* Says structured finance unit liquidation likely, failing
* Flags substantial going concern doubts for structured
* Q4 profit $3.26/shr vs loss of $3.23/shr a year earlier
* U.S. public finance insurance segment premium rises 8 pct
* Shares fall 2 percent
Feb 27 Bond insurer MBIA Inc said there
was a significant risk that its structured finance insurance
unit would be put into liquidation or rehabilitation by its New
York regulator if it was unable to settle its claims with Bank
The company, which was the largest bond insurer in the
United States before the financial crisis set in, has been mired
in a string of lawsuits involving a host of banks, most notably
Bank of America, following its restructuring in 2009.
Bank of America and the other lenders have asked for the
restructuring to be annulled and sued the company contending
that it was intended to defraud policy holders.
The bond insurer has blamed its liquidity issues on the fact
that the bank has refused to buy back billions of ineligible
loan in securitizations that MBIA insured.
The bond insurer also said there was an increased
probability that the unit would be asked to pay substantial
claims on commercial mortgage bond securitizations in the near
term, raising the risk that it would be put into rehabilitation.
In a filing with the U.S. Securities and Exchange
Commission, the insurer said it had notified the New York State
Department of Financial Services of a $140 million deficit of
qualifying assets that support contingency reserves at the
structured finance unit, called MBIA Insurance Corp.
"Substantial doubt exists about MBIA Corp.'s ability to
continue as a going concern," the insurer said in a statement.
New York regulators declined to comment.
Though MBIA has made changes to some bond indentures to
eliminate the clause that it would be in default if the
structured finance unit was put into rehabilitation, Bank of
America has sued to prevent those amendments from taking effect.
Bank of America alleges that the insurer is already in
default on the notes and that case is currently being fought in
Even with the indenture amendment, MBIA's counterparties in
credit default swaps could terminate the contracts and make
market-based claims damages, which could total up to $7 billion
or more, MBIA said in its securities filing.
MBIA reported a quarterly profit in the fourth-quarter
driven mainly by a less favorable market perception of MBIA
Insurance Corp's credit quality.
Shares of the Armonk, New York-based company, which have
risen about 22 percent since the beginning of the year, closed
at $9.98 on Wednesday on the New York Stock Exchange.