(By Salman - iStockAnalyst Writer)
Bullish Stock of the Day: MBIA Inc. (NYSE: MBI)
MBIA Inc. provides financial guarantee insurance and credit protection products as well as investment management services to public finance and structured finance issuers, investors, and capital market participants worldwide.
The company reported spectacular quarter and indicated that it has clearly turned a major corner.
The company surprisingly reported first quarter profit, reversing a string of five straight quarterly losses. Net income totaled $700.6 million, or $3.34 a share, compared with a loss of $2.41 billion, or $12.92 a share, in the year earlier quarter. Revenue totaled $1.92 billion, compared with negative $2.94 billion a year ago.
The
net premiums earned jumped from 47% to $228.7 million. Analysts on average had projected a loss of 33 cents a share for the quarter.
The results for the quarter include a $1.6 billion pretax unrealized gain and a $31.8 million pretax realized gain, both on insured credit derivatives. Armonk, New York based company was hit hard by the turmoil in financial market and a continued slump in housing market, which forced it to record huge losses on mortgage-backed securities and other risky securities over the past year. The company is no longer insuring new credit derivative contracts except in transactions related to the reduction of existing derivative exposure.
As of March 31, 2009, book value per share was $7.76 compared with $4.78 at December 31, 2008.
During the quarter, Armonk, N.Y.-based MBIA
split its insurance operations into two segments, one called National Public Finance Guarantee Corp., for its traditional municipal bond insurance, and one called MBIA Insurance Corp., for structured finance and international insurance. The separation of its municipal bond insurance business is expected to help the company to eventually rebuild those operations.
MBIA Insurance Corporation, which comprises the structured finance and international public finance businesses,
had $1.5 billion of cash and short-term investments available to support its liquidity needs and $8.0 billion of claims-paying resources as of March 31, 2009. The Company believes that the ALM business has sufficient cash and short-term investments to meet all terminable liabilities, irrespective of any ratings actions.
