MBIA (US:MBI)2020-11-10 17:52Financial Data and Key Metrics Changes - The company reported a consolidated GAAP net loss of $58 million or a negative $1.11 per share for Q3 2020, compared to a net income of $83 million or $1 per share for Q3 2019, driven by higher loss and LAE expenses and lower gains from investment portfolio security sales [11][12] - Book value per share decreased to $4.25 as of September 30, 2020, from $10.40 as of December 31, 2019, primarily due to a year-to-date net loss of $497 million [13] - The adjusted net loss for Q3 2020 was $18 million or a negative $0.34 per diluted share, compared to an adjusted net income of $115 million or $1.46 per diluted share for Q3 2019 [13][14] Business Line Data and Key Metrics Changes - National's insured portfolio declined to $44 billion, down $2 billion from the last quarter, with a leverage ratio of gross par to statutory capital at 22:1 as of September 30, 2020 [9] - National reported statutory income before taxes of $36 million for Q3 2020, down from $112 million for Q3 2019, primarily due to lower capital gains and lower premium and investment income [16] - National's statutory net loss was $8 million for Q3 2020, compared to a net income of $87 million for the same quarter in the previous year [17] Market Data and Key Metrics Changes - The outstanding gross par of the insured portfolios continued to reduce, with National's insured gross par outstanding now at $43.9 billion, down $1.9 billion during the quarter [18] - As of September 30, 2020, National's total fixed income investment portfolio had a book adjusted carrying value of $2 billion, with claims paying resources totaling $3.2 billion [18] Company Strategy and Development Direction - The company remains focused on resolving National's Puerto Rico exposure, which includes credits from the Commonwealth's General Obligation Bonds, PREPA, and HTA [8] - The company has paused share repurchases to assess the situation in Puerto Rico and ensure sufficient liquidity at National [27][48] - Future share repurchases will depend on the progress of the Puerto Rico restructuring and the new Oversight Board's actions [27][48] Management's Comments on Operating Environment and Future Outlook - Management noted that there has been no material impact on financial performance due to the COVID-19 pandemic, but they continue to monitor risks associated with insured portfolios [9] - The company expects the resolution of Puerto Rico's restructuring to take time, with no material changes to loss scenarios made this quarter [22] - Management expressed confidence in the fiscal state of Puerto Rico, noting substantial cash balances and federal aid that could improve recovery prospects [36][37] Other Important Information - National purchased 8.6 million shares of MBIA's common stock at an average price of $7.23 per share during Q3 2020, with a total of 26.4 million shares repurchased year-to-date [10] - The company received an annual dividend from National amounting to $81 million, ensuring sufficient assets to cover foreseeable obligations through at least the end of 2022 [15] Q&A Session Summary Question: Impact of COVID-19 on Puerto Rico restructuring - Management indicated that while COVID-19 has caused delays, there were no material changes to expected losses on Puerto Rico credits [20][22] Question: Focus on top credits outside Puerto Rico - Management stated they are monitoring the situation closely but have not identified any substantial reserves needed due to COVID-19 impacts [24] Question: Future share repurchase plans - Management confirmed a pause in share repurchases while assessing the situation in Puerto Rico, with plans to evaluate future buybacks based on developments [27][48] Question: Current fiscal state of Puerto Rico - Management acknowledged Puerto Rico's significant cash balances and federal aid, suggesting a potentially better recovery outlook than previously indicated [36][37] Question: Remaining capacity for stock buybacks - Management noted that as of September 30, National had about $250 million of remaining capacity for purchasing shares [49]