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MBIA Inc (MBI) Q1 2024 Earnings Call Transcript Highlights: Navigating Challenges with ...

  • Consolidated GAAP Net Loss: $86 million for Q1 2024, improved from $93 million in Q1 2023.

  • Earnings Per Share (EPS): Negative $1.84 in Q1 2024, slightly better than negative $1.86 in Q1 2023.

  • Adjusted Net Loss: $24 million for Q1 2024, compared to $1 million in Q1 2023.

  • Book Value Per Share: Decreased to negative $33.80 as of March 31, 2024, from negative $32.56 at the end of 2023.

  • Total Assets: Approximately $710 million as of March 31, 2024.

  • Unencumbered Cash and Liquid Assets: $376 million as of March 31, 2024, down from $411 million at the end of 2023.

  • Statutory Net Loss (National): $11 million for Q1 2024, a decline from a net income of $11 million in Q1 2023.

  • Statutory Capital (National): Approximately $1.1 billion as of March 31, 2024, consistent with year-end 2023.

  • Claims-Paying Resources (National): $1.7 billion, consistent with year-end 2023.

  • Gross Par Outstanding (National): $27.8 billion, down $600 million from year-end 2023.

  • Statutory Net Loss (MBIA Insurance Corp): $35 million for Q1 2024, worsened from $20 million in Q1 2023.

  • Statutory Capital (MBIA Insurance Corp): $119 million as of March 31, 2024, down from $152 million at year-end 2023.

  • Claims-Paying Resources (MBIA Insurance Corp): $468 million, down from $504 million at year-end 2023.

  • Insured Gross Par Outstanding (MBIA Insurance Corp): $2.7 billion, a 5% decrease from year-end 2023.

Release Date: May 10, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • MBIA Inc reported a lower GAAP net loss in Q1 2024 compared to Q1 2023, indicating a slight improvement in financial performance.

  • The company has maintained a strong liquidity profile at the holding company level, providing flexibility for future financial maneuvers such as debt repurchases.

  • MBIA Inc has successfully reduced its gross par outstanding, decreasing by approximately $600 million from year-end 2023, which could indicate effective risk management.

  • The company has managed to keep its claims-paying resources and statutory capital stable at $1.7 billion and $1.1 billion respectively, ensuring continued operational capability.

  • MBIA Inc has been proactive in managing its euro-denominated liabilities, purchasing Medium Term Note liabilities at prices accretive to equity, which should reduce future exchange rate volatility.

Negative Points

  • MBIA Inc reported a consolidated GAAP net loss of $86 million for Q1 2024, continuing to struggle with profitability.

  • The company experienced higher losses from its insurance operations, particularly due to adjustments in the timing of debt restructuring plans.

  • MBIA Insurance Corp reported a decrease in statutory capital from $152 million at year-end 2023 to $119 million in Q1 2024, reflecting ongoing financial challenges.

  • The adjusted net loss worsened to $24 million in Q1 2024 from $1 million in Q1 2023, indicating deteriorating core operational performance.

  • Uncertainties remain high with pending court rulings and restructuring plans, such as those related to PREPA, which could impact future financial stability.

Q & A Highlights

Q: Can you talk about your current liquidity profile at the holding company and your appetite and ability to continue repurchasing some of those liabilities? A: (William Fallon - CEO, Director) After the dividend at the end of last year, our liquidity at the holding company is stronger than it's been in quite a while. We continue to look for opportunities to buy debt or stock to use that liquidity effectively. We believe these actions are value-adding to our shareholders.

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Q: Are all of the investment agreements, medium term notes, and unsecured notes on the holding company balance sheet able to be repurchased or redeemed in the open market, or do some have to wait till maturity? A: (Joseph Schachinger - CFO) The investment agreements must wait for maturity as there are no provisions to call those earlier. However, we can purchase the medium term notes and the unsecured debt, and we aim to be opportunistic about getting those at prices accretive to equity.

Q: What do you think is contributing to the lack of issuance of several opinions, particularly from Judge Swain, regarding the PREPA case? A: (William Fallon - CEO, Director) It's believed that Judge Swain is waiting for the First Circuit to issue their opinion before she issues the confirmation. It's difficult to predict when these opinions will be issued, but it could happen any day.

Q: At what level do you become more active in buying stock back? A: (William Fallon - CEO, Director) We've done a lot of stock buyback out of National, which currently doesn't have capacity. We continue to evaluate the best use of cash at the holding company level and what's best for our shareholders, considering where the stock is trading.

Q: Can you provide an overview of MBIA's first quarter 2024 financial results? A: (Joseph Schachinger - CFO) MBIA reported a consolidated GAAP net loss of $86 million, a slight improvement from last year's $93 million. The adjusted net loss was $24 million, primarily due to higher loss and LAE at National. Our focus remains on managing our liquidity and assets effectively amidst these conditions.

Q: What are MBIA's plans regarding the resolution of its Puerto Rico exposure and the potential sale of the company? A: (William Fallon - CEO, Director) Our primary objectives are focused on the resolution of our remaining Puerto Rico exposure, particularly with PREPA, and then restarting the process to sell the company. We are awaiting rulings from the court that will significantly impact our strategies moving forward.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.