MBIA (MBI) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a consolidated GAAP net loss of $254 million, or a negative$5.34 per share for Q2 2024, compared to a net loss of $74 million, or a negative$1.46 per share for Q2 2023 [8][10] - The adjusted net loss for Q2 2024 was $138 million, or a negative$2.90 per share, compared to an adjusted net loss of $22 million, or negative$0.45 per share for Q2 2023 [10] - The book value per share decreased by $6.51 to a negative$39.07 as of June 30, 2024, from a negative $32.56 as of December 31, 2023 [10] Business Line Data and Key Metrics Changes - National reported a statutory net loss of$131 million for Q2 2024, compared to a statutory net loss of $11 million for Q2 2023, primarily driven by higher loss in LAE related to PREPA [12] - MBIA Insurance Corp. reported a statutory net loss of$35 million for Q2 2024, compared to zero net income for Q2 2023, driven by losses in LAE on Zohar-related salvage [14] Market Data and Key Metrics Changes - The gross par amount outstanding for National's insured portfolio declined by approximately $1.4 billion from year-end 2023 to$27 billion at the end of Q2 2024 [7][13] - National's statutory capital as of June 30, 2024, was $969 million, down$148 million compared to December 31, 2023 [12] Company Strategy and Development Direction - The company believes a consensual resolution regarding PREPA is in the best interest of all parties involved, but this requires a change in the Oversight Board's approach [6][7] - The company is focused on reducing operating expenses and has committed to measures that will continue to bring those expenses down over the next year [29] Management's Comments on Operating Environment and Future Outlook - Management expressed frustration over the prolonged resolution process for PREPA, noting that it has been a long-standing issue with many parties involved [18][19] - The company is aligned with the majority of bondholders and believes that court decisions may ultimately influence the resolution of the PREPA situation [21][24] Other Important Information - The Corporate Segment had total assets of approximately $657 million as of June 30, 2024, with unencumbered and liquid assets totaling$315 million [11] - The company spent approximately 62 million on retiring GFL euro-denominated medium-term note liabilities before their maturities [11] Q&A Session Summary Question: Why is PREPA unresolved compared to other Puerto Rican exposures? - Management explained that while three out of four large credits in Puerto Rico have been resolved, PREPA has faced unique challenges, including a lack of approval from the Oversight Board for a prior agreement [18][19] Question: What is the Oversight Board's issue with PREPA? - Management indicated that the Oversight Board's position complicates the resolution process, and it may require court intervention for clarification [21][24] Question: Is there still 70 million remaining under the repurchase authorization? - Yes, there is still about $70 million remaining under the repurchase authorization [25] Question: Will the company begin to buy back stock? - Management stated they are evaluating liquidity and obligations before deciding on stock buybacks [26] Question: Can operating expenses be expected to decrease? - Management confirmed they are focused on reducing operating expenses and have seen a downward trend [29] Question: What is the status of LCOR Alexandria? - Management noted that LCOR Alexandria is classified as a credit and they have a plan in place to resolve it without material impact on the company [33] Question: Is the company exploring opportunities in the synthetic risk transfer market? - Management acknowledged awareness of the synthetic market and is open to beneficial opportunities for shareholders [35]