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What changed in MBIA INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of MBIA INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+370 added−384 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-28)

Top changes in MBIA INC's 2024 10-K

370 paragraphs added · 384 removed · 247 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

59 edited+22 added−86 removed102 unchanged
Biggest changeFallon 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.
Biggest changeFallon 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.
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.
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. 9 Item 1.
Business (continued) 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 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.
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. 9 Item 1.
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.
Business (continued) 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.
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.
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.
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.
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.
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.
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.
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.
FINANCIAL INFORMATION Refer to “Note 12: 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. 11 Item 1.
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.
Refer to “Note 13: 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.
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.
During 2023 and 2022, 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, 2023 and 2022.
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.
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 maintains with Moody’s.
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.
Business (continued) 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.
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.
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.
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.
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.
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. 6 Item 1.
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. 10 Item 1.
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.
Business (continued) 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.
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.
MBIA Corp. estimates that the average life of its international and structured finance insurance policies in force as of December 31, 2023 is 6 years.
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.
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. 8 Item 1.
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.
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. 13 Item 1.
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.
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, 2023, MBIA Corp. had 168 policies outstanding in its insured portfolio.
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.
Business (continued) 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.
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.
In addition, MBIA Corp. had 27 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 124 credits.
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.
The Company’s loss and LAE reserves as of December 31, 2023 represent case basis reserves and estimates for LAE to be incurred.
The Company’s loss and LAE reserves as of December 31, 2024 represent case basis reserves and estimates for LAE to be incurred.
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. 7 Item 1. Business (continued) 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.
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.
Reinsurance We currently have third-party reinsurance agreements in place covering approximately 2.5% of our insured par outstanding.
Reinsurance We currently have third-party reinsurance agreements in place covering approximately 2.4% of our insured par outstanding.
The agreements can be terminated with six-month notice by either party or as otherwise agreed to by the parties. 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 agreements can be terminated with six-month notice by either party or as otherwise agreed to by the parties. 11 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.
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. 4 Item 1.
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.
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.
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. 10 Item 1.
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.
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. 7 Item 1.
Average annual insured debt service on the portfolio as of December 31, 2023 was $0.4 billion. Refer to “Note 13: 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.
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.
Business (continued) EMPLOYEES AND HUMAN CAPITAL MANAGEMENT As of December 31, 2023, MBIA had 61 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.
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.
As of December 31, 2023, National had $896 million of debt service outstanding related to Puerto Rico. During 2023, 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 $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.
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. Risk Management Our largest risk is the credit exposure in our insured portfolio.
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. 4 Item 1. Business (continued) Risk Management Our largest risk is the credit exposure in our insured portfolio.
We also analyze stressed liquidity scenarios and stressed counterparty exposures. 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. 6 Item 1.
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.
The Model Governance Team is responsible for the Model Governance Policy, as well as other Model Governance related initiatives. Insurance Surveillance and Remediation We surveil and remediate our insured portfolios on an ongoing basis.
The Model Governance Team is responsible for the Model Governance Policy, as well as other Model Governance related initiatives. 5 Item 1. Business (continued) Insurance Surveillance and Remediation We surveil and remediate our insured portfolios on an ongoing basis.
Additionally, MBIA promotes employee volunteerism through its annual company-wide days of service and various volunteer initiatives. 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.
Additionally, MBIA promotes employee volunteerism through its annual company-wide days of service. 8 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.
As of December 31, 2023, the gross par amount outstanding of MBIA Corp.’s insured obligations (excluding $0.7 billion of insured affiliated financial obligations and $18.1 billion of U.S. public finance debt ceded to National), was $2.9 billion. Insurance in force for the above portfolio, which includes all gross insured debt service, as of December 31, 2023 was $3.8 billion.
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.
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.
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.
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.
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.
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.
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 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. The MBIA Foundation is in the process of being legally wound down.
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.
Business (continued) 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. MBIA Insurance Corporation provided 100% reinsurance to its subsidiary, MBIA Mexico S.A. de C.V. ("MBIA Mexico").
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.
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. 5 Item 1.
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.
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 28, 2024 are set forth below: Name Age Position and Term of Office William C.
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 65 Chief Executive Officer and Director (executive officer since July 2005) Joseph R.
There is no assurance that the Amended Plan or a plan that is substantially similar in the treatment of National's claims and rights will ultimately be confirmed and become effective.
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.
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.
Young 51 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.
The Board of Directors of MBIA Inc. appointed Mr. Schachinger to the office set forth opposite his name above on May 3, 2017. Item 1A. Risk Factors References in the risk factors to the “Company” are to MBIA Inc., together with its domestic and international subsidiaries.
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. 13 Item 1A. Risk Factors References in the risk factors to the “Company” are to MBIA Inc., together with its domestic and international subsidiaries.
Risk Factors (continued) 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.
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. 14
See the “Insurance Regulation” section below for a description of these regulatory requirements. As of December 31, 2023, National’s gross par amount outstanding for its ten largest insured U.S. public finance credits totaled $7.8 billion, representing 27.5% of National’s total U.S. public finance gross par amount outstanding.
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.
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.
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.
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, 2023 is 9 years.
Insurance in force, which includes all gross insured debt service, as of December 31, 2024 was $51.2 billion. 3 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.
MBIA Corp.’s Spanish Branch was subject to local regulation in Spain until it was legally closed in May of 2023. 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.
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.
Average annual insured debt service on the portfolio as of December 31, 2023 was $4.1 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.
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.
Fallon 64 Chief Executive Officer and Director (executive officer since July 2005) Anthony McKiernan 54 Executive Vice President and Chief Financial Officer (executive officer since August 2011) Daniel M. Avitabile 50 Assistant Vice President, and President and Chief Risk Officer of MBIA Corp. (executive officer since September 2017) Adam T.
Schachinger 56 Executive Vice President and Chief Financial Officer (executive officer since April 2024) Daniel M. Avitabile 51 Assistant Vice President, and President and Chief Risk Officer of MBIA Corp. (executive officer since September 2017) Adam T. Bergonzi 61 Assistant Vice President and Chief Risk Officer of National (executive officer since September 2017) Christopher H.
On January 1, 2024 PREPA also defaulted on scheduled debt service for National insured bonds and National paid gross claims in the aggregate of $16 million. On August 25, 2023, National and the Oversight Board entered into a First Amendment to the Plan Support Agreement, resolving National's claims in the PREPA Title III case (the "PREPA PSA").
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.
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.
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.
McKiernan joined MBIA in 2000 as a vice president in the Credit Analytics Group, and managed the Corporate Insured Portfolio Management Group prior to becoming the Head of the Structured Finance Insured Portfolio Management Group in 2007. Daniel M. Avitabile is an Assistant Vice President of the Company and President and Chief Risk Officer of MBIA Corp.
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.
Anthony McKiernan was named Executive Vice President and Chief Financial Officer on May 1, 2012 and March 11, 2016, respectively. Immediately prior to those appointments Mr. McKiernan was Vice President and Chief Portfolio Officer of the Company. Mr. McKiernan is also Chairman and Chief Financial Officer of MBIA Corp. 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.
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Business (continued) • International Public Finance: International public finance credits are monitored and remediated in a manner relatively consistent with U.S. public finance transactions.
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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.
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In August 2023, the reinsurance agreement was terminated after the termination of MBIA Mexico's last insurance policy. Insurance Regulation National and MBIA Insurance Corporation are incorporated in and subject to primary insurance regulation and supervision by the State of New York.
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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.
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Holding Company Regulation MBIA Inc., National and MBIA Insurance Corporation also are subject to regulation under the insurance holding company statutes of New York.
Added
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.
Removed
Bergonzi 60 Assistant Vice President and Chief Risk Officer of National (executive officer since September 2017) Christopher H. Young 51 Assistant Vice President, and Chief Financial Officer of National (executive officer since September 2017) Joseph R. Schachinger 55 Controller (executive officer since May 2017) William C.
Added
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.
Removed
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. Joseph R. Schachinger is the Company’s Controller. Prior to being named Controller in May of 2017, since 2009 Mr. Schachinger served as Deputy Controller.
Added
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.
Removed
On November 17, 2023, the Court approved the Disclosure Statement for the Third Amended Plan of Adjustment for PREPA and on December 29, 2023, the Oversight Board filed the Corrected Fourth Amended Title III Plan (the "Amended Plan"), including the PREPA PSA.
Added
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.
Removed
The Amended PSA remains subject to a number of conditions, including (but not limited to) the Title III Court’s confirmation and effectiveness of the Amended Plan, as it may be further amended with the Court’s approval. Confirmation is currently scheduled to begin March 4, 2024.
Added
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.
Removed
While a ruling by the First Circuit that overturns portions of Judge Swain's order would not have an impact on National's settlement with the Oversight Board, a reversal on certain substantive grounds related to the scope of the liens may have an adverse impact on the timing or implementation of the Plan. 14 Item 1A.
Added
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.
Removed
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.
Added
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.
Removed
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.
Added
Our payment obligations after a default vary by deal and by insurance type. Our public finance insurance generally insures scheduled interest and principal.
Removed
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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

12 edited+70 added−0 removed22 unchanged
Biggest changeThere can be no assurance that this recovery will be received in its entirety or in the expected timeframe. 20 Item 1A. Risk Factors (continued) An MBIA Insurance Corporation rehabilitation or liquidation proceeding could accelerate certain of the Company’s other obligations and have other adverse consequences.
Biggest changeSee 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. 16 Item 1A.
Of this amount, $24 million is included in “Insurance loss recoverable” and $33 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.
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.
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 • 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.
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 20 Item 1A.
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.
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.
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.
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.
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 21 Item 1A.
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.
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.
Due to the installment nature of a significant percentage of its premium income, MBIA Corp. has an embedded future revenue stream.
Risk Factors (continued) 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 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.
MBIA Corp. has also recorded significant loss reserves on its residential mortgage-backed securities (“RMBS”) and collateralized debt obligation (“CDO”) exposures, and there can be no assurance that these reserves will be sufficient, in particular if the economy deteriorates.
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.
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. 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.
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. 19 Item 1A.
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, 2023, MBIA Corp. recorded expected RMBS recoveries of $57 million, including recoveries related to consolidated VIEs, on our RMBS transactions, in reimbursement of our past and future expected claims.
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.
Item 1A. Risk Factors (continued) 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.
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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. 15 Item 1A. Risk Factors (continued) Our risk management policies and procedures may not adequately detect or prevent future losses.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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”).
Added
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.
Added
Risk Factors (continued) Private litigation claims could materially adversely affect our reputation, business, results of operations and financial condition.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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. 17 Item 1A.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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. 18 Item 1A.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn addition, the Company's IT department arranges periodic training for Company employees related to best practices to prevent, identify, and report cybersecurity 22 Item 1C. Cybersecurity (continued) incidents. All Company employees are required to participate in scheduled training and are obligated to certify the completion of each training session.
Biggest changeIn addition, the Company's IT department arranges periodic training for Company employees related to best practices to prevent, identify, and report cybersecurity incidents. All Company employees are required to participate in scheduled training and are obligated to certify the completion of each training session.
Governance The Company created an Enterprise Security Council (“ESC”) that is comprised of senior IT management (including the CISO and CIO), Internal Audit and Compliance leaders which meet regularly to evaluate potential security risks to the Company and its IA. The CISO is responsible for performing a thorough examination of any identified or suspected cybersecurity incidents or violations.
Cybersecurity (continued) Governance The Company created an Enterprise Security Council (“ESC”) that is comprised of senior IT management (including the CISO and CIO), Internal Audit and Compliance leaders which meet regularly to evaluate potential security risks to the Company and its IA. The CISO is responsible for performing a thorough examination of any identified or suspected cybersecurity incidents or violations.
There can be no assurance that a future cybersecurity incident would not result in a loss and/or have a material adverse effect on our reputation, business, results of operations, or financial condition.
There can be no assurance that a future cybersecurity incident would not result in a loss and/or have a material adverse effect on our reputation, business, results of operations, or financial condition. 22 Item 1C.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 2. Pr operties The Company leases office space located in Purchase, New York, in which the Company, National, MBIA Corp., and MBIA Services Corporation have 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.
Biggest changeItem 2. Pr operties 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.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed3 unchanged
Biggest changeItem 3. Legal Proceedings For a discussion of the Company’s litigation and related matters, see “Note 19: 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.
Biggest changeItem 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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeManagement’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, 2023, 2022 and 2021: Years Ended December 31, Percent Change In millions 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Net premiums earned $ 30 $ 47 $ 49 -36 % -4 % Net investment income 93 81 58 15 % 40 % Net realized investment gains (losses) (39 ) (30 ) 2 30 % n/m Net gains (losses) on financial instruments at fair value and foreign exchange 8 (47 ) (2 ) -117 % n/m Fees and reimbursements 2 3 3 -33 % - % Other net realized gains (losses) (8 ) (19 ) - -58 % n/m Total revenues 86 35 110 146 % -68 % Losses and loss adjustment 170 143 227 19 % -37 % Amortization of deferred acquisition costs 7 11 11 -36 % - % Operating 40 41 51 -2 % -20 % Total expenses 217 195 289 11 % -33 % Income (loss) from continuing operations before income taxes $ (131 ) $ (160 ) $ (179 ) -18 % -11 % _______________ n/m - Percent change not meaningful.
Biggest changeManagement’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 2023 2022 2024 vs. 2023 2023 vs. 2022 Net premiums earned $ 30 $ 30 $ 47 - % -36 % Net investment income 67 93 81 -28 % 15 % Net realized investment gains (losses) (3 ) (39 ) (30 ) -92 % 30 % Net gains (losses) on financial instruments at fair value and foreign exchange 1 8 (47 ) -88 % -117 % Fees and reimbursements 4 2 3 100 % -33 % Other net realized gains (losses) - (8 ) (19 ) -100 % -58 % Total revenues 99 86 35 15 % 146 % Losses and loss adjustment 191 170 143 12 % 19 % Amortization of deferred acquisition costs 7 7 11 - % -36 % Operating 39 40 41 -3 % -2 % Total expenses 237 217 195 9 % 11 % Income (loss) from continuing operations before income taxes $ (138 ) $ (131 ) $ (160 ) 5 % -18 % 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.
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.
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. 36
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.
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.
Refer to “Note 11: 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.
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.
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 GO.
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").
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. 30 Item 7.
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. 29 Item 7.
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 primarily managed through MBIA Insurance Corporation and its subsidiaries (“MBIA Corp.”).
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.”).
NET REALIZED INVESTMENT GAINS (LOSSES) The net realized investment losses for 2023 and 2022 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 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.
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. 32 Item 7.
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. 31 Item 7.
The graph assumes a $100 investment at the closing price on December 31, 2023 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. 2018 2019 2020 2021 2022 2023 MBIA Inc.
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. 2019 2020 2021 2022 2023 2024 MBIA Inc.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 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, 2022.
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.
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. The Company did not pay cash dividends on its common stock during 2022.
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.
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 2023 or 2022 as we did not write any new insurance business in those years.
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.
Under separate petitions, the Oversight Board subsequently commenced Title III proceedings for the Puerto Rico Sales Tax Financing Corporation (“COFINA”), HTA, PREPA and the Public Buildings Authority (“PBA”) on May 5, 2017, May 21, 2017, July 2, 2017 and September 27, 2019, respectively.
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.
Gains and losses from sales and impairments of AFS securities are recorded in book value through earnings. 31 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.
Gains and losses from sales and impairments of AFS securities are recorded in book value through earnings. 30 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.
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. 29 Item 7.
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.
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 expected to take 12 months.
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.
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.
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. 33 Item 7.
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.
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. 35 Item 7.
OTHER NET REALIZED GAINS (LOSSES) For 2023 and 2022, 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. 33 Item 7.
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. 32 Item 7.
As a consequence, National has paid gross claims in the aggregate amount of $3.0 billion relating to GO bonds, PBA bonds, PREPA bonds and HTA bonds through December 31, 2023, 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.
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.
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.
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.
This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022 results.
This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023 results.
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, 2023, National had total insured gross par outstanding of $28.4 billion.
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.
The following table presents our scheduled gross debt service due on our PREPA insured exposures as of December 31, 2023, for each of the subsequent five years ending December 31, and thereafter: In millions 2024 2025 2026 2027 2028 Thereafter Total Puerto Rico Electric Power Authority (PREPA) $ 137 $ 105 $ 57 $ 20 $ 20 $ 469 $ 808 Corporate Segment Our corporate segment consists of general corporate activities, including providing support services to MBIA Inc.’s subsidiaries and asset and capital management.
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 2025 2026 2027 2028 2029 Thereafter Total Puerto Rico Electric Power Authority (PREPA) $ 105 $ 57 $ 20 $ 20 $ 89 $ 379 $ 670 Corporate Segment Our corporate segment consists of general corporate activities, including providing support services to MBIA Inc.’s subsidiaries and asset and capital management.
Provision for Income Taxes For 2023 and 2022, 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”).
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”). 28 Item 7.
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. 36 Item 7.
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.
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, 2023, 2022 and 2021: Year Ended December 31, In millions except share and per share amounts 2023 2022 2021 Net income (loss) $ (491 ) $ (195 ) $ (445 ) Less: adjusted net income (loss) adjustments: Income (loss) from discontinued operations, net of noncontrolling interest (7 ) (46 ) - Income (loss) before income taxes of our international and structured finance insurance segment and eliminations (249 ) (20 ) (283 ) 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) 19 58 39 Foreign exchange gains (losses) (1) (6 ) 15 25 Net realized investment gains (losses) (72 ) (40 ) 5 Net gains (losses) on extinguishment of debt 1 5 30 Net investment losses related to impairments of securities (2) (8 ) (21 ) - Adjusted net income adjustment to the (provision) benefit for income tax - (1 ) - Adjusted net income (loss) $ (169 ) $ (145 ) $ (261 ) Adjusted net income (loss) per diluted common share (3) $ (3.49 ) $ (2.90 ) $ (5.27 ) ___________________ (1) - Reported within “Net gains (losses) on financial instruments at fair value and foreign exchange” on the Company’s consolidated statements of operations.
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 2024 2023 2022 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) 2 19 58 Foreign exchange gains (losses) (1) 7 (6 ) 15 Net realized investment gains (losses) (3 ) (72 ) (40 ) Net investment losses related to impairments of securities (2) - (8 ) (21 ) Other net realized gains (losses) 2 1 5 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.
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 21, 2024, there were 202 shareholders of record of the Company’s common stock.
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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) RESULTS OF OPERATIONS (continued) 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.
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.
On June 23, 2023, the Oversight Board filed a fiscal plan for PREPA for FY2023, which provided for approximately $2.4 billion of distributions to PREPA bondholders. The University is not a debtor in Title III and continues to be current on its debt service payment.
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.
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.
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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) RESULTS OF OPERATIONS (continued) 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.
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.
However, the University is subject to a standstill agreement with its senior bondholders, which has been extended to May 31, 2024. National is not a party to the standstill agreement. As of December 31, 2023, National had $73 million of debt service outstanding related to the University.
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. 34 Item 7.
(44.91 ) (37.76 ) Remove net unrealized gains (losses) on available-for-sale securities included in other comprehensive income (loss) (2.40 ) (3.96 ) Include net unearned premium revenue in excess of expected losses 2.91 3.08 U.S. Public Finance Insurance Segment Our U.S. public finance insurance portfolio is managed through National.
(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.
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.
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.
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, 2023, 2022 and 2021: Years Ended December 31, In millions except for per share, percentage and share amounts 2023 2022 2021 Total revenues $ 7 $ 154 $ 189 Total expenses 491 302 634 Income (loss) from continuing operations before income taxes (484 ) (148 ) (445 ) Provision (benefit) for income taxes - 1 - Net income (loss) from continuing operations (484 ) (149 ) (445 ) Income (loss) from discontinued operations, net of income taxes (3 ) (54 ) - Net income (loss) (487 ) (203 ) (445 ) Less: Net income (loss) from discontinued operations attributable to noncontrolling interests 4 (8 ) - Net income (loss) attributable to MBIA Inc. $ (491 ) $ (195 ) (445 ) Net income (loss) per basic and diluted common share attributable to MBIA Inc. $ (10.18 ) $ (3.92 ) $ (8.99 ) Adjusted net income (loss) (1) $ (169 ) $ (145 ) $ (261 ) Adjusted net income (loss) per diluted share (1) $ (3.49 ) $ (2.90 ) $ (5.27 ) Weighted average basic and diluted common shares outstanding 48,207,574 49,803,739 49,472,281 ___________________ (1) - Adjusted net income (loss) and adjusted net income (loss) per diluted share are non-GAAP measures.
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 2024 2023 2022 Total revenues $ 42 $ 7 $ 154 Total expenses 483 491 302 Income (loss) from continuing operations before income taxes (441 ) (484 ) (148 ) Provision (benefit) for income taxes - - 1 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 3 4 (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.
As of December 31, 2023, 283,186,115 shares of Common Stock of the Company, par value $1 per share, were issued and 50,862,931 shares were outstanding. 24 Item 5.
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. 24 Item 5.
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.
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 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 2023 2022 Total shareholders' equity of MBIA Inc. $ (1,657 ) $ (882 ) Common shares outstanding 50,862,931 54,852,671 GAAP book value per share $ (32.56 ) $ (16.07 ) Management's adjustments described above: Remove negative book value per share of MBIA Corp.
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 2024 2023 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.
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, 2023 and 2022: December 31, December 31, Percent In millions 2023 2022 Change Assets: Insurance loss recoverable $ 152 $ 107 42 % Reinsurance recoverable on paid and unpaid losses (1) 11 6 83 % Liabilities: Loss and LAE reserves 230 154 49 % Insurance loss recoverable - ceded (2) 1 1 - % Net reserve (salvage) $ 68 $ 42 62 % _______________ (1) - Reported within "Other assets" on our consolidated balance sheets.
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 2024 2023 Change Assets: Insurance loss recoverable $ 165 $ 152 9 % Reinsurance recoverable on paid and unpaid losses (1) 16 11 45 % Liabilities: Loss and LAE reserves 299 230 30 % Insurance loss recoverable - ceded (2) 2 1 100 % Net reserve (salvage) $ 120 $ 68 76 % (1) - Reported within "Other assets" on our consolidated balance sheets.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) RESULTS OF OPERATIONS (continued) POLICY ACQUISITION COSTS AND OPERATING EXPENSES U.S. public finance insurance segment expenses for the years ended December 31, 2023, 2022 and 2021 are presented in the following table: Years Ended December 31, Percent Change In millions 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Gross expenses $ 40 $ 41 $ 51 -2 % -20 % Amortization of deferred acquisition costs $ 7 $ 11 $ 11 -36 % - % Operating 40 41 51 -2 % -20 % Total insurance operating expenses $ 47 $ 52 $ 62 -10 % -16 % Gross expenses represent total insurance expenses before the deferral of any policy acquisition costs.
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 2023 2022 2024 vs. 2023 2023 vs. 2022 Gross expenses $ 39 $ 40 $ 41 -3 % -2 % Amortization of deferred acquisition costs $ 7 $ 7 $ 11 - % -36 % Operating 39 40 41 -3 % -2 % Total insurance operating expenses $ 46 $ 47 $ 52 -2 % -10 % Gross expenses represent total insurance expenses before the deferral of any policy acquisition costs.
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 and changes in the revaluation of euro-denominated liabilities. 2023 included fair value net gains of $14 million on interest rate swaps compared with fair value net gains of $89 million on these swaps for 2022.
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 following table summarizes the consolidated results of our corporate segment for the years ended December 31, 2023, 2022 and 2021: Years Ended December 31, Percent Change In millions 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Net investment income $ 25 $ 22 $ 29 14 % -24 % Net realized investment gains (losses) (33 ) (10 ) 3 n/m n/m Net gains (losses) on financial instruments at fair value and foreign exchange 8 99 56 -92 % 77 % Net gains (losses) on extinguishment of debt 1 5 30 -80 % -83 % Fees 50 51 55 -2 % -7 % Other net realized gains (losses) - - (7 ) - % -100 % Total revenues 51 167 166 -69 % 1 % Operating 77 58 74 33 % -22 % Interest 76 76 75 - % 1 % Total expenses 153 134 149 14 % -10 % Income (loss) from continuing operations before income taxes $ (102 ) $ 33 $ 17 n/m 94 % ____________________ n/m - Percent change not meaningful. 37 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 2023 2022 2024 vs. 2023 2023 vs. 2022 Net investment income $ 30 $ 25 $ 22 20 % 14 % Net realized investment gains (losses) - (33 ) (10 ) -100 % n/m Net gains (losses) on financial instruments at fair value and foreign exchange 14 8 99 75 % -92 % Fees 50 50 51 - % -2 % Other net realized gains (losses) 2 1 5 100 % -80 % Total revenues 96 51 167 88 % -69 % Operating 61 77 58 -21 % 33 % Interest 72 76 76 -5 % - % Total expenses 133 153 134 -13 % 14 % Income (loss) from continuing operations before income taxes $ (37 ) $ (102 ) $ 33 -64 % n/m ____________________ n/m - Percent change not meaningful.
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.
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. 27 Item 7.
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 168 6.52 — $ 71 November 164 7.25 — 71 December 353,578 6.90 — 71 (1) Represents 168 shares in October, 164 shares in November and 330,055 shares in December repurchased in open market transactions as investments in the Company's non-qualified deferred compensation plan.
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 159 3.48 — $ 71 November 56 4.94 — 71 December 1 6.41 — 71 (1) Represents shares repurchased in open market transactions as investments in the Company's non-qualified deferred compensation plan.
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. 27 Item 7.
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.
Confirmation is currently scheduled to begin March 4, 2024. There is no assurance the Amended Plan will ultimately be confirmed and become effective. In the event of a substantially different confirmed plan of adjustment from the Amended PSA, National’s PREPA loss reserves and recoveries could be materially adversely affected. Refer to the following “U.S.
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.
Gross Par Outstanding In millions December 31, 2023 December 31, 2022 Rating Amount % Amount % AAA $ 1,283 4.5 % $ 1,433 4.5 % AA 11,919 42.0 % 13,448 42.5 % A 10,539 37.1 % 9,672 30.5 % BBB 2,394 8.5 % 5,055 16.0 % Below investment grade 2,242 7.9 % 2,044 6.5 % Total $ 28,377 100.0 % $ 31,652 100.0 % U.S.
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.
As of December 31, 2023, National had $808 million of debt service outstanding related to PREPA. On January 1, 2024, PREPA defaulted on scheduled debt service for National insured bonds and National paid gross claims in the aggregate of $16 million. 26 Item 7.
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. 26 Item 7.
The following table presents the credit quality distribution of National’s U.S. public finance outstanding gross par insured as of December 31, 2023 and 2022. 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.
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.
NET GAINS (LOSSES) ON FINANCIAL INSTRUMENTS AT FAIR VALUE AND FOREIGN EXCHANGE For 2022, net losses on financial instruments at fair value and foreign exchange were driven by fair value losses on investments for which the fair value option was elected and investments designated as trading.
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.
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, 2023, the remaining authorization under this share repurchase program was $71 million. During 2022, 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.
As of December 31, 2023 and 2022, the Company’s valuation allowance against its net deferred tax asset was $1.2 billion.
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.
The level and frequency of monitoring of any insured obligation depends on the type, size, rating and our assessed performance of the insured issue. 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.
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.
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. 2023 vs. 2022 GAAP Results Income (loss) from Continuing Operations Before Income Taxes The decrease in consolidated total revenues was principally due to unfavorable changes in fair value gains on interest rate swaps, revenues from variable interest entities (“VIEs”), net realized investment losses and foreign exchange rates.
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.
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 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.
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.
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.
In addition, there was a net increase in net losses and LAE on Puerto Rico related credits in 2023 compared with 2022. 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.
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.
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.
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.
This unfavorable change in foreign exchange was due to weakening and strengthening of the U.S. dollar against the euro in 2023 and 2022, respectively. 2023 included $6 million of gains from fair valuing investments compared with $51 million of losses from fair valuing investments for 2022.
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.
The table below presents repurchases made by the Company or National in each month during the fourth quarter of 2023. 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.
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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) RESULTS OF OPERATIONS (continued) NET REALIZED INVESTMENT GAINS (LOSSES) The increase in net realized investment losses for 2023 compared with 2022 primarily related to sales of securities to generate liquidity to terminate interest rate swaps.
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.
(2) - Reported within "Other liabilities" on our consolidated balance sheets. The insurance loss recoverable as of December 31, 2023 increased compared with December 31, 2022, primarily due to anticipated recoveries on the 2023 PREPA debt service payments, as well as a change in scenarios to reflect the PREPA Amended PSA.
(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.
This unfavorable change was primarily due to the impact of larger increases in interest rates in 2022 than in 2023 on swaps for which we receive floating rates. 2023 also included foreign currency losses of $6 million on euro-denominated liabilities compared with foreign currency gains of $16 million on these liabilities for 2022.
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.
These unfavorable changes were partially offset by a decrease in losses from fair valuing investments and an increase in net investment income. Fair value gains on our interest rate swaps for 2023 were $14 million compared with gains of $89 million for 2022. The decrease was primarily due to the impact of a larger increase in interest rates in 2022.
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.
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. 2023 Business Developments The following is a summary of 2023 business developments: Puerto Rico • During 2023, 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.
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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) RESULTS OF OPERATIONS (continued) 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.
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.
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.
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.
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. 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.
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.
Consolidated VIE revenue for 2023 was a loss of $70 million compared with a gain of $5 million for 2022. Consolidated VIE revenue for 2023 was primarily driven by the reclassification of credit risk losses from accumulated other comprehensive income ("AOCI") to net income (loss) in 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.
Refer to the following “Interest Expense” section of the International and Structured Finance Insurance segment for additional information MBIA Corp.'s surplus note interest. The increase in operating expense was primarily due to an increase in compensation expense primarily related to the Company’s non-qualified deferred compensation plan.
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.
NET INVESTMENT INCOME The increase in net investment income for 2023 compared with 2022 was primarily due to higher yields on investments as a result of investing in a rising interest rate environment.
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.
Economic Environment U.S. economic activity indicators point to modest growth in spending and production, with robust job gains and a low unemployment rate. Inflation remains elevated. With the Federal Open Market Committee (“FOMC”) seeking to achieve maximum employment and 2% inflation, the FOMC has maintained its target range for the federal funds rate at 5.25% to 5.50%.
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.
Refunding activity can vary significantly from period to period based on issuer refinancing behavior. For 2023 and 2022, scheduled premiums earned were $28 million and $32 million, respectively, and refunded premiums earned were $2 million and $15 million, respectively.
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.
Public Finance Insurance Puerto Rico Exposures” section for additional information on our Puerto Rico exposures. Dividends In November of 2023, National declared and paid an as-of-right dividend of $97 million to its ultimate parent, MBIA Inc.
Public Finance Insurance Puerto Rico Exposures” section for additional information on our Puerto Rico exposures.
Interest expense and non-VIE operating expense increased $31 million and $19 million, respectively, for 2023 compared with 2022. The increase in interest expense was primarily due to an increase in the interest rate on MBIA Corp.'s surplus notes.
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.
An amended plan of adjustment for PREPA and related disclosure statement was filed on February 9, 2023. On August 25, 2023, National entered into the First Amendment to the PREPA Plan Support Agreement (the “Amended PSA”) with 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.
The loss and LAE reserve as of December 31, 2023 increased compared with December 31, 2022, primarily related to updating PREPA scenarios to reflect the Amended PSA and extending the effective date of a settlement into 2024. 34 Item 7.
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.
Removed
In December, 23,523 shares were withheld from participants for income tax purposes whose shares of restricted stock vested during the period. Such restricted stock was originally issued to participants under the Company's long term incentive plan.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

88 edited+15 added−15 removed65 unchanged
Biggest changeManagement’s Discussion and Analysis of Financial Condition and Results of Operations (continued) RESULTS OF OPERATIONS (continued) The following table presents our international and structured finance insurance segment results for the years ended December 31, 2023, 2022 and 2021: Years Ended December 31, Percent Change In millions 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Net premiums earned $ 10 $ 11 $ 32 -9 % -66 % Net investment income 23 17 6 35 % n/m Net realized investment gains (losses) (4 ) (1 ) - n/m n/m Net gains (losses) on financial instruments at fair value and foreign exchange (12 ) (7 ) (14 ) 71 % -50 % Fees and reimbursements 7 14 17 -50 % -18 % Other net realized gains (losses) 3 7 1 -57 % n/m Revenues of consolidated VIEs: Net gains (losses) on financial instruments at fair value and foreign exchange (45 ) (14 ) (8 ) n/m 75 % Other net realized gains (losses) (25 ) 19 (15 ) n/m n/m Total revenues (43 ) 46 19 n/m 142 % Losses and loss adjustment 7 (105 ) 123 -107 % n/m Amortization of deferred acquisition costs 8 12 13 -33 % -8 % Operating 22 22 24 - % -8 % Interest 158 127 109 24 % 17 % Expenses of consolidated VIEs: Operating 11 8 6 38 % 33 % Interest 1 3 26 -67 % -88 % Total expenses 207 67 301 n/m -78 % Income (loss) from continuing operations before income taxes $ (250 ) $ (21 ) $ (282 ) n/m -93 % _______________ n/m - Percent change not meaningful.
Biggest changeThe 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 2023 2022 2024 vs. 2023 2023 vs. 2022 Net premiums earned $ 8 $ 10 $ 11 -20 % -9 % Net investment income 11 23 17 -52 % 35 % Net realized investment gains (losses) - (4 ) (1 ) -100 % n/m Net gains (losses) on financial instruments at fair value and foreign exchange (57 ) (12 ) (7 ) n/m 71 % Fees and reimbursements 9 7 14 29 % -50 % Other net realized gains (losses) (1 ) 3 7 -133 % -57 % Revenues of consolidated VIEs: Net gains (losses) on financial instruments at fair value and foreign exchange (23 ) (45 ) (14 ) -49 % n/m Other net realized gains (losses) (14 ) (25 ) 19 -44 % n/m Total revenues (67 ) (43 ) 46 56 % n/m Losses and loss adjustment (7 ) 7 (105 ) n/m -107 % Amortization of deferred acquisition costs 6 8 12 -25 % -33 % Operating 23 22 22 5 % - % Interest 159 158 127 1 % 24 % Expenses of consolidated VIEs: Operating 17 11 8 55 % 38 % Interest 1 1 3 - % -67 % Total expenses 199 207 67 -4 % n/m Income (loss) from continuing operations before income taxes $ (266 ) $ (250 ) $ (21 ) 6 % n/m _______________ n/m - Percent change not meaningful.
Liquidity The primary sources of cash available to MBIA Corp. are: • recoveries associated with insurance loss payments; • installment premiums and fees; and • principal and interest receipts on assets held in its investment portfolio, including the proceeds from the sale of assets.
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.
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.
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.
Furthermore, 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.
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.
Also, refer to "Note 10: 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.
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.
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 payments and LAE on insured transactions; • payments of dividends; • payments of operating expenses, taxes and investment portfolio asset purchases; and • funding share repurchases.
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.
Refer to “Note 10: 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.
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.
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. 50 Item 7.
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. 47 Item 7.
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. 52
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. 49
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, 2023.
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.
Advances by National cannot exceed 3% of its net admitted assets as of the last quarter end. As of December 31, 2023 and 2022, 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, 2023.
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.
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 13: Insurance in Force” for additional information about our insurance claim obligations and exposures under our insurance contracts.
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.
As of December 31, 2023, 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.
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.
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. 51 Item 7.
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. 48 Item 7.
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.
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. 38 Item 7.
As of December 31, 2023, 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.
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.
As of December 31, 2023, 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.
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, 2023, based on actual or estimated underlying ratings, the weighted average rating of the consolidated investment portfolio was in the Aa 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.
Refer to "Note 17: 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.
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.
Principal payments under investment agreements are based on contractual maturity and exclude puttable options. 47 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.
Principal payments under investment agreements are based on contractual maturity and exclude puttable options. 44 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.
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.
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. 39 Item 7.
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. 46 Item 7.
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. 43 Item 7.
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, 2023, VIE notes issued by issuer-sponsored consolidated VIEs totaled $78 million and are not considered contractual obligations of MBIA beyond MBIA’s insurance claim obligation.
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.
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, 2023, MBIA Insurance Corporation had “free and divisible surplus” of $129 million.
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.
As of December 31, 2023 and 2022, 26% and 30%, 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.
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.
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, 2024, the most recent scheduled interest payment date, there was $1.4 billion of unpaid interest on the par amount outstanding of $953 million of the Surplus Notes.
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.
(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 amount includes salvage related to a permitted practice granted by NYSDFS.
(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.
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 6% of the total consolidated investment portfolio.
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.
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, 2023, National has a stand-alone NOL carryforward of $474 million.
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.
Included in the international and structured finance insurance segment’s surplus notes due within one year is $1.4 billion of unpaid interest related to 2013 through 2023 interest payments for which MBIA Insurance Corporation’s requests for approval to pay was not approved by the NYSDFS.
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.
As of December 31, 2023 and 2022, National held cash and investments of $1.3 billion and $2.1 billion, respectively, of which $75 million and $230 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.
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.
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 7% of total assets measured at fair value on a recurring basis as of December 31, 2023 and 2022.
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.
The following table presents information about our insurance loss recoverable and loss and LAE reserves as of December 31, 2023 and 2022.
The following table presents information about our insurance loss recoverable and loss and LAE reserves as of December 31, 2024 and 2023.
As of December 31, 2023, the weighted average credit quality rating of the Company’s AFS fixed-maturity investment portfolio, excluding short-term investments, was Aa and 96% 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.
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.
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; and • recoveries associated with insurance loss payments; 44 Item 7.
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. 41 Item 7.
Below investment grade insurance policies primarily include 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, 2023 and 2022, MBIA Corp. had $596 million and $802 million, respectively, of first-lien RMBS gross par outstanding.
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.
As of December 31, 2023 and 2022, MBIA Corp. held cash and investments of $323 million and $386 million, respectively, of which $41 million was 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.
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.
(2) - Includes financial guarantee and insured derivative related premiums. 49 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 $152 million and $169 million as of December 31, 2023 and 2022, respectively.
(2) - Includes financial guarantee and insured derivative related premiums. 46 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.
For 2023 and 2022, National had statutory net loss of $142 million and statutory net income of $75 million, respectively. Refer to the “National — Claims - Paying Resources (Statutory Basis)” section below for additional information on National’s statutory capital.
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.
As of December 31, 2023 and 2022, the liquidity positions of MBIA Inc. were $411 million and $230 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. 45 Item 7.
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. 42 Item 7.
Level 3 liabilities represented approximately 99% and 82% of total liabilities measured at fair value on a recurring basis as of December 31, 2023 and 2022, 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.
Investing activities Net cash provided by investing activities increased for 2023 compared with 2022 primarily due to higher net proceeds from the sales of investments in connection with generating liquidity to pay the extraordinary dividend and to pay claims.
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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) RESULTS OF OPERATIONS (continued) 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 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.
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.
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 a result of the consolidation of VIEs, loss and LAE excludes losses and LAE benefits of $30 million and $9 million, for 2023 and 2022, respectively, as VIE losses and LAE activity is eliminated in consolidation.
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.
As of December 31, 2023, MBIA Insurance Corporation maintained its minimum requirement of policyholders’ surplus and had 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 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.
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 related to interest rate swaps (substantially all were terminated in 2023); • payments of operating expenses; • funding share repurchases and debt buybacks; and • payment of dividends to shareholders.
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.
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 $1.1 billion and $1.9 billion as of December 31, 2023 and 2022, respectively. As of December 31, 2023, National’s unassigned surplus was $174 million.
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.
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, 2023 and 2022 are presented in the following table: As of December 31, As of December 31, In millions 2023 2022 Policyholders’ surplus $ 147 $ 164 Contingency reserves 5 5 Statutory capital 152 169 Unearned premiums 30 36 Present value of installment premiums (1) 26 34 Premium resources (2) 56 70 Net loss and LAE reserves (1) 27 35 Salvage reserves on paid claims (1) (3) 269 395 Gross loss and LAE reserves 296 430 Total claims-paying resources $ 504 $ 669 ________________ (1) - Calculated using a discount rate of 5.48% and 5.53% as of December 31, 2023 and 2022, respectively.
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 2024 2023 Policyholders’ surplus $ 83 $ 147 Contingency reserves 5 5 Statutory capital 88 152 Unearned premiums 21 30 Present value of installment premiums (1) 20 26 Premium resources (2) 41 56 Net loss and LAE reserves (1) 57 27 Salvage reserves on paid claims (1) (3) 170 269 Gross loss and LAE reserves 227 296 Total claims-paying resources $ 356 $ 504 ________________ (1) - Calculated using a discount rate of 5.42% and 5.48% as of December 31, 2024 and 2023, respectively.
POLICY ACQUISITION COSTS AND OPERATING EXPENSES International and structured finance insurance segment expenses for the years ended December 31, 2023, 2022 and 2021 are presented in the following table: Years Ended December 31, Percent Change In millions 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Gross expenses $ 23 $ 22 $ 25 5 % -12 % Amortization of deferred acquisition costs $ 8 $ 12 $ 13 -33 % -8 % Operating 22 22 24 - % -8 % Total insurance operating expenses $ 30 $ 34 $ 37 -12 % -8 % Gross expenses represent total insurance expenses before the deferral of any policy acquisition costs.
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 2023 2022 2024 vs. 2023 2023 vs. 2022 Gross expenses $ 23 $ 23 $ 22 - % 5 % Amortization of deferred acquisition costs $ 6 $ 8 $ 12 -25 % -33 % Operating 23 22 22 5 % - % Total insurance operating expenses $ 29 $ 30 $ 34 -3 % -12 % Gross expenses represent total insurance expenses before the deferral of any policy acquisition costs.
NET GAINS (LOSSES) ON FINANCIAL INSTRUMENTS AT FAIR VALUE AND FOREIGN EXCHANGE The increase in net losses for 2023 compared with 2022 was primarily due to fair value losses on investments for which the fair value option was elected in 2023 compared with fair value gains in 2022.
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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) RESULTS OF OPERATIONS (continued) 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.
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.
There can be no assurance as to the amount and timing of any future dividends from National. 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.
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’s CPR and components thereto, as of December 31, 2023 and 2022 are presented in the following table: As of December 31, As of December 31, In millions 2023 2022 Policyholders' surplus $ 763 $ 1,545 Contingency reserves 354 379 Statutory capital 1,117 1,924 Unearned premiums 237 262 Present value of installment premiums (1) 101 110 Premium resources (2) 338 372 Net loss and LAE reserves (1) 75 (140 ) Salvage reserves on paid claims (1) 151 288 Gross loss and LAE reserves 226 148 Total claims-paying resources $ 1,681 $ 2,444 ________________ (1) - Calculated using a discount rate of 4.67% and 4.29% as of December 31, 2023 and 2022, respectively .
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 2024 2023 Policyholders' surplus $ 602 $ 763 Contingency reserves 310 354 Statutory capital 912 1,117 Unearned premiums 208 237 Present value of installment premiums (1) 95 101 Premium resources (2) 303 338 Net loss and LAE reserves (1) 130 75 Salvage reserves on paid claims (1) 162 151 Gross loss and LAE reserves 292 226 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.
Financing activities Net cash used by financing activities increased for 2023 compared with 2022 primarily due to the extraordinary cash dividend payment of $409 million to shareholders in 2023, partially offset by a decrease of $130 million of principal paydowns of non-VIE related debt.
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. 40 Item 7.
We did not defer a material amount of policy acquisition costs during 2023 or 2022 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.
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.
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.
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.
NET INVESTMENT INCOME The increase in net investment income for 2023 compared with 2022 was primarily due to the acceleration of accretion to par value upon the redemption of securities that were purchased at a discount.
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.
December 31, December 31, Percent In millions 2023 2022 Change Assets: Insurance loss recoverable $ 31 $ 30 3 % Reinsurance recoverable on paid and unpaid losses (1) 2 4 -50 % Liabilities: Loss and LAE reserves 243 285 -15 % Net reserve (salvage) $ 210 $ 251 -16 % _______________ (1) - Reported within "Other assets" on our consolidated balance sheets. 40 Item 7.
December 31, December 31, Percent In millions 2024 2023 Change Assets: Insurance loss recoverable $ 20 $ 31 -35 % Reinsurance recoverable on paid and unpaid losses (1) - 2 -100 % Liabilities: Loss and LAE reserves 227 243 -7 % Net reserve (salvage) $ 207 $ 210 -1 % _______________ (1) - Reported within "Other assets" on our consolidated balance sheets.
National had positive earned surplus as of December 31, 2023 from which it may pay dividends, subject to the limitations described above. During 2023, National paid a $550 million special dividend that was approved by the NYSDFS to its ultimate parent, MBIA Inc.
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.
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. MBIA Corp.’s Spanish Branch was subject to local regulation in Spain.
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.
Certain premiums may be eliminated in our consolidated financial statements as a result of the Company consolidating VIEs.
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. 37 Item 7.
These amounts include the gross par outstanding related to transactions that the Company consolidates under accounting guidance for VIEs and includes international exposure of $39 million and $149 million, as of December 31, 2023 and 2022, respectively. In addition, as of December 31, 2023 and 2022, MBIA Corp. insured $117 million and $201 million, respectively, of CDOs and related instruments.
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, Insured Investments at fair value represented $135 million or 7% of consolidated investments, of which $125 million or 6% of consolidated investments were Company-Insured Investments.
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.
We may experience considerable incurred losses in certain of these 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.
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.
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.
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.
Due Within In millions Total 1 Year U.S. public finance insurance segment: Gross insurance claim obligations (1) $ 665 $ 641 Lease liability 20 3 Corporate segment: Long-term debt 355 18 Investment agreements 286 30 Medium-term notes 707 38 International and structured finance insurance segment: Gross insurance claim obligations (1) 550 68 Surplus notes 3,744 1,492 Total $ 6,327 $ 2,290 ________________ (1) - Amounts exclude any recoveries the Company expects to receive related to these estimated payments or to prior paid claims.
Due Within In millions Total 1 Year U.S. public finance insurance segment: Gross insurance claim obligations (1) $ 774 $ 131 Lease liability 7 7 Corporate segment: Long-term debt 336 63 Investment agreements 256 41 Medium-term notes 629 4 International and structured finance insurance segment: Gross insurance claim obligations (1) 425 24 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.
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.
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”).
In May of 2023, MBIA Corp.’s Spanish Branch was legally closed. 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.
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.
The following table summarizes our consolidated cash flows for the years ended December 31, 2023, 2022 and 2021: Years Ended December 31, Percent Change In millions 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Statement of cash flow data: Net cash provided (used) by: Operating activities $ (195) $ (418 ) $ 511 -53 % n/m Investing activities 767 623 (61 ) 23 % n/m Financing activities (542) (285 ) (457 ) 90 % -38 % Effect of exchange rate changes on cash and cash equivalents - (2 ) - -100 % n/m Cash and cash equivalents - beginning of period 78 160 167 -51 % -4 % Cash and cash equivalents - end of period $ 108 $ 78 $ 160 38 % -51 % _________________________________ n/m - Percent change not meaningful.
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 2023 2022 2024 vs 2023 2023 vs 2022 Statement of cash flow data: Net cash provided (used) by: Operating activities $ (176 ) $ (195 ) $ (418 ) -10 % -53 % Investing activities 287 767 623 -63 % 23 % Financing activities (132 ) (542 ) (285 ) -76 % 90 % Effect of exchange rate changes on cash and cash equivalents - - (2 ) - % -100 % Cash and cash equivalents - beginning of period 108 78 160 38 % -51 % Cash and cash equivalents - end of period $ 87 $ 108 $ 78 -19 % 38 % 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.
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.
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.
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 NYSDFS will approve such requests and, if the NYSDFS does approve such dividends, in what amounts.
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.
INTEREST EXPENSE Interest expense relates to MBIA Corp.’s surplus notes that are indexed to the 3-month secured overnight financing rate ("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%.
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.
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 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.
Currently, we do not intend to use reinsurance to decrease the insured exposure in our portfolio. Refer to “Note 13: 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.
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.
For 2022, the losses and LAE benefit primarily related to an increase in risk-free rates used to discount net loss reserves, which resulted in a decline in the value of expected future payments, net of future recoveries, primarily on our first-lien RMBS portfolio. An increase in expected salvage collections from insured CDOs also contributed to the losses and LAE benefit.
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.
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.
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.
In addition, in 2023, National declared and paid an as-of-right dividend of $97 million to its ultimate parent, MBIA Inc. During 2022, National declared and paid an as-of-right dividend of $72 million to its ultimate parent, MBIA Inc.
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.
Due to the transaction-specific nature inherent in fees and reimbursements, these revenues can vary significantly from period to period. REVENUES OF CONSOLIDATED VIEs The net losses of consolidated VIE revenues for 2023 included the reclassification of $45 million of credit risk losses from AOCI to net income (loss).
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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) LIQUIDITY AND CAPITAL RESOURCES (continued) Consolidated Cash Flows Information about our consolidated cash flows by category is presented on our consolidated statements of cash flows.
Consolidated Cash Flows Information about our consolidated cash flows by category is presented on our consolidated statements of cash flows.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe following table presents the estimated pre-tax change in fair value of the Company’s financial instruments as of December 31, 2023 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 $ (28 ) $ (14 ) $ 14 $ 28 CREDIT SPREAD SENSITIVITY Credit spread sensitivity can be estimated by projecting a hypothetical instantaneous increase or decrease in credit spreads.
Biggest changeThe 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 ) $ 7 $ 14 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, 2023 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 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 following table presents the estimated pre-tax change in fair value of the Company’s financial instruments as of December 31, 2023 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 $ 182 $ 106 $ 47 $ (37 ) $ (67 ) $ (90 ) 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.
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 $ 173 $ 106 $ 46 $ (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.
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 $ 33 $ (30 ) $ (104 ) 53
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 $ 29 $ (36 ) $ (101 ) 50

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