Bond insurer MBIA’s pounded out a settlement agreement over mortgage bonds MBIA guaranteed for Countrywide, netting MBIA a total payment of $1.7 billion.
MBIA also settled a lawsuit it filed against Flagstar Bancorp over second-lien mortgage securitizations guaranteed by MBIA this past quarter.
Flagstar agreed to pay MBIA $110 million to settle that case.
Commutations also aided MBIA in separating itself from future risk on insurance claims.
BofA agreed to the commutation of all MBIA policies held by BofA, which have a notional insured value of $7.4 billion—$6.1 billion of which is tied to credit default swaps held by BofA for commercial real estate exposures.
With those policies commuted, MBIA has no further obligations to cover claims, the insurer said.
MBIA has been the subject of claims that it’s facing a potential seizure with liquidity issues expected to push the hand of regulators in the near future, but the large settlement with BofA sent a dose of optimism through the market this week.
Analysts forecasted earnings of 15 cents a share, well below MBIA’s realized EPS of 84 cents a share.
Revenue, on the other hand, declined in 1Q to $219 billion, down from $383 billion a year earlier.
