MBIA Posts Fourth-Quarter Loss, Hit Hard by Derivative Write-downs
MBIA Inc. reported a fourth-quarter loss today after a $3.5 billion write-down in its credit derivatives portfolio. The bond insurer, struggling to maintain the top credit ratings necessary for its business, posted a loss of $2.3 billion, or $18.61 a share, compared with profit of $181 million, or $1.32 a share in the same quarter the previous year.
The world's largest bond insurer stated it was writing down $3.5 billion on its credit derivatives portfolio, including a credit impairment of $200 million it expects to actually incur.
It also set aside $713.5 million, which includes a special addition of $100 million for an unallocated loss reserve for MBIA's prime, second-lien mortgage exposure.
MBIA, which guarantees municipal bonds and repackaged consumer debt, sold $1 billion of surplus notes to boost its capital levels earlier this month. And only yesterday Warburg Pincus closed a $500 million investment in MBIA shares, and has also committed to backstop a $500 million rights offering.
MBIA Chief Executive Gary Dunton said the measures would offset the reserves and impairment.
"We believe that these steps, along with reduced capital requirements resulting from slower business growth, will result in our capital position surpassing rating agency Triple-A requirements as currently articulated and will allow us to continue serving the needs of our clients and investors," he said in a statement.
Moody's Investors Service, however, said on January 17 that even with the new capital it may cut the top credit ratings for MBIA's main unit.
Published on January 31, 2008
Are you a retail Agent Looking for a Quote?