MBIA Increases Capital with $1B from Warbus Pincus Commitment

MBIA Inc. the holding company for MBIA Insurance Corporation, today announced that it has entered into a definitive agreement with Warburg Pincus, the global private equity firm, which will commit to invest up to $1 billion in MBIA through a direct purchase of MBIA common stock and a backstop for a shareholder rights offering.  
 
MBIA said the investment will, among other things, increase MBIA’s already substantial capital and claims-paying resources and enable MBIA to grow its business profitably at a time when market conditions present it with attractive opportunities.  
 
Under the agreement, Warburg Pincus will make an initial investment of $500 million in MBIA through the acquisition of 16.1 million shares of MBIA common stock at a price of $31.00 per share, which represents a 3 percent premium to the $30.00 a share closing price of MBIA common stock on the New York Stock  
Exchange on Friday, December 7, 2007. Subsequent to its initial common stock purchase, Warburg Pincus will backstop a shareholder rights offering of up to $500 million that the Company expects to undertake during the first quarter of 2008.  
 
In connection with its investment and backstop commitment, Warburg will receive warrants to purchase 8.7 million shares of MBIA common stock at a price of $40 per share and “B” warrants, which, upon obtaining certain approvals, will become exercisable to purchase 7.4 million shares of Common Stock at a price of $40 per share. The term of the warrants is seven years. In addition, all of the securities purchased by Warburg Pincus are subject to significant transfer restrictions for a minimum of one year and up to three years.  
 
The Company’s senior management team has also committed to invest a total $2 million in the Company’s common stock at the same price as Warburg.  
 
“We believe this investment in our common stock by Warburg Pincus, one of the most respected and successful private equity firms, is a validation of the strength and integrity of our business,” said Gary Dunton, MBIA’s Chairman and Chief Executive Officer.  
 
“As we have stated previously, we have been evaluating various alternatives to further strengthen our capital position, particularly in light of rating agencies’ pending reviews of residential mortgage-backed securities (“RMBS”) and collateralized debt obligations (“CDO”) transactions that we have insured. We believe this investment by Warburg Pincus represents an ideal outcome as it not only provides additional capital, but also allows us to join forces with a growth-oriented, long-term investor that understands the business model and shares our vision for growing our business profitably," he said.  
 
Mr. Dunton added that the Company continues to have available additional capital management options including reinsurance, issuance of debt and the issuance of hybrid securities.  
 
David A. Coulter, a Warburg Pincus managing director who leads the firm’s Financial Services investment activities, commented, “We always look for unique opportunities to invest in differentiated franchises with talented management teams.  
 
About MBIA  
 
MBIA Inc., through its subsidiaries, is a leading financial guarantor and provider of specialized financial services. MBIA's innovative and cost-effective products and services meet the credit enhancement, financial and investment needs of its public and private sector clients, domestically and internationally. MBIA Inc.'s principal operating subsidiary, MBIA Insurance Corporation, has a financial strength rating of Triple-A from Moody's Investors Service, Standard & Poor's Ratings Services, Fitch Ratings, and Rating and Investment Information, Inc. MBIA has offices in London, Madrid, Mexico City, Milan, New York, Paris, San Francisco, Sydney and To