In a regulatory filing with the Securities and Exchange Commission, MBIA said for the three months ended March 31, net income available to common shareholders was $696.7 million, or $3.34 per share, compared with a loss of $2.4 billion, or $12.92 per share, in the year-earlier quarter.
The results for the quarter include a $1.6 billion pretax unrealized gain and a $31.8 million pretax realized gain, both on insured credit derivatives. Losses on such risky securities fueled MBIA's losses over the past year.
Those gains were partially offset by a pretax loss and loss adjustment expenses of $693.7 million on insured securities, mainly on second-lien mortgage securitizations, and $169 million in pretax realized losses in the company's asset-liability management asset portfolio. The company said these losses reflect the continued deterioration and stress in the credit markets.
"MBIA continues to be affected by the on-going credit crisis, but we believe our financial position is more than adequate," said President and Chief Financial Officer Chuck Chaplin in a statement. MBIA said its balance sheet liquidity remains strong and it has "ample resources to meet all expected obligations."
During the quarter, Armonk, N.Y.-based MBIA split its insurance operations into two segments, one called National Public Finance Guarantee Corp., for its traditional municipal bond insurance, and one called MBIA Insurance Corp., for structured finance and international insurance.
Net premiums written for the combined insurance units came in at a loss of $39 million, compared to a gain of $106 million last year.
MBIA said it did not write any new policies during the quarter, and the quarterly loss represents adjustments to premiums on policies closed in prior periods. The company said the lack of new business was due to downgrades of its insurance financial strength credit ratings by the major ratings agencies last year. It does not expect to write a significant amount of new business until its ratings are upgraded, which it said is unlikely in the near future because of its exposure to mortgage-related risks and other factors.
In the structured finance unit, MBIA took additional loss reserves against certain mortgage-backed securities that reflect uncertainty about the future direction of the housing market. "We have learned that many of the policies on which we're incurring the greatest losses were related to pools that mainly comprised ineligible loans," Chaplin said. "We are vigorously pursuing all available remedies against the originators of these loans."
The results come less than a week after MBIA split the roles of its chairman and chief executive, and amid ongoing restructuring related to the division of the two insurance units.