MBIA swings to 3Q profit on derivatives gain
MBIA Inc. (MBI) reported third-quarter income of $444 million, or $2.26 per share, up from a $213 million loss, or $1.06 per share, last year, driven by an unrealized gain of $776 million from insured credit derivatives. The Armonk, N.Y.-based bond insurer's income also increased from $137 million recorded for the second quarter. Pre-tax income was $745 million in the third quarter, as the company brought in about $1.12 billion of revenue for the quarter with total expenses at $375 million. Revenue was up from a loss of $191 million for the third quarter of 2010. For the year through Sept. 30, the loss to common shareholders was $693 million, or $3.50 a share, compared with a loss of $398 million, or $1.96 a share, a year earlier. "The risk reductions we sought in 2011 have been occurring," President and Chief Financial Officer Chuck Chaplin said. "We have agreed to commute $23 billion of potentially volatile liabilities, primarily CMBS pools and ABS CDOs." The company estimated commercial mortgage-backed securities losses of $497 million for the third quarter. First-lien residential mortgage-backed securities losses were estimated at $109 million, with second-lien RMBS losses at $134 million. MBIA is in process of winding down its asset liability management and conduit businesses, and recorded a pretax loss of $9 million in the third quarter from these operations, narrower than a loss of $104 million in the 2010 third quarter. Total assets for MBIA at Sept. 30 were $29.37 billion, down from $32.28 billion at Dec. 31. Write to Andrew Scoggin. Follow him on Twitter @ascoggin.