MBIA (US:MBI)2023-05-10 16:32Financial Data and Key Metrics Changes - The company reported a consolidated GAAP net loss of $93 million or negative $1.86 per share for Q1 2023, compared to a net loss of $73 million or negative $1.48 per share for Q1 2022, indicating a deterioration in financial performance [8] - The adjusted net loss was $1 million or negative $0.03 per diluted share for Q1 2023, an improvement from an adjusted net loss of $96 million or negative $1.94 per diluted share for Q1 2022, primarily due to lower loss in loss adjustment expenses (LAE) at National [9][10] - Book value per share decreased to negative $16.57 as of March 31, 2023, from negative $16.07 as of December 31, 2022, mainly due to the net loss for the year [10] Business Line Data and Key Metrics Changes - National reported statutory net income of $11 million for Q1 2023, down from $104 million in Q1 2022, primarily due to a large loss in LAE benefit in Q1 2022 compared to a modest loss in Q1 2023 [11] - MBIA Insurance Corp. had a statutory net loss of $20 million for Q1 2023, compared to a loss of $14 million in Q1 2022, driven by increased LAE expense [13] Market Data and Key Metrics Changes - National's remaining exposure to Puerto Rico's PREPA is $710 million of gross par insured as of March 31, 2023, with the insured portfolio running off as gross par declined by $600 million from year-end 2022 to $31 billion [6][7] - Total claims paying resources for National were $2.4 billion, with statutory capital and surplus at $1.9 billion as of March 31, 2023 [12] Company Strategy and Development Direction - The company has suspended the exploration of strategic alternatives due to volatile market conditions and feedback from potential suitors, focusing instead on finalizing PREPA remediation and seeking cost reductions [5] - A new $100 million share repurchase authorization has been approved, which can be utilized by MBIA Inc. and/or National [5] Management Comments on Operating Environment and Future Outlook - Management indicated that the macroeconomic environment, including tighter credit conditions, influenced the decision to suspend strategic alternatives, but they remain optimistic about restarting the process in the near future [16][23] - The finalization of PREPA is seen as a critical step that could eliminate uncertainty and potentially attract interest from prospective buyers [23][25] Other Important Information - The company noted that Charlie Rinehart, the Board Chairman, resigned after 15 years of service, highlighting his contributions to MBIA [7] Q&A Session Summary Question: Reasons for suspending strategic alternatives - Management indicated that the primary reason was the overall market conditions rather than stale interest from potential suitors [16] Question: Statutory capacity for National to buy back stock - The capacity for National to buy shares is based on a calculation related to its surplus, approximately 50% of surplus minus common and preferred shares [18] Question: Future strategic plans and potential for reinsurance deals - Management stated they will continue to look for opportunities to enhance shareholder value, including potential reinsurance deals [31] Question: Market conditions affecting prospective buyers - Management acknowledged that both risk aversion and wider spreads are impacting the market, making it difficult to attribute the effects to one factor [28] Question: Capacity for National to conduct buybacks - Management confirmed that National currently has about $50 million of capacity for buybacks, which has increased as share prices have declined [20] Question: True economic book value for buybacks - Management refrained from providing specific numbers on the true economic book value but emphasized diligence in purchasing shares at discounted prices [36][38]