Q1 2025 MBIA Inc Earnings Call
Speaker Change: Welcome to the MBA Inc. First Quarter 2025 Financial Results Conference Call. I would now like to turn the call over to Greg Diamond, Managing Director of Investor and Media Relations at NBIA. Please go ahead, sir.
Thank you, Chelsea.
Speaker Change: Yes, welcome to NBI's conference call for our first quarter, 2025 financial results. After the market closed yesterday, we issued and posted several items on our websites, including our financial results, 10Q, quarterly operating supplement, and statutory statements for both NBIA Insurance Corporation and National Public Finance Guarantee Corporation.
Speaker Change: We also post updates to the listings of our insurance companies insured portfolios.
Speaker Change: Regarding today's call, please note that anything set on the call is qualified by the information provided in the company's 10K, 10Q, and other SEC filings as their company's definitive disclosures are incorporated in those documents.
Speaker Change: We urge investors to read our 10K and 10Q as they contain our most current disclosures about the company and its financial and operating results.
Speaker Change: Those documents also contain information that may not be addressed on today's call.
Speaker Change: The definitions and reconciliation of the non-GAAP terms included in our remarks today are also included in our 10K and 10Q, as well as our financial results report and our quarterly operating supplement.
Speaker Change: The recorded replay of today's call will become available on the MBI website at approximately two hours after the end of this call.
Now for our Safe Harbor Disclosure Statement.
Our remarks on today's conference call may contain forward-looking statements.
Speaker Change: Important factors such as general market conditions in the competitive environment could cause our actual results to differ materially from the projected results referenced in our forward-looking statements.
Speaker Change: Risk Factors are detailed in our 10K and 10Q, which are available on our website at mbia.com
Speaker Change: The company cautions not to place undue reliance on any such forward-looking statements. Company also undertakes no obligation to publicly correct or update any forward-looking statement if it later becomes aware that such statement is no longer accurate.
Bill Fallon: Our call today, Bill Fallon and Joe Schachinger will provide introductory comments and then a question and answer session will follow. Out, here is Bill Fallon. Thanks, Greg. Good morning, everyone. Thanks for being with us today.
Bill Fallon: Our first quarter, 2025 financial results had a lower net loss than the comparable period for 2024.
Bill Fallon: Compared to 2024, our first quarter, 2025 financial results, benefited from favorable variances on revenues of consolidated VIEs and losses in LA.
Bill Fallon: as well as lower operating expenses, primarily due to reduced compensation-related expense.
Bill Fallon: Our priority continues to be resolving national's prep exposure, with a path in timing of that resolution remained largely uncertain.
which is an excess of $800 million dollars.
Bill Fallon: We continue to believe that the process to sell the company in a maximize shareholder value will likely require substantially reducing the uncertainty regarding prep up.
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 nationals in short portfolio has declined by approximately $500 million from year in 2024 to about $25 billion at March 31st, 2025.
Bill Fallon: Marshall's leverage ratio of gross part of statutory capital was 27 to 1 at the end of the first quarter.
Bill Fallon: As of March 31st, 2025, National had total claims paying resources of $1.5 billion, and statutory capital on surplus in excess of $900 million.
Now Joe will provide additional comments about our financial results.
Thank you, Bill, and good morning all.
Bill Fallon: I will begin with a review of our first quarter 2025 gap and non-GAAP results, and then provide an overview of our statutory results.
Bill Fallon: The company reported a consolidated gap net loss of $62 million.
or a negative $1.28 per shitter.
for the first quarter of 2025.
Compaired with a consolidated GapNet loss.
of $86 million $10 million.
Bill Fallon: or a negative $1.84 per share for the first quarter of 2024.
Bill Fallon: The lower gap net loss this quarter was driven by several items.
Bill Fallon: First was a favorable change in revenues of consolidated variable interest entities at MBIA Insurance
Bill Fallon: In the first quarter of 2024, we purchased insured debt of a consolidated VIE as part of our D-Risking Efforts.
Bill Fallon: which resulted in a net loss in earnings, most of which was reclassified from accumulated other comprehensive income.
Bill Fallon: In the first quarter of 2025, we did not have any comparable activity.
Bill Fallon: Lower losses in LAE in the current quarter were primarily driven by lower losses at national on its prep exposure.
Bill Fallon: Partially offset by higher losses at NBIA Insurance Corp on its first lean RNBS exposure.
The higher losses at NBIA Insurance Corp.
Bill Fallon: were primarily driven by the impact of a decrease in interest rates used to discount its gap loss reserves.
Bill Fallon: In addition, consolidated operating expenses are lower in the first quarter of 2025 compared with the first quarter of 2024, primarily due to lower compensation related costs.
Bill Fallon: Partially offsetting these positive variances were unfavorable variances related to foreign exchange losses at MBIA Insurance Corp and at our corporate segment due to a weakening of the U.S. dollar during the quarter.
Bill Fallon: and to a lesser extent, fair value net losses on investments this quarter, compared with fair value net gains in the first quarter of 2024.
Bill Fallon: The company's adjusted net loss, a non-GAAP measure, was $8 million or a negative 16 cents per share for the first quarter of 2025.
Bill Fallon: Compared with an adjusted net loss of $24 million, or a negative 52 cents per share for the first quarter of 2024.
Bill Fallon: The favorable change was primarily due to the lower losses in LAE at National.
During the quarter,
Bill Fallon: MBIA Inc.'s book value per share decreased $1.23 to a negative $42.22 per share as of March 31, 2025 from a negative $40.99 per share as of December 31, 2024.
Bill Fallon: Partially offset by a decrease in unrealized losses on investments recorded in accumulated other comprehensive income.
Bill Fallon: Included in MBIA Inc.'s book value, as of March 31st, 2025, is MBIA Insurance Corp's negative book value of $50.78 per share versus a negative $49.48 per share.
as of December 31st, 2024.
Bill Fallon: I will now spend a few minutes on our Corporate Segment Balance Sheet.
Bill Fallon: The corporate segment, which primarily comprises the activities of the holding company, MBIA Inc.
Bill Fallon: at Total Assets of Approximately $685 million as of March 31st, 2025.
Within this total are the following material assets.
Bill Fallon: Unencumbered cash and liquid assets held by MBIA Inc total $378 million. Reflecting a slight decrease compared with $380 million as of December 31st, 2024.
which fully collateralized those contracts.
Now, I'll turn to the insurance company's statutory results.
Bill Fallon: National reported statutory net income of $4 million for the first quarter of 2025 compared with a statutory net loss of $11 million for the first quarter of 2024.
Bill Fallon: The positive variant reflects lower losses in LAE, primarily related to National's Prepa Exposure.
Bill Fallon: Partially offset by lower net investment gains compared to the first quarter of 2024.
Bill Fallon: National Statutory Capital, as of March 31st, 2025, was $919 million, up $7 million compared with December 31st, 2024.
Bill Fallon: claims paying resources were $1.5 billion consistent with December 31, 2024.
Now, we'll turn to MBIA Insurance Corps.
Bill Fallon: MBIA Insurance Corp reported statutory net income of $2 million for the first quarter of 2025 compared with a statutory net loss of $35 million for the first quarter of 2024.
Bill Fallon: The favorable variance was primarily due to lower losses in LAE.
Bill Fallon: The losses in LAE benefit in the current quarter was driven by favorable adjustments to the recoveries of paid claims associated with the Zohar CDOs.
Bill Fallon: While losses in LAE in the first quarter of 2024 were primarily driven by unfavorable adjustments to Zohar-related recoveries,
Bill Fallon: and to a lesser extent an increase in reserves on first-lean RNBS exposures.
Bill Fallon: As of March 31st, 2025, the statutory capital of MBIA Insurance Corps was $88 million.
Consistent with the year end, 2024.
Bill Fallon: Claims paying resources totaled $349 million at March 31st, 2025, compared with $356 million at December 31st, 2024.
Bill Fallon: M.B.I.A. insurance corpse insured gross power outstanding was $2.3 billion as of March 31st, 2025, consistent with year-end 2024.
Bill Fallon: and now we will turn the call over to the operator to begin the question and answer session.
Thank you.
Bill Fallon: 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 two.
Bill Fallon: We ask that when posing your question, you please pick up your handset to allow optimal sound quality.
Once again, that is star one to ask a question.
Speaker Change: And our first question will come from John Staley with Staley Capital Advisors. Please go ahead.
John Staley: Bill, I think I missed the last call, but it's nice to be back on this one. This whole prep thing, I mean, it's just so clearly a political.
process.
There's some recent articles written.
about the absolute…
Abstractionist Approach of the Oversight Committee.
John Staley: suggesting Trump administration think about just removing it that it's run its course.
Redsen, followed by a black cat on the island.
John Staley: which I don't feel bad about what it does to the people. I wouldn't want to live there, but it's certainly underscores the desperate need to get this resolved and get to prep a whole grid back functional.
with a Republican head of the island.
Speaker Change: What are you doing politically to get the Trump administration's focus?
Speaker Change: who clearly wants to do something positive for the citizens of Puerto Rico given the nonsense he had to put up post-Madison Square Garden in the campaign. What are you doing proractively?
Speaker Change: politically to get this whole thing resolved as opposed to these nonsense that's going on with the oversight committee.
Speaker Change: When if you didn't have that committee, you could negotiate this and get it over with.
Speaker Change: I'm very puzzled why politically with the Republican leadership in Puerto Rico, a Republican leadership in Congress, a Republican leadership in the White House, this isn't resolved. Yeah, enlighten me, I don't get it.
Speaker Change: John , good morning. I'm not sure I can necessarily enlighten you but you've touched on a lot of aspects and there are many parts.
Speaker Change: to the preposituation, as you've just highlighted, I do think in terms of Governor Gonzales that fixing prepa, whatever that might mean, is at the top of her priority list.
Speaker Change: It will take some time. We obviously have conversations in DC as do other people.
Speaker Change: We also think that finally that the court schedule will move along some of the key litigation issues.
Which It Helped
Speaker Change: We think with the perspective of the oversight board and so there are a lot of parties as you mentioned, they all do need to come together. Hopefully it is moving towards that end.
Speaker Change: We've all lived through what is now, depending on how you want to mark the beginning of this, probably at least an eight-year process, if not longer. But it feels as though all the right focus is coming to PREPA.
Speaker Change: and it's the parties that you just mentioned. So we're becoming a little bit more optimistic that we're moving into perhaps a different phase.
Um, here at this time.
Speaker Change: Thank you, and you have no, you said all the other credits are performing, so you're not staring at with national concerns or further write-offs.
Speaker Change: As we said, our portfolio is performing within our expectation, so it's prepa that is getting all the attention.
John Staley: Alright, now it certainly has my attention. Thank you Bill very much.
Thank you.
Thank you.
Once again, that is star one to ask a question.
Speaker Change: All right, and at this time we have no further questions, so I'd like to turn the call back over to Greg Diamond for any additional or closing remarks.
Greg Diamond: Thank you, Chelsea, and thanks to all of you listening to our call today.
Greg Diamond: Please contact us directly if you have additional questions. We also recommend that you visit our website at mba.com for additional information about our company.
Speaker Change: and if you're interested in BIA, good day and goodbye.
Speaker Change: Thank you ladies and gentlemen. This concludes today's program and we appreciate your participation. You made this connect at any time.
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