Bond insurer MBIA more than doubles fourth-quarter profit
Bond insurer MBIA Inc. (MBI) posted a fourth-quarter profit of $451 million, or $2.24 per share, on Tuesday. That compares to a net loss of $240 million, or $1.16 per share, for the same quarter of 2009. The company's positive swing is partly attributed to several agreements the firm inked to eliminate $15.7 billion in gross insurance exposure on multisector collateralized debt obligations, commercial real estate CDOs and commercial mortgage-backed securities. “Since 2007, we have paid $9.1 billion in gross claims on mortgage securitizations, CDOs and other transactions, demonstrating the value of bond insurance to investors," said MBIA Inc. President and Chief Financial Officer Chuck Chaplin. "Investors in uninsured securities in the same general asset classes have sustained substantial cash losses, while those who hold securities wrapped by MBIA Corp. and National Public Finance Guarantee Corp. haven’t suffered a single dollar of loss." He added, "This fact provides simple and obvious evidence for the value in uncertain times of the bond insurance we provided. Meanwhile, our insurance companies continue to have adequate resources to meet all expected future claims obligations." MBIA forecasted a brighter future in November when it reported a $213 million third-quarter loss. At the time, the company was doing better than competitor Ambac, which filed for bankruptcy in the third quarter. Leaders at the firm also applauded the Fed's QE2 expansionary monetary program, which took effect in November, saying it would reduce volatility in MBIA's line of business. For the entire 2010 fiscal year, MBI reported net income of $53 million, or 26 cents per share, down from $623 million, or $2.99 per share, a year earlier. The company's year-end earnings were negatively impacted by a $607 million pre-tax unrealized net loss on the fair value of insured derivatives, which resulted from changes in the company's perceived credit risk, MBIA said. Write to Kerri Panchuk.