CHICAGO (Reuters) - Exposure to defaulted Puerto Rico debt helped balloon bond insurer MBIA Inc’s net loss for the second quarter of 2017 to $1.2 billion compared with a loss of $27 million in the same period last year, the company reported on Tuesday.
MBIA attributed the dismal results in part to bigger losses at its National Public Finance Guarantee Corporation unit, which guarantees payment on some of the U.S. commonwealth’s debt.
“National’s losses and loss adjustment expenses in the quarter resulted from its insurance of several Puerto Rico credits, nearly all of which have entered bankruptcy-like proceedings under PROMESA,” Bill Fallon, MBIA president and CEO said in a statement.
The U.S. commonwealth filed the largest bankruptcy in U.S. municipal history in May under PROMESA, a federal law aimed at rescuing Puerto Rico’s sinking finances.
Fallon also said “the ill-advised and unlawful actions” of an oversight board, also created by PROMESA, and Governor Ricardo Rossello’s Administration hurt a restructuring support agreement for the Puerto Rico Electric Power Authority (PREPA). This sparked several lawsuits, including five that include MBIA as a plaintiff.
“We intend to vigorously exercise the rights and remedies associated with our insurance on the Puerto Rico bonds,” Fallon said.
MBIA’s loss in the quarter ended June 30 equated to $9.78 per share, up from a 20 cent per share loss a year ago and a 55 cent per share loss in the first quarter.
Reporting By Karen Pierog; Editing by Daniel Bases and Andrew Hay