MBIA Q2 Earnings Call Highlights

MBIA’s second-quarter loss narrowed: GAAP net loss improved to $46 million, or $0.91 per share, from $56 million a year earlier, while adjusted net loss decreased to $7 million.

PREPA remains the central issue: National’s outstanding PREPA exposure fell by $35 million to $390 million, but bondholders representing about 90% of claims rejected Puerto Rico’s roughly $3 billion settlement proposal. Litigation and negotiations remain unresolved.

Capital and strategic flexibility improved, though challenges remain: National’s leverage declined to 21-to-1 and statutory capital rose to about $968 million. MBIA also had $337 million in unencumbered cash and liquid assets, $71 million remaining under its buyback authorization, and continues to evaluate potential strategic transactions.

MBIA NYSE: MBI reported a narrower second-quarter net loss as lower expenses tied to its Puerto Rico Electric Power Authority, or PREPA, exposure and favorable foreign-exchange movements helped results. Management said its principal priority remains resolving National Public Finance Guarantee Corp.’s remaining PREPA exposure, while litigation and negotiations surrounding the utility’s restructuring continue.

The company posted a consolidated GAAP net loss of $46 million, or $0.91 per share, for the second quarter of 2026, compared with a $56 million loss, or $1.12 per share, a year earlier. Adjusted net loss, a non-GAAP measure, improved to $7 million, or $0.14 per share, from $8 million, or $0.17 per share, in the prior-year period.

Chief Financial Officer Joe Schachinger said the smaller GAAP loss reflected a reversal of legal expenses within a consolidated variable-interest entity related to Zohar CDO recoveries at MBIA Insurance Corp., as well as foreign-exchange gains. The currency gains were associated with the revaluation of euro-denominated medium-term-note liabilities in the corporate segment, compared with foreign-exchange losses in the second quarter of 2025.

National’s outstanding PREPA exposure declined by $35 million during the quarter to $390 million of gross par value, following insurance-policy claims paid on PREPA bonds that matured July 1, CEO Bill Fallon said. The payment included $30 million that has been transferred to a custody account, for which National holds custodial receipts, and $5 million associated with a secondary policy. Fallon said the company could sell up to $35 million of those receipts if it receives what it considers an appropriate price or offer.

Fallon also said PREPA debt-service payments are expected to decline substantially, with $20 million of payments in 2027 and another $20 million in 2028. Meanwhile, the Financial Oversight and Management Board for Puerto Rico increased its settlement proposal to PREPA bondholders to about $3 billion from $1.6 billion. Fallon characterized the increase as positive from the board’s perspective but said bondholders representing roughly 90% of claims rejected the proposal as inadequate. In response to an analyst question, Fallon said the proposal appeared to equate to roughly 30 cents to 40 cents on the dollar of par value, depending on valuation assumptions. He noted that recent market indications for PREPA bonds were about 75 cents on the dollar, though he cautioned that the market was not especially deep or liquid.

“Hard to say where we go from here in terms of how much time,” Fallon said, citing ongoing uncertainty over the composition of the oversight board and several continuing legal proceedings.