MBI - MBIA Inc.

[Luke 532]

From the 8-K...

http://www.sec.gov/Archives/edgar/data/814585/000115752313005897/a50774382.htm

 

MBIA Inc. (the “Company”) announced today that on December 24, 2013 its wholly-owned subsidiary, MBIA Insurance Corporation (“MBIA Corp.”), sold its claims and certain related rights (the “Claims”) against the bankruptcy estates of Residential Funding Company, LLC (“RFC”), GMAC Mortgage LLC (“GMAC”) and Residential Capital LLC and certain related entities (collectively, “ResCap”) for an amount that modestly exceeds the recoveries recorded in respect of the Claims on MBIA Corp.’s  balance sheet as of September 30, 2013.  As previously disclosed, MBIA Corp. had asserted contract claims (referred to as “put-back” claims) against RFC, GMAC and ResCap related to mortgage loans whose inclusion in insured securitizations failed to comply with representations and warranties.  ResCap and its wholly-owned subsidiary companies, RFC and GMAC, each filed for bankruptcy protection in May 2012, and their reorganization plan was approved in bankruptcy court on December 11, 2013.

 

MBIA Corp. used approximately $72 million of the proceeds of the sale of the Claims to repay all outstanding borrowings plus accrued interest and related expenses under its $500 million credit agreement with Blue Ridge Investments, L.L.C.  (the “Blue Ridge Secured Loan”).  In addition, the Blue Ridge Secured Loan was terminated as a result of the sale of the Claims since the aggregate proceeds of the sale exceeded Blue Ridge’s commitment amount, which was reduced to zero under the terms of the Blue Ridge Secured Loan.

 

[muscleman]

From the 8-K...

http://www.sec.gov/Archives/edgar/data/814585/000115752313005897/a50774382.htm

 

MBIA Inc. (the “Company”) announced today that on December 24, 2013 its wholly-owned subsidiary, MBIA Insurance Corporation (“MBIA Corp.”), sold its claims and certain related rights (the “Claims”) against the bankruptcy estates of Residential Funding Company, LLC (“RFC”), GMAC Mortgage LLC (“GMAC”) and Residential Capital LLC and certain related entities (collectively, “ResCap”) for an amount that modestly exceeds the recoveries recorded in respect of the Claims on MBIA Corp.’s  balance sheet as of September 30, 2013.  As previously disclosed, MBIA Corp. had asserted contract claims (referred to as “put-back” claims) against RFC, GMAC and ResCap related to mortgage loans whose inclusion in insured securitizations failed to comply with representations and warranties.  ResCap and its wholly-owned subsidiary companies, RFC and GMAC, each filed for bankruptcy protection in May 2012, and their reorganization plan was approved in bankruptcy court on December 11, 2013.

 

MBIA Corp. used approximately $72 million of the proceeds of the sale of the Claims to repay all outstanding borrowings plus accrued interest and related expenses under its $500 million credit agreement with Blue Ridge Investments, L.L.C.  (the “Blue Ridge Secured Loan”).  In addition, the Blue Ridge Secured Loan was terminated as a result of the sale of the Claims since the aggregate proceeds of the sale exceeded Blue Ridge’s commitment amount, which was reduced to zero under the terms of the Blue Ridge Secured Loan.

 

Cool. Good progress is made here.

Do you have a position in MBIA?

[Luke 532]

 

Cool. Good progress is made here.

Do you have a position in MBIA?

 

Yes, not much though as I'm invested big in AIG warrants, BAC warrants, and SHLD.

[Capitalist World]

There is some good research by BTIG's Mark Palmer on upcoming catalysts over the very near term on MBIA. Its my largest holding and imprudently out of proportion but the stars are finally aligning.....

[muscleman]

There is some good research by BTIG's Mark Palmer on upcoming catalysts over the very near term on MBIA. Its my largest holding and imprudently out of proportion but the stars are finally aligning.....

 

What % of portfolio are you into this? I have 10% MBI and 10% AGO, but already regretted that I should have just put 20% into AGO.

After those catalysts happen, MBI will be in the same shape as AGO, so why not just buy AGO instead?

[Capitalist World]

I own both MBI and AGO. MBIA is at an embarassing 20% size now.  My ACB on MBI is in the $7.75 range and have traded it at times and it has been the most rewarding and the most frustrating company I have owned in a while.  Been in and out of AGO too and currently its a 1.5% positon and looking to add.  But I did go through similar gyrations with USG, Yellow Media and MCI/Worldcom, Stelco, Algoma, GGP, Fremont General, Radian, TYCO, MPEL  during the bankruptcy/post-bankruptcy/near bankruptcy/scandal.  Last week SHLD came within a bargain range so I took a 1% position. Added to HLSS @20 Thursday on the violent dip too.  Currently most interesting positions I have are MBI, IRE, APO, NBG, HLSS, OCN, HOVNP, FNMAS, HIG wts, XCO, AGO,  AMI.L.  I follow many legends including Buffett, Whitman, Berkowitz, Watsa, Ross, Lampert, Cooperman, Black and many others.

 

Twitter handle @CapitalismWorld  (sorry must remain anonymous as per firm policy)

 

 

[muscleman]

I own both MBI and AGO. MBIA is at an embarassing 20% size now.  My ACB on MBI is in the $7.75 range and have traded it at times and it has been the most rewarding and the most frustrating company I have owned in a while.  Been in and out of AGO too and currently its a 1.5% positon and looking to add.  But I did go through similar gyrations with USG, Yellow Media and MCI/Worldcom, Stelco, Algoma, GGP, Fremont General, Radian, TYCO, MPEL  during the bankruptcy/post-bankruptcy/near bankruptcy/scandal.  Last week SHLD came within a bargain range so I took a 1% position. Added to HLSS @20 Thursday on the violent dip too.  Currently most interesting positions I have are MBI, IRE, APO, NBG, HLSS, OCN, HOVNP, FNMAS, HIG wts, XCO, AGO,  AMI.L.  I follow many legends including Buffett, Whitman, Berkowitz, Watsa, Ross, Lampert, Cooperman, Black and many others.

 

Twitter handle @CapitalismWorld  (sorry must remain anonymous as per firm policy)

 

So in terms of fundamental analysis, how would you compare MBI vs AGO?

[zippy1]

MBIA close to settlement with Nomura over MBS exposure-WSJ

Feb 13 (Reuters) - Bond insurer MBIA Inc is close to a $400 million settlement with Japan's Nomura Holdings Inc , reducing its legal exposure to soured mortgage-backed securities by $3 billion, the Wall Street Journal said.

 

Under the settlement, which could be announced as soon as Thursday, MBIA will pay $325 million now and $83 million later if certain legal disputes "work out in its favor," the daily said, without naming its source. ()

 

MBIA shares were up about 3 percent at $12.33 in afternoon trading on the New York Stock Exchange.

http://finance.yahoo.com/news/mbia-close-settlement-nomura-over-174647113.html

[zippy1]

Moody's places MBIA Insurance Corporation's B3 IFS rating on review for upgrade

New York, February 14, 2014 -- Moody's Investors Service has placed the B3 insurance financial strength (IFS) rating of MBIA Insurance Corporation (MBIA Corp.) on review for upgrade following MBIA's announcement of its commutation of $3 billion of commercial mortgage backed securities pools. As part of the same rating action, Moody's placed the ratings of MBIA Mexico S.A de C.V. (MBIA Mexico -- B3 IFS), MBIA UK Insurance Limited (MBIA UK -- B1 IFS), and MBIA Inc. (Ba3, senior debt) on review for upgrade. The Baa1 IFS rating of National Public Finance Guarantee Corporation (National) was affirmed with a positive outlook. The rating action also has implications for the various transactions wrapped by the MBIA group as discussed later in this press release.

 

A full list of rating actions on MBIA Inc. and its subsidiaries is provided below.

 

SUMMARY RATIONALE

Moody's stated that today's rating actions reflect the positive effect that MBIA's recent settlement of CMBS exposures has had on the credit profile of MBIA Insurance Corporation (MBIA Corp.) and its linked affiliates. Specifically, the settlement, while in excess of third quarter 2013 loss reserves, has substantially reduced MBIA Corp.'s exposure to impaired CMBS and to the associated potential losses in adverse scenarios. The effect of the settlement will be reflected in YE 2013 statutory financials. Following the settlement of approximately $3 billion of CMBS exposures, MBIA Corp. retains only $760 million of exposure to CMBS with reference obligations originally rated Baa, of which, according to the insurer, approximately $391 million has some associated statutory loss reserves. This settlement follows a number of material settlements in 2013 that substantially reduced the volatility of insured losses and improved the liquidity of MBIA Corp. and terminated the main litigations challenging the group's 2009 restructuring.

https://www.moodys.com/research/Moodys-places-MBIA-Insurance-Corporations-B3-IFS-rating-on-review--PR_292952?WT.mc_id=NLTITLE_YYYYMMDD_PR_292952

[stahleyp]

MBI reported today.

 

http://www.reuters.com/article/2014/03/03/ny-mbia-idUSnBw036551a+100+BSW20140303

[zippy1]

S&P upgrade!  :)

S&P Upgrades National Public Finance Guarantee Corp. and MBIA Inc.

, N.Y.--(BUSINESS WIRE)--

 

MBIA Inc. (MBI) today announced that Standard & Poor’s Ratings Services (S&P) has upgraded its financial strength rating on MBIA Inc.’s primary financial guarantee insurance subsidiary, National Public Finance Guarantee Corp. (National), to “AA-” from “A”. At the same time, S&P upgraded the counterparty credit rating of MBIA Inc. to “A-” from “BBB”. The outlook on both companies is stable. S&P’s upgrade of National recognizes its extremely strong capital adequacy position, strong operating performance and expected strong competitive position in the financial guarantee market. The upgrade to MBIA Inc.’s rating reflects S&P’s view that National is its principal source of cash flow for debt service and expense needs.

Commenting on the upgrades, MBIA CEO Jay Brown said, “We’re pleased that S&P has recognized the positive steps we’ve taken to reduce risk and volatility throughout the organization as well as National’s strong financial profile and competitive prospects. With a rating in the double-A range now in hand, National will turn its attention toward executing its business plan and supporting the credit enhancement needs of municipalities across the United States. MBIA Inc.’s single-A minus rating will significantly enhance its financial flexibility and provide us with greater opportunities to reduce holding company leverage over time.”

[txlaw]

It's about time.

[mankap]

I know MBIA has not given any timeline on when National will start insuring munis.

What is the expectation of the members of board on when National can start insuring munis.

[txlaw]

http://www.bloomberg.com/news/2014-04-09/detroit-to-pay-bondholders-74-on-388-million-claim.html

[muscleman]

http://google.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=9866922-4963-14800&type=sect&TabIndex=2&companyid=7168&ppu=%252fdefault.aspx%253fsym%253dMBI

 

"Reinitiating a meaningful dialogue with some of our major surplus note holders to see if we can identify a path forward that allows us to deleverage MBIA Corp.  But that path must reflect the economic reality of MBIA Corp.’s financial condition and how it will operate for the next several years.  I have said it before, and I will say it again, I cannot come up with any scenario that justifies the advertised trading price that the capital markets have placed on the surplus notes."

 

Does anyone have insights into this surplus notes? My understanding is that surplus notes rank above equity, so if he wants surplus notes holders to take a big haircut, does that imply that he believes that the structured sub's equity value is zero?

[PatientCheetah]

http://google.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=9866922-4963-14800&type=sect&TabIndex=2&companyid=7168&ppu=%252fdefault.aspx%253fsym%253dMBI

 

"Reinitiating a meaningful dialogue with some of our major surplus note holders to see if we can identify a path forward that allows us to deleverage MBIA Corp.  But that path must reflect the economic reality of MBIA Corp.’s financial condition and how it will operate for the next several years.  I have said it before, and I will say it again, I cannot come up with any scenario that justifies the advertised trading price that the capital markets have placed on the surplus notes."

 

Does anyone have insights into this surplus notes? My understanding is that surplus notes rank above equity, so if he wants surplus notes holders to take a big haircut, does that imply that he believes that the structured sub's equity value is zero?

 

"I think when you look at the surplus notes, you really have to think about the situation in MBIA Corp. first. In that regard and as Chuck went through the balance sheet, the isolated number of areas that have significant potential volatility still remaining in the portfolio. We also have a substantial collection of recoverables that totals in excess of $1 billion. My sense of that is that payments to the surplus notes in terms of interest probably will not occur until those sources of volatility are removed and collection of those recoverable occurs. We have indicated to the market that we would be happy to engage in any conversation to exchange surplus notes for other securities, but at time, Geoff, the way the market has priced the surplus notes, in our mind makes it impossible for us to make a rational economic decision to trade them for another security. If there is an adjustment in the prices of securities, we’d be happy to engage in those conversations, but the levels that they exist today, which the surplus notes, the last time I looked were trading in the 85 range for those few that actually trade. At those price levels, we can’t make the numbers work in exchanging them for any other security at our holding company whether it’s debt or equity." 2013 Q2 CC

 

Looks like a timing issue and perceived valuation differences

[muscleman]

http://google.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=9866922-4963-14800&type=sect&TabIndex=2&companyid=7168&ppu=%252fdefault.aspx%253fsym%253dMBI

 

"Reinitiating a meaningful dialogue with some of our major surplus note holders to see if we can identify a path forward that allows us to deleverage MBIA Corp.  But that path must reflect the economic reality of MBIA Corp.’s financial condition and how it will operate for the next several years.  I have said it before, and I will say it again, I cannot come up with any scenario that justifies the advertised trading price that the capital markets have placed on the surplus notes."

 

Does anyone have insights into this surplus notes? My understanding is that surplus notes rank above equity, so if he wants surplus notes holders to take a big haircut, does that imply that he believes that the structured sub's equity value is zero?

 

"I think when you look at the surplus notes, you really have to think about the situation in MBIA Corp. first. In that regard and as Chuck went through the balance sheet, the isolated number of areas that have significant potential volatility still remaining in the portfolio. We also have a substantial collection of recoverables that totals in excess of $1 billion. My sense of that is that payments to the surplus notes in terms of interest probably will not occur until those sources of volatility are removed and collection of those recoverable occurs. We have indicated to the market that we would be happy to engage in any conversation to exchange surplus notes for other securities, but at time, Geoff, the way the market has priced the surplus notes, in our mind makes it impossible for us to make a rational economic decision to trade them for another security. If there is an adjustment in the prices of securities, we’d be happy to engage in those conversations, but the levels that they exist today, which the surplus notes, the last time I looked were trading in the 85 range for those few that actually trade. At those price levels, we can’t make the numbers work in exchanging them for any other security at our holding company whether it’s debt or equity." 2013 Q2 CC

 

Looks like a timing issue and perceived valuation differences

 

I can't find these surplus notes' trading symbols from fidelity. Do you know?

So once they recover the $1bn putback litigations, the surplus notes will likely trade above par, and there will be real equity value in the structure unit?

[PatientCheetah]

http://google.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=9866922-4963-14800&type=sect&TabIndex=2&companyid=7168&ppu=%252fdefault.aspx%253fsym%253dMBI

 

"Reinitiating a meaningful dialogue with some of our major surplus note holders to see if we can identify a path forward that allows us to deleverage MBIA Corp.  But that path must reflect the economic reality of MBIA Corp.’s financial condition and how it will operate for the next several years.  I have said it before, and I will say it again, I cannot come up with any scenario that justifies the advertised trading price that the capital markets have placed on the surplus notes."

 

Does anyone have insights into this surplus notes? My understanding is that surplus notes rank above equity, so if he wants surplus notes holders to take a big haircut, does that imply that he believes that the structured sub's equity value is zero?

 

"I think when you look at the surplus notes, you really have to think about the situation in MBIA Corp. first. In that regard and as Chuck went through the balance sheet, the isolated number of areas that have significant potential volatility still remaining in the portfolio. We also have a substantial collection of recoverables that totals in excess of $1 billion. My sense of that is that payments to the surplus notes in terms of interest probably will not occur until those sources of volatility are removed and collection of those recoverable occurs. We have indicated to the market that we would be happy to engage in any conversation to exchange surplus notes for other securities, but at time, Geoff, the way the market has priced the surplus notes, in our mind makes it impossible for us to make a rational economic decision to trade them for another security. If there is an adjustment in the prices of securities, we’d be happy to engage in those conversations, but the levels that they exist today, which the surplus notes, the last time I looked were trading in the 85 range for those few that actually trade. At those price levels, we can’t make the numbers work in exchanging them for any other security at our holding company whether it’s debt or equity." 2013 Q2 CC

 

Looks like a timing issue and perceived valuation differences

 

I can't find these surplus notes' trading symbols from fidelity. Do you know?

So once they recover the $1bn putback litigations, the surplus notes will likely trade above par, and there will be real equity value in the structure unit?

 

I have no idea and only have superficial knowledge on MBIA. Given the limited liquidity, I would imagine those notes are not listed and are traded OTC.

[muscleman]

Anyone buying MBI at these levels? :D

[A_Hamilton]

Anyone buying MBI at these levels? :D

 

When are MBI and AGO going to see the light and just put themselves in runoff? They are worth more in liquidiation then trying to write another new policy...they need to just try to commute everything as fast as possible and return capital to shareholders...since mgmt is too entrenched to do this I don't touch these...

[muscleman]

Big drop today after BTIG removed the price target and downgraded. The reason is that MBI has 1.53 bn exposure to Puerto Rico Electric Company debt but AGO only has 0.875 bn. Do you really think this is the cause, or just an execuse?

 

What are your thoughts now? AGO seems to be generating lots of cash and able to make big buybacks. MBI doesn't have any buybacks so far. But if the price can be low enough, I would be interested to get back in.

[zippy1]

Big drop today after BTIG removed the price target and downgraded. The reason is that MBI has 1.53 bn exposure to Puerto Rico Electric Company debt but AGO only has 0.875 bn. Do you really think this is the cause, or just an execuse?

 

What are your thoughts now? AGO seems to be generating lots of cash and able to make big buybacks. MBI doesn't have any buybacks so far. But if the price can be low enough, I would be interested to get back in.

The inability to do buy back for MBI appears to be a reason why BTIG downgraded the stock.

http://www.btigresearch.com/2014/06/30/mbia-mbi-downgrading-to-neutral-from-buy-and-removing-price-target-prepa-uncertainty-moves-us-to-sidelines/#more-47188

 

[muscleman]

Big drop today after BTIG removed the price target and downgraded. The reason is that MBI has 1.53 bn exposure to Puerto Rico Electric Company debt but AGO only has 0.875 bn. Do you really think this is the cause, or just an execuse?

 

What are your thoughts now? AGO seems to be generating lots of cash and able to make big buybacks. MBI doesn't have any buybacks so far. But if the price can be low enough, I would be interested to get back in.

The inability to do buy back for MBI appears to be a reason why BTIG downgraded the stock.

http://www.btigresearch.com/2014/06/30/mbia-mbi-downgrading-to-neutral-from-buy-and-removing-price-target-prepa-uncertainty-moves-us-to-sidelines/#more-47188

 

What is the difference here? What makes MBI unable to repurchase shares but AGO kept buying lots of shares every year?

[valueyoda]

The price to book ratio only indicates when it might be attractive to repurchase common stock for an insurer, but never measures the insurer's ability to do so. AGO relative to MBI has better liquidity at the holding company and better cash flow flow through from the subsidiaries.

[valueyoda]

Nonetheless, I think that all three of them (MBI, AGO, and AMBC) might be attractive longs, if investors get further spooked this week on deteriorating Puerto Rico news.