the underlying credit exposure of the insured obligation. The nature of the Company’s variable interests in nonconsolidated VIEs is related to financial guarantees and any investments in obligations issued by nonconsolidated VIEs.
December 31, 2024
Carrying Value of Assets
Carrying Value of Liabilities
In millions
Maximum
Exposure
to Loss
Investments
Premiums
Receivable
Insurance Loss
Recoverable
Unearned
Premium
Revenue
Loss and Loss
Adjustment
Expense
Reserves
Insurance:
Global structured finance:
Mortgage-backed residential
$
$
$
$
$
$
Consumer asset-backed
-
-
-
-
Corporate asset-backed
-
-
-
Total global structured finance
1,229
Global public finance
-
-
-
Total insurance
$
1,426
$
$
$
$
$
December 31, 2023
Carrying Value of Assets
Carrying Value of Liabilities
In millions
Maximum
Exposure
to Loss
Investments
Premiums
Receivable
Insurance Loss
Recoverable
Unearned
Premium
Revenue
Loss and Loss
Adjustment
Expense
Reserves
Insurance:
Global structured finance:
Mortgage-backed residential
$
$
$
$
$
$
Consumer asset-backed
-
-
-
Corporate asset-backed
-
-
Total global structured finance
1,376
Global public finance
-
-
-
Total insurance
$
1,594
$
$
$
$
$
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 5: Insurance Premiums
The following tables present a roll forward of the Company’s premiums receivable for the years ended December 31, 2024 and 2023:
In millions
Adjustments
Premiums
Premiums
Changes in
Accretion of
Premiums
Receivable as of
Premium
from New
Expected
Premiums
Receivable as of
December 31,
Payments
Business
Term of
Receivable
December 31,
Received
Written
Policies
Discount (1)
$
$
(17
)
$
-
$
-
$
$
(1) - Recorded within premiums earned on the Company's consolidated statements of operations.
In millions
Adjustments
Premiums
Premiums
Changes in
Accretion of
Premiums
Receivable as of
Premium
from New
Expected
Premiums
Receivable as of
December 31,
Payments
Business
Term of
Receivable
December 31,
Received
Written
Policies
Discount (1)
$
$
(18
)
$
-
$
-
$
$
(1) - Recorded within premiums earned on the Company's consolidated statements of operations.
As of December 31, 2024 and 2023, the weighted average risk-free rates used to discount future installment premiums was 3.0%, and the weighted average expected collection term of the premiums receivable was 8.57 years and 8.75 years, respectively. As of December 31, 2024 and 2023, reinsurance premiums payable was $3 million and $4 million, respectively and is included in “Other liabilities” in the Company’s consolidated balance sheets. The reinsurance premiums payable is accreted and paid to reinsurers as premiums due to MBIA are accreted and collected.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 5: Insurance Premiums (continued)
The following table presents the undiscounted future amount of premiums expected to be collected and the period in which those collections are expected to occur:
Expected
Collection of
In millions
Premiums
Three months ending:
March 31, 2025
$
June 30, 2025
September 30, 2025
December 31, 2025
Twelve months ending:
December 31, 2026
December 31, 2027
December 31, 2028
December 31, 2029
Five years ending:
December 31, 2034
December 31, 2039
December 31, 2044 and thereafter
Total
$
The following table presents the unearned premium revenue balance and future expected premium earnings as of and for the periods presented:
Total
Expected
Unearned
Expected Future
Future
Premium
Premium Earnings
Premium
In millions
Revenue
Upfront
Installments
Accretion
Earnings
December 31, 2024
$
Three months ending:
March 31, 2025
$
$
$
$
June 30, 2025
September 30, 2025
December 31, 2025
Twelve months ending:
December 31, 2026
December 31, 2027
December 31, 2028
December 31, 2029
Five years ending:
December 31, 2034
December 31, 2039
December 31, 2044 and thereafter
-
Total
$
$
$
$
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 6: Loss and Loss Adjustment Expense Reserves
The Company’s insured portfolio management groups within its U.S. public finance insurance and international and structured finance insurance businesses (collectively, “IPM”) monitor the Company’s outstanding insured obligations with the objective of minimizing losses. IPM meets this objective by identifying issuers that, because of deterioration in credit quality or changes in the economic, regulatory or political environment, are at a heightened risk of defaulting on debt service of obligations insured by the Company. In such cases, IPM works with the issuer, trustee, bond counsel, servicer, underwriter and other interested parties in an attempt to alleviate or remedy the problem and avoid defaults on debt service payments. The Company typically requires the issuer, servicer (if applicable) and the trustee of insured obligations to furnish periodic financial and asset-related information, including audited financial statements, to IPM for review. IPM also monitors publicly available information related to insured obligations. Potential problems uncovered through this review, such as poor financial results, low fund balances, covenant or trigger violations and trustee or servicer problems, or other events that could have an adverse impact on the insured obligation, could result in an immediate surveillance review and an evaluation of possible remedial actions. IPM also monitors and evaluates the impact on issuers of general economic conditions, current and proposed legislation and regulations, political developments, as well as sovereign, state and municipal finances and budget developments.
The frequency and extent of IPM’s monitoring is based on the criteria and categories described below. Insured obligations that are judged to merit more frequent and extensive monitoring or remediation activities due to a deterioration in the underlying credit quality of the insured obligation or the occurrence of adverse events related to the underlying credit of the issuer are assigned to a surveillance category (“Caution List-Low,” “Caution List-Medium,” “Caution List-High” or “Classified List”) depending on the extent of credit deterioration or the nature of the adverse events. IPM monitors insured obligations assigned to a surveillance category more frequently and, if needed, develops a remediation plan to address any credit deterioration.
Remediation actions may involve, among other things, waivers or renegotiations of financial covenants or triggers, waivers of contractual provisions, the granting of consents, transfer of servicing, consideration of restructuring plans, acceleration, security or collateral enforcement, actions in bankruptcy or receivership, litigation and similar actions. The types of remedial actions pursued are based on the insured obligation’s risk type and the nature and scope of the event giving rise to the remediation. As part of any such remedial actions, the Company seeks to improve its security position and to obtain concessions from the issuer of the insured obligation. From time to time, the issuer of an insured obligation by the Company may, with the consent of the Company, restructure the insured obligation by extending the term, increasing or decreasing the par amount or decreasing the related interest rate, with the Company insuring the restructured obligation.
The Company does not establish any case basis reserves for insured obligations that are assigned to “Caution List-Low,” “Caution List-Medium” or “Caution List-High.” In the event MBIA expects to pay a claim with respect to an insured transaction, it places the insured transaction on its “Classified List” and establishes a case basis reserve. The following provides a description of each surveillance category:
“Caution List-Low”-Includes issuers where debt service protection is adequate under current and anticipated circumstances. However, debt service protection and other measures of credit support and stability may have declined since the transaction was underwritten and the issuer is less able to withstand further adverse events. Transactions in this category generally require more frequent monitoring than transactions that do not appear within a surveillance category. IPM subjects issuers in this category to heightened scrutiny.
“Caution List-Medium”-Includes issuers where debt service protection is adequate under current and anticipated circumstances, although adverse trends have developed and are more pronounced than for “Caution List - Low.” Issuers in this category may have breached one or more covenants or triggers. These issuers are more closely monitored by IPM but generally take remedial action on their own.
“Caution List-High”-Includes issuers where more proactive remedial action is needed but where no defaults on debt service payments are expected. Issuers in this category exhibit more significant weaknesses, such as low debt service coverage, reduced or insufficient collateral protection or inadequate liquidity, which could lead to debt service defaults in the future. Issuers in this category may have breached one or more covenants or triggers and have not taken conclusive remedial action. Therefore, IPM adopts a remediation plan and takes more proactive remedial actions.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 6: Loss and Loss Adjustment Expense Reserves (continued)
“Classified List”-Includes all insured obligations where the Company has paid a claim or where a claim payment is expected. It also includes insured obligations where a significant LAE payment has been made, or is expected to be made, to mitigate a claim payment. This may include property improvements, bond purchases and commutation payments. Generally, IPM is actively remediating these credits where possible, including restructurings through legal proceedings, usually with the assistance of specialist counsel and advisors.
The establishment of the appropriate level of loss reserves is an inherently uncertain process involving numerous assumptions, estimates and subjective judgments by management that depend primarily on the nature of the underlying insured obligation. These variables include the nature and creditworthiness of the issuers of the insured obligations, expected recovery rates on unsecured obligations, the projected cash flow or market value of any assets pledged as collateral on secured obligations, and the expected rates of recovery, cash flow or market values on such obligations or other expected consideration. Factors that may affect the actual ultimate realized losses for any policy include economic conditions and trends, political developments, levels of interest rates, borrower behavior, the default rate and salvage values of specific collateral or other expected consideration, and the Company’s ability to enforce contractual rights through litigation and otherwise, including the collection of contractual interest on claim payments. The Company’s remediation strategy for an insured obligation that has defaulted or is expected to default may also have an impact on the Company’s loss reserves.
In establishing case basis loss reserves, the Company calculates the present value of probability-weighted estimated loss payments, net of estimated recoveries, using a discount rate equal to the risk-free rate applicable to the currency and the weighted average remaining life of the insurance contract as required by accounting principles for financial guarantee contracts. Yields on U.S. Treasury offerings are used to discount loss reserves denominated in U.S. dollars, which represent the majority of the loss reserves. Similarly, yields on foreign government offerings are used to discount loss reserves denominated in currencies other than the U.S. dollar. Significant changes in discount rates from period to period may have a material impact on the present value of the Company’s loss reserves and expected recoveries. In addition, if the Company were to apply different discount rates, its case basis reserves may have been higher or lower than those established as of December 31, 2024. For example, a higher discount rate applied to expected future payments would have decreased the amount of a case basis reserve established by the Company and a lower rate would have increased the amount of a reserve established by the Company. Similarly, a higher discount rate applied to the potential future recoveries would have decreased the amount of a loss recoverable established by the Company and a lower rate would have increased the amount of a loss recoverable established by the Company.
U.S. Public Finance Insurance
U.S. public finance insured transactions consist of municipal bonds, including tax-exempt and taxable indebtedness of U.S. political subdivisions, as well as utilities, airports, health care institutions, higher educational facilities, housing authorities and other similar agencies and obligations issued by private entities that finance projects that serve a substantial public purpose. The Company estimates future losses by using probability-weighted cash flow scenarios that are customized to each insured transaction. Future loss estimates consider debt service due for each insured transaction, which includes par outstanding and interest due, as well as recoveries for such payments, if any. Gross par outstanding for capital appreciation bonds represents the par amount at the time of issuance of the insurance policy.
Puerto Rico
In formulating loss reserves and recoveries for its Puerto Rico exposures, estimates in the Company’s probability-weighted scenarios include assumptions related to the nature, value, and timing of net cash flows considering the following: environmental, economic, and political developments on the island; litigation and ongoing discussions with creditors and obligors on the Title III proceedings; contractual debt service payments; any existing settlement agreements or proposals and deviations from these proposals; the remediation strategy for insured obligations that have defaulted or are expected to default; and values of other obligations of the issuer. Refer to “Note 1: Business Developments and Risks and Uncertainties” for further information on the Company’s Puerto Rico exposures.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 6: Loss and Loss Adjustment Expense Reserves (continued)
International and Structured Finance Insurance
The international and structured finance insurance segment’s case basis reserves and insurance loss recoveries recorded in accordance with GAAP do not include reserves and recoveries on consolidated VIEs, since they are eliminated in consolidation.
RMBS Case Basis Reserves (Financial Guarantees)
The Company’s RMBS case basis reserves primarily relate to RMBS backed by alternative A-paper and subprime mortgage loans. The Company calculated RMBS case basis reserves as of December 31, 2024 using a process called the Roll Rate Methodology (“Roll Rate Methodology”). The Roll Rate Methodology is a multi-step process using databases of loan level information, proprietary internal cash flow models, and commercially available models to estimate potential losses and recoveries on insured bonds. Roll Rate is defined as the probability that current loans become delinquent and subsequently default and loans in the delinquent pipeline are charged-off or liquidated. The loss reserve estimates are based on a probability-weighted average of potential scenarios of loan losses. Additional data used for both first and second-lien loans include historic averages of deal specific voluntary prepayment rates, forward projections of the secured overnight financing rate, and historic averages of deal-specific loss severities. Where applicable, the Company factors in termination scenarios when clean up calls are imminent.
In calculating ultimate cumulative losses for RMBS, the Company estimates the amount of first-lien loans that are expected to be liquidated in the future through foreclosure or short sale, and estimates the amount of second-lien loans that are expected to be charged-off (deemed uncollectible by servicers of the transactions). The time to liquidation for a defaulted loan is specific to the loan’s delinquency bucket.
For all RMBS transactions, cash flow models consider allocations and other structural aspects and claims against MBIA Corp.’s insurance policy consistent with such policy’s terms and conditions. The estimated net claims from the procedure above are then discounted using a risk-free rate to a net present value reflecting MBIA’s general obligation to pay claims over time and not on an accelerated basis.
The Company monitors RMBS portfolio performance on a monthly basis against projected performance, reviewing delinquencies, roll rates, and prepayment rates (including voluntary and involuntary). However, loan performance remains difficult to predict and losses may exceed expectations. In the event of a material deviation in actual performance from projected performance, the Company would increase or decrease the case basis reserves accordingly and re-evaluate its assumptions.
RMBS Recoveries
The Company’s RMBS recoveries relate to structural features within the trust structures that allow for the Company to be reimbursed for prior claims paid. These reimbursements for specific trusts include recoveries that are generated from the excess spread of the transactions. Excess spread within insured RMBS securitizations is the difference between interest inflows on mortgage loan collateral and interest outflows on the insured RMBS notes.
Summary of Loss and LAE Reserves and Recoveries
The Company’s loss and LAE reserves and recoveries before consolidated VIE eliminations, along with amounts that were eliminated as a result of consolidating VIEs for the international and structured finance insurance segment, which are included in the Company’s consolidated balance sheets as of December 31, 2024 and 2023 are presented in the following table:
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 6: Loss and Loss Adjustment Expense Reserves (continued)
As of December 31, 2024
As of December 31, 2023
In millions
Balance Sheet Line Item
Balance Sheet Line Item
Insurance loss recoverable
Loss and LAE reserves (1)
Insurance loss recoverable
Loss and LAE reserves (1)
U.S. Public Finance Insurance
$
$
$
$
International and Structured Finance Insurance:
Before VIE eliminations
VIE eliminations
(3
)
(11
)
(1
)
(92
)
Total international and structured finance insurance
Total
$
$
$
$
(1) - Amounts are net of estimated recoveries of expected future claims.
Changes in Loss and LAE Reserves
Loss and LAE reserves represent the Company’s estimate of future claims and LAE payments, net of any future recoveries of such payments. The following tables present changes in the Company’s loss and LAE reserves for the years ended December 31, 2024 and 2023. Changes in loss and LAE reserves, with the exception of loss and LAE payments, are recorded in “Losses and loss adjustment” expenses in the Company’s consolidated statements of operations. As of December 31, 2024 and 2023, the weighted average risk-free rate used to discount the Company’s loss reserves (claim liability) was 4.50% and 3.97%, respectively. LAE reserves are generally expected to be settled within a one-year period and are not discounted. As of December 31, 2024 and 2023, the Company’s gross loss and LAE reserves included $19 million and $8 million, respectively, related to LAE.
In millions
Changes in Loss and LAE Reserves for the Year Ended December 31, 2024
Gross Loss
Gross Loss
and LAE
Accretion
Changes in
and LAE
Reserves as of
Loss
of Claim
Changes in
Unearned
Reserves as of
December 31,
and LAE
Liability
Discount
Changes in
Premium
December 31,
Payments
Discount
Rates
Assumptions (1)
Revenue
$
$
(157
)
$
$
(19
)
$
$
(2
)
$
(1) - Includes changes in amount and timing of estimated payments and recoveries.
In millions
Changes in Loss and LAE Reserves for the Year Ended December 31, 2023
Gross Loss
Gross Loss
and LAE
Accretion
Changes in
and LAE
Reserves as of
Loss
of Claim
Changes in
Unearned
Reserves as of
December 31,
and LAE
Liability
Discount
Changes in
Premium
December 31,
Payments
Discount
Rates
Assumptions (1)
Revenue
$
$
(214
)
$
$
(4
)
$
$
$
(1) - includes changes in amount and timing of estimated payments and recoveries.
The increase in the Company’s loss and LAE reserves during 2024 was primarily due to assumption changes for National's PREPA reserves, partially offset by the January and July claims payments on PREPA. Refer to "Note 1: Business Developments and Risks and Uncertainties" for further information on PREPA. In addition, National established reserves on a U.S. Public Finance lease-backed transaction.
The increase in the Company’s loss and LAE reserves during 2023 was primarily due to updated scenarios to reflect the then Amended Plan Support Agreement ("PSA") with PREPA as well as accretion, partially offset by claims payments on PREPA and the termination of a first-lien RMBS insured transaction.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 6: Loss and Loss Adjustment Expense Reserves (continued)
Changes in Insurance Loss Recoverable
Insurance loss recoverable represents the Company’s estimate of expected recoveries on paid claims and LAE. The Company recognizes potential recoveries on paid claims based on the probability-weighted net cash inflows present valued at applicable risk-free rates as of the measurement date. The following tables present changes in the Company’s insurance loss recoverable for the years ended December 31, 2024 and 2023. Changes in insurance loss recoverable with the exception of collections, are recorded in “Losses and loss adjustment” expenses in the Company’s consolidated statements of operations.
Changes in Insurance Loss Recoverable
for the Year Ended December 31, 2024
Gross
Gross
Recoverable
Recoverable
as of
Accretion
Changes in
as of
December 31,
Collections
of
Discount
Changes in
December 31,
In millions
for Cases
Recoveries
Rates
Assumptions
Insurance loss recoverable
$
$
(16
)
$
$
-
$
$
Changes in Insurance Loss Recoverable
for the Year Ended December 31, 2023
Gross
Gross
Recoverable
Recoverable
as of
Accretion
Changes in
as of
December 31,
Collections
of
Discount
Changes in
December 31,
In millions
for Cases
Recoveries
Rates
Assumptions
Insurance loss recoverable
$
$
(8
)
$
$
-
$
$
The increase in the Company’s insurance loss recoverable during 2024 was primarily due to reclassifying expected PREPA recoveries from loss and LAE reserves on paid claims related to 2024 claim payments, partially offset by assumption changes related to PREPA reserves and from collections of recoveries.
The increase in the Company’s insurance loss recoverable during 2023 was primarily due to the PREPA debt service payments, and included a change in scenarios to reflect the then current status of a proposed settlement which was expected in 2024.
Loss and LAE Activity
For 2024, the incurred loss primarily related to updating PREPA scenarios to reflect current developments in the PREPA remediation and extending the timing of resolution. In addition, the incurred loss related to reserves on a U.S. public finance lease-backed transaction.
For 2023, the incurred loss primarily relates to updating PREPA scenarios to reflect the then PSA, which resulted in lower net expected recoveries. Changes in scenario assumptions also included extending the effective date of a settlement until 2024. In addition, for 2023, the incurred loss included the termination of a first-lien RMBS insured transaction.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 6: Loss and Loss Adjustment Expense Reserves (continued)
For 2022, the loss and LAE incurred primarily related to changes in the Company's estimate of expected recoveries on National's PREPA exposure. PREPA loss reserves and recoveries included certain assumptions about the timing and amount of claims payments and recoveries. National's expected recoveries on PREPA reflected assumptions from the PREPA RSA agreed to in January of 2023. In addition, an increase in risk-free rates during 2022 attributed to the decrease in National's estimated present value of expected PREPA recoveries. This was partially offset by loss incurred benefits related to HTA and GO recoveries to reflect the fair values of the consideration received as of the acquisition date, which was higher than previous estimates. Additionally, an increase in risk-free rates during 2022, resulted in a decrease in the present value of net case reserves on first-lien RMBS.
Costs associated with remediating insured obligations assigned to the Company’s surveillance categories are recorded as LAE and are included in “Losses and loss adjustment” expenses on the Company’s consolidated statements of operations. For 2024, 2023 and 2022 gross LAE related to remediating insured obligations were $17 million, $6 million and $3 million, respectively.
Surveillance Categories
The following table provides information about the financial guarantees and related claim liability included in each of MBIA’s surveillance categories as of December 31, 2024:
Surveillance Categories
Caution
Caution
Caution
List
List
List
Classified
$ in millions
Low
Medium
High
List
Total
Number of policies
-
-
Number of issues (1)
-
-
Remaining weighted average contract period (in years)
5.7
-
-
6.4
6.2
Gross insured contractual payments outstanding: (2)
Principal
$
$
-
$
-
$
1,509
$
2,226
Interest
1,307
-
-
1,876
Total
$
2,024
$
-
$
-
$
2,078
$
4,102
Gross Claim Liability (3)
$
-
$
-
$
-
$
$
Less:
Gross Potential Recoveries (4)
-
-
-
Discount, net (5)
-
-
-
Net claim liability (recoverable)
$
-
$
-
$
-
$
$
Unearned premium revenue
$
$
-
$
-
$
$
Reinsurance recoverable on paid and unpaid losses (6)
$
(1) - An “issue” represents the aggregate of financial guarantee policies that share the same revenue source for purposes of making debt service payments on the insured debt.
(2) - Represents contractual principal and interest payments due by the issuer of the obligations insured by MBIA.
(3) - The gross claim liability with respect to Puerto Rico exposures are net of expected recoveries for policies in a net payable position.
(4) - Gross potential recoveries with respect to certain Puerto Rico exposures are net of the claim liability for policies in a net recoverable position.
(5) - Represents discount related to Gross Claim Liability and Gross Potential Recoveries.
(6) - Included in "Other assets" on the Company's consolidated balance sheets.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 6: Loss and Loss Adjustment Expense Reserves (continued)
The following table provides information about the financial guarantees and related claim liability included in each of MBIA’s surveillance categories as of December 31, 2023:
Surveillance Categories
Caution
Caution
Caution
List
List
List
Classified
$ in millions
Low
Medium
High
List
Total
Number of policies
-
-
Number of issues (1)
-
-
Remaining weighted average contract period (in years)
5.6
-
-
7.1
6.3
Gross insured contractual payments outstanding: (2)
Principal
$
1,336
$
-
$
-
$
1,244
$
2,580
Interest
1,614
-
-
2,118
Total
$
2,950
$
-
$
-
$
1,748
$
4,698
Gross Claim Liability (3)
$
-
$
-
$
-
$
$
Less:
Gross Potential Recoveries (4)
-
-
-
Discount, net (5)
-
-
-
Net claim liability (recoverable)
$
-
$
-
$
-
$
$
Unearned premium revenue
$
$
-
$
-
$
$
Reinsurance recoverable on paid and unpaid losses (6)
$
(1) - An “issue” represents the aggregate of financial guarantee policies that share the same revenue source for purposes of making debt service payments on the insured debt.
(2) - Represents contractual principal and interest payments due by the issuer of the obligations insured by MBIA.
(3) - The gross claim liability with respect to Puerto Rico exposures are net of expected recoveries for policies in a net payable position.
(4) - Gross potential recoveries with respect to certain Puerto Rico exposures are net of the claim liability for policies in a net recoverable position.
(5) - Represents discount related to Gross Claim Liability and Gross Potential Recoveries.
(6) - Included in "Other assets" on the Company's consolidated balance sheets.
Note 7: Fair Value of Financial Instruments
Fair Value Measurement
Financial Assets and Liabilities
Financial assets held by the Company primarily consist of investments in debt and equity securities and loans receivables at fair value. Financial liabilities issued by the Company primarily consist of debt issued for general corporate purposes within its corporate segment, MTNs, investment agreements, and debt issued by consolidated VIEs.
Valuation Techniques
Valuation techniques for financial instruments measured at fair value are described below.
Fixed-Maturity Securities Held as Available-For-Sale, Investments Carried at Fair Value and Short-term Investments
These investments include investments in U.S. Treasury and government agencies, state and municipal bonds, foreign governments, corporate obligations, MBS, ABS, money market securities, equity investments and loans carried at fair value.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 7: Fair Value of Financial Instruments (continued)
Substantially all of these investments are valued based on recently executed transaction prices or quoted market prices by independent third parties, including pricing services and brokers. When quoted market prices are not available, fair value is generally determined using quoted prices of similar investments or a valuation model based on observable and unobservable inputs. Inputs vary depending on the type of investment. Observable inputs include contractual cash flows, interest rate yield curves, credit default swap (“CDS”) spreads, prepayment and volatility scores, diversity scores, cross-currency basis index spreads, and credit spreads for structures similar to the financial instrument in terms of issuer, maturity and seniority. Unobservable inputs include cash flow projections, the value of any credit enhancement and currently for certain equity investments, a discount rate, EBITDA multiple and EBITDA royalty share.
Investments based on quoted market prices of identical investments in active markets are classified as Level 1 of the fair value hierarchy. Level 1 investments generally consist of U.S. Treasury and government agency, money market securities and equity investments. Quoted market prices of investments in less active markets, as well as investments which are valued based on other than quoted prices for which the inputs are observable, such as interest rate yield curves, are categorized in Level 2 of the fair value hierarchy. Investments that contain significant inputs that are not observable are categorized as Level 3.
Cash and Cash Equivalents
The carrying amounts of cash and cash equivalents approximate fair value due to the short-term nature and credit worthiness of these instruments and are categorized in Level 1 of the fair value hierarchy.
Variable Interest Entity Loans Receivable at Fair Value
Loans receivable at fair value are assets held by a consolidated VIE consisting of residential mortgage loans and are categorized in Level 3 of the fair value hierarchy. Fair values of residential mortgage loans are determined using quoted prices for similar securities, adjusted for the fair values of the financial guarantees provided by MBIA Corp. on the related MBS. The fair values of the financial guarantees consider expected claim payments, net of recoveries, under MBIA Corp.’s policies.
Other Assets
As of December 31, 2023, other assets included receivables representing the right to receive reimbursement payments on claim payments expected to be made on certain insured VIE liabilities due to risk mitigating transactions with third parties executed to effectively defease, or, in-substance commute the Company’s exposure on its financial guarantee policies. The right to receive reimbursement payments was based on the value of the Company’s financial guarantee determined using a cash flow model. The fair value of the financial guarantee primarily contained unobservable inputs and is categorized in Level 3 of the fair value hierarchy.
Medium-term Notes at Fair Value
The fair values of certain MTNs are based on quoted market prices provided by third-party sources, where available. When quoted market prices are not available, the Company applies a matrix pricing grid to determine fair value based on the quoted market prices received for similar instruments and considering the MTNs’ stated maturity and interest rate. Nonperformance risk is included in the quoted market prices and the matrix pricing grid. MTNs are categorized in Level 3 of the fair value hierarchy and do not include accrued interest.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 7: Fair Value of Financial Instruments (continued)
Variable Interest Entity Debt
The fair values of VIE debt are determined based on recently executed transaction prices or quoted prices where observable. When position-specific quoted prices are not observable, fair values are based on quoted prices of similar securities. Fair values based on quoted prices of similar securities may be adjusted for factors unique to the securities, including any credit enhancement. Observable inputs include interest rate yield curves, bond spreads of similar securities and MBIA Corp.’s CDS spreads. Unobservable inputs include the value of any credit enhancement. VIE debt are categorized in Level 3 of the fair value hierarchy based on the lowest level input that is significant to the fair value measurement in its entirety.
Derivatives
A VIE consolidated by the Company entered into a derivative instrument consisting of a cross currency swap that as of December 31, 2024 and December 31, 2023 had outstanding notional amounts of $36 million and $39 million, respectively. The cross currency swap was entered into to manage the variability in cash flows resulting from fluctuations in foreign currency rates. The fair value of the VIE derivative was determined based on the valuation provided by an independent third-party, which is included in “Liabilities of consolidated variable interest entities - Derivative liabilities” on the Company’s consolidated balance sheets. As the significant inputs are unobservable, the derivative contract is categorized in Level 3 of the fair value hierarchy.
Significant Unobservable Inputs
The following tables provide quantitative information regarding the significant unobservable inputs used by the Company for assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 and 2023:
Fair Value as of
Range
December 31,
(Weighted
In millions
Valuation Techniques
Unobservable Input
Average)
Assets:
Equity Investments
$
Discounted cash flow
Discount rate (1)
EBITDA multiple (1)
Type certificate
Discount rate (1)
EBITDA royalty share (1)
Loans carried at fair value
Discounted cash flow
Discount rate (1)
Assets of consolidated VIEs:
Loans receivable at fair value
Market prices of similar liabilities adjusted for financial guarantees provided to VIE obligations
Impact of financial guarantee
27% - 27% (27%) (2)
(1) - Ranges for discount rate, EBITDA multiple and EBITDA royalty share are not meaningful.
(2) - Weighted average represents the total MBIA guarantees as a percentage of total instrument fair value.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 7: Fair Value of Financial Instruments (continued)
Fair Value as of
Range
December 31,
(Weighted
In millions
Valuation Techniques
Unobservable Input
Average)
Assets:
Equity Investments
$
Discounted cash flow
EBITDA multiples (1)
Discount rate (1)
Weightings (1)
Sum of the parts
Hard asset values (1)
Type certificate values (1)
Weightings (1)
Assets of consolidated VIEs:
Loans receivable at fair value
Market prices of similar liabilities or internal cash flow models adjusted for financial guarantees provided to VIE obligations
Impact of financial guarantee
27% - 27% (27%) (2)
Liabilities of consolidated VIEs:
Variable interest entity notes
Market prices of VIE assets adjusted for financial guarantees provided or market prices of similar liabilities
Impact of financial guarantee
74% - 74% (74%) (2)
(1) - Range for EBITDA multiples, discount rate, weightings, hard asset values and type certificate values are not meaningful.
(2) - Weighted average represents the total MBIA guarantees as a percentage of total instrument fair value.
Sensitivity of Significant Unobservable Inputs
The significant unobservable inputs used in the fair value measurement of the Company’s equity investments at fair value are the discount rate, EBITDA multiple and EBITDA royalty share. The fair value of equity investments is determined as the mid-point of a range of valuation scenarios. If there had been lower or higher EBITDA multiple or EBITDA royalty share, the value of equity investments would have been lower or higher, respectively. If there had been a lower or higher discount rate, the value of equity investments would have been higher or lower, respectively. Prior to the second quarter of 2024, the significant unobservable inputs used in the fair value measurement of the Company’s equity investments at fair value were the EBITDA multiples, discount rate, hard asset values and type certificate values. The fair value of equity investments was determined by taking a weighted average of valuation scenarios. If there had been lower or higher EBITDA multiples, hard asset values or type certificate values, the value of equity investments would have been lower or higher, respectively. If there had been a lower or higher discount rate, the value of equity investments would have been higher or lower, respectively.
The significant unobservable input used in the fair value measurement of the loans carried at fair value is the discount rate. The loans carried at fair value is determined by discounting cash flows. The discount rate includes the credit spread which primarily reflects the credit quality of the obligor. If there had been a lower or higher discount rate, the value of loans carried at fair value would have been higher or lower, respectively.
The significant unobservable input used in the fair value measurement of the Company’s residential loans receivable at fair value of consolidated VIEs is the impact of the financial guarantee. The fair value of residential loans receivable is calculated by subtracting the value of the financial guarantee from the market value of similar instruments to that of the VIE liabilities. The value of a financial guarantee is estimated by the Company as the present value of expected cash payments, net of recoveries, under the policy. If there had been a lower expected cash flow on the underlying loans receivable of the VIE, the value of the financial guarantee provided by the Company under the insurance policy would have been higher. This would have resulted in a lower fair value of the residential loans receivable in relation to the obligations of the VIE.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 7: Fair Value of Financial Instruments (continued)
As of December 31, 2023, the significant unobservable input used in the fair value measurement of the Company’s VIE notes of consolidated VIEs was the impact of the financial guarantee. The fair value of VIE notes was calculated by adding the value of the financial guarantee to the market value of VIE assets. When the VIE note is backed by RMBS, the fair value of the VIE liability is calculated by applying the market value of similar instruments to that of the VIE liabilities. The value of a financial guarantee was estimated by the Company as the present value of expected cash payments under the policy. If the value of the guarantee provided by the Company to the obligations issued by the VIE had increased, the credit support would have added value to the liabilities of the VIE. This would have resulted in an increased fair value of the liabilities of the VIE.
Fair Value Measurements
The following tables present the fair value of the Company’s assets (including short-term investments) and liabilities measured and reported at fair value on a recurring basis as of December 31, 2024 and 2023:
Fair Value Measurements at Reporting Date Using
Quoted Prices in
Significant
Active Markets
Other
Significant
for Identical
Observable
Unobservable
Balance as of
Assets
Inputs
Inputs
December 31,
In millions
(Level 1)
(Level 2)
(Level 3)
Assets:
Fixed-maturity investments:
U.S. Treasury and government agency
$
$
-
$
-
$
State and municipal bonds
-
-
Foreign governments
-
-
Corporate obligations
-
(1)
Mortgage-backed securities:
Residential mortgage-backed agency
-
-
Residential mortgage-backed non-agency
-
-
Commercial mortgage-backed
-
-
Asset-backed securities:
Collateralized debt obligations
-
-
Other asset-backed
-
-
Total fixed-maturity investments
1,356
Money market securities
-
-
Equity investments
(2)
Cash and cash equivalents
-
-
Assets of consolidated VIEs:
Cash
-
-
Loans receivable at fair value:
Residential loans receivable
-
-
Total assets
$
$
$
$
1,769
Liabilities:
Medium-term notes
$
-
$
-
$
$
Other liabilities:
Insured credit derivatives
-
-
Liabilities of consolidated VIEs:
Variable interest entity notes
-
-
Currency derivatives
-
-
Total liabilities
$
-
$
$
$
(1) - Includes loans carried at fair value of $15 million.
(2) - Includes $10 million of an exchange-traded bond fund that seeks to track the investment results of an index composed of U.S. dollar-denominated, high yield corporate bonds. The fund is measured at fair value by applying the net asset value per share practical expedient, and is not required to be classified in the fair value hierarchy.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 7: Fair Value of Financial Instruments (continued)
Fair Value Measurements at Reporting Date Using
Quoted Prices in
Significant
Active Markets
Other
Significant
for Identical
Observable
Unobservable
Balance as of
Assets
Inputs
Inputs
December 31,
In millions
(Level 1)
(Level 2)
(Level 3)
Assets:
Fixed-maturity investments:
U.S. Treasury and government agency
$
$
$
-
$
State and municipal bonds
-
-
Foreign governments
-
-
Corporate obligations
-
Mortgage-backed securities:
Residential mortgage-backed agency
-
-
Residential mortgage-backed non-agency
-
-
Commercial mortgage-backed
-
-
Asset-backed securities:
Collateralized debt obligations
-
-
Other asset-backed
-
-
Total fixed-maturity investments
1,033
1,739
Money market securities
-
-
Equity investments
Cash and cash equivalents
-
-
Assets of consolidated VIEs:
Mortgage-backed securities:
Residential mortgage-backed non-agency
-
-
Commercial mortgage-backed
-
-
Asset-backed securities:
Collateralized debt obligations
-
-
Other asset-backed
-
-
Cash
-
-
Loans receivable at fair value:
Residential loans receivable
-
-
Other assets
-
-
Total assets
$
$
1,063
$
$
2,094
Liabilities:
Medium-term notes
$
-
$
-
$
$
Other liabilities:
Insured credit derivatives
-
-
Non-insured interest rate derivatives
-
-
Liabilities of consolidated VIEs:
Variable interest entity notes
-
-
Currency derivatives
-
-
Total liabilities
$
-
$
$
$
Level 3 assets at fair value as of December 31, 2024 and 2023 represented approximately 5% and 7%, respectively, of total assets measured at fair value. Level 3 liabilities at fair value as of December 31, 2024 and 2023 represented approximately 99% of total liabilities measured at fair value.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 7: Fair Value of Financial Instruments (continued)
The following tables present the fair values and carrying values of the Company’s assets and liabilities that are disclosed at fair value but not reported at fair value on the Company’s consolidated balance sheets as of December 31, 2024 and 2023. The majority of the financial assets and liabilities that the Company requires fair value reporting or disclosures are valued based on the Company’s or a third party’s estimate of discounted cash flow model estimates, or quoted market values for identical or similar products.
Fair Value Measurements at Reporting Date Using
Quoted Prices in
Significant
Significant
Fair Value
Carry Value
Active Markets for
Other Observable
Unobservable
Balance as of
Balance as of
Identical Assets
Inputs
Inputs
December 31,
December 31,
In millions
(Level 1)
(Level 2)
(Level 3)
Assets:
Other investments
$
-
$
-
$
$
$
Total assets
$
-
$
-
$
$
$
Liabilities:
Long-term debt
$
-
$
$
-
$
$
2,741
Medium-term notes
-
-
(1)
Investment agreements
-
-
Liabilities of consolidated VIEs:
Variable interest entity loans payable
-
-
Total liabilities
$
-
$
$
$
$
3,360
Financial Guarantees:
Gross liability (recoverable)
$
-
$
-
$
$
$
Ceded recoverable (liability)
-
-
(1) - The carry value includes the complex interest calculations embedded in certain MTNs elected to be accounted for as separate derivatives that are reported together with the host contract. As of December 31, 2024, the Company had no embedded derivative assets and had embedded derivative liabilities of $2 million.
Fair Value Measurements at Reporting Date Using
Quoted Prices in
Significant
Significant
Fair Value
Carry Value
Active Markets for
Other Observable
Unobservable
Balance as of
Balance as of
Identical Assets
Inputs
Inputs
December 31,
December 31,
In millions
(Level 1)
(Level 2)
(Level 3)
Assets:
Other investments
$
-
$
-
$
$
$
Total assets
$
-
$
-
$
$
$
Liabilities:
Long-term debt
$
-
$
$
-
$
$
2,585
Medium-term notes
-
-
(1)
Investment agreements
-
-
Liabilities of consolidated VIEs:
Variable interest entity loans payable
-
-
Total liabilities
$
-
$
$
$
$
3,264
Financial Guarantees:
Gross liability (recoverable)
$
-
$
-
$
$
$
Ceded recoverable (liability)
-
-
(1) - The carry value includes the complex interest calculations embedded in certain MTNs elected to be accounted for as separate derivatives that are reported together with the host contract. As of December 31, 2023, the Company had embedded derivative assets and liabilities of $1 million and $3 million, respectively.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 7: Fair Value of Financial Instruments (continued)
The following tables present information about changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the years ended December 31, 2024 and 2023:
Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Year Ended December 31, 2024
Change in
Change in
Unrealized
Unrealized
Gains
Gains
(Losses) for
(Losses) for
the Period
the Period
Included in
Included in
Total
Earnings for
OCI for
Gains /
Unrealized
Assets
Assets
(Losses)
Gains /
still held
still held
Balance
Included
(Losses)
Transfers
Transfers
as of
as of
Beginning
in
Included
into
out of
Ending
December 31,
December 31,
In millions
of Year
Earnings
in OCI(1)
Purchases
Issuances
Settlements
Sales
Level 3
Level 3
Balance
2024(1)
Assets:
Corporate obligations
$
$
(2
)
$
-
$
$
-
$
-
$
-
$
-
$
-
$
(3)
$
-
$
-
Equity investments
(56
)
-
-
-
-
-
-
-
(56
)
-
Assets of consolidated VIEs:
Loans receivable -
residential
(4
)
-
-
-
(3
)
-
-
-
(6
)
-
Other
-
-
-
-
-
(2
)
-
-
-
-
-
Total assets
$
$
(62
)
$
-
$
$
-
$
(3
)
$
(2
)
$
-
$
-
$
$
(62
)
$
-
Change in
Change in
Unrealized
Unrealized
(Gains)
(Gains)
Losses for
Losses for
the Period
the Period
Included in
Included in
Total
Unrealized
Earnings for
OCI for
(Gains) /
(Gains) /
Liabilities
Liabilities
Losses
Losses
still held
still held
Balance,
Included
Included in
Transfers
Transfers
as of
as of
Beginning
in
Credit Risk
into
out of
Ending
December 31,
December 31,
In millions
of Year
Earnings
in OCI(2)
Purchases
Issuances
Settlements
Sales
Level 3
Level 3
Balance
2024(2)
Liabilities:
Medium-term notes
$
$
(4
)
$
(1
)
$
-
$
-
$
-
$
-
$
-
$
-
$
$
(4
)
$
(1
)
Liabilities of consolidated VIEs:
VIE notes
(27
)
-
-
(40
)
(20
)
-
-
-
Currency derivatives
(8
)
-
-
-
-
-
-
-
(8
)
-
Total liabilities
$
$
$
(28
)
$
-
$
-
$
(40
)
$
(20
)
$
-
$
-
$
$
(12
)
$
-
(1) - Reported within the "Unrealized gains (losses) on available-for-sale securities" on the Company's consolidated statements of comprehensive income (loss).
(2) - Reported within the "Instrument-specific credit risk of liabilities measured at fair value" on the Company's consolidated statements of comprehensive income (loss).
(3) - Includes loans carried at fair value of $15 million.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 7: Fair Value of Financial Instruments (continued)
Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis for the Year Ended December 31, 2023
Change in
Change in
Unrealized
Unrealized
Gains
Gains
(Losses) for
(Losses) for
the Period
the Period
Included in
Included in
Total
Earnings for
OCI for
Gains /
Unrealized
Assets
Assets
(Losses)
Gains /
still held
still held
Balance,
Included
(Losses)
Transfers
Transfers
as of
as of
Beginning
in
Included
into
out of
Ending
December 31,
December 31,
In millions
of Year
Earnings
in OCI(1)
Purchases
Issuances
Settlements
Sales
Level 3
Level 3
Balance
2023(1)
Assets:
Corporate obligations
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
$
-
$
$
-
$
-
Equity securities
(7
)
-
-
-
-
-
-
-
(7
)
-
Assets of consolidated VIEs:
Loans receivable -
residential
(33
)
-
-
-
(9
)
(1
)
-
-
-
Other
-
-
-
-
(25
)
-
-
(1
)
-
Total assets
$
$
(36
)
$
-
$
-
$
-
$
(9
)
$
(26
)
$
$
-
$
$
(7
)
$
-
Change in
Change in
Unrealized
Unrealized
(Gains)
(Gains)
Losses for
Losses for
the Period
the Period
Included in
Included in
Total
Earnings for
OCI for
(Gains) /
Unrealized
Liabilities
Liabilities
Losses
(Gains) /
still held
still held
Balance,
Included
Losses
Transfers
Transfers
as of
as of
Beginning
in
Included
into
out of
Ending
December 31,
December 31,
In millions
of Year
Earnings
in OCI(2)
Purchases
Issuances
Settlements
Sales
Level 3
Level 3
Balance
2023(2)
Liabilities:
Medium-term notes
$
$
$
(6
)
$
-
$
-
$
-
$
-
$
-
$
-
$
$
$
(6
)
Liabilities of consolidated VIEs:
VIE notes
(38
)
-
(46
)
(97
)
-
-
Currency derivatives
-
-
-
-
-
-
-
-
Total liabilities
$
$
$
(44
)
$
-
$
$
(46
)
$
(97
)
$
-
$
-
$
$
$
(4
)
(1) - Reported within the "Unrealized gains (losses) on available-for-sale securities" on the Company's consolidated statements of comprehensive income (loss).
(2) - Reported within the "Instrument-specific credit risk of liabilities measured at fair value" on the Company's consolidated statements of comprehensive income (loss).
For the years ended December 31, 2024 and 2023, sales include the impact of the deconsolidation of VIEs. Refer to “Note 4: Variable Interest Entities” for additional information about the deconsolidation of VIEs.
For the year ended December 31, 2024, there were no transfers into or out of Level 3.
For the year ended December 31, 2023, transfers into Level 3 and out of Level 2 were related to corporate obligations, where inputs, which are significant to their valuation, became unobservable during the year. These inputs included spreads, prepayment speeds, default speeds, default severities, yield curves observable at commonly quoted intervals, and market corroborated inputs. There were no transfers out of Level 3.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 7: Fair Value of Financial Instruments (continued)
Gains and losses (realized and unrealized) included in earnings relating to Level 3 assets and liabilities for the years ended December 31, 2024, 2023 and 2022 are reported on the Company’s consolidated statements of operations as follows:
Change in Unrealized Gains (Losses)
for the Period Included in Earnings
Total Gains (Losses)
for Assets and Liabilities still
In millions
Included in Earnings
held as of December 31,
Revenues:
Net gains (losses) on financial instruments
at fair value and foreign exchange
$
(54
)
$
(12
)
$
$
(52
)
$
(12
)
$
Revenues of consolidated VIEs (1)
(36
)
(62
)
(10
)
(10
)
Total
$
(90
)
$
(74
)
$
$
(50
)
$
(22
)
$
(1) - Reported within "Net gains (losses) on financial instruments at fair value and foreign exchange-VIE" and "Other net realized gains (losses)-VIE" on the Company's consolidated statements of operations.
Derivative Instruments
The Company's derivatives are comprised of insured swaps, primarily consisting of insured interest rate swaps and inflation-linked swaps related to its insured debt issuance, embedded derivatives containing the complex interest rate calculations and a cross currency swap entered into by a consolidated VIE. The following table presents the effect of derivative instruments on the Company's consolidated statements of operations for the years ended December 31, 2024, 2023 and 2022:
In millions
Derivatives Not Designated
Years Ended December 31,
as Hedging Instruments
Location of Gain (Loss) Recognized in Income on Derivative
Insured swaps
Net gains (losses) on financial instruments at fair value and foreign exchange
$
-
$
-
$
Interest rate swaps
Net gains (losses) on financial instruments at fair value and foreign exchange
-
Currency swaps-VIE
Net gains (losses) on financial instruments at fair value and foreign exchange-VIE
(7
)
(15
)
Total
$
$
$
Fair Value Option
The Company elected to record at fair value certain financial instruments, including certain equity investments and financial instruments that are consolidated in connection with the adoption of the accounting guidance for consolidation of VIEs.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 7: Fair Value of Financial Instruments (continued)
The following table presents the gains and (losses) included in the Company's consolidated statements of operations for the years ended December 31, 2024, 2023 and 2022 for financial instruments for which the fair value option was elected:
Years Ended December 31,
In millions
Investments carried at fair value (1)
$
(55
)
$
$
(17
)
Fixed-maturity securities held at fair value-VIE (2)
(1
)
(4
)
(5
)
Loans receivable and other instruments at fair value:
Residential mortgage loans (2)
(4
)
(33
)
Other assets-VIE (2)
-
Medium-term notes (1)
(5
)
Variable interest entity notes (2)
(40
)
(25
)
(20
)
(1) - Reported within "Net gains (losses) on financial instruments at fair value and foreign exchange" on the Company's consolidated statements of operations.
(2) - Reported within "Net gains (losses) on financial instruments at fair value and foreign exchange-VIE" and "Other net realized gains (losses)-VIE" on the Company's consolidated statements of operations.
The following table reflects the difference between the aggregate fair value and the aggregate remaining contractual principal balance outstanding as of December 31, 2024 and 2023 for loans and notes for which the fair value option was elected:
As of December 31, 2024
As of December 31, 2023
Contractual
Contractual
Outstanding
Fair
Outstanding
Fair
In millions
Principal
Value
Difference
Principal
Value
Difference
Loans receivable at fair value:
Residential mortgage loans - current
$
$
$
-
$
$
$
-
Residential mortgage loans (90 days or more past due)
Corporate loans - current
-
-
-
Total loans receivable at fair value
$
$
$
$
$
$
Variable interest entity notes
$
$
$
$
$
$
Medium-term notes
$
$
$
$
$
$
The differences between the contractual outstanding principal and the fair values on residential mortgage loans receivable, VIE notes and MTNs in the preceding table are primarily attributable to credit risk. This is due to the high rate of defaults on loans (90 days or more past due), the collateral supporting the VIE notes and the nonperformance risk of the Company on its MTNs, all of which resulted in depressed pricing of the financial instruments.
Instrument-Specific Credit Risk of Liabilities Elected Under the Fair Value Option
As of December 31, 2024 and 2023, the cumulative changes in instrument-specific credit risk of liabilities elected under the fair value option were gains of $27 million and losses of $1 million, respectively, reported in AOCI on the Company’s consolidated balance sheets. Changes in value attributable to instrument-specific credit risk were derived principally from changes in the Company’s credit spread. For liabilities of VIEs, additional adjustments to instrument-specific credit risk are required, which is determined by an analysis of deal specific performance of collateral that support these liabilities. During the years ended December 31, 2024, 2023 and 2022, the portions of instrument-specific credit risk included in AOCI that were recognized in earnings due to settlement of liabilities were losses of $28 million, $45 million and $18 million, respectively.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 8: Investments
Investments, excluding equity instruments and those elected under the fair value option, primarily consist of debt instruments classified as AFS.
The following tables present the amortized cost, allowance for credit losses, corresponding gross unrealized gains and losses and fair value for AFS investments in the Company’s consolidated investment portfolio as of December 31, 2024 and 2023:
December 31, 2024
Allowance
Gross
Gross
Amortized
for Credit
Unrealized
Unrealized
Fair
In millions
Cost
Losses
Gains
Losses
Value
AFS Investments
Fixed-maturity investments:
U.S. Treasury and government agency
$
$
-
$
-
$
(19
)
$
State and municipal bonds
-
(11
)
Foreign governments
-
-
(2
)
Corporate obligations
-
(106
)
Mortgage-backed securities:
Residential mortgage-backed agency
-
-
(16
)
Residential mortgage-backed non-agency
-
(5
)
Commercial mortgage-backed
-
-
-
Asset-backed securities:
Collateralized debt obligations
-
-
Other asset-backed
-
-
(1
)
Total AFS investments
$
1,391
$
-
$
$
(160
)
$
1,236
December 31, 2023
Allowance
Gross
Gross
Amortized
for Credit
Unrealized
Unrealized
Fair
In millions
Cost
Losses
Gains
Losses
Value
AFS Investments
Fixed-maturity investments:
U.S. Treasury and government agency
$
$
-
$
$
(18
)
$
State and municipal bonds
-
(8
)
Foreign governments
-
(2
)
Corporate obligations
-
(90
)
Mortgage-backed securities:
Residential mortgage-backed agency
-
-
(14
)
Residential mortgage-backed non-agency
-
(5
)
Commercial mortgage-backed
-
-
-
Asset-backed securities:
Collateralized debt obligations
-
(1
)
Other asset-backed
-
-
(2
)
Total AFS investments
$
1,688
$
-
$
$
(140
)
$
1,557
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 8: Investments (continued)
The following table presents the distribution by contractual maturity of AFS fixed-maturity securities at amortized cost, net of allowance for credit losses, and fair value as of December 31, 2024. Contractual maturity may differ from expected maturity as borrowers may have the right to call or prepay obligations.
AFS Securities
Net
Amortized
Fair
In millions
Cost
Value
Due in one year or less
$
$
Due after one year through five years
Due after five years through ten years
Due after ten years
Mortgage-backed and asset-backed
Total fixed-maturity investments
$
1,391
$
1,236
Deposited and Pledged Securities
The fair value of securities on deposit with various regulatory authorities as of December 31, 2024 and 2023 was $11 million. These deposits are required to comply with state insurance laws.
Investment agreement obligations require the Company to pledge securities as collateral. Securities pledged in connection with investment agreements may not be repledged by the investment agreement counterparty. As of December 31, 2024 and 2023, the fair value of securities pledged as collateral for these investment agreements were $213 million and $241 million, respectively. The Company’s collateral as of December 31, 2024 consisted principally of U.S. Treasury and government agency and corporate obligations, and was primarily held with major U.S. banks.
Impaired Investments
The following tables present the non-credit related gross unrealized losses related to AFS investments as of December 31, 2024 and 2023:
December 31, 2024
Less than 12 Months
12 Months or Longer
Total
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
In millions
Value
Losses
Value
Losses
Value
Losses
AFS Investments
Fixed-maturity investments:
U.S. Treasury and government agency
$
$
(1
)
$
$
(18
)
$
$
(19
)
State and municipal bonds
(1
)
(10
)
(11
)
Foreign governments
-
(2
)
(2
)
Corporate obligations
(1
)
(105
)
(106
)
Mortgage-backed securities:
Residential mortgage-backed agency
-
(16
)
(16
)
Residential mortgage-backed non-agency
(1
)
(4
)
(5
)
Asset-backed securities:
Collateralized debt obligations
-
-
-
Other asset-backed
-
(1
)
(1
)
Total AFS investments
$
$
(4
)
$
$
(156
)
$
$
(160
)
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 8: Investments (continued)
December 31, 2023
Less than 12 Months
12 Months or Longer
Total
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
In millions
Value
Losses
Value
Losses
Value
Losses
AFS Investments
Fixed-maturity investments:
U.S. Treasury and government agency
$
$
-
$
$
(18
)
$
$
(18
)
State and municipal bonds
(1
)
(7
)
(8
)
Foreign governments
-
-
(2
)
(2
)
Corporate obligations
-
(90
)
(90
)
Mortgage-backed securities:
Residential mortgage-backed agency
-
-
(14
)
(14
)
Residential mortgage-backed non-agency
-
(5
)
(5
)
Commercial mortgage-backed
-
-
-
Asset-backed securities:
Collateralized debt obligations
-
-
(1
)
(1
)
Other asset-backed
-
-
(2
)
(2
)
Total AFS investments
$
$
(1
)
$
$
(139
)
$
$
(140
)
Gross unrealized losses on AFS investments increased as of December 31, 2024 compared with December 31, 2023 primarily due to higher interest rates, partially offset by tighter credit spreads.
With the weighting applied on the fair value of each security relative to the total fair value, the weighted average contractual maturity of securities in an unrealized loss position as of December 31, 2024 and 2023 was 15 and 14 years, respectively. As of December 31, 2024 and 2023, there were 366 and 450 securities, respectively, that were in an unrealized loss position for a continuous twelve- month period or longer, of which, fair values of 318 and 365 securities, respectively, were below book value by more than 5%.
The following table presents the distribution of securities in an unrealized loss position for a continuous twelve-month period or longer where fair value was below book value by more than 5% as of December 31, 2024:
AFS Securities
Percentage of Fair Value
Number of
Book Value
Fair Value
Below Book Value
Securities
(in millions)
(in millions)
> 5% to 15%
$
$
> 15% to 25%
> 25% to 50%
> 50%
-
-
Total
$
$
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 8: Investments (continued)
As of December 31, 2024, the Company concluded that it does not have the intent to sell securities in an unrealized loss position and it is more likely than not, that it would not have to sell these securities before recovery of their cost basis. In making this conclusion, the Company examined the cash flow projections for its investment portfolios, the potential sources and uses of cash in its businesses, and the cash resources available to its business other than sales of securities. It also considered the existence of any risk management or other plans as of December 31, 2024 that would require the sale of impaired securities. Impaired securities that the Company intends to sell before the expected recovery of such securities' fair values have been written down to fair value. For the years ended December 31, 2023 and 2022, impairment loss due to intent to sell securities in an unrealized position was $8 million and $21 million, respectively, and reported in "Other net realized gains (losses)" on the Company's consolidated results of operations.
Credit Losses on Investments
In calculating credit-related losses, the Company uses cash flow modeling based on the type of security. The Company’s cash flow analysis considers all sources of cash that support the payment of amounts owed by an issuer of a security. For AFS investments, this includes the credit enhancement taking into the consideration of cash expected to be provided by financial guarantors, including MBIA Corp. and National, resulting from an actual or potential insurance policy claim. In general, any change in the amount and/or timing of cash flows received or expected to be received, whether or not such cash flows are contractually defined, is reflected in the Company’s cash flow analysis for purposes of assessing a credit loss on an impaired security.
Each quarter, an internal committee, comprising staff that is independent of the Company’s evaluation process for determining credit losses of securities, reviews and approves the valuation of investments. Among other responsibilities, this committee ensures that the Company’s process for identifying and calculating allowance for credit losses, including the use of models and assumptions, is reasonable and complies with the Company’s internal policy.
Determination of Credit Losses on ABS, MBS and Corporate Obligations
AFS ABS investments are evaluated for credit loss using historical collateral performance, deal waterfall and structural protections, credit ratings, and forward looking projections of collateral performance based on business and economic conditions specific to each collateral type and risk. The underlying collateral is evaluated to identify any specific performance concerns, and stress scenarios are considered in forecasting ultimate returns of principal. Based on this evaluation, if a principal default is projected for a security, estimated future cash flows are discounted at the security’s effective interest rate used to recognize interest income on the security. For CDO investments, the Company uses the same tools as its RMBS investments discussed below, aggregating the bond level cash flows to the CDO investment level. If the present value of cash flows is less than the Company’s amortized cost for the security, the difference is recorded as a credit loss.
AFS RMBS investments are evaluated for credit losses using several quantitative tools. Loan level data is obtained and analyzed in a model that produces prepayment, default, and severity vectors. The model uses macro inputs, including housing price assumptions and interest rates. The vector outputs are used as inputs to a third-party cash flow model, which considers deal waterfall dynamics and structural features, to generate cash flows for an RMBS investment. The expected cash flows of the security are then discounted at the interest rate used to recognize interest income of the security to arrive at a present value amount. If the present value of the cash flows is less than the Company’s amortized cost for the investment, the difference is recorded as a credit loss.
For AFS corporate obligation investments, credit losses are evaluated using credit analysis techniques. The Company’s analysis includes a detailed review of a number of quantitative and qualitative factors impacting the value of an individual security. These factors include the interest rate of the security (fixed or floating), the security’s current market spread, any collateral supporting the security, the security’s position in the issuer’s capital structure, and credit rating upgrades or downgrades. Additionally, these factors include an assessment of various issuer-related credit metrics including market capitalization, earnings, cash flow, capitalization, interest coverage, leverage, liquidity and management. The Company’s analysis is augmented by comparing market prices for similar securities of other issuers in the same sector, as well as any recent corporate or government actions that may impact the ultimate return of principal. If the Company determines that a principal default is projected, a recovery analysis is performed using the above data. If the Company’s estimated recovery value for the security is less than its amortized cost, the difference is recorded as a credit loss.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 8: Investments (continued)
Determination of Credit Losses Guaranteed by the Company and Other Third-Party Guarantors
The Company does not recognize credit losses on securities insured by MBIA Corp. and National since those securities, whether or not owned by the Company, are evaluated for impairments in accordance with its loss reserving policy. Refer to "Note 2: Significant Accounting Policies" included herein for information about the Company's loss reserving policy and "Note 6: Loss and Loss Adjustment Expense Reserves" for information about loss reserves.
The following table provides information about securities held by the Company as of December 31, 2024 that were in an unrealized loss position and insured by a financial guarantor, along with the amount of insurance loss reserves corresponding to the par amount owned by the Company. The Company did not hold any securities in an unrealized loss position that were insured by a third-party financial guarantor as of December 31, 2024.
Unrealized
Insurance Loss
In millions
Fair Value
Loss
Reserve (1)
Mortgage-backed
$
$
(5
)
$
Corporate obligations
(45
)
-
Total
$
$
(50
)
$
(1) - Insurance loss reserve estimates are based on the proportion of par value owned to the total amount of par value insured and are discounted using a discount rate equal to the risk-free rate applicable to the currency and weighted average remaining life of the insurance contract and may differ from the fair value.
Sales of Available-for-Sale Investments
The proceeds and the gross realized gains and losses from sales of fixed-maturity securities held as AFS for the years ended December 31, 2024, 2023 and 2022 are as follows:
Years Ended December 31,
In millions
Proceeds from sales
$
$
$
1,100
Gross realized gains
$
$
$
Gross realized losses
$
(4
)
$
(79
)
$
(47
)
Equity and Trading Investments
Unrealized gains and losses recognized on equity and trading investments held as of the end of each period for the years ended December 31, 2024, 2023 and 2022 are as follows:
Years Ended December 31,
In millions
Net gains (losses) recognized during the period on equity and trading securities
$
(50
)
$
(2
)
$
(21
)
Less:
Net gains (losses) recognized during the period on equity and trading securities sold during the period
-
-
(6
)
Unrealized gains (losses) recognized during the period on equity and trading securities still held at the reporting date
$
(50
)
$
(2
)
$
(15
)
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 9: Debt
Long-Term Debt
The Company’s long-term debt consists of notes and debentures including accrued interest as follows:
As of December 31,
In millions
7.000% Debentures due 2025
$
$
7.150% Debentures due 2027
6.625% Debentures due 2028
5.700% Senior Notes due 2034 (1)
Surplus Notes due 2033 (2)
Accrued interest
1,535
1,378
Debt issuance costs
(7
)
(7
)
Total
$
2,741
$
2,585
(1) - Callable anytime at the greater of par or the present value of the remaining scheduled payments of principal and interest.
(2) - Contractual interest rate is based on three-month term Secured Overnight Financing Rate ("SOFR") plus 11.52161% at each future reset date.
During 2024, MBIA Inc. repurchased $10 million and $1 million principal amounts of MBIA Inc. 7.000% Debentures due 2025 from National and MBIA Corp., respectively, and $5 million principal amount of MBIA Inc. 7.150% Debentures due 2027 from MBIA Corp. As of December 31, 2024, National owned $308 million principal amount of MBIA Inc. 5.700% Senior Notes due 2034 and MBIA Corp. owned $29 million principal amount of MBIA Inc. 6.625% Debentures due 2028; and MBIA Inc., through its corporate segment, owned $13 million of MBIA Corp. surplus notes. These amounts are eliminated in the Company's consolidated financial statements.
Interest and principal payments on the surplus notes are subject to prior approval by the NYSDFS. From the January 15, 2013 interest payment to the present, MBIA Corp.’s requests for approval of the note interest payments have not been approved by the NYSDFS. MBIA Corp. provides notice to the Fiscal Agent when it will not make a scheduled interest payment. The deferred interest payment will become due on the first business day on or after which MBIA Corp. obtains approval from the NYSDFS to make such payment. No interest will accrue on the deferred interest. The surplus notes were callable at par at the option of MBIA Corp. on the fifth anniversary of the date of issuance, and are callable at par on January 15, 2028 and on any other date at par plus a make-whole amount, subject to prior approval by the Superintendent and other restrictions. The cash received from the issuance of surplus notes was used for general business purposes and the deferred debt issuance costs are being amortized over the term of the surplus notes.
The aggregate maturities of principal payments of long-term debt obligations in each of the next five years ending December 31, and thereafter, are as follows:
In millions
Thereafter
Total
Corporate debt
$
$
-
$
$
$
-
$
$
Surplus Notes due 2033
-
-
-
-
-
Total debt obligations due
$
$
-
$
$
$
-
$
$
1,213
Investment Agreements
Certain investment agreements provide for early termination, including, in some cases, with make-whole payments, upon certain contingent events including the bankruptcy of MBIA Inc. or the commencement of an insolvency proceeding with respect to MBIA Corp. Upon the occurrence of certain contractually agreed-upon events, some of these funds may be withdrawn by the investor prior to their contractual maturity dates. All of the investment agreements have been collateralized in accordance with the contractual terms.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 9: Debt (continued)
Investment agreements have been issued with fixed interest rates in U.S. dollars. As of December 31, 2024 and 2023, the annual interest rates on these agreements ranged from 4.78% to 6.88% and the weighted average interest rates were 6.01% and 6.06%, respectively. Expected principal payments due under investment agreements in each of the next five years ending December 31, and thereafter, based upon contractual maturity dates, are as follows:
Principal
In millions
Amount
Maturity date:
$
-
Thereafter (through 2037)
Total expected principal payments (1)
$
Less discount and other adjustments (2)
Total
$
(1)- Amounts reflect principal due at maturity for investment agreements issued at a discount.
(2)- Discount is net of carrying amount adjustment of $2 million and accrued interest adjustment of $4 million.
Medium-Term Notes
MTNs have been issued with fixed or floating interest rates in U.S. dollars or Euros. Floating rates on Euro-denominated MTNs are floored at 0% when the actual floating rates become negative. As of December 31, 2024, the interest rates of the MTNs ranged from 2.50% to 5.90% and the weighted average interest rate was 5.17%. As of December 31, 2023, the interest rates of the MTNs ranged from 2.21% to 5.90% and the weighted average interest rate was 4.76%. Expected principal payments due under MTN obligations in each of the next five years ending December 31, and thereafter, based upon contractual maturity dates, are as follows:
Principal
In millions
Amount
Maturity date:
$
-
-
-
Thereafter (through 2035)
Total expected principal payments (1)
$
Less discount and other adjustments (2)
Total
$
(1)- Amounts reflect principal due at maturity for notes issued at a discount.
(2)- Discount is net of carrying amount and market value adjustments of $9 million and accrued interest adjustment of $3 million.
Variable Interest Entity Debt
VIE notes elected to be recorded at fair value are debt instruments that were issued primarily in U.S. dollars by VIEs consolidated within the Company’s international and structured finance insurance segment. These VIE notes consist of debt instruments issued by issuer-sponsored consolidated VIEs collateralized by assets held by those consolidated VIEs. Holders of insured obligations of issuer-sponsored VIEs do not have recourse to the general assets of the Company. In the event of non-payment of an obligation issued by a consolidated VIE, the Company is obligated to pay principal and interest, when due, on MBIA-insured obligations only.
As of December 31, 2024 and 2023, the aggregate unpaid contractual principal of consolidated VIE notes were $45 million and $328 million, respectively. As of December 31, 2024, the unpaid contractual principal of MBIA-insured consolidated VIE notes was $36 million and as of December 31, 2023, the unpaid contractual principal of MBIA-insured consolidated VIE notes was $96 million, which excluded liabilities where the Company’s insured exposure had been fully offset by way of loss remediation transactions. Refer to “Note 7: Fair Value of Financial Instruments” for information about the fair values of consolidated VIE notes.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 9: Debt (continued)
Expected principal payments due under MBIA-insured consolidated VIE notes in each of the next five years ending December 31, and thereafter, based upon expected contractual maturity dates, are as follows:
Insured
Principal
In millions
Amount
Maturity date:
$
Thereafter (through 2035)
Total
$
Following the creation of a litigation trust established to liquidate the Zohar Collateral pursuant to a plan of liquidation that became effective in August of 2022, certain lenders agreed to make term loans to fund the trust that the Company consolidates as a VIE, in an aggregate amount not to exceed the commitment amount. Loans made to the trust bear interest at 18% per annum, mature on August 2, 2027, and can be prepaid at any time in part or in whole, in some cases subject to certain fees. Accrued interest due on the interest payment date is capitalized and added to the outstanding principal in lieu of cash payment. Loans are secured by recoveries from the litigation claims transferred into the trust. Proceeds received from the settlement of the litigation claims are first applied to the outstanding loan balances and, to the extent of any excess, distributed to the trust beneficiaries or used to permanently reduce the unused commitment amounts. As of December 31, 2024 and 2023 the outstanding balance was $12 million and $3 million, respectively. As of December 31, 2024, there was no unused commitment amount available to the litigation trust.
Note 10: Income Taxes
Income (loss) from continuing operations before provision (benefit) for income taxes consisted of:
Years Ended December 31,
In millions
Domestic
$
(441
)
$
(484
)
$
(148
)
Foreign
-
-
-
Income (loss) from continuing operations before income taxes
$
(441
)
$
(484
)
$
(148
)
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 10: Income Taxes (continued)
The Company files a consolidated tax return that includes all of its U.S. subsidiaries and foreign branches. The Company also files tax returns in Mexico and in various state and local jurisdictions. Income tax expense (benefit) on income (loss) and shareholder's equity, net of changes in the Company's valuation allowance, consisted of:
Years Ended December 31,
In millions
Current taxes:
Federal
$
-
$
-
$
-
State
-
-
-
Foreign
-
-
Deferred taxes:
Federal
-
-
-
Foreign
-
-
-
Provision (benefit) for income taxes
$
-
$
-
$
A reconciliation of the U.S. federal statutory tax rate to the Company's effective income tax rate for the years ended December 31, 2024, 2023 and 2022 is presented in the following table:
Years Ended December 31,
Federal income tax computed at the statutory rate
21.0
%
21.0
%
21.0
%
Increase (reduction) in taxes resulting from:
Change in valuation allowance
(18.9
)%
(18.8
)%
(9.4
)%
Deferred inventory adjustments
(0.9
)%
(1.3
)%
(9.3
)%
Excessive Remuneration Sec. 162(m)
(0.4
)%
(1.1
)%
(1.7
)%
Other
(0.8
)%
0.2
%
(1.1
)%
Effective tax rate
0.0
%
0.0
%
(0.5
)%
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 10: Income Taxes (continued)
Deferred Tax Asset, Net of Valuation Allowance
The tax effects of temporary differences that give rise to deferred tax assets and liabilities as of December 31, 2024 and 2023 are presented in the following table:
As of
In millions
December 31, 2024
December 31, 2023
Deferred tax liabilities:
Unearned premium revenue
$
$
Deferred acquisition costs
Net gains on financial instruments at fair value and foreign exchange
Net deferred taxes on VIEs
Total gross deferred tax liabilities
Deferred tax assets:
Compensation and employee benefits
Accrued interest
Loss and loss adjustment expense reserves
Net operating loss
Foreign tax credits
Other-than-temporary impairments and capital loss carryforward
Net unrealized gains and losses in accumulated other comprehensive income
Other
Total gross deferred tax assets
1,450
1,399
Valuation allowance
1,380
1,245
Net deferred tax asset
$
-
$
-
The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of its existing deferred tax assets. A significant piece of objective negative evidence evaluated was the Company having a three-year cumulative loss. Such objective evidence limits the ability to consider other subjective evidence, such as the Company’s projections of pre-tax income. On the basis of this evaluation, the Company has recorded a full valuation allowance against its net deferred tax asset of $1.4 billion and $1.2 billion as of December 31, 2024 and 2023, respectively. The Company will continue to analyze the valuation allowance on a quarterly basis.
Net operating losses (“NOLs”) of property and casualty insurance companies are permitted to be carried back two years and carried forward 20 years. NOLs of property and casualty insurance companies are not subject to the 80 percent taxable income limitation and indefinite lived carryforward period required by the Tax Cuts and Jobs Act applicable to general corporate NOLs.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 10: Income Taxes (continued)
Treatment of Undistributed Earnings of Certain Foreign Subsidiaries - "Accounting for Income Taxes - Special Areas"
The Company's amount of undistributed earnings of certain foreign subsidiaries was not material as of December 31, 2024.
Accounting for Uncertainty in Income Taxes
The Company’s policy is to record and disclose any change in unrecognized tax benefit (“UTB”) and related interest and/or penalties to income tax in the consolidated statements of operations. The Company includes interest as a component of income tax expense. As of December 31, 2024 and 2023, the Company had no significant UTB.
Federal income tax returns through 2011 have been examined or surveyed. As of December 31, 2024, the Company’s NOL is approximately $4.4 billion. NOLs generated prior to tax reform and property and casualty NOLs generated after tax reform will expire between tax years 2026 through 2044. As of December 31, 2024, the Company has a foreign tax credit carryforward of $55 million, which will expire between tax years 2025 through 2033.
Section 382 of the Internal Revenue Code
Included in the Company’s Amended By-Laws are restrictions on certain acquisitions of Company stock that otherwise may have increased the likelihood of an ownership change within the meaning of Section 382 of the Internal Revenue Code. With certain exceptions, the By-Laws generally prohibit a person from becoming a “Section 382 five-percent shareholder” by acquiring, directly or by attribution, 5% or more of the outstanding shares of the Company’s common stock.
Inflation Reduction Act
On August 16, 2022, the Inflation Reduction Act (“IRA”) was signed into law and includes several tax changes, notably a new 15% minimum tax on the book income of large corporations and a 1% excise tax on most stock buybacks. The IRA did not have a material impact on the Company’s financial results. Refer to “Note 16: Common and Preferred Stock” for further information about excise tax on stock buybacks.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 11: Business Segments
As defined by segment reporting, an operating segment is a component of a company (i) that engages in business activities from which it earns revenue and incurs expenses, (ii) whose operating results are regularly reviewed by the Chief Operating Decision Maker ("CODM") to assess the performance of the segment and to make decisions about the allocation of resources to the segment and, (iii) for which discrete financial information is available. The Company manages its businesses across three operating segments: 1) U.S. public finance insurance; 2) corporate; and 3) international and structured finance insurance. The Company's CODM is the Chief Executive Officer. The Company evaluates the performance of all of its reportable segments based on each segment's income (loss) from continuing operations before income taxes. The CODM uses each segment's income (loss) from continuing operations before income taxes to allocate resources, including employees and financial or capital resources. Operating decisions are made during the Company's annual planning and quarterly forecasting processes, and after considering budget-to-actual variances on a quarterly basis using the income (loss) from continuing operations before income taxes. The following sections provide a description of each of the Company’s reportable operating segments.
U.S. Public Finance Insurance
The Company’s U.S. public finance insurance portfolio is managed through National. The financial guarantees issued by National provide unconditional and irrevocable guarantees of the payment of the principal of, and interest or other amounts owing on, U.S. public finance insured obligations when due. The obligations are not subject to acceleration, except that National may have the right, at its discretion, to accelerate insured obligations upon default or otherwise. National’s guarantees insure municipal bonds, including tax-exempt and taxable indebtedness of U.S. political subdivisions, as well as utilities, airports, health care institutions, higher educational facilities, housing authorities and other similar agencies and obligations issued by private entities that finance projects that serve a substantial public purpose. Municipal bonds and privately issued bonds used for the financing of public purpose projects are generally supported by taxes, assessments, fees or tariffs related to the use of these projects, lease payments or other similar types of revenue streams.
Corporate
The Company’s corporate segment consists of general corporate activities, including providing support services to MBIA Inc.’s subsidiaries as well as asset and capital management. Support services are provided by the Company’s service company, MBIA Services, and include, among others, management, legal, accounting, treasury, information technology, and insurance portfolio surveillance, on a fee-for-service basis. MBIA Services is compensated for services at cost and its net revenues and expenses are generally managed to break-even. Capital management includes activities related to servicing obligations issued by MBIA Inc. and its subsidiary, MBIA Global Funding, LLC (“GFL”). MBIA Inc. issued debt to finance the operations of the MBIA group. GFL raised funds through the issuance of MTNs with varying maturities, which were in turn guaranteed by MBIA Corp. GFL lent the proceeds of these MTN issuances to MBIA Inc. MBIA Inc. also provided customized investment agreements, guaranteed by MBIA Corp., for bond proceeds and other public funds for such purposes as construction, loan origination, escrow and debt service or other reserve fund requirements. The Company has ceased issuing new MTNs and investment agreements and the outstanding liability balances and corresponding asset balances have declined over time as liabilities matured, terminated or were called or repurchased. All of the debt within the corporate segment is managed collectively and is serviced by available liquidity.
International and Structured Finance Insurance
The Company’s international and structured finance insurance segment is managed through MBIA Corp. The financial guarantees issued by MBIA Corp. generally provide unconditional and irrevocable guarantees of the payment of principal of, and interest or other amounts owing on, non-U.S. public finance and global structured finance insured obligations when due, or in the event MBIA Corp. has the right, at its discretion, to accelerate insured obligations upon default or otherwise. MBIA Corp. insures non-U.S. public finance and global structured finance obligations, including asset-backed obligations. MBIA Corp. has insured sovereign-related and sub- sovereign bonds, utilities, privately issued bonds used for the financing of projects that include toll roads, bridges, public transportation facilities, and other types of infrastructure projects serving a substantial public purpose. MBIA Corp. also insures structured finance and asset-backed obligations repayable from expected cash flows generated by a specified pool of assets, such as residential and commercial mortgages, consumer loans and structured settlements. MBIA Corp. insures the investment contracts written by MBIA Inc., and if MBIA Inc. were to have insufficient assets to pay amounts due upon maturity or termination, MBIA Corp. would make such payments. MBIA Insurance Corporation also insures debt obligations of GFL. MBIA Corp. has also written policies guaranteeing obligations under certain derivative contracts, including termination payments that may become due upon certain insolvency or payment defaults of the financial guarantor or the issuer. MBIA Corp. has not written any meaningful amount of business since 2008.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 11: Business Segments (continued)
The following tables provide the Company’s segment results for the years ended December 31, 2024, 2023 and 2022:
Year Ended December 31, 2024
U.S.
International
Public
and Structured
Finance
Finance
In millions
Insurance
Corporate
Insurance
Eliminations
Consolidated
Revenues (1)
$
$
$
$
-
$
Net gains (losses) on financial instruments at fair value and foreign exchange
(57
)
-
(42
)
Revenues of consolidated VIEs
-
-
(37
)
-
(37
)
Inter-segment revenues (2)
(86
)
-
Total revenues (3)
(67
)
(86
)
Losses and loss adjustment
-
(7
)
-
Compensation and benefits
-
-
-
Interest
-
(23
)
Inter-segment service charge
-
(50
)
-
Other segment items (4)
(13
)
Total expenses
(86
)
Income (loss) from continuing operations before income taxes
$
(138
)
$
(37
)
$
(266
)
$
-
$
(441
)
Total assets per reportable segment
$
1,549
$
$
$
(933
)
(5)
$
2,157
Assets held for sale
Total assets
$
2,168
(1) - Consists primarily of net premiums earned, net investment income, net realized investment gains (losses), fees and reimbursements and other net realized gains (losses).
(2) - Primarily represents intercompany service charges and intercompany net investment income.
(3) - Includes net investment income of $67 million, $30 million, $11 million, and ($24) million for the U.S. Public Finance, Corporate, International and Structured Finance, and Eliminations segments, respectively.
(4) - Other segment items for each reportable segment include:
a. U.S. Public Finance Insurance - amortization of DAC, professional service fees, occupancy costs and other operating expenses;
b. Corporate - professional service fees, occupancy costs and other operating expenses;
c. International and Structured Finance Insurance - expenses of consolidated VIEs, amortization of DAC, professional service fees and other operating expenses, and
d. Elimination - inter-segment amortization of DAC and inter-segment occupancy costs.
(5) - Consists principally of intercompany reinsurance balances.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 11: Business Segments (continued)
Year Ended December 31, 2023
In millions
U.S. Public Finance Insurance
Corporate
International and Structured Finance Insurance
Eliminations
Consolidated
Revenues (1)
$
$
(11
)
$
$
-
$
Net gains (losses) on financial instruments at fair value and foreign exchange
(12
)
-
Revenues of consolidated VIEs
-
-
(70
)
-
(70
)
Inter-segment revenues (2)
(87
)
-
Total revenues (3)
(43
)
(87
)
Losses and loss adjustment
-
-
Compensation and benefits
-
-
-
Interest
-
(24
)
Inter-segment service charge
-
(50
)
-
Other segment items (4)
(12
)
Total expenses
(86
)
Income (loss) from continuing operations before income taxes
$
(131
)
$
(102
)
$
(250
)
$
(1
)
$
(484
)
Total assets per reportable segment
$
1,742
$
$
$
(938
)
(5)
$
2,533
Assets held for sale
Total assets
$
2,606
(1) - Consists primarily of net premiums earned, net investment income, net realized investment gains (losses), fees and reimbursements and other net realized gains (losses).
(2) - Primarily represents intercompany service charges and intercompany net investment income.
(3) - Includes net investment income of $93 million, $25 million, $23 million, and ($25) million for the U.S. Public Finance, Corporate, International and Structured Finance, and Eliminations segments, respectively.
(4) - Other segment items for each reportable segment include:
a. U.S. Public Finance Insurance - amortization of DAC, professional service fees, occupancy costs and other operating expenses;
b. Corporate - professional service fees, occupancy costs and other operating expenses;
c. International and Structured Finance Insurance - expenses of consolidated VIEs, amortization of DAC, professional service fees and other operating expenses, and
d. Elimination - inter-segment amortization of DAC and inter-segment occupancy costs.
(5) - Consists principally of intercompany reinsurance balances.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 11: Business Segments (continued)
Year Ended December 31, 2022
In millions
U.S. Public Finance Insurance
Corporate
International and Structured Finance Insurance
Eliminations
Consolidated
Revenues (1)
$
$
$
$
(1
)
$
Net gains (losses) on financial instruments at fair value and foreign exchange
(47
)
(7
)
-
Revenues of consolidated VIEs
-
-
-
Inter-segment revenues (2)
(93
)
-
Total revenues (3)
(94
)
Losses and loss adjustment
-
(105
)
-
Compensation and benefits
-
-
-
Interest
-
(24
)
Inter-segment service charge
-
(51
)
-
Other segment items (4)
(19
)
Total expenses
(94
)
Income (loss) from continuing operations before income taxes
$
(160
)
$
$
(21
)
$
-
$
(148
)
Total assets per reportable segment
$
2,491
$
$
1,132
$
(973
)
(5)
$
3,295
Assets held for sale
Total assets
$
3,375
(1) - Consists primarily of net premiums earned, net investment income, net realized investment gains (losses), fees and reimbursements and other net realized gains (losses).
(2) - Primarily represents intercompany service charges and intercompany net investment income.
(3) - Includes net investment income of $81 million, $22 million, $17 million, and ($25) million for the U.S. Public Finance, Corporate, International and Structured Finance, and Eliminations segments, respectively.
(4) - Other segment items for each reportable segment include:
a. U.S. Public Finance Insurance - amortization of DAC, professional service fees, occupancy costs and other operating expenses;
b. Corporate - professional service fees, occupancy costs and other operating expenses;
c. International and Structured Finance Insurance - expenses of consolidated VIEs, amortization of DAC, professional service fees and other operating expenses, and
d. Elimination - inter-segment amortization of DAC and inter-segment occupancy costs.
(5) - Consists principally of intercompany reinsurance balances.
Net premiums earned reported within the Company’s insurance segments are generated within and outside the U.S. The following table summarizes net premiums earned by geographic location for the years ended December 31, 2024, 2023 and 2022:
Years Ended December 31,
In millions
Net premiums earned:
United States
$
$
$
Other Americas
Total
$
$
$
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 12: Insurance in Force
The financial guarantees issued by the Company provide unconditional and irrevocable guarantees of the payment of the principal of, and interest or other amounts owing on, insured obligations when due. The obligations are generally not subject to acceleration, except in the event the Company has the right, at its discretion, to accelerate insured obligations upon default or otherwise. Payments to be made by the issuer on the bonds or notes may be backed by a pledge of revenues, reserve funds, letters of credit, investment contracts or collateral in the form of mortgages or other assets. The right to such funds or collateral would typically become National’s or MBIA Corp.’s upon the payment of a claim by either National or MBIA Corp.
The Company’s ultimate exposure to credit loss in the event of nonperformance by the issuer of the insured obligation is represented by insurance in force. Insurance in force is the estimated maximum potential exposure to insured obligations before considering the Company's various legal rights to the underlying collateral and other remedies available under its financial guarantee contract. The calculation of insurance in force includes estimates, which the Company periodically updates, relating to the expected remaining term of insured obligations supported by homogeneous pools of assets, foreign exchange rates, a municipality's taxing power, municipal revenues derived from a public project or dedicated tax or fee and other assumptions based on the characteristics of each insured obligation. The Company insures predominantly fixed-rate instruments. For variable rate contracts and contracts which reference the consumer price indices, the Company's methodology includes utilizing the respective interest rates in effect at the inception of the insurance contracts.
Actual insurance in force may differ from estimated insurance in force due to refundings, terminations and commutations, prepayments, changes in floating interest rates and consumer price indices, changes in foreign exchange rates on non-U.S. denominated insured obligations and other factors.
As of December 31, 2024, the Company's insurance in force had an expected maturity through 2058. The distribution of MBIA Corp.’s and National’s combined insurance in force by geographic location, excluding financial obligations guaranteed by MBIA Corp. on behalf of affiliated companies, is presented in the following table:
As of December 31,
$ in billions
% of
% of
Insurance
Insurance
Insurance
Insurance
Geographic Location
in Force
in Force
in Force
in Force
California
$
12.1
22.3
%
$
13.4
22.0
%
Illinois
6.0
11.0
%
6.6
10.8
%
New Jersey
3.8
7.0
%
3.8
6.2
%
Hawaii
3.5
6.5
%
3.6
6.0
%
Virginia
3.2
6.0
%
3.4
5.6
%
Texas
2.0
3.7
%
2.7
4.4
%
Colorado
1.6
2.9
%
1.7
2.8
%
Oregon
1.4
2.5
%
1.7
2.8
%
Georgia
1.2
2.2
%
1.5
2.4
%
New York
1.1
2.1
%
1.5
2.5
%
Subtotal
35.9
66.2
%
39.9
65.5
%
Nationally Diversified
6.3
11.5
%
6.7
11.1
%
Other states
10.1
18.5
%
11.8
19.4
%
Total United States
52.3
96.2
%
58.4
96.0
%
Internationally Diversified
0.2
0.4
%
0.2
0.3
%
Country specific
1.8
3.4
%
2.3
3.7
%
Total non-United States
2.0
3.8
%
2.5
4.0
%
Total
$
54.3
100.0
%
$
60.9
100.0
%
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 12: Insurance in Force (continued)
The insurance in force and insured gross par outstanding by type of bond, excluding financial obligations guaranteed by MBIA Corp. on behalf of affiliated companies, are presented in the following table:
As of December 31,
$ in billions
Insurance
Gross Par
Insurance
Gross Par
Bond type
in Force
Amount
in Force
Amount
Global public finance - United States:
General obligation (1)
$
14.6
$
7.0
$
16.8
$
8.0
Military housing
12.7
6.5
13.2
6.6
Tax-backed
9.8
4.2
11.0
4.9
Transportation
6.1
1.9
6.5
2.1
Municipal utilities
5.4
3.9
6.4
4.6
Higher education
0.8
0.6
1.0
0.7
General obligation - lease
0.8
0.5
1.0
0.7
Health care
0.6
0.4
0.7
0.4
Investor-owned utilities (2)
0.4
0.3
0.4
0.3
Other (3)
-
-
0.1
-
Total United States
51.2
25.3
57.1
28.3
Global public finance - non-United States:
Sovereign-related and sub-sovereign (4)
1.1
0.9
1.3
1.0
Transportation
0.3
0.2
0.4
0.4
Other (5)
0.1
0.1
0.1
0.1
Total non-United States
1.5
1.2
1.8
1.5
Total global public finance
52.7
26.5
58.9
29.8
Global structured finance:
Mortgage-backed residential
0.8
0.5
0.9
0.6
Corporate asset-backed
0.4
0.4
0.5
0.4
Mortgage-backed commercial
0.3
0.1
0.4
0.2
Consumer asset-backed
0.1
0.1
0.1
0.1
Collateralized debt obligations
-
-
0.1
0.1
Total global structured finance
1.6
1.1
2.0
1.4
Total
$
54.3
$
27.6
$
60.9
$
31.2
(1) - Includes general obligation unlimited and limited (property) tax bonds, general fund obligation bonds and pension obligation bonds of states, cities, counties, schools and special districts.
(2) - Includes investor owned utilities, industrial development and pollution control revenue bonds.
(3) - Includes stadium related financings, municipal housing and certain non-profit enterprises.
(4) - Includes regions, departments or their equivalent in each jurisdiction as well as sovereign owned entities that are supported by a sovereign state, region or department.
(5) - Includes municipal owned entities backed by sponsoring local government, tax backed and utility transactions.
Affiliated Financial Obligations Insured by MBIA Corp.
Investment agreement contracts and MTNs issued by the Company’s corporate segment are not included in the previous tables. If MBIA Inc. or these subsidiaries were to have insufficient assets to pay amounts due, MBIA Corp. would be obligated to make such payments under its insurance policies. As of December 31, 2024, the maximum amount of future payments that MBIA Corp. could be required to make under these guarantees is $0.9 billion. These guarantees, which mature through 2037, were entered into on an arm’s length basis. MBIA Corp. has both direct recourse provisions and subrogation rights in these transactions. If MBIA Corp. is required to make a payment under any of these affiliate guarantees, it would have the right to seek reimbursement from such affiliate and to liquidate any collateral to recover amounts paid under the guarantee.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 12: Insurance in Force (continued)
Reinsured Exposure
Reinsurance enables the Company to cede exposure for purposes of syndicating risk. The Company generally retains the right to reassume the business ceded to reinsurers under certain circumstances, including a reinsurer’s rating downgrade below specified thresholds. At this time, the Company does not intend to utilize reinsurance to decrease the insured exposure in its portfolio.
MBIA requires certain unauthorized reinsurers to maintain bank letters of credit or establish trust accounts to cover liabilities ceded to such reinsurers under reinsurance contracts. The Company remains liable on a primary basis for all reinsured risk. MBIA believes that its reinsurers remain capable of meeting their obligations, although, there can be no assurance of such in the future.
The aggregate amount of insurance in force ceded by MBIA to reinsurers was $1.5 billion and $1.7 billion as of December 31, 2024 and 2023, respectively.
As of December 31, 2024, the aggregate amount of insured par outstanding ceded by MBIA to reinsurers under reinsurance agreements was $671 million compared with $782 million as of December 31, 2023. As of December 31, 2024, $539 million of the ceded par outstanding was ceded from the Company’s U.S. public finance insurance segment and $132 million was ceded from the Company’s international and structured finance insurance segment. Under National’s reinsurance agreement with MBIA Corp., if a reinsurer of MBIA Corp. is unable to pay claims ceded by MBIA Corp. on U.S. public finance exposure, National will assume liability for such ceded claim payments. The following table presents information about the Company’s reinsurance agreements as of December 31, 2024 for its U.S. public finance and international and structured finance insurance operations.
In millions
Reinsurers
Standard & Poor's Rating (Status)
Moody's Rating (Status)
Ceded Par Outstanding
Letters of Credit/Trust Accounts
Reinsurance Recoverable/(Payable), Net(1)
Assured Guaranty Re Ltd.
AA
WR(2)
$
$
$
(Stable Outlook)
Assured Guaranty Inc.
AA
A1
-
(Stable Outlook)
(Stable Outlook)
Others
A or above
WR(2) or above
-
-
Total
$
$
$
(1) - Total reinsurance recoverable/(payable) is primarily related to recoverables on paid and unpaid losses net of paid and unpaid salvage due to reinsurers.
(2) - Represents a withdrawal of ratings.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 13: Insurance Regulations and Dividends
National and MBIA Insurance Corporation are subject to insurance regulations and supervision of the State of New York (their state of domicile) and all U.S. and non-U.S. jurisdictions in which they are licensed to conduct insurance business. In order to maintain their New York State financial guarantee insurance license, National and MBIA Insurance Corporation are required to maintain a minimum of $ 65 million of policyholders’ surplus. MBIA Mexico is regulated by the Comisión Nacional de Seguros y Fianzas in Mexico. The Company has commenced the process of dissolving MBIA Mexico under Mexican law. The extent of insurance regulation and supervision varies by jurisdiction, but New York and most other jurisdictions have laws and regulations prescribing minimum standards of solvency and business conduct, which must be maintained by insurance companies. Among other things, these laws prescribe permitted classes and concentrations of investments and limit both the aggregate and individual securities risks that National and MBIA Insurance Corporation may insure on a net basis based on the type of obligations insured. In addition, some insurance laws and regulations require the approval or filing of policy forms and rates. National and MBIA Insurance Corporation are required to file detailed annual financial statements with the NYSDFS. The operations and accounts of National and MBIA Insurance Corporation are subject to examination by regulatory agencies at regular intervals.
Statutory Capital and Regulations
National
For 2024, 2023 and 2022, National had statutory net losses of $133 million, $142 million and statutory net income of $75 million, respectively. As of December 31, 2024, National’s statutory capital was $912 million, consisting of policyholders’ surplus of $602 million and contingency reserves of $310 million. As of December 31, 2023, National had statutory capital of $1.1 billion.
As of December 31, 2024, National was in compliance with its aggregate risk limits under NYIL, but was not in compliance with certain of its single risk limits.
MBIA Insurance Corporation
For 2024, 2023 and 2022, MBIA Insurance Corporation had statutory net losses of $64 million, $28 million and statutory net income of $46 million, respectively. As of December 31, 2024, MBIA Insurance Corporation’s statutory capital was $88 million, consisting of policyholders’ surplus of $83 million and contingency reserves of $5 million. As of December 31, 2023, MBIA Insurance Corporation had statutory capital of $152 million. MBIA Insurance Corporation’s policyholders’ surplus as of December 31, 2024 and 2023 included negative unassigned surplus of $1.9 billion. MBIA Insurance Corporation’s policyholders’ surplus may be further negatively impacted if future additional insured losses are incurred.
As of December 31, 2024, MBIA Insurance Corporation was in compliance with its aggregate risk limits under the NYIL, but was not in compliance with certain of its single risk limits.
Dividends
NYIL regulates the payment of dividends by financial guarantee insurance companies and provides that such companies may not declare or distribute dividends except out of statutory earned surplus. Under NYIL, the sum of (i) the amount of dividends declared or distributed during the preceding 12-month period and (ii) the dividend to be declared may not exceed the lesser of (a) 10% of policyholders’ surplus, as reported in the latest statutory financial statements or (b) 100% of adjusted net investment income for such 12-month period (the net investment income for such 12-month period plus the excess, if any, of net investment income over dividends declared or distributed during the two-year period preceding such 12-month period), unless the Superintendent of the NYSDFS approves a greater dividend distribution based upon a finding that the insurer will retain sufficient surplus to support its obligations.
During 2024, National declared and paid a dividend of $69 million to its ultimate parent, MBIA Inc. In 2023, National paid a $550 million special dividend that was approved by the NYSDFS to its ultimate parent, MBIA Inc. In addition, National declared and paid an as-of-right dividend of $97 million to its ultimate parent, MBIA Inc.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 13: Insurance Regulations and Dividends (continued)
In 2024, MBIA Insurance Corporation did not declare or pay any dividends to MBIA Inc. or the holders of its preferred stock. MBIA Insurance Corporation is currently unable to pay dividends, including those related to its preferred stock, as a result of its earned surplus deficit as of December 31, 2024 and is not expected to have any statutory capacity to pay dividends in the near term. In connection with MBIA Insurance Corporation obtaining approval from the NYSDFS to release excess contingency reserves in previous periods, MBIA Insurance Corporation agreed that it would not pay any dividends without prior approval from the NYSDFS.
Note 14: Benefit Plans
Long-term Incentive Plans
Plan Description
The Company maintains the Amended and Restated MBIA Inc. Omnibus Incentive Plan (the “Omnibus Plan”), which was originally effective upon approval by the shareholders of the Company on May 5, 2005, and subsequently amended on May 7, 2009, May 1, 2012, May 5, 2020, May 3, 2022 and May 2024. Under the Omnibus Plan a maximum of 17,750,000 shares of the Company’s common stock can be used for any type of award including stock options, performance shares, performance units, restricted stock, restricted stock units and dividend equivalents. Any shares issued under the Omnibus Plan in connection with stock options shall be counted against this limit as 1 share covered by such option. For all awards other than stock options, any shares issued shall be counted against this limit as 1.28 shares for every share issued after the May 1, 2012 amendment and two shares for every share issued prior to the May 1, 2012 amendment. In 2024, the type of equity awards granted by the Company were time-based restricted stock. In 2022 and 2023, the Company granted time and performance based restricted stock awards.
Under the restricted stock component of the Omnibus Plan, certain employees are granted restricted shares of the Company’s common stock. These awards have a restriction period lasting between three to seven years depending on the type of award, after which time the awards fully vest. During the vesting period, these shares may not be sold. Restricted stock may be granted to all employees.
There were 1,370,920 shares available for future grants under the Omnibus Plan as of December 31, 2024.
In accordance with accounting guidance for share-based payments, the Company expenses the fair value of stock-based compensation as described in the following sections. In addition, the guidance classifies share-based payment awards as either liability awards, which are remeasured at fair value at each balance sheet date, or equity awards, which are measured on the grant date and not subsequently remeasured. Generally, awards with cash-based settlement repurchase features or that are settled at a fixed dollar amount are classified as liability awards, and changes in fair value will be reported in earnings. Awards with net-settlement features are classified as equity awards and changes in fair value are not reported in earnings. The Company’s long-term incentive plans include features which result in equity awards. In addition, the guidance requires the use of a forfeiture estimate. The Company uses historical employee termination information to estimate the forfeiture rate applied to current stock-based awards.
The Company maintains voluntary retirement benefits, which provide certain benefits to eligible employees of the Company upon retirement. A description of these benefits is included in the Company’s proxy statement. One of the components of the retirement program for those employees that are retirement eligible is to continue to vest all performance-based restricted stock awards beyond the retirement date in accordance with the original vesting terms and to immediately vest all outstanding time-based restricted stock grants. The accounting guidance for share-based payment requires compensation costs for those employees to be recognized from the date of grant through the retirement eligible date. Accelerated expense, if any, relating to this retirement benefit for restricted stock awards has been included in the compensation expense amounts. Refer to the “Performance Based Awards” section below for additional information on compensation expense.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 14: Benefit Plans (continued)
Restricted Stock
The fair value of the restricted shares awarded, net of cancellations, determined on the grant date during 2024 was $5 million and 2023 was $6 million, respectively. The amount of unearned compensation, net of estimated forfeitures, was $2 million as of December 31, 2024, which is expected to be recognized as expense over a weighted average period of 1.87 years. Unearned compensation is amortized to expense over the appropriate vesting period.
In connection with the MBIA Inc. dividend payment to shareholders, payments to restricted stockholders was considered a modification of the original restricted stock awards since the dividend payment was required to be made to restricted stockholders. There was no additional compensation expense recognized on the restricted stock awards as a result of the dividend payment, since the fair value of the awards immediately before the modification was the same as the fair value of the awards after the modification, including the cash payment. Therefore, the dividend payment to restricted stockholders was effectively a cash settlement of a portion of the original awards since no future service is required to earn the cash. Since the restricted stock awards were unvested at the modification date, the dividend payment accelerated the recognition of compensation expense by $5 million in 2023 for the portion of the arrangement that was settled. Refer to “Note 1: Business Developments and Risks and Uncertainties” for additional information on the dividend.
Compensation expense related to the restricted shares, net of estimated forfeitures, was $7 million, $18 million and $12 million for the years ended December 31, 2024, 2023 and 2022, respectively. There was no tax charge related to the restricted share awards during 2024, 2023 and 2022 after consideration of the Company’s valuation allowance.
A summary of the Company’s restricted shares outstanding as of December 31, 2024, 2023 and 2022, and changes during the years ended on those dates, is presented in the following table:
Restricted Share Activity
Number of Shares
Weighted Average Price Per Share
Number of Shares
Weighted Average Price Per Share
Number of Shares
Weighted Average Price Per Share
Outstanding at beginning of year
4,838,270
$
9.9295
5,759,505
$
9.5583
5,907,636
$
9.1868
Granted
793,891
6.4543
519,238
11.6314
478,670
13.4214
Vested
(1,418,225
)
8.6867
(1,440,473
)
9.0587
(586,582
)
9.2154
Forfeited
(216,460
)
13.8595
-
-
(40,219
)
5.9673
Outstanding at end of year
3,997,476
$
9.4675
4,838,270
$
9.9295
5,759,505
$
9.5583
Performance Based Awards
During 2023 and 2022, the Company granted 255,340 and 216,460 restricted shares, respectively, to certain key employees which have a vesting schedule dependent on the achievement of certain stock price targets of the Company. The grants and corresponding compensation expense have been included in the above restricted stock disclosures. As permitted by the accounting guidance for share-based payments, the Company estimates the fair value of awards that contain market performance conditions at the date of grant using a binomial lattice model with a Monte Carlo simulation and recognizes compensation cost over the requisite service period. The binomial lattice model can better incorporate assumptions about a stock price path because the model can accommodate a large number of potential stock prices over the award’s term in comparison to the Black-Scholes model. As of December 31, 2024 and December 31, 2022, certain previously awarded grants did not meet the stock price performance target. The corresponding cancellation of shares has been included in the above restricted stock disclosures. As of December 31, 2023, certain previously awarded grants exceeded the stock price performance target which resulted in issuing additional shares. In 2024, the Company granted 71,193 restricted shares representing the dividend value on the above target shares that will vest on the same vesting schedule as the performance shares. The corresponding issuance of additional shares has been included in the above restricted stock disclosure.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 14: Benefit Plans (continued)
Pension, 401(k) and Deferred Compensation Plans
The Company maintains a qualified non-contributory defined contribution pension plan to which the Company contributes 10% of each eligible employee’s annual compensation. Annual compensation for determining such contributions consists of base salary and bonus, as applicable, up to a maximum of $ 2 million. Pension benefits vest over the first five-year period of employment with 20% vested after two years, 60% vested after three years, 80% vested after four years and 100% vested after five years. The Company funds the annual pension contribution by the following February of each applicable year.
The Company also maintains a qualified 401(k) plan. The plan is a voluntary contributory plan that allows eligible employees to defer compensation for federal income tax purposes under Section 401(k) of the Internal Revenue Code of 1986, as amended. Employees may contribute, through payroll deductions, up to 25% of eligible compensation. The Company matches employee contributions up to the first 5% of such compensation. The 401(k) matching contributions are made in the form of cash, whereby participants may direct the Company match to an investment of their choice. The 401(k) matching benefits vest over the first five-year period of employment with 20% vested after two years, 60% vested after three years, 80% vested after four years and 100% vested after five years. Generally, a participating employee is entitled to distributions from the plans upon termination of employment, retirement, death or disability.
In addition to the above two plans, the Company maintains a non-qualified deferred compensation plan. Contributions to the above qualified plans that exceed limitations established by federal regulations are then contributed to the non-qualified deferred compensation plan.
Expenses related to these plans for the years ended December 31, 2024, 2023 and 2022 were $2 million, $2 million and $3 million, respectively.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 15: Earnings Per Share
Earnings per share is calculated using the two-class method in which earnings are allocated to common stock and participating securities based on their rights to receive nonforfeitable dividends or dividend equivalents. The Company grants restricted stock to certain employees and non-employee directors in accordance with the Company’s long-term incentive programs, which entitle the participants to receive nonforfeitable dividends or dividend equivalents during the vesting period on the same basis as those dividends are paid to common shareholders. These unvested stock awards represent participating securities. During periods of net income, the calculation of earnings per share exclude the income attributable to participating securities in the numerator and the dilutive impact of these securities from the denominator. During periods of net loss, no effect is given to participating securities in the numerator and the denominator excludes the dilutive impact of these securities since they do not share in the losses of the Company.
Basic earnings per share excludes dilution and is reported separately for continuing operations and discontinued operations. Basic earnings per share for continuing operations and discontinued operations is computed by dividing net income from continuing operations and discontinued operations available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the dilutive effect of all unvested restricted stock outstanding during the period that could potentially result in the issuance of common stock. The dilution from unvested restricted stock is calculated by applying the two-class method and using the treasury stock method. The treasury stock method assumes the proceeds from the unrecognized compensation expense from unvested restricted stock will be used to purchase shares of the Company’s common stock at the average market price during the period. If the potentially dilutive securities disclosed in the table below become vested, the transaction would be net share settled resulting in a significantly lower impact to the outstanding share balance in comparison to the total amount of the potentially dilutive securities. During periods of net loss, unvested restricted stock is excluded from the calculation because it would have an antidilutive effect. Therefore, in periods of net loss, the calculation of basic and diluted earnings per share would result in the same value.
The following table presents the computation of basic and diluted earnings per share for the years ended December 31, 2024, 2023 and 2022:
Years Ended December 31,
In millions except per share amounts
Basic and diluted earnings per share:
Net income (loss) from continuing operations available to common shareholders
$
(441
)
$
(484
)
$
(149
)
Income (loss) from discontinued operations, net of income taxes
(3
)
(3
)
(54
)
Less: Net income (loss) from discontinued operations attributable to noncontrolling interests
(8
)
Net income (loss) from discontinued operations attributable to MBIA Inc.
(6
)
(7
)
(46
)
Net income (loss) attributable to MBIA Inc.
$
(447
)
$
(491
)
$
(195
)
Basic and diluted weighted average shares (1)
47.4
48.2
49.8
Net income (loss) per common share attributable to MBIA Inc. - basic and diluted:
Continuing operations
$
(9.31
)
$
(10.03
)
$
(3.00
)
Discontinued operations
(0.12
)
(0.15
)
(0.92
)
Net income (loss) per share attributable to MBIA Inc. - basic and diluted
$
(9.43
)
$
(10.18
)
$
(3.92
)
Potentially dilutive securities excluded from the calculation of diluted EPS because of antidilutive affect
3.2
4.3
5.0
(1) - Includes approximately 1 million of participating securities that met the service condition and were eligible to receive nonforfeitable dividends or dividend equivalents for each of the years ended December 31, 2024, 2023 and 2022 respectively.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 16: Common and Preferred Stock
Common Stock
Share Repurchases
Purchases or repurchases of common stock may be made from time to time in the open market or in private transactions as permitted by securities laws and other legal requirements. The Company believes that share purchases or repurchases can be an appropriate deployment of capital in excess of amounts needed to support the Company’s liquidity while maintaining the claims-paying resources of MBIA Corp. and National, as well as other business needs. On May 3, 2023, the Company’s Board of Directors approved a share repurchase program authorizing the Company and/or National to purchase up to $100 million of the Company’s shares in open market transactions, in privately negotiated transactions or by any other legal means. During 2024, MBIA Inc. or National did not repurchase or purchase any MBIA Inc. common shares. During 2023, National or the Company purchased or repurchased 3.6 million shares at an average price per share of $8.12. As of December 31, 2024, the remaining authorization under this share repurchase program was $71 million. Any excise tax on share repurchases is reflected as an additional cost of the shares acquired and is recorded in “Treasury stock, at cost” with a corresponding liability recorded in “Other liabilities” on the Company’s consolidated balance sheets. For 2023, the excise tax calculated was not material and is not included in the above amounts.
Dividends
On December 7, 2023, the Company's Board of Directors declared an extraordinary cash dividend on MBIA’s common stock of $8.00 per share. Refer to “Note 1: Business Developments and Risks and Uncertainties” for a further information about this dividend.
Preferred Stock
As of December 31, 2024, MBIA Insurance Corporation had 2,759 shares of preferred stock issued and outstanding with a carrying value of $28 million, including 1,444 shares held by MBIA Inc. that were purchased at a weighted average price of $10,900 per share or 10.9% of face value and 1,315 shares held by unaffiliated investors. During 2024, MBIA Inc. did not repurchase any additional shares.
In accordance with MBIA’s fixed-rate election, the dividend rate on the preferred stock was determined using a fixed-rate equivalent of SOFR plus 2.26161%. Each share of preferred stock has a par value of $1,000 with a liquidation preference of $100,000. The holders of the preferred stock are generally not entitled to any voting rights. Subject to certain requirements, the preferred stock may be redeemed, in whole or in part, at the option of MBIA Corp. at any time or from time to time for cash at a redemption price equal to the liquidation preference per share plus any accrued and unpaid dividends thereon at the date of redemption for the then current dividend period and any previously accumulated dividends payable without interest on such unpaid dividends. As of December 31, 2024 and 2023, there were no dividends declared on the preferred stock. Payment of dividends on MBIA Corp.’s preferred stock is subject to the same restrictions that apply to dividends on common stock under NYIL.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 17: Accumulated Other Comprehensive Income
The following table presents the changes in the components of AOCI for the years ended December 31, 2024, 2023 and 2022:
In millions
Unrealized Gains (Losses) on AFS Securities, Net
Foreign Current Translation, Net
Instrument-Specific Credit Risk of Liabilities Measured at Fair Value, Net
Total
Balance, January 1, 2022
$
$
(6
)
$
(32
)
$
Other comprehensive income (loss) before reclassifications
(362
)
(31
)
(391
)
Amounts reclassified from AOCI
(10
)
-
Net period other comprehensive income (loss)
(372
)
(13
)
(383
)
Balance, December 31, 2022
$
(234
)
$
(4
)
$
(45
)
$
(283
)
Other comprehensive income (loss) before reclassifications
-
(1
)
Amounts reclassified from AOCI
-
Net period other comprehensive income (loss)
-
Balance, December 31, 2023
$
(134
)
$
(4
)
$
(1
)
$
(139
)
Other comprehensive income (loss) before reclassifications
(19
)
(1
)
-
(20
)
Amounts reclassified from AOCI
-
Net period other comprehensive income (loss)
(16
)
(1
)
Balance, December 31, 2024
$
(150
)
$
(5
)
$
$
(128
)
The following table presents the details of the reclassifications from AOCI for the years ended December 31, 2024, 2023 and 2022:
In millions
Amounts Reclassified from AOCI
Years Ended December 31,
Details about AOCI Components
Affected Line Item on the Consolidated Statements of Operations
Unrealized gains (losses) on AFS securities:
Realized gains (losses) on sale of securities
$
(3
)
$
(67
)
$
Net realized investment gains (losses)
Instrument-specific credit risk of liabilities:
Deconsolidation of VIEs
(9
)
(20
)
-
Other net realized gains (losses) - VIEs
Settlement of liabilities
(19
)
(25
)
(18
)
Net gains (losses) on financial instruments at fair value and foreign exchange - VIEs
Total reclassifications for the period
$
(31
)
$
(112
)
$
(8
)
Net income (loss) attributable to MBIA Inc.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 18: Commitments and Contingencies
MBIA has received subpoenas or informal inquiries from a variety of regulators, regarding a variety of subjects. MBIA has cooperated fully with each of these regulators and has or is in the process of satisfying all such requests. MBIA may receive additional inquiries from these or other regulators and expects to provide additional information to such regulators regarding their inquiries in the future.
Litigation
Zohar CDO 2003-1, Ltd., et al. v. Patriarch Partners, LLC et al., Case No. 1:17-cv-0307-WHP (S.D.N.Y.)
On November 27, 2017, Lynn Tilton and certain affiliated entities including Patriarch Partners, LLC commenced a third-party complaint against MBIA Inc., MBIA Insurance Corp. and other Zohar Fund stakeholders seeking damages for alleged breaches of the contracts governing the Zohar Funds and additional alleged legal duties and obligations relating to the Funds. On December 22, 2020, the Company and the other third-party defendants moved to dismiss the third-party complaint. On July 6, 2021, following the completion of briefing on those motions to dismiss, the presiding judge, the Honorable William H. Pauley died, and the case was reassigned to the Honorable P. Kevin Castel. On September 29, 2021, Judge Castel issued a decision on the motions to dismiss; granting them almost in full, with certain claims being stayed rather than dismissed, pending further developments in the Adversary Proceedings pending in the Zohar Funds Bankruptcy Cases in Delaware Bankruptcy Court.
Zohar Litigation Trust-A v. Tilton, et al. (f/k/a MBIA Insurance Corp. v. Tilton et al.),Adversary Case No. 20-50776 (KBO) (Bankr. Del.)
On July 30, 2020, MBIA Corp. commenced an adversary proceeding in the Zohar Funds Bankruptcy Cases against Lynn Tilton and certain affiliated entities seeking damages incurred by MBIA Corp. in connection with insurance policies it issued on senior notes issued by Zohar I and Zohar II. On July 23, 2021, the court denied in part and granted in part Tilton’s and her affiliated defendants’ motion to dismiss the complaint. The court denied defendants’ motion with respect to MBIA’s claims for breach of contract, tortious interference, unjust enrichment, and malicious prosecution of claims Tilton brought against MBIA in Delaware. On February 1, 2022, MBIA filed its most recent Amended Complaint pursuant to and in accordance with the court’s multiple rulings on defendants’ motion to dismiss and related filings regarding the parties’ pleadings. Defendants filed their Answer to MBIA’s most recent Amended Complaint on April 13, 2022. Following the confirmation of a liquidation plan of the Zohar Collateral by the Delaware Bankruptcy Court and that plan becoming effective on August 2, 2022, MBIA Corp.’s claims in this adversary proceeding, among other assets, were transferred and assigned to a litigation trust (Zohar Litigation Trust-A, or "the Trust") and distributed to MBIA Corp. in the form of interests in the Trust subject to oversight by MBIA Corp. and another former Zohar creditor. As a result, on September 12, 2022, the court ordered the substitution of the Trust, as successor-in-interest to MBIA Corp., for MBIA Corp. as plaintiff in this adversary proceeding. Accordingly, MBIA Corp. is no longer the plaintiff or party to this adversary proceeding. On September 13, 2022, the Delaware Bankruptcy Court ordered the consolidation of this adversary proceeding for discovery and pretrial proceedings with an adversary proceeding commenced in 2020 by the Zohar Funds against Lynn Tilton in the Delaware Bankruptcy Court. Pursuant to that order, all pleadings concerning the now-consolidated proceedings shall be filed only in the adversary proceeding captioned Zohar III, Corp. v. Patriarch Partners, LLC, Adv. Proc. No. 20-50534 (KBO).
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 18: Commitments and Contingencies (continued)
Complaint Objecting to Defendant's Claims and Seeking Related Relief, Case No. 17-BK-4780-LTS (D.P.R. July 1, 2019)
On July 1, 2019, the Oversight Board and the Puerto Rico Fiscal Agency and Financial Advisory Authority filed an adversary complaint against the Trustee for the PREPA bonds, challenging the validity of the liens arising under the Trust Agreement securing the insurance obligations of National. On September 30, 2022, the Oversight Board filed an amended complaint objecting to: (1) the secured claims asserted by the Trustee in PREPA’s assets; and (2) all unsecured claims of the Trustee, including as a result of the disallowance of the Trustee’s claims. The Oversight Board alleges that the Trustee’s security interest in PREPA’s property is limited to moneys deposited to the credit of the sinking fund and subordinate funds, and are non-recourse except as to the same sinking and subordinate funds moneys actually deposited. In addition it asserts that the Trust Agreement does not grant security interests in any of the covenants or remedies thereunder, that any security interests in deposit accounts other than those held by the Trustee are unperfected, and that there can be no security interest in the covenants and remedies, and if so, would be unperfected. The Defendants, including National, filed an answer and counterclaim on October 17, 2022. On October 24, 2022, the Oversight Board and Defendants each filed summary judgment motions seeking expedited resolution of certain counts in the amended complaint. On March 22, 2023, the Court ruled on summary judgment, finding the bondholders' liens only extend to the amount of funds held in certain specified accounts. In addition, the court determined that the unsecured portion of the bondholders' claims were subject to estimation of their scope. On January 29, 2024, the First Circuit Court of Appeals heard argument on the appeals and cross appeals of the parties. On June 12, 2024, the First Circuit Court of Appeals reversed Judge Swain's prior rulings and supported bondholder liens and claim amounts (the "Appeal Decision"). On June 26, 2024, the Oversight Board filed a petition for a First Circuit panel rehearing, and the UCC filed an en banc appeal. On November 13, 2024, the First Circuit affirmed the Appeal Decision. On November 27, 2024, the Oversight Board filed a petition for further rehearing, and on December 31, 2024, the First Circuit denied the rehearing request.
For those aforementioned actions in which it is a defendant, the Company is defending against those actions and expects ultimately to prevail on the merits. There is no assurance, however, that the Company will prevail in these actions. Adverse rulings in these actions could have a material adverse effect on the Company’s ability to implement its strategy and on its business, results of operations, cash flows and financial condition. At this stage of the litigation, there has not been a determination as to the amount, if any, of damages. Accordingly, the Company is not able to estimate any amount of loss or range of loss. The Company similarly can provide no assurance that it will be successful in those actions in which it is a plaintiff.
There are no other material legal proceedings pending or, to the knowledge of the Company, threatened, to which the Company or any of its subsidiaries is a party.
Lease Commitments
The Company has a lease agreement for its headquarters in Purchase, New York. The initial lease term expires in 2030 with the option to terminate the lease in 2025 upon the payment of a termination amount. This lease agreement included an incentive amount to fund certain leasehold improvements, renewal options, escalation clauses and a free rent period. This lease agreement has been classified as an operating lease, and operating rent expense is recognized on a straight-line basis.
In May of 2024, the Company notified its landlord of the Purchase, New York lease that it is exercising its right to terminate the lease in August of 2025 ("Termination Date"). In connection with this termination notice, the Company will pay a termination fee that includes the unamortized amount of incentives, free rent and other costs at the Termination Date. The Company accounted for this termination as a lease modification and remeasured its lease liability to the present value of the remaining lease payments and adjusted its right-of-use ("ROU") asset as of the modification date in accordance with ASC 842. This resulted in a decrease of the Company's ROU asset and lease liability of $7 million and did not have a material impact to lease expense recognized in the Company’s consolidated statements of operations.
MBIA Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 18: Commitments and Contingencies (continued)
The following table provides information about the Company’s leases as of December 31, 2024:
$ in millions
As of
December 31, 2024
Balance Sheet
Location
Right-of-use asset
$
Other assets
Lease liability
$
Other liabilities
Weighted average remaining lease term (years)
0.7
Discount rate used for operating leases
10.5%
Total future minimum lease payments
$
Other Commitment
MBIA Corp. and other non-affiliates agreed to provide a delayed draw term loan commitment to an entity which MBIA Corp. holds as an equity investment. MBIA Corp.'s maximum commitment to this loan is approximately $15 million which was fully drawn and outstanding as of December 31, 2024.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Annual Report on Form 10-K, an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) was performed under the supervision and with the participation of the Company’s senior management, including the Chief Executive Officer and the Chief Financial Officer. Based on that evaluation, the Company’s Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2024, the end of the period covered by this report.
Management’s Report on Internal Control over Financial Reporting
Management of MBIA Inc. and its subsidiaries is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
MBIA’s internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; (2) provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and, (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management has assessed the effectiveness of MBIA Inc.’s internal control over financial reporting as of December 31, 2024. In making its assessment, management used the criteria described in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment and those criteria, management has determined that the Company’s internal control over financial reporting as of December 31, 2024 was effective.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2024 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which is included in Item 8, “Financial Statements.”
Changes in Internal Control over Financial Reporting
As required by Rule 13a-15(d) under the Exchange Act, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, has evaluated the Company’s internal control over financial reporting to determine whether any changes occurred during the fourth fiscal quarter covered by this annual report that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, there has been no such change during the fourth fiscal quarter of 2024.

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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information
None.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers and Corporate Governance
Information regarding directors will be set forth under “Proposals for Shareholder Approval Recommended by the Board-Proposal 1: Election of Directors” and “Board of Directors Corporate Governance-The Board of Directors and its Committees” in the Company’s Proxy Statement to be filed within 120 days of the end of our fiscal year ended December 31, 2024 (the “Proxy Statement”) and is incorporated by reference.
Information regarding executive officers is set forth under Part I, Item 1, “Business-Executive Officers of the Registrant,” included in this annual report.
Information regarding Section 16(a) beneficial ownership reporting compliance will be set forth in the section “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement and is incorporated by reference.
Information regarding the Company’s Audit Committee will be set forth under “Board of Directors Corporate Governance-The Board of Directors and its Committees” in the Proxy Statement and is incorporated by reference.
The Company has adopted a code of ethics that applies to all employees of the Company including its Chief Executive Officer, Chief Financial Officer and its controller. A copy of such code of ethics can be found on the Company’s internet website at www.mbia.com. The Company intends to satisfy the disclosure requirements under Item 10 of Form 8-K regarding an amendment to, or waiver from, a provision of its code of ethics and that relates to a substantive amendment or material departure from a provision of the Code by posting such information on its internet website at www.mbia.com.
The Company has adopted an insider trading policy governing the purchase, sale and other dispositions of its securities by directors, officers and certain other insiders that is reasonably designed to promote compliance with insider trading laws, rules and regulations and any applicable listing standards. A copy of this policy is filed with this Annual Report on Form 10-K as Exhibit 19.1.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. Exec utive Compensation
Information regarding compensation of the Company’s directors and executive officers will be set forth under “Board of Directors Corporate Governance-The Board of Directors and its Committees,” “Compensation and Governance Committee Report,” “Compensation Discussion and Analysis” and “Executive Compensation Tables” in the Proxy Statement and is incorporated by reference.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information regarding security ownership of certain beneficial owners and management will be set forth under “Security Ownership of Certain Beneficial Owners” and “Security Ownership of Directors and Executive Officers” in the Proxy Statement and is incorporated by reference.
The following table provides information as of December 31, 2024, regarding securities authorized for issuance under our equity compensation plans. All outstanding awards relate to our common stock. For additional information about our equity compensation plans refer to “Note 14: Benefit Plans” in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
(a)
(b)
(c)
Number of
securities
remaining
Number of
available for
securities
Weighted
future issuance
to be issued
average
under equity
upon exercise
exercise price
compensation
of outstanding
of outstanding
plans (excluding
options,
options,
securities
warrants
warrants
reflected
Plan category
and rights (1)
and rights
in column (a)) (2)
Equity compensation plans approved by security holders
19,128
$
12.35
1,528,781
Equity compensation plans not approved by security holders
-
-
-
Total
19,128
12.35
1,528,781
(1) - Represents phantom shares granted under the Deferred Compensation and Stock Ownership Plan for Non-Employee Directors.
(2) - Includes 1,370,920 shares of common stock available for future grants under the MBIA Inc. 2005 Omnibus Incentive Plan and 157,861 shares of common stock available for future grants under the Deferred Compensation and Stock Ownership Plan for Non-Employee Directors.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transact ions, and Director Independence
Information regarding certain relationships and related transactions will be set forth under “Certain Relationships and Related Transactions” in the Proxy Statement and is incorporated by reference. Information regarding director independence will be set forth under “Proposals for Shareholder Approval Recommended by the Board-Proposal 1: Election of Directors-Director Independence” in the Proxy Statement and is incorporated by reference.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Acc ounting Fees and Services
Information regarding principal accounting fees and services will be set forth under “Principal Accountant Fees and Services” in the Proxy Statement and is incorporated by reference.
Part IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits, Financial Statement Schedules
(a)Financial Statements and Financial Statement Schedules and Exhibits
1. Financial Statements
The following financial statements of MBIA Inc. have been included in Part II, Item 8 hereof:
Report of Independent Registered Public Accounting Firm.
Consolidated balance sheets as of December 31, 2024 and 2023.
Consolidated statements of operations for the years ended December 31, 2024, 2023 and 2022.
Consolidated statements of comprehensive income (loss) for the years ended December 31, 2024, 2023 and 2022.
Consolidated statements of changes in shareholders’ equity for the years ended December 31, 2024, 2023 and 2022.
Consolidated statements of cash flows for the years ended December 31, 2024, 2023 and 2022.
Notes to consolidated financial statements.
2. Financial Statement Schedules
The following financial statement schedules are filed as part of this Annual Report on Form 10-K.
Schedule
Title
I
Summary of investments, other than investments in related parties, as of December 31, 2024.
II
Condensed financial information of Registrant:
Condensed balance sheets as of December 31, 2024 and 2023.
Condensed statements of operations for the years ended December 31, 2024, 2023 and 2022.
Condensed statements of cash flows for the years ended December 31, 2024, 2023 and 2022.
Notes to condensed financial statements.
IV
Reinsurance for the years ended December 31, 2024, 2023 and 2022.
The report of the Registrant’s Independent Registered Public Accounting Firm with respect to the above listed financial statement schedules is included within the report listed under Item 15.1 above.
All other schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.
3. Exhibits
An exhibit index immediately preceding the Exhibits indicates the exhibit number where each exhibit filed as part of this report can be found.
(Note Regarding Reliance on Statements in Our Contracts: In reviewing the agreements included as exhibits to this Annual Report on Form 10-K, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about MBIA Inc., its subsidiaries or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and (i) should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; (ii) have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; (iii) may apply standards of materiality in a way that is different from what may be viewed as material to investors; and (iv) were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time.)
Item 15. Exhibits, Financial Statement Schedules (continued)
3. Articles of Incorporation and By-Laws.
3.1. Amended and Restated Certificate of Incorporation, dated May 5, 2005, incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2005.
3.2. By-Laws as Amended as of March 27, 2020 incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2022.
4. Instruments Defining the Rights of Security Holders, including Indentures.
4.1. Indenture, dated as of August 1, 1990, between MBIA Inc. and The First National Bank of Chicago, Trustee, incorporated by reference to Exhibit 10.72 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1992 as amended by the First Supplemental Indenture, dated as of August 22, 2002, between MBIA Inc. and Bank One Trust Company, N.A., as Trustee, in connection with the $300,000,000 6.4% senior notes due 2022, incorporated by reference to the Exhibit 4.04 to the Company’s Current Report on Form 8-K filed on August 22, 2002, and the Second Supplemental Indenture, dated as of November 21, 2012, between MBIA Inc. and The Bank of New York Mellon, as Trustee, incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on November 26, 2012.
4.2. Senior Indenture, dated as of November 24, 2004, between MBIA Inc. and The Bank of New York, as Trustee, incorporated by reference to Exhibit 4.01 to the Company’s Current Report on Form 8-K filed on November 29, 2004 as amended by the First Supplemental Indenture, dated as of November 24, 2004, between MBIA Inc. and The Bank of New York, as Trustee, in connection with the $350,000,000 5.70% senior notes due 2034, incorporated by reference to Exhibit 4.02 to the Company’s Current Report on Form 8-K filed on November 29, 2004 as amended by the Second Supplemental Indenture, dated as of November 21, 2012, between MBIA Inc. and The Bank of New York Mellon, as Trustee, incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on November 26, 2012.
4.3. Fiscal Agency Agreement, dated as of January 16, 2008, between MBIA Insurance Corporation and The Bank of New York, incorporated by reference to Exhibit 4.01 to the Company’s Current Report on Form 8-K filed on January 17, 2008.
4.4. Form of MBIA Corp. 14% Fixed-to-Floating Rate Global Note due January 15, 2033, incorporated by reference to Exhibit 4.02 to the Company’s Current Report on Form 8-K filed on January 17, 2008.
In accordance with Item 601(b)(4)(iii) of Regulation S-K, certain instruments defining the rights of holders of long term debt of the Company and its consolidated subsidiaries pursuant to which the total amount of securities authorized thereunder does not exceed 10% of the total assets of the Company and its subsidiaries on a consolidated basis are not filed herewith. The Company hereby agrees to furnish a copy of any such instrument to the SEC upon request.
10. Material Contracts
Executive Compensation Plans and Arrangements
The following Exhibits identify all existing executive compensation plans and arrangements:
10.1. MBIA Inc. Annual Incentive Plan, effective January 1, 2016, incorporated by reference to Exhibit A to the Company’s Proxy Statement filed on March 24, 2015.
10.2. Amended and Restated MBIA Inc. Omnibus Incentive Plan, as amended through May 2, 2024, incorporated by reference to Exhibit 10.1 to the Company’s Form S-8 filed on June 24, 2024.
10.3. Key Employee Employment Protection Plan, amended as of February 27, 2007, incorporated by reference to Exhibit 10.80 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007, as further amended by Amendment No. 2, effective February 22, 2010, incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009.
Item 15. Exhibits, Financial Statement Schedules (continued)
10.4. Form of Key Employee Employment Protection Agreement, amended as of February 27, 2007, incorporated by reference to Exhibit 10.81 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007.
10.5. MBIA Inc. 2005 Non-Employee Director Deferred Compensation Plan (as amended through February 2014), incorporated by reference to Exhibit 10.1 to the Company’s Form S-8 filed on March 5, 2014 (Reg. No. 333-194335).
10.6. Amended and Restated MBIA Inc. Deferred Compensation and Excess Benefit Plan, effective as of March 22, 2010, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2010.
10.7. Restricted Stock Agreement, dated as of November 8, 2018, between MBIA Inc. and Daniel M. Avitabile, incorporated by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
10.8. Restricted Stock Agreement, dated as of November 8, 2018, between MBIA Inc. and Adam T. Bergonzi, incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
10.9. Restricted Stock Agreement, dated as of November 8, 2018, between MBIA Inc. and William C. Fallon, incorporated by reference to Exhibit 10.9 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
10.10. Restricted Stock Agreement, dated as of November 8, 2018, between MBIA Inc. and Christopher H. Young, incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
10.11. Form of Restricted Stock Agreement Template between MBIA Inc. and (Named Executive Officers/Grantees) for grants of restricted stock pursuant to the Amended and Restated MBIA Inc. Omnibus Incentive Plan, as amended, incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
19.1. MBIA Inc. Insider Trading Policy
21. List of Subsidiaries.
23. Consent of PricewaterhouseCoopers LLP.
31.1. Chief Executive Officer-Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2. Chief Financial Officer-Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1. Chief Executive Officer-Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2. Chief Financial Officer- Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
97.1. MBIA Inc. Executive Compensation Clawback Policy, incorporated by reference to Exhibit 97.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
99.1. Quota Share Reinsurance Agreement between MBIA Insurance Corporation and MBIA Insurance Corp. of Illinois dated February 17, 2009, incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on February 20, 2009.
Item 15. Exhibits, Financial Statement Schedules (continued)
99.2. Novation Agreement, dated as of September 14, 2012, between Financial Guaranty Insurance Company and National Public Finance Guarantee Corporation, incorporated by reference to Exhibit 99.3 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2013.
99.3. Amended and Restated Tax Sharing Agreement, dated as of September 8, 2011, between MBIA Inc. and certain of its subsidiaries, incorporated by reference to Exhibit 99.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.
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101.SCH. Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents.
104. Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).