Q4 2020 MBIA Inc Earnings Call
Paul.
Okay.
[music].
Welcome to the MBIA, Inc, fourth quarter and full year 2020 financial results Conference call.
I would now like to turn the call over to Greg Diamond managing director of Investor and media Relations at MBIA. Please go ahead Sir.
Thank you Maria.
Welcome to Mbia's conference call for our full year on fourth quarter 2020 financial results. After the market closed yesterday, we issued and posted several items on our websites, including our financial results.
Jay.
Orderly operating supplements and statutory financial statements for both MBIA Insurance Corporation and National Public Finance guarantee Corporation.
We also posted updates to the listings of our insurance portfolios rigor.
Regarding today's call. Please note that anything said on the call is qualified by the information in the company's 10-K and other SEC filings as our company's definitive disclosures are incorporated in those documents.
We urge investors to read our 10-K as it contains our most current disclosures about the company and its financial and operating results.
The 10-K also contains information that may not be addressed on today's call.
For definitions and reconciliations of the non-GAAP terms included in our remarks today.
Also included in our 10-K as well as our financial results report and our quarterly operating supplement.
Recorded replay of today's call will become available approximately two hours. After the end of the call and the information for accessing it was included in last week's press announcement and in the financial results report that was posted yesterday on MBIA websites.
Now I'll read our safe Harbor disclosure statement however.
Our remarks on today's conference call May contain forward looking statements important factors, such as general market conditions, and the competitive environment could cause our actual results to differ materially from the projected results referenced in our forward looking statements.
Risk factors are detailed in our 10-K, which is available on our website at MBIA dotcom.
The company cautions not to place undue reliance on any such forward looking statements.
The company also undertakes no obligation to publicly correct or update any forward looking statements. If later becomes aware that such statement is no longer accurate.
For our call today, Bill Fallon and Anthony Mckiernan will provide some introductory comments and then a question and answer session will follow.
Now here is bill Fallon.
Thanks, Greg.
Good morning, everyone. Thank you for being with us today.
After the fourth quarter ended we had two significant developments of note.
The Army has put back several with credit Suisse.
By planned support agreement for PSA for the Puerto Rico T O debt.
The Army has put back set them up with credit Suisse can't after more than 11 years of litigation and resulted in credit Suisse paying MBIA insurance Corp for $600 million.
Regarding a new PSA for Puerto Rico National was the signing party to this new agreement that was announced last week.
While both of these developments occurred in 2021.
They were both reflected on our fourth quarter and full year 2020 financial results.
For the credit Suisse settlement, the 600 million dollar recovery, which reflected an irrelevant MBIA insurance Corp accounts.
For the Puerto Rico P. S. A its economics were reflected within the cash flow scenarios and probability weightings that we use to calculate national's loss expenses and reserves.
Turning to our bottom line financial results.
The company's $81 million net loss for the fourth quarter of 2020 was caused primarily by the $103 million.
Loss and loss adjustment expense for.
Quarter.
MBIA insurance Corp accounted for approximately 70 per cent of the loss expense, which primarily resulted from reduced estimated recoveries on the Zohar cdos.
As we have noted previously we do not believe the financial performance of MBIA Insurance Corp has an impact on MBIA, Inc. Shareholders.
The remaining 30 per cent of loss expense that resulted from national was primarily due to the increase in risk free discount rates that caused a reduction in the present value of the estimated recoveries on claims largely related to Puerto Rico credits.
Last week, when national became assigning partied to the revised Puerto Rico PSA approximately 62 per cent a bondholder supported the agreement.
Subsequently the federal oversight and management Board has announced that it has achieved the PSA threshold detainment level of 70% bondholder support for the revised agreement.
Please note that national has the unilateral right to terminate its participation in the revised PSA on or prior to March 31 2021.
In the Meanwhile, we continue to support the implementation of the restructuring support agreement for the Puerto Rico Electric power authority or PREPA and pursue resolution for the debt obligations for the Puerto Rico Highway and transportation authority or H T E.
Regarding National's litigation against certain underwriters of some of its insured Puerto Rico debt.
We are waiting for resolution of the defendants motion to dismiss the case, which was fully briefed as of November 32020.
Most of the credits in our insurance portfolios continue to perform consistent with our expectations.
Outstanding gross par for the insured portfolios continues to reduce.
National's insured portfolio declined to $42 billion at year end down $2 billion from the previous quarters and.
At December 31, 2020, National's leverage ratio gross par to statutory capital was 21 to one.
During 2020 National acquired 26 4 million shares of MBIA common stock at an average price of $7 50 per share.
As of February 22021 and beyond.
I had $53 7 million shares outstanding.
Since the end of 2016, the company has repurchased 86 million shares.
On a common stock, which we believe has contributed substantial value to MBIA, Inc. Shareholders.
Now Anthony will cover the financial results.
Thanks, Bill and good morning.
I will begin with a review of our fourth quarter and fiscal year end 2020, GAAP and non-GAAP results.
Company reported a consolidated GAAP net loss of $81 million or a negative $1.64 per share for the fourth quarter ended December 31, 2020, compared to a consolidated GAAP net loss of $243 million or a negative $3.21 per share for the for.
Quarter ended December 31, 2019.
The lower net loss this quarter was driven by several factors higher V. I a income in Q4 2020, primarily due to an increase on our R. M. B S put back recoveries, reflecting the settlement with credit Suisse.
Loss and loss adjustment expense at National.
Lower impairments on investments.
Lower consolidated V Ie expense several V I E where D. Consolidated in 2020 due to the repayment of insured debt by the issuer and the related elimination of our insurance coverage.
These items were somewhat offset by foreign exchange losses on financial instruments, and lower net investment income due to lower invested assets at national.
Loss in LAE incurred at National this quarter was primarily due to the increase in risk free rates used to discount Puerto Rico assumed losses on recoveries.
There were no material changes to our loss scenarios.
As Bill stated earlier results of the analysis related to the G. O P. S. A national conditionally entered into fell within our current estimates of G O loss reserves on recoveries.
Loss and loss adjustment expense this quarter at MBIA Corp was higher than the prior comparable quarter, primarily due to a reduction in estimated recoveries on claims paid on the Zohar cdos.
The company's adjusted net loss, a non-GAAP measure was $36 million or negative <unk> 74 per diluted share for the fourth quarter of 2020 compared with an adjusted net loss of $95 million were a negative $1.25 per diluted share for the fourth quarter of 2019.
The favorable change was primarily due to lower loss and LAE at national on a consolidated V. I a loss in Q4 2019 related to the since the consolidated Kofinis exposure.
Somewhat offset by lower earned premiums and net investment income for national.
Now onto the full year 2020 results.
The company reported a consolidated GAAP net loss of $578 million or a negative $9 78 per share for the fiscal year ended December 31, 2020, compared to a consolidated GAAP net loss of $359 million or a negative $4 43 per share for the fiscal year ended December.
31 2019.
The higher net loss year over year was driven by greater loss and LAE at MBIA Corp, due primarily to decreased ex.
Expected recoveries related to the Zohar cdos and at national related to certain of its Puerto Rico exposures with H T a driving the increase.
GAAP discount rates reduced year over year, resulting in a partial benefit.
Total revenues of $282 million in 2020 were comparable with the prior year, although the composition of revenues changed there were higher consolidated via E revenues in 2020 due to increases in our MBS put back recoveries and gains from deconsolidation of <unk> versus losses in 2019.
In addition in 2019, we recognize losses on an impaired security held at National that was sold in early 2020.
These revenue increases were offset by lower gains on investments at national and lower net investment income and earned premiums in 2020.
The company's adjusted net loss for the year ended December 31, 2020 was $173 million or a negative $2.93 per diluted share compared with an adjusted net loss of $17 million or negative 21 cents per diluted share for the year ended December 31 2019.
The unfavorable change was primarily due to higher loss in LAE on national and lower earned premiums and net investment income somewhat offset by lower interest and operating expenses.
Book value per share decreased to $2 55 per share as of December 31, 2020, compared to $10 40 per share as of December 31, 2019, primarily due to the 2020 net loss for $578 million and nearly 200 million.
Dollar spend for MBIA, Inc share repurchases, partially offset by unrealized gains on investments and 26 million fewer net shares outstanding due to the share repurchases during the year.
We believe that the impact on book value, resulting from cumulative share repurchases should ultimately improve shareholder value.
In addition, the negative GAAP book value of MBIA Insurance Corp, which includes accrued but unpaid interest on its surplus notes is materially contributed to the decline in consolidated book value.
MBIA management believes MBIA Corp, does not have significant economic impact on MBIA, Inc. Shareholder value, which is why it is one of the book value adjustments implemented by management.
In the event consolidated book value could become negative in the future are primarily due to MBIA corp's negative contribution it does not reflect any solvency issues for MBIA, Inc. And it's also why in many ways statutory filings for a more accurate portrayal of economic value at the operating companies.
I will now spend a few minutes on the corporate segment balance sheet and the insurance companies.
The corporate segment, which primarily includes the activity of the holding company MBIA, Inc. Had total assets of $954 million as of December 31, 2020.
Within this total are the following material items.
Unencumbered cash and liquid assets held by MBIA, Inc totaled $294 million as of December 31, 2020 versus $375 million as of December 31, 2019.
The decrease was primarily due to calling the remaining $115 million of MBIA, Inc. Six 4% notes due in August 2022 at par.
Partially offset by the receipt of the as of right dividend from national of $81 million.
There were approximately $500 million of assets at market value pledged to the gifts and the interest rate swaps supporting legacy <unk> operation.
As of December 31, 2020, there were $12 million of tax deposits made by national under our tax sharing agreement that had not yet been refunded to national or released to MBIA, Inc, and which represented the remaining portion of National's 2018 tax deposits.
As we have stated in recent prior quarters tax escrow releases are not expected to be a meaningful contributor to holding company liquidity in the future.
Turning to the insurance company's statutory results National reported statutory net income of $41 million for the quarter end December 31, 2020 versus net income of $4 million for the quarter ended December 31 2019.
The favorable result was due to lower loss and LAE, mostly as a result of lower statutory discount rates, partially offset by higher taxes.
For the year ended December 31, 2020 National reported a statutory net loss of $82 million versus net income of $39 million for the year ended December 31 2019.
Unfavorable result was due to lower capital gains as from 2019 national benefited from the sale of its PREPA and casino bonds as well as lower earned premiums and investment income somewhat offset by lower loss and LAE.
As of December 31, 2020 National has paid $1 $6 billion and it's an inception to date gross claims on its insured Puerto Rico bonds.
As of December 31, 2020, National's total fixed income investment portfolio, including cash and cash equivalents had a book adjusted carrying value of $2 billion.
Statutory capital was $2 billion impacted from year end 2019 by its purchases of MBIA, Inc shares in its year to date net loss.
Claims paying resources totaled $3 $1 billion.
Insured gross par outstanding reduced by $2 billion during the quarter and now stands at $41 $9 billion.
Turning to MBIA insurance Corp. The statutory net loss was $54 million for the fourth quarter of 2020 compared to a statutory net loss of $73 million for the fourth quarter of 2019.
The favorable result was due to higher premium revenue and lower loss and LAE, partially offset by higher foreign exchange losses.
For the year ended December 31, 2020, MBIA Insurance Corp reported a statutory net loss of $202 million compared to a statutory net loss of $141 million for the year ended December 31 2019.
The unfavorable result was due to higher loss in LAE driven by the decrease in interest expected recoveries on the Zohar Cdos.
As of December 31, 2020, the statutory capital of MBIA Insurance Corp was $273 million versus $476 million as of December 31, 2019 claims paying resources totaled $992 million in cash and liquid assets of 130 million.
Have remained relatively consistent throughout the year.
As Bill mentioned due to the settlement with credit Suisse. MBIA Corp received a payment of $600 million in February 2021.
The settlement amount was reflected in MBIA Corp, 's 2020 year end as an adjustment to salvage reserves on claims paid and statutory capital.
MBIA Corp's insured gross par outstanding was $7 $7 billion as of December 31, 2020, due to some large paydowns in Q4.
With credit Suisse behind it N.
MBIA Corp, 's largest remaining legacy remediation and projected recoveries on related to the Zohar cdos.
And now we will turn the call over to the operator to begin the question and answer session.
Yeah.
Thank you. The floor is now opened for questions. If you wish to ask a question at this time.
Press Star then the number one on your telephone keypad.
Thats Star one if at any point. Your question has been answered and you wish to remove yourself from the queue press the pound key.
Our first question comes from the line of total mainland China, That's K B W.
Hey, good morning, guys. Thanks for taking my question.
Yeah. So can you guys provide some details on what you mean by the conditions that need to be net for you to continue on your support.
For the agreement.
In your view is it possible for new GL and its PVA other deal to go through on without.
Resolution HCA as well.
Yes, Tommy Thanks for your question you focused on the right issue, which is the.
The attention now is turning to HCA, whether or not it needs to be a complete agreement or whether certain issues need to be addressed prior to.
March 31st remains to be seen but that is the focus in.
That's what the priority is at this point.
Okay and can you discuss near line kind of stand in terms of trying to escalate HD resolution.
On the way or did you just kind of day just getting started.
He had unfortunately everything on an eye on that as confidential. So there's not much I can comment on at this point, but given that there was agreement and that there is a date of March 31.
It's reasonable to assume that parties are now focused on it.
Okay makes sense.
Secondly, you noted that you named the three discount rate, which had a negative impact on expected recoveries with debt.
Based on year end rate.
It's closer to 1% or did it reflect more recent rise in rates equity came true.
What I'm getting at is just saying it needs to be another day.
It was year end timing.
We based the discount rates on on the.
The results as of the end of the year.
Okay. So at the end of the first quarter given the recent RASM range, we expected to pay and other.
I'm sitting on there.
Depending on where we are at the end of the quarter.
Adjusted rates accordingly at that time, and if they're higher all things being equal we would probably have an impact on the recoveries.
Okay makes sense.
Okay, and then last week, we just walk through kind of where the.
Thanks for your capital thing take home pay for National Mi.
And then just mean the tax escrow release I think you said that's pretty much the euro and then is the AGM a dividend.
Which I think around $80 million and then there is potential special dividend can you just hang on.
Make sure we're kind of theory on that.
Net debt, what they should look like going forward.
Sure So let's start with the as of right dividends. So.
As of right dividend for 2020 was about 81 million.
A million dollars.
We would expect given national's investment base debt.
As of right next November would be probably somewhere in the realm of $60 million at this point.
And then a few trials of Reits will depend on just the level of <unk>.
National is managed assets and and investment yields.
Going forward.
The tax escrow as we said, it's down to $12 million at the end of the year.
Going forward, having settled remaining tax items in 2021, just use. The example, if national makes money it will contribute additional deposits to the tax escrow that would be all things being equal paid out two years later to.
For the holding company, depending on National's performance, if national loses money in 2021.
It'll have an NOL of its own that it creates but all in again I would not expect tax escrow releases to be a material contributor and then special dividends again, it's at some point as I think we've said before when Puerto Rico is it's more settled and understood we would potentially.
We look.
For a special dividend from from international.
In the meantime, when you look at MBIA, Inc. As you know we've been bolstering the cash position and liquidity profile of thing for last several years, we repaid the remainder of Inc. 's 2022.
Debentures in the fourth quarter, so with our cash position today.
And there's not a substantial amount of debt coming due the next few years, we're really looking more towards the 2020 for 2025 time frame. When you just consider as of right dividends on a normal investment in commenting so we're well positioned for the next few years at the holding company.
The other thing.
Our next question comes from around the impairment Effemination partners.
Hey, guys. Good morning, I wanted to ask a big picture question. So looking at the past few years, you've executed on our capital allocation strategy that frankly makes Henry Singleton on the outsiders look timid 17, you've grown true economic value.
By 68% to 42 Bucks a share now almost any other stock still trades at like a six of liquidation value basically.
Could be the most mispriced security on the stock market I do the math and you guys have something like $1 billion of excess capital at National Day, you could distribute post Puerto Rico, which is two five times today's market cap I mean, what am I missing here stock could be up three other key there'll be trading at half of liquidation value.
Oscar Wilde's famous last words for either the wallpaper goes or I do on this feels like the same either valuations crazy right.
And Theres really not much I can say range, you've described some of the financial metrics accurately.
As you know, we've repurchased a substantial substantial amount of stock.
And roughly the last five years I think it's over 60%.
I mentioned, the 86 million share and if so.
We don't comment per se on.
The stock price relative to some of the metrics.
So I'm not sure I can add much more to the commentary that you just laid out.
Got it and then just the follow up to that I mean, you know as you think going forward. If you bought back an.
On an incremental 20 million shares even at 12 box, which I think you have the capacity for national I get to know you know adjusted book value at liquidation value true intrinsic value of 59 Bucks a share.
Fox at whatever seven eight bucks, so I'm just trying to figure out like if.
This is third grade math, it's not differential equations for Bill you own $2 4 million shares I think so you know at 60 Bucks per $160 million of net worth personally pretty good how do we get there like what how do you think about that.
For shareholders for yourselves.
Uh huh.
How are you thinking about the situation.
It'll be valuable security and the equity.
As you know the the key issue for the shareholders is Puerto Rico at this point and everyone is aware of that.
It's obviously a complex situation there was I think.
Quite a bit of attention last week with the PSA.
And the fact that at least the parties involved the words recently seem to generate more urgency or indicate margins here on trying to resolve Puerto Rico now the key is whether the actions followed awards and then following up on some other metrics that you.
I have mentioned.
Sure I think for shareholders is being able to move money from national to the holding company.
The exposure that is the insured portfolio reduces and as the exposure to reduce them.
So that's how it works.
And that's where the focus is and as I've said.
For quite a while the emphasis is on Puerto Rico right now because that's the key.
To frame, the cash up and reducing the sort of distressed exposures at national.
And then being able to move money up to the holding company. So again, that's where the emphasis is.
Got it yeah. I mean, you guys have done an extraordinary job actually growing intrinsic value per share, even with even with Puerto Rico, even with not writing new business. It's a it's.
Frankly extraordinary so anyway very excited to be partnering with you here.
Thank you for your call.
Okay.
Our next question comes from line of talent.
Alan Weinstein.
Excellent.
Hi, gentlemen, thank you for taking my question.
A similar question to the gentleman prior had been on long term shareholder Bill and grew up on the municipal bond business and I guess my question has to do on enhancing long term shareholder value.
What is your plan post quarter leeco.
To enhance shareholder value since we're not writing new insurance.
What does the business look like.
Three years down the road and how do we.
Make the stock perform the way, we all think it should.
First off thank you for the question Alan in terms of.
What things look like at this point in time after Puerto Rico.
Generically there are a couple of things people could do we as a company have looked at lots of different alternatives for I am aware of obviously other runoff companies that have looked to.
Diversify get into other businesses, we've looked at lots of things. We've concluded that the best thing for shareholders. Given the situation is to run off the portfolio that is the insured portfolio.
Yet as much of the cash up to the holding company and available to the shareholders. That's how we think we can enhance shareholder value at this point in time.
And therefore to your question the real issue is one of being able to do that in large quantities, obviously the amount of dollars coming from national and the speed at which we can do it and again similar to the last call on that all focuses on Puerto Rico. So once we're able to do that.
To the extent there are things that we can do to eliminate other exposures, sometimes you see refunding that have taken place in the portfolio. Many of those are not within our control.
Municipalities to refinance their exposure.
But that's how I think we can increase shareholder value.
And again that will continue to be the focus so again, its Puerto Rico and then it's getting the cash up to the holding company.
Where we think we can.
Really make it clear and transparent debt there is value for the shareholders.
Okay. Thank you. Thank you for taking my question I appreciate it thank you.
Yeah.
Our next question comes from the line of Paul Saunders of Hutch capital.
Good morning, guys. Thanks for thanks for taking my questions.
On a couple of questions just on MBIA Corp.
Congrats by the way on the credit Suisse settlement.
So on that items, specifically can you provide any color on on what you plan to do with the $600 million on a capital their core.
So sure good morning.
Okay.
Given that we have the money in the door right now.
The good news is corp, and the best liquidity position, it's been in I, probably cant remember back too.
Post financial crisis, So we need to look at now is.
The following one is how do we position the funds from an investment portfolio standpoint.
Optimize returns from cover future policyholder claims.
For two to the degree that we may consider repaying some of or all of the MZ funding facility.
We need to look at the balance between.
The investment portfolio strategy, and possibly paying that down with.
Credit Suisse funds, that's subject to New York Department of financial Services' approval.
But at that point again, it really becomes more of a normalized situation for Corp, where claims paying resources have primarily been in the form of.
Recoveries for last.
Many years and now we're in a position where we actually have some of those recoveries monetized and it's really getting the investment portfolio.
Right size to handle future claims.
And then just as a follow up for that if you don't mind as it relates to Zohar.
An empty funding.
I mean again can you provide kind of any color on on what it what monetizing that portfolio looks like and timing and then just as.
As your discussions with the New York regulator goes how do they think about that in terms of.
You know, even if say Zohar zero I know, it's not but would they still allow core resources to be used to pay that.
Debt there at MZ funding.
Well, let me let me go to your first part of the question. We are in the midst of a chapter 11 bankruptcy process in the state of Delaware related to the zone ours and everything specifically to portfolio companies was confidential, but there are court orders in place related to the sales of portfolio.
Companies were in the midst for that process now. So you know I would say our hope is that over the next year.
We make some meaningful progress in monetizing some of those portfolio companies.
And getting some some funds on the door to repay MZ funding as far as I'm not going to speak for for the department, but obviously, what we need to speak with them about is.
On the adequacy of overall claims paying resources.
And the benefits of policyholders of potentially paying down some of MZ. So that's it's really an optionality question at this point because he doesn't mature until January of 2022, but that's what we'll be looking at over the next couple of months.
Got it thanks.
Our next question comes from the line of Giuliano Bologna of <unk>.
Compass point.
Good morning, I guess huh.
Shifting back to a topic that Congress in different times.
Obviously, resolving the geos would be a positive and put a range.
Joe.
Fortunately or unfortunately, you paid on a lot of things on Geo So there's potential for some recoveries there.
But then when we look at the other exposures, perhaps it seems like it's moving along at least there's a document in place.
Execution is obviously partner channel.
A potential risk there.
And then were to resolve the highway transportation exposures.
Secondly, most of the result of your Puerto Rico risk.
Would that be sufficient if you resolve those buckets to request a special dividend.
It's possible as we said when there's more clarity on Puerto Rico now you've just outlined.
On the three remaining credits of substantial size. So all those are resolved and some type of restructuring executed on all those.
We could be in a position at that point to go and ask the department for.
Our special distribution up to the holding company so again.
So we've got to get into the details of those three things then and I don't want to get ahead of ourselves, but as those get pushed out.
Then we do have the clarity that we've been looking for.
We obviously are looking to move money up to the holding company.
That makes total sense.
And then from a.
From a capacity perspective.
Trying to get a sense of what the capacity would be Dubai, Inc.
Shares for National on a go for business based on where you were at least start for the fourth quarter.
As of December 31st Giuliano, we had about $235 million of capacity.
For national to buying shares.
It's measured every quarter every quarter, it's measured based on the share price at the end of the quarter. So there's a market value fluctuations, but as of the end of December.
The remaining capacity was about $235 million.
That sounds good and then one last one that I was curious about was.
When we think about reserving and kind of where your reserves are positioned for.
Your fourth quarter reserves include the Puerto.
Puerto Rico announcement on the deal that was made.
Are.
The announcement does it include any of that trend.
It's a transaction.
Or do you on at least for fourth quarter numbers or would that flow through in the first quarter.
It's already reflected go ahead, Anthony so I'm sorry, so in the free.
It's reflected in our fourth quarter numbers Giuliano.
We analyzed the.
Economics of the of the transaction versus our third quarter.
Loss reserve and recovery estimates and the economics for the transaction felt within those bounds. So they are reflected in the fourth quarter analysis for loss reserves on recoveries.
That is great. Thank you so much.
Thanks.
Again, ladies and gentlemen, if you wish to ask a question simply press Star then the number one on your telephone keypad again to ask a question press Star one.
Yes.
Our next question comes on line of Robert Mcnally private Investor.
Hello. Thank you for taking my question most of them most of them have been answered I was wondering if you could elaborate a little bit on the status of negotiations on the highways empower the Puerto Rican hydro power.
Sure.
Yeah, Robert Unfortunately, there's nothing I can say at this point given the confidential nature of those discussions, but as I mentioned it is highlighted as a condition that other us and other.
You have to the G O deal announced last week.
And obviously highways and important credit for us and as I've said our attention on this our focus there.
And am I right in thinking that when you say you have capacity purchased 250.
Worth of shares this year it is debt available for actual purchase.
Well as Anthony mentioned that number fluctuates.
And if measured every quarter.
We do not currently have an authorization the board, which is required to repurchase shares but it is something that we continuously look at and as we've done in the past we used to say we bought substantial shares and we do believe.
But it does add to them.
Long term shareholder value under the right conditions, essentially meaning the price that we can buy it at.
Alright, let last question going back to the highways and power do you have any kind of timeframe as to how long it might take for all that to get resolved.
No. It's it's very hard to predict as you can imagine we've been involved in Puerto Rico, some things at times seem to move quickly and other things have taken a long time. When this the fact that I think the oversight board because it's been in place now for four and a half years.
Mhm.
Alright, Thank you very much thank you.
Yeah.
Our next question comes from the line of Peter chassis of.
Barclays.
Hi, Good morning, just a quick follow up on the credit credit Suisse matter.
Will there be a gain that is booked because the amount of cash that is collected or if the amount of cash that was collected is in excess of where the.
We're comfortable was booked.
Peter Good morning.
We actually reflected that in the fourth quarter.
So on a GAAP basis.
The majority of the V. I E revenue for the quarter is the increase in the V E related to credit Suisse.
On repurchase receivable, so that was reflected in that spend.
And that column and on a stat basis, we increased the salvage recovery.
On credit Suisse to reflect the $600 million settlement, so from an accounting standpoint, it's been reflected.
<unk> is in the form of a V. I E recoverable on GAAP and salvage for stat that will be converted to cash in the first quarter.
Okay that makes sense. Thank you very much.
Our next question comes from line of John Stanley Stanley Capital Advisors.
So similar to you and your management team.
All right.
Long term hold.
Holder of MBIA and a lot of my interest.
Great.
But on a very possible.
Aggressive.
Capital allocation program buying back remember share that you articulated.
A lot of it were done on permanent at double digit for a lot of it done around the nine 950 level.
Most recently at 750.
Yes.
Doctor is going to be lower than that morning.
Free market indications for our because of the report.
What is that if you have the capacity.
Keeping your director for <unk>.
400 review on going in and buying on the other $50 million for <unk>.
$1 billion.
You have $250 million.
Stopping you from buying more stock at these levels.
Yes, John again good morning. Thank you for the question as we look at it as you can imagine there's lots of factors we assess.
The Big change is one we bought a lot of shares in 2020.
As we've indicated and additionally, with the onset of the pandemic approximately a year ago.
And at the time will continue or what appeared to be continued delays in Puerto Rico.
It just created some uncertainty as to what the liquidity needs of.
National might be with regard to any future claim payments and so we just wanted to take a good look at that make sure we have enough liquidity.
People have mentioned, we paid out over $1 billion on claims on Puerto Rico.
If things are not resolved in the near term, we obviously have.
Other payments that are scheduled.
Puerto Rico doesn't pay them, we have to pay for claims.
And it was unclear I think as we went through the.
Third and fourth quarter, what impact the pandemic might have the good news is the pandemic does not appear.
To create be creating the stress on municipalities that people initially thought.
So that is I think trending in a positive direction and as I said, we will continue to assess.
The liquidity of national and the ability or the decision to buy additional share.
Okay Alright.
My question is much simpler.
Look at your capital allocation program.
We'd go out of another year, or so and you're saying, it's going to be a mistake or we're all going to have a smile.
Our mistake.
To not be purchasing shares right now.
Alright.
They're in the past.
Yeah as I said, we've purchased a lot I know your question is we stopped a while back.
I'm not going to predict.
And I stay away from what the stock price will be at any point in time, but again, we had been big proponents of repurchasing shares and we continue to look at it in terms of assessing.
<unk>.
Buying additional shares.
They're just they're all critical cause the house.
On the state per year.
You're in good shape independent of the stimulus bill on the reallocation or whatever how many billions stakes.
Yes in the current proposal, there's about 350 billion for the states and cities.
We think independent of that the portfolio is performing quite well as I said I don't think the stress has been what people were predicting if you went back to the summer of last year.
However, if it is passed in a form that was discussed over the weekend it would clearly be a positive.
For many states and cities in terms of the allocation of $350 billion, but we don't believe.
But right now we need it.
To see the portfolio strength, but it clearly would be a positive.
And then I see a negative credit comment on them for sure.
Our guidance for and you'll have some type of a railroad.
Carbon something or other.
Right.
I'm not sure, which one you're referring to okay.
Okay.
Great.
You haven't had any new credit issues.
On your insured.
Nothing substantial amount.
Yes.
Thank you very much for resolved. Thank you. Thank.
Thank you.
And ladies and gentlemen that was our final question and I am showing no further questions. At this time I would like to turn the floor back over to Greg Diamond for any additional or closing remarks.
Thank you Maria.
Thanks to all of you for listening to our call today. Please contact us directly if you have any additional questions. We also recommend that you visit our website at MBIA Dot com for additional information about our company.
For your interest in MBIA, good day and Goodbye.
Thank you ladies and gentlemen, this does conclude today's conference call you may now disconnect.
Yeah.
Okay.
Yeah.
Non.
Now moving.
Okay.
Yeah.