Q4 2024 MBIA Inc Earnings Call
Speaker Change: Please stand by. Your program is about to begin. If you need assistance during your conference today, please press star zero.
Speaker Change: Welcome to the MBIA Inc. Fourth Quarter and Full Year 2024 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.
Speaker Change: Thank you, Madison. Welcome to MBIA's conference call for our full year and fourth quarter 2024 financial results.
Speaker Change: After the market closed yesterday, we issued and posted several items on our websites, including our financial results, 10-K, quarterly operating supplement, and statutory financial statements for both NBIA Insurance Corporation and National Public Finance Guarantee Corporation.
Speaker Change: We also posted updates to the listings of our insurance companies' insurance portfolios.
Speaker Change: Regarding today's call, please note that anything said on the call is qualified by the information provided in the company's 10-K and other SEC filings as our company's definitive disclosures are incorporated in those documents.
Speaker Change: We urge investors to read our 10-K as it contains our most current disclosures about the company and its financial and operating results.
Speaker Change: The 10-K also contains information that may not be addressed on today's call. The definitions and reconciliations of the non-GAAP terms included in our remarks today are also included in our 10-K as well as our Financial Results Report and our Quarterly Operating Supplement.
Speaker Change: The recorded replay of today's call will become available approximately two hours after the end of the call, and the information for accessing it is included in last week's press announcement and in the financial results report that's posted to the NBIA website.
Speaker Change: 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 and our forward looking statements risk factors are detailed in our 10-K, which is available on our website.
Speaker Change: At MBIA Dot com.
Speaker Change: Company cautions not to place undue reliance on any such forward looking statements.
Speaker Change: He also undertakes no obligation to publicly correct or update any forward looking statement.
Speaker Change: It later becomes aware that such statement is no longer accurate.
Speaker Change: For our call today, Bill Fallon and Joe Shan <unk> will provide introductory comments and then a question and answer session will follow.
Bill Fallon: Now here is bill Fallon.
Bill Fallon: Thanks, Greg Good morning, everyone.
Bill Fallon: For being with us today.
Our full year and fourth quarter 2024 financial results were lower net losses in the comparable period for 2023.
Bill Fallon: Compared to 2023, our full year 2024 financial results.
Bill Fallon: <unk> benefits from reduced investment losses at National and the corporate segment and lower operating expenses.
Bill Fallon: Our priority continues to be resolving national's PREPA exposure.
Bill Fallon: While there have been many developments regarding PREPA since our conference call last quarter.
Bill Fallon: The path and timing for resolving prep as outstanding debt remains largely uncertain.
Bill Fallon: While there had been rulings and decisions to support a more favorable outcome for PREPA bondholders.
Bill Fallon: Bondholders and the oversight board appear.
Bill Fallon: Our apart.
Bill Fallon: Given the uncertainty associated with the possible outcomes for nationals prep, a bankruptcy claim which is in excess of $800 million.
Bill Fallon: We continue to believe that the process to sell the company and to maximize shareholder value will likely require substantially reducing the uncertainty regarding PREPA.
Bill Fallon: Regarding the balance of nationals insured portfolio. Those credits have continued to perform generally consistent with our expectations.
Bill Fallon: The gross par amount outstanding for National's insured portfolio has declined by approximately $3 $1 billion from year end 2023 to about $25 billion at the end of 2024.
Bill Fallon: National's leverage ratio gross par to statutory capital was 28 to one at the end of 2024.
Bill Fallon: As of December 31, 2024 National had total claims paying resources of one $5 billion in statutory capital and surplus in excess of $900 million.
Bill Fallon: Now Joe will provide additional comments about our financial results.
Joe Shan: Thank you Bill and good morning all.
Joe Shan: I will begin with the review of our fourth quarter and full year 2024, GAAP and non-GAAP results and then provide an overview of our statutory results.
Joe Shan: The company reported a consolidated GAAP net loss of $51 million or a negative $1.07 per share for the fourth quarter of 2024 compared to a consolidated GAAP net loss of $138 million or a negative $2 94.
Joe Shan: <unk> per share for the fourth quarter of 2023.
Joe Shan: The lower GAAP net loss this quarter was driven by several items.
Joe Shan: First was a favorable change in net realized investment losses.
Joe Shan: Significantly higher realized investment losses in the fourth quarter of 2023.
Joe Shan: <unk> from sales of Securities to fund National's as of right and special dividends to MBIA, Inc.
Joe Shan: And in our corporate segment to fund the termination of interest rate swaps.
Joe Shan: We also realized mark to market losses on those interest rate swaps in 2023 with no comparable losses in 2024.
Joe Shan: In addition in the fourth quarter of 2024, we reported foreign exchange gains on Euro denominated debt within our corporate segment compared to foreign exchange losses on that debt in the fourth quarter of 2023.
Joe Shan: The gains and losses were driven by movements in the U S dollar Euro exchange rate in each period.
Joe Shan: And finally consolidated operating expenses are lower in the fourth quarter of 2024 compared to the fourth quarter of 2023, primarily due to lower compensation costs.
Joe Shan: The company's adjusted net loss, a non-GAAP measure was $22 million or a negative 48 cents per share for the fourth quarter of 2024 compared to an adjusted net loss of $8 million or a negative <unk> 16 per share.
Joe Shan: For the fourth quarter of 2023.
Joe Shan: The unfavorable change was primarily due to higher loss in LAE and lower net investment income at national.
Joe Shan: Partially offset by lower operating expenses.
Joe Shan: For full year 2024, the company reported a consolidated GAAP net loss of $447 million or.
Joe Shan: Or a negative $9 43 per share.
Joe Shan: Compared to a consolidated net loss of $491 million or a negative $10 18 per share for full year 2023.
Joe Shan: The lower consolidated GAAP net loss for full year, 2024, which was driven by lower net realized investment losses at national and in our corporate segment.
Joe Shan: Lower losses related to the termination and deconsolidation of variable interest entities at MBIA Insurance Corp.
Joe Shan: And lower operating expenses.
Joe Shan: These favorable variances were somewhat offset by fair value losses on assets acquired in connection with recoveries of paid claims related to the Zohar cdos.
Joe Shan: Lower net investment income primarily due to a reduction in invested assets from dividends paid in 2023.
Joe Shan: And higher loss in LAE at National.
Joe Shan: The company's adjusted net loss was $184 million or a negative $3 90 per share for full year 2024, compared to an adjusted net loss of $169 million.
Joe Shan: Or a negative $3 49 per share for full year 2023.
Joe Shan: The unfavorable change was primarily due to the higher loss in LAE and lower net investment income at national partially offset by lower operating expenses.
Joe Shan: MBIA, Inc. 's book value per share decreased $8.43 to a negative $40 99 per share as of December 31 2024.
Joe Shan: From a negative $32 56 per share as of December 31, 2023.
Joe Shan: This decrease was primarily due to our consolidated net loss for full year 2024.
Joe Shan: Included in MBIA, Inc. 's book value as of December 31st 2024 is a negative $49 48 per share of MBIA insurance Corp book value <unk>.
Joe Shan: Versus a negative $44 91 per share as of December 31, 2023.
Joe Shan: I will now spend a few minutes on our corporate segment balance sheet.
Joe Shan: The corporate segment, which primarily comprises the activities of the holding company MBIA, Inc had.
Joe Shan: We had total assets of approximately $707 million as of December 31, 2024.
Joe Shan: Within this total are the following material assets.
Joe Shan: Unencumbered cash and liquid assets held by MBIA, Inc totaled $380 million compared with $411 million as of December 31, 2023.
Joe Shan: The decrease was largely due to spending approximately $78 million in the first and second quarters of 2024 on purchasing GSL Euro denominated medium term note liabilities and MBIA, Inc. Senior notes before their maturities.
Joe Shan: As noted in prior quarters, both the medium term notes and senior notes were purchased at prices accretive to equity.
Joe Shan: In the fourth quarter of 2024 national declared and paid and as of right dividend of $69 million to MBIA, Inc, which partially offset MBIA, Inc. Decrease in cash and liquid assets during 2024.
Joe Shan: In addition to the unencumbered cash and liquid assets. The corporate segment's assets included approximately $213 million of assets at market value pledged to guaranteed investment agreement contract holders, which fully collateralize those contracts.
Joe Shan: Now I'll turn to the insurance company's statutory results.
Joe Shan: National reported a statutory net loss of $10 million for the fourth quarter of 2024 compared to a statutory net loss of $9 million for the fourth quarter of 2023.
Joe Shan: In the fourth quarter of 2024 higher loss in LAE related to National's PREPA exposure and lower net investment income were largely offset by lower net realized investment losses compared to the fourth quarter of 2023.
Joe Shan: For full year 2024 National reported a statutory net loss of $133 million compared to a statutory net loss of $142 million for full year 2023.
Joe Shan: The favorable change was primarily due to lower net realized investment losses, partially offset by lower net investment income and lower loss and LAE, mostly related to national as PREPA exposure.
Joe Shan: National's statutory capital as of December 31, 2024 was $912 million down $205 million compared to December 31, 2023 <unk>.
Joe Shan: Largely due to its statutory net loss for full year 2024, and the $69 million as of right dividend paid to MBIA, Inc. In December of 2024.
Joe Shan: Claims paying resources were one $5 billion down $174 million from December 31, 2023.
Speaker Change: Now I'll turn to MBIA insurance Corp.
Speaker Change: MBIA Insurance Corp reported statutory net income of $4 million for the fourth quarter of 2024 compared to statutory net income of $6 million for the fourth quarter of 2023.
Speaker Change: Higher net income in last year's fourth quarter was primarily due to a small loss in LAE benefit.
Speaker Change: For full year 2024.
B I E Insurance Corp reported a statutory net loss of $64 million.
Speaker Change: <unk> to a statutory net loss of $28 million for full year 2023.
Speaker Change: The higher net loss in 2024 was primarily driven by higher loss in LAE, mostly related to adjustments to estimates of recoveries of paid claims associated with the Zohar cdos.
Speaker Change: As of December 31, 2020 for the statutory capital of MBIA Insurance Corp was $88 million down from $152 million at year end 2023, primarily due to its net loss for full year 2024.
Speaker Change: Claims paying resources totaled $356 million at December 31, 2024, compared to $504 million at year end 2023.
Speaker Change: MBIA insurance Corp's insured gross par outstanding was $2 $3 billion as of December 31, 2024 down about 18% from year end 2023.
Speaker Change: The decrease in gross par outstanding was driven by regular amortization of the insured portfolio as well as our proactive derisking of exposures for which we held reserves and were paying claims.
Speaker Change: And now we will turn the call over to the operator to begin the question and answer session.
Speaker Change: If you have a question at this time. Please press star one on your telephone keypad, if you wish to remove yourself from the queue Press Star Q, we ask that when posing your question you. Please pickup your handset to allow optimal sound quality.
Speaker Change: And we'll take our first question from Tommy Mcveigh link with <unk>. Please go ahead.
Speaker Change: Okay.
Tommy Mcveigh: Hey, good morning.
Tommy Mcveigh: So you pay the regular way dividend in the fourth quarter every year and that's the way to trickle out excess capital out of national.
Tommy Mcveigh: But as the rest of the portfolio continues to run off naturally delever are there ways to think about your strategy to release incrementally beyond that regular dividend <unk> paid to very large special at the end of 2023.
Is it possible to work with the regulator to allow more frequent, albeit smaller and more measured special capital releases out of national rather than only pursuing a R.
Tommy Mcveigh: A large lump sum special.
Tommy Mcveigh: Tommy the answer is yes, we can do that and to your point you just need the regulator to approve it.
Tommy Mcveigh: Obviously you have.
Tommy Mcveigh: Ongoing conversations with our regulator.
Speaker Change: What was going on with Puerto Rico. When you go back several years and we had approximately $4 billion of exposure. We didn't think it was prudent.
Speaker Change: Engaged in those conversations as you just mentioned, we then had a large dividend of $550 million, which was a special dividend. In addition to the annual as of right dividend that you referenced. So we continue to look at that I think right now given the size of the portfolio.
Speaker Change: The way the portfolio is amortizing and again.
Speaker Change: The exception really of PREPA, which is.
Speaker Change: But one thing we focus on.
Speaker Change: Quite heavily.
Speaker Change: We probably would want more certainty around prep up before we went for a special dividend from the regulator, but it all depends on all the factors you mentioned if the portfolio continues to come down.
Speaker Change: We will continue to look at it but I think right now given the size of PREPA with the $800 million claim that we have.
Speaker Change: The regulator would want to see some.
Speaker Change: Movement towards resolution of that.
Speaker Change: Okay got it.
And then switching over with regards to the PREPA litigation.
Speaker Change: Can you just talk about your position within the creditor group and perhaps of your objectives relate to the rest of the members of that group.
Speaker Change: And I'm kind of thinking are there points, where maybe MBIA has been sensitive to focus on.
Speaker Change: Expediting the potential resolution rather than maximizing recovery.
Speaker Change: Can you just talk about your objectives relative to the other members there.
Speaker Change: Sure when we.
Speaker Change: We think about what would be best for our shareholders. The two points that you just alluded to one is the dollar recovery or.
Speaker Change: Or the percentage recovery have you when I think about it but the second is timing, obviously, you all things equal having this resolved sooner.
Speaker Change: Other than later would be beneficial to our shareholders. So we look at both of those things I think all of the bondholders also look at both of those.
Speaker Change: Components of this.
Speaker Change: And while I'm sure everyone has a differing view as to exactly.
Speaker Change: What they're looking for right now I think theres very strong alignment.
Speaker Change: And we will continue to work through this.
Speaker Change: Again, the biggest challenge right now seems to be the oversight board in a position, but hopefully we'll see some movement in the near future with regard perhaps to litigation as people know we filed that is all the bondholders had a filing this week.
Speaker Change: Try to move the litigation forward because to your point.
Speaker Change: Timing is important the sooner we can get this resolved the better.
Speaker Change: Makes sense. Thank you.
Speaker Change: Thank you.
Speaker Change: As a reminder, if you would like to ask a question today. Please press the star one on your telephone keypad now.
Speaker Change: And we'll pause for just a moment to allow any additional questions to queue.
Speaker Change: And we will take our next question from Paul Saunders with Hutch capital. Please go ahead.
Speaker Change: Please go ahead, Paul Saunders your line is open.
Speaker Change: Hi, sorry about that I was on mute can you guys hear me.
Speaker Change: Yes.
Speaker Change: Good morning, Hey, Bill Thanks for taking my question.
Speaker Change: Good morning, Paul.
Speaker Change: You guys have been asked this somewhat over the last few quarters, but.
Speaker Change: In terms of just sort of the uncertainty around PREPA and that being.
Speaker Change: What's holding up sort of the bid ask I guess on that.
Speaker Change: The sale process for MBIA.
Speaker Change: Can you explain sort of.
Speaker Change: Why.
Speaker Change: Carving that out of our purchase price and sort of some sort of contingent type instrument to wear.
Speaker Change: Yes.
Speaker Change: If recovery is less than the buyer expects then they.
Speaker Change: They pay less to shareholders type of thing.
Speaker Change: Is there any sort of possibility too.
Speaker Change: Strike a deal for MBIA.
Speaker Change: Excluding the PREPA obligation.
Speaker Change: It's possible and we've had those conversations everything that has been suggested are offered.
Speaker Change: He has been in our view.
Speaker Change: Very inadequate as far as our shareholders should be concerned.
Speaker Change: Yes.
Speaker Change: It is.
Speaker Change: Why is that I guess my thought is.
Speaker Change: If they have some view on what ultimate recovery is and they're worried about it and do you think it's going to be higher than that.
Speaker Change: Really understand.
Speaker Change: Why you couldnt solve exactly for that or is it something like unrelated to PREPA that you're saying is unsatisfactory to the shareholders.
Speaker Change: I suppose I don't know exactly what is in the mind of the people who are <unk>.
Speaker Change: Expressing some interest, but I think when you deal with the size of the PREPA claim and the complexity around it.
Speaker Change: The prospective buyers.
Speaker Change: Okay.
Speaker Change: Arent willing to offer again, what would be acceptable and therefore, it is better to play out the PREPA situation.
Speaker Change: Yes got it okay.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: At this time I am showing no further questions I'd like to turn the floor back to Greg Diamond for any additional or closing remarks.
Greg Diamond: Thanks, again, Madison and thanks to those of you listening to the call today.
Greg Diamond: 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 the company.
Greg Diamond: You for your interest in MBIA, Good day and Goodbye.
Greg Diamond: Thank you. This does concludes today's presentation. Thank you for your participation you may disconnect at any time.
Greg Diamond: Okay.
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