MBIA (US:MBI)2022-03-01 16:54Financial Data and Key Metrics Changes - The company reported a consolidated GAAP net loss of $155 million or a negative $3.21 per share for Q4 2021, compared to a net loss of $80 million or negative $1.64 per share for Q4 2020, primarily due to lower VIE revenues and higher Puerto Rico losses [10][15] - For the full year 2021, the consolidated GAAP net loss was $445 million or negative $8.99 per share, an improvement from a net loss of $578 million or negative $9.78 per share in 2020, driven by lower loss in LAE expenses and gains on financial instruments [15][16] - The adjusted net loss for Q4 2021 was $106 million or negative $2.13 per diluted share, compared to an adjusted net loss of $36 million or negative $0.74 per diluted share for Q4 2020 [14] Business Line Data and Key Metrics Changes - National's insured portfolio outstanding gross par reduced to $36.5 billion as of December 31, 2021, down $5.4 billion from year-end 2020, with a leverage ratio of gross par to statutory capital at 18:1 [9] - National reported statutory net income of $5.5 million for Q4 2021, down from $41 million in Q4 2020, while for the full year, statutory net income was $55 million compared to a statutory net loss of $82 million in 2020 [18][19] - MBIA Insurance Corp. reported a statutory net loss of $40 million for Q4 2021, an improvement from a net loss of $54 million in Q4 2020, and a statutory net loss of $129 million for the full year, down from $202 million in 2020 [20] Market Data and Key Metrics Changes - National's total fixed income investment portfolio had a book adjusted carrying value of $1.9 billion as of December 31, 2021, with statutory capital at $2 billion and claims paying resources totaling $3 billion [19] - The company had remaining PREPA exposure of $809 million of gross par at year-end, with approximately 35% of its par claims monetized through sales [8][9] Company Strategy and Development Direction - The resolution of Puerto Rico exposures remains a primary focus, with the Oversight Board making progress on restructuring the Highway and Transportation Authority debt [6][7] - The company is considering strategic objectives that may include a potential sale of the company and/or requests for special distributions from National to MBIA Inc. [8] - The corporate segment aims to reduce risk in the portfolio to a normal runoff mode, with a focus on the Zohar CLOs and improving liquidity [32][34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the resolution of Puerto Rico credits, indicating that the company does not need to resolve all obligations to sell the company [39] - The company is continuously analyzing potential sale opportunities and is not waiting for a specific event to pursue strategic options [41] Other Important Information - The book value per share decreased to negative $5.73 as of December 31, 2021, primarily due to the fiscal year net loss of $445 million [16] - The holding company received a $60 million as-of-right dividend from National in Q4 2021 [18] Q&A Session Summary Question: Status of the PREPA deal and potential scenarios - Management indicated that the Puerto Rican legislature is not inclined to approve the deal, and mediation has been requested by creditors [23][24] Question: Plans for cash proceeds from PREPA claims - The cash proceeds will add to investable assets, generating additional investment income and increasing dividend capacity [25][26] Question: Excess capital and potential special dividends - Management noted that calculating special distributions requires a case-by-case analysis rather than a general leverage ratio approach [27][28] Question: MBIA Insurance Corp. and regulatory responsibilities - Management clarified that they have fiduciary responsibilities to policyholders and aim to reduce risk in the portfolio without entering regulatory rehabilitation [30][31] Question: Strategic acquisition considerations - Management believes that potential acquirers can add value and that the remaining portfolio is nearing the end of its runoff phase [36]