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MBIA posts $10 million profit, hopes to end mortgage litigation

Bond insurer MBIA (MBIA) posted a profit of $10 million, or 5 cents a share, attributable to common shareholders for the first quarter of 2012.

That compares to a net loss of $1.3 billion, or $6.37 a share, in the first quarter of 2011.

MBIA's adjusted pre-tax loss, a non-GAAP measure, hit $548 million for the first quarter of 2012, compared to adjusted pre-tax income of $25 million a year earlier.

The bond insurer's president and chief financial officer Chuck Chaplin called the pre-tax results disappointing and blamed them on the insurer having to take significant steps to reduce potential volatility in its insured portfolio while lowering liquidity risks within its holding company.

"A combination of additional losses on insured exposures, realized losses and impairments on invested assets and legal and litigation-related expenses led to the adjusted pre-tax loss in the quarter," said MBIA president and chief financial officer Chuck Chaplin.

Still, the insurer is more confident that it's closer to putting mortgage-related litigation behind it.

"Our put-back litigation against several mortgage originators has been moving steadily forward, and with several favorable decisions over the past few months, we have little doubt that we will achieve substantial recoveries," MBIA said.

The bond insurer also said major litigation challenging MBIA's 2009 restructuring is set to begin on May 14. Chaplin said once that's behind the firm, it could open the door for MBIA's National Public Finance Guarantee Corp. subsidiary to begin writing new municipal bond insurance again.


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