MBIA, based in Armonk, NY, had contracted the consultant as part of a January 2007 settlement of probes by the U.S. Securities and Exchange Commission, the New York Attorney General and the state's insurance department.
These probes involved the 1998 default by the Allegheny Health, Education and Research Foundation on $256 million of hospital bonds that MBIA had guaranteed. MBIA in 2005 restated seven years of results to fix its accounting for a $170 million loss it suffered on the bonds.
According to MBIA, the regulators have reviewed the report, and it does not expect further enforcement action. The bond insurer also stated that it had previously implemented changes to its risk, audit and governance procedures upon the recommendations of another firm, Promontory Financial Group L.L.C.
MBIA said the consultant found that its accounting and disclosures were proper for its investment in Capital Asset Holdings GP Inc., and for its exposure on debt issued by the U.S. Airways 1998-1 Repackaging Trust.
MBIA Inc. is a premier financial guarantor and a leading provider of fixed-income investment management services. The Company’s core business is credit enhancement of municipal bonds and asset-and mortgage-backed transactions in the new issue and secondary markets. MBIA’s financial strength, underwriting performance and record of service are reflected in the Triple-A rating of MBIA’s claims-paying resources by Moody’s Investors Service, Standard & Poor’s Ratings Services, Fitch Ratings, and Rating and Investment Information, Inc. With offices in New York, Denver, San Francisco, Paris, London, Madrid, Milan, Sydney and Tokyo, MBIA services the needs of clients with local solutions around the globe.