OREANDA-NEWS. MBIA Inc. (NYSE: MBI) (the Company) today reported combined operating income (a non-GAAP measure defined in the attached Explanation of Non-GAAP Financial Measures) of \$34 million for the three months ended March 31, 2015 compared with combined operating income of \$40 million in the same period of 2014. The decline in combined operating income for the three months ended March 31, 2015 was primarily the result of a decrease in net investment income and a larger reduction in loss reserves in the first quarter of 2014 than in the first quarter of 2015, partially offset by an increase in premiums earned net of deferred acquisition cost amortization.

Adjusted Book Value (ABV) per share (a non-GAAP measure defined in the attached Explanation of Non-GAAP Financial Measures) was \$25.78 as of March 31, 2015 compared with \$24.87 as of December 31, 2014. The increase in ABV per share was primarily driven by a decrease in common shares outstanding resulting from share repurchases. The Company repurchased 8.6 million of its common shares during the first quarter of 2015.

Consolidated GAAP net income was \$69 million, or \$0.37 per diluted share, for the first quarter of 2015 compared with consolidated net income of \$256 million, or \$1.32 per diluted share, in the same period of 2014. The decrease in consolidated net income in the first quarter of 2015 was primarily due to lower net gains on insured derivatives, partially offset by a lower provision for income taxes, gains on foreign exchange and lower losses on insured exposures.

Operating income and ABV per share provide investors with other views of the Company’s operating results that management uses in measuring financial performance. Reconciliations of ABV per share to book value per share, and operating income to net income, calculated in accordance with GAAP, are attached.

“We continue to make progress toward more normal operations,” said MBIA Inc. President and Chief Financial Officer Chuck Chaplin. “Since National began writing new business in the third quarter of 2014, we have wrapped \$614 million of par and its earnings have been stable. We also made progress at the holding company on debt reduction and repurchased over 10 million of our shares since the beginning of the year at prices we consider advantageous. MBIA Corp.’s statutory net income was positive and capital was stable as loss volatility continued its decline.”

U.S. Public Finance Insurance Results

The Company’s U.S. public finance insurance business is conducted through its National Public Finance Guarantee Corporation (National) subsidiary. The U.S. public finance insurance segment recorded \$56 million of operating income in the first quarter of 2015 compared with \$61 million of operating income in the same period of 2014.

Total premiums earned in the U.S. public finance insurance segment were \$85 million in the first quarter of 2015, up 31 percent from \$65 million of total premiums earned in the same period of 2014, reflecting a 123 percent increase in refunded premiums earned partially offset by a 17 percent decline in scheduled premiums earned. The decline in scheduled premiums earned resulted from portfolio amortization and high refunding volume over the past several years.

National wrote \$38 million par amount of primary new insurance during the first quarter of 2015 and wrote or is committed to write \$241 million since the end of the first quarter, for a total of \$614 million of par since the third quarter of 2014. Premiums written since the third quarter of 2014 totaled \$8 million.

Net investment income for the U.S. public finance insurance segment was \$29 million in the first quarter of 2015, down from \$33 million in the first quarter of 2014 primarily due to lower average yields, lower average investment balances following a dividend payment to MBIA Inc. in the fourth quarter of 2014 and tax payments.

Other net realized losses for the U.S. public finance insurance segment were \$4 million in the first quarter of 2015 as a result of an impairment charge on the Company’s former headquarters facility in Armonk, New York. The property was sold after the end of the first quarter of 2015. There were no other net realized gains or losses in the same period of 2014.

The U.S. public finance insurance segment recorded a benefit of \$6 million to losses and LAE in the first quarter of 2015 compared with a benefit of \$14 million in the first quarter of 2014. The benefit in losses and LAE for the first quarter of 2015 primarily related to decreases in reserves for certain municipal utilities and general obligation bonds. The benefit in losses and LAE for the first quarter of 2014 primarily related to decreases in reserves associated with certain general obligation bonds.

The amortization of deferred acquisition costs totaled \$18 million in the first quarter of 2015 compared with \$14 million in the same period of 2014. The increase in the amortization of deferred acquisition costs was due to higher refunding activity in 2015.

National’s operating expenses were \$16 million in the first quarter of 2015, compared with \$13 million in the same period of 2014. The increase in operating expenses in the first quarter of 2015 was driven by increased headcount and higher allocated compensation expenses as National expands its new business activities.

National had qualified statutory capital of \$3.3 billion and claims-paying resources totaling \$4.9 billion as of March 31, 2015.

Corporate

The corporate segment is responsible for general corporate activities, including managing the holding company’s balance sheet and expense base, providing support services to MBIA’s other operating businesses and other business development activities. Shared support services are provided by MBIA Services Corporation on a fee-for-service basis.

The corporate segment recorded an operating loss of \$22 million in the first quarter of 2015 compared with an operating loss of \$21 million in the same period of 2014. The increase in the corporate segment's operating loss was primarily driven by a lower benefit from income taxes, lower net investment income and higher losses on financial instruments at fair value and foreign exchange, partially offset by lower net realized losses and lower interest expense. In the first quarter of 2014, the corporate segment recorded a net realized loss of \$5 million on an investment. There were no similar net realized gains or losses in the corporate segment in the first quarter of 2015.

As of March 31, 2015, MBIA Inc. held cash and liquid assets of \$567 million, excluding \$193 million of assets in its tax escrow account. During the first quarter of 2015, \$228 million was released to MBIA Inc. from the tax escrow account in accordance with the Company’s tax sharing agreement.

The Company’s consolidated net operating loss carryforward for income tax purposes as of March 31, 2015 was approximately \$3.1 billion.

During the first quarter of 2015, the Company repurchased 8.6 million of its common shares at an average price of \$8.83 per share. In the second quarter of 2015 through May 5, 2015, the Company repurchased an additional 1.9 million common shares at an average price of \$9.15 per share. As of May 5, 2015, there was \$95 million of remaining authorized capacity under the Company’s 2014 share repurchase program.

International and Structured Finance Insurance Results

The international and structured finance insurance business is primarily conducted through MBIA Corp. and includes the results of MBIA Insurance Corporation, the New York-regulated insurer on a stand-alone basis and its subsidiaries, MBIA UK Insurance Limited and MBIA Mexico S.A. de C.V.

The Company does not measure operating income of this segment. The international and structured finance insurance segment’s contribution to consolidated GAAP net income was a net loss of \$2 million in the first quarter of 2015, compared with net income of \$254 million in the same period of 2014. The change was driven by lower net gains on the fair value of insured derivatives, partially offset by a benefit from income taxes in the first quarter of 2015 compared with a provision for income taxes in the same period of the prior year, as well as lower loss and LAE expenses.

MBIA Corp.’s statutory net income for the first quarter of 2015 was \$3 million. Statutory net losses and LAE incurred for the first quarter of 2015 totaled \$18 million compared with net losses and LAE incurred of \$70 million in the comparable period of the prior year. The qualified statutory capital of MBIA Insurance Corporation as of March 31, 2015 was \$857 million and claims-paying resources totaled \$2.6 billion.

As of March 31, 2015, MBIA Insurance Corporation’s (excluding its subsidiaries and branches) liquidity position totaled \$415 million consisting of cash and invested assets. Based on MBIA Corp.’s liquidity position and its assessment of payment risks on insured exposures, the Company believes that MBIA Corp.’s liquidity resources, including expected cash inflows, will adequately provide for anticipated cash outflows, including expected future claim payments.