MBIA Inc. Provides Financial Update for First Nine Months of 2009

http://www.businesswire.com/news/home/20091109006523/en

Highlights

* MBIA Inc.`s (the Company`s) Adjusted Book Value (ABV) was $39.05 per share at
September 30, 2009 compared with $40.06 per share at December 31, 2008. ABV is a
non-GAAP measure that excludes the impact of changes in the fair value of
insured credit derivatives and temporary asset impairments but includes the
present value of future expected loss payments on insured credit derivatives,
net of recoveries (credit impairments).
* The Company recorded net income available to common shareholders of $863.6
million, or $4.15 per share, for the first nine months of 2009, compared with a
net loss of $1.5 billion, or $6.87 per share, during the same period in 2008.
The Company recorded a net loss to common shareholders of $727.8 million, or
$3.50 per share, for the third quarter of 2009, compared with a net loss of
$806.5 million, or $3.42 per share, for the third quarter of 2008.
* National Public Finance Guarantee Corporation (National) and MBIA Insurance
Corporation (MBIA Corp.), the Company`s primary insurance operating
subsidiaries, had statutory capital, surplus and contingency reserves totaling
$1.9 billion and $3.9 billion, respectively, as of September 30, 2009.
* Cash and short-term investments at National and MBIA Corp. totaled $629.7
million and $1.9 billion, respectively, as of September 30, 2009. Cash and
short-term investments at the Corporate segment of the holding company totaled
$408.8 million as of September 30, while cash and short-term investments in the
wind-down Asset Liability Management (ALM) business totaled $1.3 billion.

ARMONK, N.Y.--(Business Wire)--
MBIA Inc. (NYSE: MBI) today reported Adjusted Book Value (ABV) per share (a
non-GAAP measure) of $39.05 as of September 30, 2009, compared with $40.06 as of
December 31, 2008. ABV declined slightly over the first nine months of 2009 as
increased credit impairments on insured credit derivatives, other-than-temporary
impairments of invested assets and insurance incurred losses outpaced earnings
from premiums and investment income.

Net income available to common shareholders for the first nine months of 2009
was $863.6 million, or $4.15 per share, compared with a net loss of $1.5
billion, or $6.87 per share, during the same period in 2008. In the year-to-date
period, net income was affected by a $1.2 billion pre-tax improvement in the
fair values of insured credit derivatives. All other components of pre-tax
income contributed $199.3 million. For the third quarter of 2009, the net loss
to common shareholders was $727.8 million, or $3.50 per share, compared with a
net loss of $806.5 million, or $3.42 per share, for the third quarter of 2008.
The net loss in the third quarter of 2009 was driven by an $810.2 million
pre-tax unrealized loss on insured credit derivatives, $238.8 million in pre-tax
loss and loss adjustment expenses primarily related to the Company`s insured
exposures to second-lien mortgage loan securitizations, and $171.4 million in
pre-tax realized losses and other-than-temporary impairments on investments.
Book value per share was $13.16 as of September 30, 2009 compared with $4.78 as
of December 31, 2008. The increase in book value is primarily due to the $1.2
billion pre-tax improvement in the fair values of insured credit derivatives, an
increase of $749.6 million in Other Comprehensive Income (OCI) and a net $199.3
million from all other components of pre-tax income.

"The third quarter`s loss is a reminder that the impact of this recession
continues to be felt throughout the economy," said President and Chief Financial
Officer Chuck Chaplin. "Incurred losses in our insurance business were above
expectations and the same housing-related performance trends drove our asset
losses and impairments, but those losses were partially offset by gains on debt
repurchases in the quarter. In addition, National`s earnings were consistent
with its business plans and our third-party Asset Management business added $1.0
billion in assets under management in the third quarter and $4.7 billion
year-to-date. On the litigation front, we continue to be highly confident that
the New York State Insurance Department`s decision to permit the creation of
National will ultimately be upheld," Mr. Chaplin continued. "Our litigation
against sponsors of structured finance vehicles where the nature of collateral
was misrepresented is ongoing and we continue to expect substantial recoveries
from our contractual right to put back ineligible mortgages."

Segment Results

The following is a summary of results for the first nine months and third
quarter of 2009, as well as book value and ABV per share data:

$ in millions except Structured Investment
per share data U.S. Public Finance and Management
Finance International Services Corporate Consolidated
9/30/09 ABV per share $ 20.05 $ 23.18 $ (4.35) $ 0.17 $ 39.05
12/31/08 ABV per share $ 18.95 $ 25.17 $ (3.26) $ (0.80) $ 40.06

9/30/09 BV per share $ 13.02 $ 8.81 $ (8.84) $ 0.17 $ 13.16
12/31/08 BV per share $ 10.97 $ 5.16 $ (10.53) $ (0.82) $ 4.78

YTD Pre-tax Income $ 365 $ 1,253 $ (96) $ (106) $ 1,422
Q3 Pre-tax Income $ 132 $ (1,076) $ (61) $ (60) $ (1,066)

U.S. Public Finance Results

The U.S. Public Finance Insurance segment`s contribution to ABV per share was
$20.05 as of September 30, 2009 as compared with $18.95 (pro forma) as of
December 31, 2008. The increase in both book value and ABV per share is the
result of net income for the segment. The contribution to the Company`s book
value per share attributable to the U.S. Public Finance Insurance segment was
$13.02 as of September 30, 2009 compared with $10.97 as of December 31, 2008
(pro forma). The U.S. Public Finance insurance business is conducted in the
National subsidiary.

While National wrote virtually no new business in the nine months ended
September 30, 2009, the existing book of business performed as expected and
generated scheduled premiums earned of $314.0 million in the first nine months
of 2009 and $96.4 million in the third quarter, up 75 percent and 69 percent,
respectively, from the first nine months and third quarter of 2008. The growth
was primarily the result of the previously announced reinsurance transaction
with Financial Guaranty Insurance Corp. (FGIC) in 2008. Refunded premiums earned
totaled $111.7 million for the first nine months of 2009, down 37 percent from
$178.1 million in the first nine months of 2008. Refunded premiums earned were
$46.5 million in the third quarter of 2009, down 47 percent from $87.9 million
in the third quarter of 2008.

Pre-tax net investment income for the U.S. Public Finance Insurance segment was
$152.0 million for the first nine months of 2009 and $60.9 million in the third
quarter. National`s investment portfolio averaged Double-A credit quality and
totaled $5.4 billion as of September 30, 2009. National`s investment portfolio
comprised 56 percent taxable securities and 44 percent tax-exempt securities as
of quarter-end.

Loss and loss adjustment expenses for the U.S. Public Finance Insurance segment
totaled $91.7 million in the first nine months of 2009 and $28.7 million in the
third quarter. The losses in the first nine months of the year were primarily
attributable to an affordable housing transaction and a student loan
transaction.

Expenses in the U.S. Public Finance Insurance segment for the first nine months
of 2009 consisted of $89.9 million from the amortization of deferred acquisition
costs associated with ceding commissions paid to MBIA Corp. and $39.4 million in
operating expenses. In the third quarter, the amortization of deferred
acquisition costs totaled $33.1 million and operating expenses were $11.0
million.

National had statutory capital, surplus and contingency reserves totaling $1.9
billion at September 30, 2009, consisting of capital and surplus of $509.0
million and contingency reserves of $1.4 billion. National`s claims-paying
resources totaled $5.5 billion as of September 30, 2009.

Structured Finance and International Insurance Results

The Structured Finance and International Insurance segment, which is operated by
MBIA Insurance Corp. and its subsidiaries, had a contribution to ABV per share
of $23.18 as of September 30, 2009, as compared with $25.17 (pro forma) as of
December 31, 2008. The reduction in ABV per share reflects the impact of
impairments on insured credit derivatives and incurred losses on insured
second-lien mortgage loan transactions, partially offset by earnings from
premiums and investment income. The contribution to the Company`s book value per
share attributable to the Structured Finance and International Insurance segment
was $8.81 as of September 30, 2009, compared with $5.16 as of December 31, 2008
(pro forma). The increase in book value per share reflects net income for the
segment driven by unrealized net gains (marks-to-market) on insured credit
derivatives.

While there was no new business written in the Structured Finance and
International Insurance segment in the first nine months of 2009, the existing
book of business generated $273.3 million in scheduled premiums earned in the
first nine months of the year and $74.8 million in scheduled premiums earned in
the third quarter.

Pre-tax net investment income for the Structured Finance and International
Insurance segment was $255.3 million in the first nine months of 2009 and $64.1
million in the third quarter. Both the third quarter and first nine months of
the year were impacted by a lower level of invested assets due to claims
payments and by MBIA Corp.`s decision to enhance its liquidity by holding a
greater proportion of cash.

Fee income for the Structured Finance and International Insurance segment
totaled $132.9 million in the first nine months of 2009 and $42.5 million in the
third quarter. Fees in the third quarter included $33.1 million representing the
amortization of ceding commission income received by MBIA Corp. from National in
connection with the Company`s Transformation.

Realized gains and other settlements on insured credit derivatives totaled $33.2
million in the first nine months of 2009, as $93.1 million in premiums and fees
attributable to insured credit derivatives were partially offset by $60.0
million in losses paid on insured credit derivatives. For the third quarter,
realized losses and other settlements on insured credit derivatives totaled
$30.5 million as premiums and fees of $29.4 million only partially offset the
losses paid.

The Structured Finance and International Insurance segment recognized pre-tax
unrealized net gains (marks-to-market) on insured credit derivatives of $1.2
billion for the first nine months of 2009. In the third quarter, pre-tax
unrealized net losses on insured credit derivatives totaled $810.2 million.

Unrealized mark-to-market losses on insured credit default swap (CDS) contracts
during the third quarter were comprised of three primary factors. The factors
which negatively impacted the unrealized mark-to-market losses were MBIA's lower
nonperformance risk and enhancements to internal model inputs. While credit
spreads and market recovery rate assumptions for MBIA Corp. improved during the
third quarter, the impact on mark-to-market results is the opposite. As MBIA
Corp.'s market credit perception improves, the market values of its obligations
increase, resulting in unrealized losses. In addition, some enhancements were
made to the model inputs used to estimate the mark-to-market to better reflect
the current environment and available market information. Those enhancements
also increased unrealized mark-to-market losses. A partial offset to these
negative factors was the tightening of credit spreads on referenced obligations
in the insured CDS contracts, reflecting the market's view of an improving
credit and liquidity profile.

Pre-tax net investment losses from other-than-temporary impairments in the
Structured Finance and International Insurance segment totaled $90.8 million in
the first nine months of the year and $50.4 million in the third quarter. In the
first nine months and third quarter of 2009 an additional $170.4 million and
$85.0 million, respectively, of pre-tax non-credit-related impairments on debt
securities were charged directly to equity as the impairments were attributable
to reductions in market value that are expected to reverse prior to the maturity
or sale of the securities.

The Structured Finance and International Insurance segment incurred $111.5
million in loss and loss adjustment expenses in the first nine months of 2009
and $210.1 million in loss and loss adjustment expenses in the third quarter.
The future payment streams are discounted at a risk-free rate which varies
according to the tenors and currencies of the insured obligations. Loss and loss
adjustment expenses for the nine month period benefited from the previously
announced $1.1 billion in expected recoveries recorded in the second quarter in
connection with ineligible mortgages in certain insured second-lien residential
mortgage loan securitizations that are subject to a contractual obligation by
the seller/servicer to repurchase or replace the mortgages. This amount was
increased by approximately $75.6 million in the third quarter following
additional forensic reviews of defaulted mortgage loan files. The Company is
continuing to review and evaluate additional mortgage loans in its insured RMBS
pools and expects that there will be additional mortgages in these or in other
transactions that are subject to a repurchase or replacement obligation by the
seller/servicer.

While the Company believes that these ineligible mortgage loans are subject to
the repurchase or replacement obligations of the seller/servicers, successful
challenges of such determinations by the seller/servicers could result in the
Company recovering less than the amount of its estimated recoveries.
Alternatively, recoveries and damages from legal actions that MBIA Corp. has
filed against certain of the seller/servicers could result in recoveries that
are substantially higher than the amounts currently recognized as recoveries.

As part of the ongoing review of the performance expectations for its insured
portfolio, the Company monitors and discloses a non-GAAP measure that it refers
to as "credit impairments." Credit impairments represent the present value of
future expected loss payments on insured credit derivatives, net of recoveries.
The Company estimated $634.5 million and $250.4 million in incremental credit
impairments on its multi-sector CDO exposures in the first nine months and third
quarter of 2009, respectively. Although the Company`s income statement includes
the change in fair value of insured credit derivatives, it regards the changes
in credit impairment estimates as critical information for investors since the
credit impairment estimates reflect the present value of amounts it expects to
pay in claims net of recoveries with respect to insured credit derivatives. The
future payment streams are discounted at the statutory discount rate of 5.03
percent. Cumulative credit impairments on insured credit derivatives since the
Company began estimating them in the fourth quarter of 2007 total $2.4 billion,
consisting of $594.3 million in losses paid through September 30, 2009 and $1.8
billion in estimated credit impairments as of the same date. The estimated
credit impairment amount on insured credit derivatives is analogous to case loss
reserves on financial guarantee policies as both represent the present value of
future expected loss payments net of recoveries.

Other than the credit impairments, the Company expects the unrealized gains and
losses in fair value (marks-to-market) to be reversed prior to or upon the
maturities of the insured credit derivatives. As of September 30, 2009, the
Company carried a net derivative liability (the cumulative negative
mark-to-market on insured credit derivatives) of $4.2 billion for all insured
credit derivatives.

The Structured Finance and International Insurance segment`s insured portfolio
declined in size during the first nine months of 2009, to $215.4 billion as of
September 30, 2009 from $232.9 billion as of December 31, 2008. During the first
nine months of 2009, 16 insured credit derivative transactions representing
$11.7 billion in net par exposure either matured or were contractually
terminated prior to maturity without payments by MBIA Corp., including four
transactions representing $2.1 billion in net par exposure in the third quarter.
There were no material commutations of insured credit derivative exposures
requiring a payment by MBIA Corp. in the first nine months of the year. The
reduction in net par resulting from amortization, terminations and maturities
during the quarter was partially offset by the reassumption of approximately
$3.5 billion in previously ceded exposure as a result of commutation agreements
with four reinsurers.

Subsequent to the end of the third quarter, MBIA Corp. entered into a
commutation agreement with one of its counterparties related to two insured
credit derivative transactions that resulted in the elimination of $1.2 billion
in net par exposure in exchange for a one-time payment of $93.8 million, net of
reinsurance. The payment by MBIA Corp. was less than the estimated credit
impairment associated with these two transactions. In addition, MBIA Corp.
commuted a financial guarantee transaction with net par outstanding of $839.9
million at a cost of $65.3 million, net of reinsurance. While MBIA Corp. had not
previously recorded a loss in connection with this transaction, the commutation
payment eliminated potential near term liquidity risk as well as future
performance volatility. The impact of the payments and reductions in exposure
will be reflected in the Company`s fourth quarter results.

The Structured Finance and International Insurance segment`s gross insurance
operating expenses (prior to deferrals or the amortization of previously
deferred amounts) were $149.0 million in the first nine months of 2009 and $44.1
million in the third quarter. Cost-reduction efforts have resulted in lower
compensation-related expenses, but the segment has experienced increases in
consulting, legal and loss prevention expenses, a significant portion of which
continue to be related to efforts to obtain recoveries on improperly originated
and serviced transactions. As there was no new business written in the segment
during the first nine months of 2009, no expenses were deferred.

During the third quarter of 2009, MBIA Corp. paid a total of $638.4 million in
net claims primarily in connection with its second-lien residential mortgage
exposures. As of September 30, 2009, MBIA Corp.`s statutory balance sheet
reflected $5.2 billion in cash and invested assets including $1.5 billion of
cash and short-term investments available to meet demands on its liquidity. The
Company believes that MBIA Corp.`s liquidity resources will adequately provide
for anticipated cash outflows.

MBIA Corp. had statutory capital, surplus and contingency reserves totaling $3.9
billion at September 30, 2009, consisting of capital and surplus of $2.5 billion
and contingency reserves of $1.4 billion. MBIA Corp.`s claims-paying resources
totaled $7.1 billion as of September 30, 2009.

Investment Management Services

The Investment Management Services (IMS) business` contribution to ABV per share
declined from ($3.26) at December 31, 2008 to ($4.35) as of September 30, 2009
due to asset impairments and negative spread between its earnings on assets and
the cost of its liabilities. Its contribution to book value per share improved
from ($10.53) as of December 31, 2008 to ($8.84) as of September 30, 2009. The
improvement resulted from a reduction in unrealized losses in OCI, partially
offset by pre-tax other-than-temporary impairments on structured investments in
the ALM investment portfolio.

Ending assets under management in the Advisory Services business were $35.4
billion at September 30, 2009, up 1 percent from $34.9 billion as of June 30,
2009, and up 11 percent from $31.9 billion as of year-end 2008. Excluding assets
managed for affiliates, assets under management in the Advisory Services
business increased 4 percent in the third quarter of 2009 and 23 percent in the
first nine months of the year.

The ALM and conduit businesses continued to wind-down throughout the first nine
months of 2009. As of September 30, 2009, the Company had $8.4 billion in
outstanding guaranteed investment contract, medium-term note and repurchase
agreement liabilities (all at book value) related to its ALM business, down from
$11.8 billion as of December 31, 2008. Liabilities held by third parties
declined from $9.2 billion at December 31, 2008 to $5.8 billion at September 30,
2009. Total invested assets in the ALM business were $7.4 billion as of
September 30, 2009, excluding unrealized losses, of which $1.3 billion consisted
of cash and short-term investments. The Company believes that its liquidity
resources, along with cash flows generated from the ALM assets, will adequately
provide for the cash outflows and collateral posting requirements of the ALM
business, irrespective of ratings. Assets under management in the conduit
business totaled $2.0 billion as of September 30, 2009, down from $2.4 billion
as of December 31, 2008. Conduit assets declined due to the maturity and
scheduled amortization of transactions and the repurchase of medium-term notes.

For the IMS operation, which comprises the Advisory Services business and the
wind-down ALM and conduit businesses, the third quarter pre-tax net loss on
financial instruments at fair value and foreign exchange was $69.0 million,
pre-tax net realized losses were $35.4 million and pre-tax net investment losses
from other-than-temporary impairments totaled $42.9 million. An additional $20.8
million of pre-tax non-credit-related impairments on debt securities were
charged directly to equity. The pre-tax net loss on financial instruments at
fair value and foreign exchange was primarily the result of losses on interest
rate swaps in the ALM portfolio and exchange rate movements on non-U.S. dollar
denominated liabilities, while the investment losses primarily resulted from the
recognition of other-than-temporary impairments to securities held in the ALM
asset portfolio. There were no impairments to conduit assets. Pre-tax net gains
on medium-term note repurchases totaled $118.4 million in the third quarter.

Corporate Segment

The Corporate segment`s contribution to consolidated ABV per share was $0.17 as
of September 30, 2009, as compared with $(0.80) as of December 31, 2008. The
book value per share attributable to the Corporate segment was $0.17 as of
September 30, 2009, compared with $(0.82) as of December 31, 2008.

As of September 30, 2009 the Corporate segment of the holding company had $408.8
million in cash and short-term investments, an amount sufficient to meet
approximately the next 2.5 years of debt service and operating expense
requirements.

Conference Call

The Company will host a webcast and conference call for investors tomorrow,
Tuesday, November 10, 2009 at 8:00 AM (EST) to discuss its third quarter 2009
financial results and other matters relating to the Company. The webcast and
conference call will consist of brief remarks followed by a question and answer
session.

The dial-in number for the call is (877) 694-4769 in the U.S. and (404) 665-9935
from outside the U.S. The conference call code is 33556043. A live webcast of
the conference call will also be accessible on www.mbia.com.

A replay of the call will be available approximately two hours after the
completion of the call on November 10 until 5:00 p.m. on November 24 by dialing
(800) 642-1687 in the U.S. or (706) 645-9291 from outside the U.S. The replay
call code is also 33556043. In addition, a recording of the call will be
available on the Company's Web site approximately two hours after the completion
of the call.

Forward-Looking Statements

This release includes statements that are not historical or current facts and
are "forward-looking statements" made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. The words "believe,"
"anticipate," "project," "plan," "expect," "intend," "will likely result,"
"looking forward" or "will continue," and similar expressions identify
forward-looking statements. These statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected, including,
among other risks, the possibility that the Company will experience severe
losses due to increased deterioration in its insurance portfolios; significant
fluctuations in liquidity and asset values with the global credit markets; the
Company`s ability to fully implement its Strategic Plan as outlined in the
Company`s most recent Annual Report on Form 10-K; further changes in the
Company`s credit ratings; and changes in general economic and competitive
conditions. These and other factors that could affect financial performance or
could cause actual results to differ materially from estimates contained in or
underlying the Company`s forward-looking statements are discussed under the
"Risk Factors" section in MBIA Inc.`s most recent Annual Report on Form 10-K,
which may be updated or amended in the Company`s subsequent filings with the
Securities and Exchange Commission. The Company cautions readers not to place
undue reliance on any such forward-looking statements, which speak only to their
respective dates. The Company undertakes no obligation to publicly correct or
update any forward-looking statement if it later becomes aware that such result
is not likely to be achieved.

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 and Sydney. Please visit MBIA's Web site at
www.mbia.com.

Explanation of Non-GAAP Financial Measures

The following are explanations of why MBIA believes that the non-GAAP financial
measures used in this press release, which serve to supplement GAAP information,
are meaningful to investors.

Adjusted Book Value ("ABV"): The Company believes the presentation of ABV, which
includes items that are expected to impact shareholders` equity in future
periods and, in general, do not require any additional future performance
obligation on the Company`s part and excludes gains and losses due to market
value changes that have not been realized through sales or impairments of assets
or extinguishment of liabilities, provides additional information that gives a
comprehensive measure of the value of the Company. ABV is not a substitute for
GAAP book value but does provide investors with additional information when
viewed in conjunction with GAAP book value.

Credit Impairments: Although MBIA`s income statement includes the change in fair
value of insured credit derivatives, the Company believes the estimation of
credit impairments, which are the present value of future expected loss and loss
adjustment expense payments, net of recoveries, on insured credit derivatives,
provides additional important information for investors. Other than the
impairments, the Company expects the gains and losses in fair value of insured
credit derivatives to reverse over time.

September 30, 2009 December 31, 2008
Assets
Investments:
Fixed-maturity securities held as available-for-sale, at fair value
(amortized cost $11,330,409 and $13,245,574) (includes hybrid
financial instruments at fair value $30,710 and $25,498) $9,955,464 $11,223,716
Fixed-maturity securities held as trading,
at fair value (amortized cost $115,946) 123,467 -
Investments held-to-maturity, at amortized cost
(fair value $2,405,860 and $3,109,248) 2,861,353 3,156,969
Investments pledged as collateral, at fair value
(amortized cost $652,992 and $1,101,929) 617,249 845,887
Short-term investments held as available-for-sale, at fair value
(amortized cost $2,895,514 and $4,728,090) 2,895,530 4,693,283
Short-term investments held-to-maturity, at amortized cost (fair value
$605,650 and $485,857) 1,032,388 498,865
Other investments (includes investments at fair value $373,097 and $216,805) 376,150 220,412
Total investments 17,861,601 20,639,132

Cash and cash equivalents 1,645,453 2,279,783
Accrued investment income 111,558 201,688
Premiums receivable 2,059,389 7,744
Deferred acquisition costs 477,429 560,632
Prepaid reinsurance premiums 367,110 216,609
Insurance loss recoverable 2,207,625 458,512
Reinsurance recoverable on paid and unpaid losses 53,440 173,548
Goodwill 76,938 76,938
Property and equipment (net of accumulated depreciation) 84,349 105,364
Receivable for investments sold 203,093 77,464
Derivative assets 780,795 911,188
Current income taxes 75,035 240,871
Deferred income taxes, net 1,309,423 2,374,164
Other assets 539,822 706,812
Total assets $27,853,060 $29,030,449

Liabilities and Equity
Liabilities:
Unearned premium revenue $ 5,121,978 $ 3,424,402
Loss and loss adjustment expense reserves 1,322,873 1,557,884
Reinsurance premiums payable 208,422 8,672
Investment agreements 2,881,757 4,666,944
Medium-term notes (includes financial instruments carried at
fair value $142,017 and $176,261) 3,932,747 6,339,527
Variable interest entity notes 2,668,798 1,791,597
Securities sold under agreements to repurchase 501,961 802,938
Long-term debt 2,718,076 2,396,059
Deferred fee revenue 88,000 44,989
Payable for investments purchased 303,949 239
Derivative liabilities 4,988,759 6,470,874
Other liabilities 362,171 504,306
Total liabilities 25,099,491 28,008,431

Equity:
Common stock 274,837 273,200
Additional paid-in capital 3,056,500 3,050,506
Retained earnings 2,633,690 1,629,187
Accumulated other comprehensive loss (1,044,568) (1,775,954)
Treasury stock (2,183,668) (2,182,519)
Total shareholders' equity of MBIA Inc. 2,736,791 994,420
Preferred stock of subsidiary 16,778 27,598
Total equity 2,753,569 1,022,018

Total liabilities and equity $27,853,060 $29,030,449

MBIA INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS (Unaudited)
(in thousands)

Structured
U.S. Finance and
Public Finance International Investment
Three months ended September 30, 2009 Insurance Insurance Management Intercompany
(National) (MBIA Corp.) Services Corporate Subtotal Eliminations Consolidated
Revenues:
Premiums earned:
Scheduled premiums earned $ 96,363 $ 74,750 $ - $ - $ 171,113 $ (26,699) $ 144,414
Refunded premiums earned 46,494 143 - - 46,637 (9,803) 36,834
Total premiums earned 142,857 74,893 - - 217,750 (36,502) 181,248

Net investment income 60,913 64,067 47,102 4,293 176,375 (19,600) 156,775
Fees and reimbursements 1,001 42,529 11,770 - 55,300 (41,009) 14,291

Change in fair value of insured derivatives:
Realized gains (losses) and other settlements on insured derivatives 200 (30,482) - - (30,282) - (30,282)
Unrealized gains (losses) on insured derivatives (11) (810,178) - - (810,189) - (810,189)
Net change in fair value of insured derivatives 189 (840,660) - - (840,471) - (840,471)
Net gains (losses) on financial instruments at fair value and foreign exchange - 26,495 (68,988) (44,803) (87,296) - (87,296)
Net realized gains (losses) (330) (44,644) (35,358) 2,211 (78,121) - (78,121)

Investment losses related to other-than-temporary impairments:
Investment losses related to other-than-temporary impairments - (135,403) (63,691) - (199,094) - (199,094)
Other-than-temporary impairments recognized in accumulated other comprehensive loss - 85,000 20,814 - 105,814 - 105,814
Net investment losses related to other-than-temporary impairments - (50,403) (42,877) - (93,280) - (93,280)

Net gains on extinguishment of debt - 13,059 113,035 602 126,696 - 126,696

Total revenues 204,630 (714,664) 24,684 (37,697) (523,047) (97,111) (620,158)

Expenses:
Loss and LAE incurred 28,708 210,052 - - 238,760 - 238,760
Amortization of deferred acquisition costs 33,122 52,806 - - 85,928 (66,032) 19,896
Operating 11,015 44,114 22,288 5,440 82,857 (5,744) 77,113
Interest - 55,189 63,721 16,561 135,471 (25,335) 110,136

Total expenses 72,845 362,161 86,009 22,001 543,016 (97,111) 445,905

Pre-tax income (loss) 131,785 (1,076,825) (61,325) (59,698) (1,066,063) - (1,066,063)
Benefit for income taxes (341,530)

Net loss (724,533)
Preferred stock dividends of subsidiary 3,271

Net loss available to common shareholders $ (727,804)

Investment
Three months ended September 30, 2008 Management Intercompany
Insurance Services Corporate Subtotal Eliminations Consolidated
Revenues:
Premiums earned:
Scheduled premiums earned $ 148,405 $ - $ - $ 148,405 $ (7,356) $ 141,049
Refunded premiums earned 93,696 - - 93,696 - 93,696
Total premiums earned 242,101 - - 242,101 (7,356) 234,745

Net investment income 146,688 199,257 7,451 353,396 1,023 354,419
Fees and reimbursements 3,643 11,155 - 14,798 (2,678) 12,120

Change in fair value of insured derivatives:
Realized gains (losses) and other settlements on insured derivatives
34,263 - - 34,263 - 34,263
Unrealized gains (losses) on insured derivatives 104,818 - - 104,818 - 104,818
Net change in fair value of insured derivatives 139,081 - - 139,081 - 139,081
Net gains (losses) on financial instruments at fair value and foreign exchange (6,819) (107,955) (119,426) (234,200) - (234,200)
Net realized gains (losses) 25,992 (314,395) (3,838) (292,241) - (292,241)

Investment losses related to other-than-temporary impairments:
Investment losses related to other-than-temporary impairments - (134,058) - (134,058) - (134,058)
Other-than-temporary impairments recognized in accumulated other comprehensive loss - - - - - -
Net investment losses related to other-than-temporary impairments - (134,058) - (134,058) - (134,058)

Net gains on extinguishment of debt 9,980 205,394 24,524 239,898 - 239,898

Total revenues 560,666 (140,602) (91,289) 328,775 (9,011) 319,764

Expenses:
Loss and LAE incurred 982,514 - - 982,514 - 982,514
Amortization of deferred acquisition costs 24,618 - - 24,618 - 24,618
Operating 63,205 25,724 10,796 99,725 (4,714) 95,011
Interest 48,083 201,937 18,488 268,508 (4,297) 264,211

Total expenses 1,118,420 227,661 29,284 1,375,365 (9,011) 1,366,354

Pre-tax loss (557,754) (368,263) (120,573) (1,046,590) - (1,046,590)

Benefit for income taxes (240,111)

Net loss $ (806,479)

MBIA INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS (Unaudited)
(in thousands)

Structured
U.S. Finance and
Public Finance International Investment
Nine months ended September 30, 2009 Insurance Insurance Management Intercompany
(National) (MBIA Corp.) Services Corporate Subtotal Eliminations Consolidated
Revenues:
Premiums earned:
Scheduled premiums earned $ 314,035 $ 273,328 $ - $ - $ 587,363 $ (94,848) $ 492,515
Refunded premiums earned 111,669 2,178 - - 113,847 (18,497) 95,350
Total premiums earned 425,704 275,506 - - 701,210 (113,345) 587,865

Net investment income 152,041 255,315 169,458 15,622 592,436 (67,471) 524,965
Fees and reimbursements 1,578 132,897 35,873 - 170,348 (115,031) 55,317

Change in fair value of insured derivatives:
Realized gains (losses) and other settlements on insured derivatives 386 33,150 - - 33,536 - 33,536
Unrealized gains (losses) on insured derivatives (178) 1,222,939 - - 1,222,761 - 1,222,761
Net change in fair value of insured derivatives 208 1,256,089 - - 1,256,297 - 1,256,297
Net gains (losses) on financial instruments at fair value and foreign exchange - 38,991 91,717 (56,246) 74,462 - 74,462
Net realized gains (losses) 6,689 (35,718) 10,214 5,105 (13,710) - (13,710)

Investment losses related to other-than-temporary impairments:
Investment losses related to other-than-temporary impairments - (261,133) (525,368) - (786,501) - (786,501)
Other-than-temporary impairments recognized in accumulated other comprehensive loss - 170,369 179,197 - 349,566 - 349,566
Net investment losses related to other-than-temporary impairments - (90,764) (346,171) - (436,935) - (436,935)

Net gains on extinguishment of debt - 13,547 231,850 2,542 247,939 5,158 253,097

Total revenues 586,220 1,845,863 192,941 (32,977) 2,592,047 (290,689) 2,301,358

Expenses:
Loss and LAE incurred 91,706 111,468 - - 203,174 - 203,174
Amortization of deferred acquisition costs 89,855 168,827 - - 258,682 (192,019) 66,663
Operating 39,379 148,973 60,522 20,985 269,859 (20,256) 249,603
Interest - 163,161 228,165 52,135 443,461 (83,572) 359,889

Total expenses 220,940 592,429 288,687 73,120 1,175,176 (295,847) 879,329

Pre-tax income (loss) 365,280 1,253,434 (95,746) (106,097) 1,416,871 5,158 1,422,029
Provision for income taxes 547,900

Net income 874,129
Preferred stock dividends of subsidiary 10,484

Net income available to common shareholders $ 863,645

Investment
Nine months ended September 30, 2008 Management Intercompany
Insurance Services Corporate Subtotal Eliminations Consolidated
Revenues:
Premiums earned:
Scheduled premiums earned $ 458,418 $ - $ - $ 458,418 $ (24,213) $ 434,205
Refunded premiums earned 189,248 - - 189,248 - 189,248
Total premiums earned 647,666 - - 647,666 (24,213) 623,453

Net investment income 447,388 802,293 22,315 1,271,996 14,833 1,286,829
Fees and reimbursements 5,912 36,240 - 42,152 (10,184) 31,968

Change in fair value of insured derivatives:
Realized gains (losses) and other settlements on insured derivatives 102,325 - - 102,325 - 102,325
Unrealized gains (losses) on insured derivatives (147,972) - - (147,972) - (147,972)
Net change in fair value of insured derivatives (45,647) - - (45,647) - (45,647)
Net gains (losses) on financial instruments at fair value and foreign exchange 155,239 (117,935) (108,157) (70,853) - (70,853)
Net realized gains (losses) 68,106 (684,068) (2,970) (618,932) - (618,932)

Investment losses related to other-than-temporary impairments:
Investment losses related to other-than-temporary impairments - (793,837) - (793,837) - (793,837)
Other-than-temporary impairments recognized in accumulated other comprehensive loss - - - - - -
Net investment losses related to other-than-temporary impairments - (793,837) - (793,837) - (793,837)

Net gains on extinguishment of debt 9,980 284,611 24,524 319,115 - 319,115

Total revenues 1,288,644 (472,696) (64,288) 751,660 (19,564) 732,096
Expenses:
Loss and LAE incurred 1,292,466 - - 1,292,466 - 1,292,466
Amortization of deferred acquisition costs 63,147 - - 63,147 - 63,147
Operating 150,508 66,095 22,849 239,452 (14,662) 224,790
Interest 141,494 767,597 58,578 967,669 (4,902) 962,767

Total expenses 1,647,615 833,692 81,427 2,562,734 (19,564) 2,543,170

Pre-tax loss $ (358,971) $ (1,306,388) $ (145,715) $ (1,811,074) $ - (1,811,074)

Benefit for income taxes (298,222)

Net loss $ (1,512,852)

MBIA INC. AND SUBSIDIARIES

Components of Adjusted Book Value per Share

September 30, 2009

National Public MBIA Investment
Finance Guarantee Insurance Management
Corporation Corporation Services Corporate Consolidated

Reported Book Value $13.02 $8.81 ($8.84) $0.17 $13.16

Plus: Cumulative unrealized loss on insured credit derivatives, after tax 0.00 13.27 0.00 0.00 13.27

Less: Cumulative impairments on insured credit derivatives, after tax 0.00 (5.76) 0.00 0.00 (5.76)

Reverse: Unrealized (gains) losses included in OCI (0.37) 0.90 4.89 0.00 5.42

Analytic Book Value 12.65 17.22 (3.95) 0.17 26.09

Plus: Net unearned premium revenue, after tax (1) (2) 8.51 6.87 0.00 0.00 15.38

Plus: Asset/Liability products adjustment 0.00 0.00 (0.40) 0.00 (0.40)

Plus: Loss provision (3) (1.11) (0.91) 0.00 0.00 (2.02)
Adjusted Book Value (4) $20.05 $23.18 ($4.35) $0.17 $39.05

December 31, 2008
National Public MBIA Investment
Finance Guarantee Insurance Management
Corporation Corporation Services Corporate Consolidated

Reported Book Value $10.97 $5.16 ($10.53) ($0.82) $4.78

Plus: Cumulative unrealized loss on insured credit derivatives, after tax 0.00 16.92 0.00 0.00 16.92

Less: Cumulative impairments on insured credit derivatives, after tax 0.00 (3.78) 0.00 0.00 (3.78)

Reverse: Unrealized (gains) losses included in OCI (0.02) 1.18 7.85 0.02 9.03

Analytic Book Value 10.95 19.48 (2.68) (0.80) 26.95

Plus: Net unearned premium revenue, after tax (1) (2) 9.42 6.38 0.00 0.00 15.80

Plus: Asset/Liability products adjustment 0.00 0.00 (0.58) 0.00 (0.58)

Plus: Loss provision (3) (1.42) (0.69) 0.00 0.00 (2.11)
Adjusted Book Value (4) $18.95 $25.17 ($3.26) ($0.80) $40.06

(1) The amounts consist of Financial Guarantee premiums and Insured Derivative revenue.
(2) At September 30, 2009 the discount rate on Financial Guarantee installment premiums was the risk free rate as defined by accounting principles for Financial Guarantee insurance contracts and the discount rate on Insured Derivative installment revenue was 5.03%. At December 31, 2008 the discount rate was 5.03% for both Financial Guarantee and Insured Derivative installments.
(3) The loss provision is calculated by applying 12% to net unearned premiums and net unearned Insured Derivative revenue on an after-tax basis.
(4) A non-GAAP measure.

Net Income (Loss) per Common Share:

Three Months Ended Nine Months Ended
September 30 September 30
2009 2008 2009 2008
Basic ($3.50) ($3.42) $4.15 ($6.87)
Diluted ($3.50) ($3.42) $4.15 ($6.87)

Weighted-Average Number of Common Shares Outstanding:
Basic 208,219,324 235,706,851 208,278,589 220,137,758
Diluted 208,219,324 235,706,851 208,278,589 220,137,758

INSURANCE OPERATIONS

Selected Financial Data Computed on a Statutory Basis
(dollars in millions)

National Public Finance Guarantee Corporation
Proforma
September 30, 2009 December 31, 2008

Capital and surplus $ 509.0 $ 416.0
Contingency reserve 1,351.8 1,357.0

Capital base 1,860.8 1,773.0

Unearned premium reserve 3,216.5 3,479.0
Present value of installment premiums (1) 286.5 298.0

Premium resources (2) 3,503.0 3,777.0

Loss and loss adjustment expense reserves 172.8 179.0

Total claims-paying resources $ 5,536.6 $ 5,729.0

Net debt service outstanding $844,431.4 $908,087.0

Capital ratio (3) 454:1 512:1

Claims-paying ratio (4) 196:1 206:1

MBIA Insurance Corporation September 30, 2009 Proforma

December 31, 2008

Capital and surplus $ 2,478.8 $ 3,087.0
Contingency reserve 1,432.5 1,238.0

Capital base 3,911.3 4,325.0

Unearned premium reserve 753.9 691.0
Present value of installment premiums (1) 1,936.4 2,088.0

Premium resources (2) 2,690.3 2,779.0

Loss and loss adjustment expense reserves 545.8 1,692.0

Total claims-paying resources $ 7,147.4 $ 8,796.0

Net debt service outstanding $281,217.1 $290,261.0

Capital ratio (3) 72:1 67:1

Claims-paying ratio (4) 45:1 37:1

(1) At September 30, 2009 and December 31, 2008 the discount rate was 5.03%.
(2) The amounts consist of Financial Guarantee premiums and Insured Derivative premiums.
(3) Net debt service outstanding divided by the capital base.
(4) Net debt service outstanding divided by the sum of the capital base, unearned premium reserve (after-tax), present value of installment premiums (after-tax) and loss and loss adjustment expense.

MBIA Inc., Media:
Kevin Brown, +1-914-765-3648
or
MBIA Inc., Media:
Elizabeth James, +1-914-765-3889
or
MBIA Inc., Investor Relations:
Greg Diamond +1-914-765-3190

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