Executive Summary

Q2 2024 GAAP net loss was $254.0M (−$5.34 EPS), materially wider vs Q1 2024 (−$86.0M, −$1.84 EPS) and Q2 2023 (−$74.0M, −$1.46 EPS), driven primarily by a significant increase in reserves related to National’s PREPA exposure and fair value losses tied to Zohar-related recoveries .
Adjusted net loss was $138.0M (−$2.90 EPS), vs −$24.0M (−$0.52 EPS) in Q1 2024 and −$22.0M (−$0.45 EPS) in Q2 2023, reflecting higher loss and LAE at National from PREPA scenarios .
Holding company liquidity declined to $315.0M, as MBIA retired € MTNs and repurchased $16M par of senior notes; share repurchase authorization remained $71.0M, with 51.0M shares outstanding .
Management emphasized PREPA resolution as the gating factor before resuming a strategic sale process; court-led mediation and First Circuit actions are key near-term catalysts .

What Went Well and What Went Wrong

What Went Well

Proactive liability management: MBIA repurchased $26M par of Global Funding MTNs and $16M par of senior notes at accretive prices to equity, improving the liability profile and reducing FX/interest exposure .
Portfolio runoff and leverage transparency: National’s insured portfolio declined to $27.0B, with leverage at 28:1 and claims-paying resources of $1.6B, giving investors clarity on risk capacity and runoff trajectory .
Strategic focus reiterated: “PREPA… remains an important issue to be resolved to pursue a sale of MBIA Inc.” signaling continued intent to simplify and unlock value post-resolution .

What Went Wrong

PREPA reserve build: “A significant increase in our PREPA loss reserve was the primary reason for National's net loss,” driving the consolidated GAAP loss and Adjusted loss in Q2 .
FAIR value losses (Zohar): Higher losses on financial instruments at fair value at MBIA Corp., tied to declines in Zohar-related recoveries, added to quarterly headwinds .
Lower net investment income: Reduced investment base after 2023 dividends contributed to lower NII at National, compounding the quarter’s loss dynamics .

Financial Results

Metric	Q2 2023	Q4 2023	Q1 2024	Q2 2024
GAAP Net Income (Loss) ($USD Millions)	−$74	−$138	−$86	−$254
Diluted EPS ($)	−$1.46	−$2.94	−$1.84	−$5.34
Adjusted Net Income (Loss) ($USD Millions)	−$22	−$8	−$24	−$138
Adjusted Diluted EPS ($)	−$0.45	−$0.16	−$0.52	−$2.90
Book Value per Share ($)	N/A	−$32.56	−$33.80	−$39.07

Segment and statutory metrics:

Segment KPI	Q4 2023	Q1 2024	Q2 2024
National – Statutory Capital ($USD Billions)	$1.1	$1.1	$0.969
National – Claims-Paying Resources ($USD Billions)	$1.7	$1.7	$1.6
National – Gross Par Outstanding ($USD Billions)	$28.4	$27.8	$27.0
National – Leverage (Gross Par / Stat Capital)	25:1	25:1	28:1
National – Statutory Net Income (Loss) ($USD Millions)	−$9	−$11	−$131
MBIA Insurance Corp – Statutory Capital ($USD Millions)	$152	$119	$85
MBIA Insurance Corp – Claims-Paying Resources ($USD Millions)	$504	$468	$355
MBIA Insurance Corp – Insured Gross Par ($USD Billions)	$2.9	$2.7	$2.5
MBIA Insurance Corp – Statutory Net Income (Loss) ($USD Millions)	+$6	−$35	−$35

Holding company and capital actions:

KPI	Q4 2023	Q1 2024	Q2 2024
Holding Company Liquidity ($USD Millions)	$411	$376	$315
Share Repurchase Authorization ($USD Millions)	$71 (2/21/24)	$71 (5/2/24)	$71 (7/30/24)
Shares Outstanding (Millions)	50.9	51.3	51.0
Debt Repurchase Activity	—	Retired € MTNs $36 post-Q1	$26 MTNs + $16 Senior Notes

Notes: MBIA’s quarterly releases emphasize net loss/adjusted loss and statutory/capital metrics, not “Revenue” or GAAP margin measures customary for operating companies .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
PREPA resolution timing	2024	No specific timeline	Court-led mediation underway; timing uncertain; resolution required before restarting sale process	N/A (qualitative)
Operating expenses	2024–2025	Ongoing reduction focus	Management expects continued OpEx reduction over “next year or so”	Maintained focus (qualitative)
Share repurchases	Ongoing	Authorization in place	$71M capacity; potential to buy at holdco depending on liquidity/opportunities	Maintained flexibility

MBIA did not provide formal quantitative guidance ranges (revenue, EPS, margins, tax rate, etc.) in Q2 2024 materials .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2023)	Previous Mentions (Q1 2024)	Current Period (Q2 2024)	Trend
PREPA resolution	Focus on confirmation hearing; PREPA par $610M; sale of company contingent on Puerto Rico resolution	Awaiting First Circuit and Judge Swain; timing uncertain	Reserve increase drove losses; Oversight Board approach criticized; mediation in process; resolution needed before sale	Deteriorated (higher reserves), process-driven
Capital returns/liquidity	$8 special dividend; holdco liquidity $411M	Liquidity $376M; repurchased MTNs; flexibility to buy debt/stock	Liquidity $315M; repurchased MTNs and senior notes; buyback optionality at holdco	Active liability management; lower liquidity
Portfolio runoff & leverage	National par to $28.4B; leverage 25:1	Par $27.8B; leverage 25:1; CPR $1.7B	Par $27.0B; leverage 28:1; CPR $1.6B	Continued runoff; leverage ticked up
MBIA Corp/Zohar exposure	RMBS and salvage impacts	VIE/ABS CDO termination actions	Fair value losses from Zohar-related recoveries	Headwinds persisted
Strategic alternatives	Sale after Puerto Rico resolution	Reiterated; PREPA timing key	Reiterated; PREPA must be substantially resolved first	Unchanged, contingent on PREPA
OpEx trajectory	—	Reducing OpEx; swap terminations	Expect further reduction over next year or so	Improving (management focus)

Management Commentary

“Our second quarter 2024 net loss was largely due to National's net loss… A significant increase in our PREPA loss reserve was the primary reason…” .
“PREPA has the ability to repay its creditors. The Oversight Board does not have the willingness to pay… Given the range of possible outcomes… we continue to believe that it is necessary to substantially resolve PREPA before we can restart the process to sell the company.” .
“The company reported a consolidated GAAP net loss of $254 million, or $(5.34) per share… Adjusted Net Loss… $138 million or $(2.90) per diluted share…” .
“Unencumbered cash and liquid assets… totaled $315 million… spent $26 million… to retire… euro MTNs… [and] $16 million… to purchase its senior notes.” .
“Additional losses associated with National's PREPA exposure adversely impacted our financial results this quarter…” .

Q&A Highlights

PREPA process frustration and court-led path: Management aligned with majority bondholders; mediation underway; timing remains unpredictable; resolution likely influenced by Judge Swain/First Circuit decisions .
Buyback optionality: ~$71M authorization outstanding; willingness to buy back stock at holdco subject to liquidity and obligations; opportunistic approach .
Operating expenses: Trend down; management committed to further reductions over next year; legacy ALM runoff and MBIA Corp expenses included in the OpEx profile .
Reserves concentration: PREPA is the significant portion of National reserves; management has not disclosed specific recovery assumptions .
LCOR Alexandria (office exposure): Classified credit in D.C. area; plan in place; expected to have no material impact .

Estimates Context

Wall Street EPS and revenue consensus (S&P Global) for Q2 2024 could not be retrieved due to data access limits, and MBIA did not provide numeric guidance ranges; therefore, estimate comparisons are unavailable at this time. Values would be retrieved from S&P Global if accessible.*

Where estimates may need to adjust:

Analysts may reduce forward Adjusted earnings expectations to reflect higher PREPA loss scenarios and lower National investment income post-2023 dividends .

Key Takeaways for Investors

The quarter’s outsized GAAP and Adjusted losses were driven by PREPA reserve increases and Zohar-related fair value losses; until PREPA is resolved, outcome uncertainty will dominate near-term results .
National remains well-capitalized with $1.6B CPR and $27.0B gross par; leverage increased to 28:1 as capital fell on losses, but portfolio continues to amortize .
Holdco liquidity is $315M after accretive repurchases of MTNs and senior notes; balance sheet optimization remains ongoing .
Share repurchase remains a flexible tool at the holding company, with $71M capacity; potential buybacks are a function of liquidity and strategic objectives .
Court outcomes around PREPA (mediation, First Circuit) are the primary stock catalysts; a favorable resolution could enable resumption of the sale process .
Management expects further OpEx reductions over the next year, providing a structural tailwind to earnings normalization post-PREPA .
MBIA Corp exposures continue to create volatility (Zohar-related fair value marks); expect non-GAAP adjustments to remain relevant for interpreting core performance .

References: earnings-call-transcript Q2 2024 ; press-release postings ; Form 8-K Q2 2024 ; Q1 2024 call and 8-K ; Q4 2023 call and 8-K .

MBIA INC (MBI)·Q2 2024 Earnings Summary