MBIA Inc. (NYSE: MBI) today announced the closing of the previously
announced reinsurance transaction between its insurance subsidiary, MBIA
Insurance Corporation (MBIA) and Financial Guaranty Insurance Company
(FGIC). The reinsured portfolio consists entirely of U.S. public finance
bonds (the “public finance portfolio”)
with total net par outstanding of approximately $166 billion. In
connection with the reinsurance, MBIA has received unearned upfront
premiums, net of a ceding commission paid to FGIC, of approximately $639
million. As required by the New York State Insurance Department, the
funds will be placed in a trust and will be released to MBIA upon the
earlier of its removal from ratings review with its current ratings or
nine months from the closing date of the transaction. Under the terms of
the trust, the funds will be released to MBIA as the premium is earned
and can be used to pay claims under the reinsurance agreement.
The public finance portfolio consists exclusively of investment grade
credits, primarily in the general obligation, water and sewer,
tax-backed and transportation sectors, and does not contain any credit
default swap contracts, below investment grade credits or other credits
inconsistent with MBIA’s credit underwriting
standards. The reinsurance has been provided on a “cut-through”
basis, enabling FGIC’s policyholders to
receive the benefit of MBIA’s reinsurance by
allowing them to present claims directly to MBIA.
"We are pleased to be a part of a win-win transaction for MBIA, FGIC and
FGIC’s policyholders,”
said Bill Fallon, MBIA Managing Director. “The
transaction provides an attractive return to MBIA, additional capital
for FGIC and the security of MBIA’s strong
claims-paying resources for FGIC’s
policyholders.”
Forward-Looking Statements
This release contains statements about future results that may
constitute "forward-looking statements" within the meaning of the safe
harbor provisions of the Private Securities Litigation Reform Act of
1995. Readers are cautioned that these statements are not guarantees of
future performance. There are a variety of factors, many of which are
beyond MBIA's control, which affect the operations, performance,
business strategy and results and could cause its actual results to
differ materially from the expectations and objectives expressed in any
forward-looking statements. Accordingly, readers are cautioned not to
place undue reliance on forward-looking statements which speak only as
of the date they are made. MBIA does not undertake to update
forward-looking statements to reflect the impact of circumstances or
events that arise after the date the forward-looking statements are
made. The reader should, however, consult any further disclosures MBIA
may make in its future filings of its reports on Form 10-K, Form 10-Q
and Form 8-K.
MBIA Inc., headquartered in Armonk, New York is a holding company whose
subsidiaries provide financial guarantee insurance, fixed-income asset
management, and other specialized financial services. The Company
services its clients around the globe, with offices in New York, Denver,
San Francisco, Paris, London, Madrid, Mexico City, Sydney and Tokyo. Its
principal operating subsidiary, MBIA Insurance Corporation, is rated A2
by Moody's Investors Service on review for possible downgrade and AA by
Standard & Poor's Ratings Services with a negative outlook. Please visit
MBIA's Web site at www.mbia.com.
MBIA, Media: Kevin Brown +1-914-765-3648
MBIA, Media:
Elizabeth James +1-914-765-3889
MBIA, Investor Relations: Greg
Diamond +1-914-765-3190
APCO Worldwide, Media: Jim McCarthy
+1-202-333-8810
