MBIA

MBIA, Inc. (MBIA)

Type	Public
Traded as	NYSE: MBI
Industry	Finance
Revenue	US$894 Million (FY 2010)[1]
Operating income	US$95.2 Million (FY 2010)[1]
Net income	US$52.5 Million (FY 2010)[1]
Total assets	US$32.3 Billion (FY 2010)[2]
Total equity	US$2.83 Billion (FY 2010)[2]

MBIA, Inc. is a financial services company. It was founded in 1973 as the Municipal Bond Insurance Association. It is headquartered in Armonk, New York, and has approximately 400 employees. MBIA is the largest bond insurer.^{[3] [4]}

Functions of the company

MBIA is a monoline insurer primarily of municipal bonds and on asset-backed securities and mortgage-backed securities. Financial insurance or Financial Guarantees are a form of credit enhancement. It also provides a fixed-income asset management service with about seventy billion dollars under management.

History

A consortium of insurance companies (Aetna, Fireman's Fund, Travelers, Cigna, and Continental) formed the Municipal Bond Insurance Association in 1973 to diversify their holdings in municipal bonds. The company went public in 1987.

In 2009, MBIA Corp. (NYSE:MBI) was replaced by Mead Johnson Nutrition Co. (NYSE:MJN) in the S&P 500.^[5]

Credit rating history

• April 4, 2008. Fitch Ratings cut MBIA's Insurance Corp rating to AA from AAA with a negative outlook.^[6] Fitch issued the new, lower rating even though MBIA had asked the ratings company, the month before, to stop assessing its credit worthiness.
• June 4, 2008. Moody's Investors Service announced that it would review MBIA's rating for possible downgrade for the second time in the year.^[7] Four months before this announcement, on February 2008, Moody's had affirmed the AAA rating after MBIA raised $2.6 bn in capital and announced that would stop insuring structured finance securities for six months.
• June 6, 2008. Despite having affirmed MBIA's AAA rating on February 2008, Standard and Poor's decided to downgrade MBIA's Insurance Financial Strength (IFS) rating from AAA to AA.^[8]
• June 19, 2008. Moody's downgraded MBIA's credit rating 5 notches to A2.^[9]
• November 7, 2008. Moody's further downgraded the IFS rating to "Baa1" from "A2" .^[10]
• June 25, 2009. Moody's downgraded MBIA from "Ba3" to "Ba1" which is a speculative grade.^[11]
• March 5, 2010. Moody's referred to MBIA's IFS rating as "B3".^[12][13]

References

1. ^ ^{a b c} MBIA (MBI) annual SEC income statement filing via Wikinvest
2. ^ ^{a b} MBIA (MBI) annual SEC balance sheet filing via Wikinvest
3. ^ Kathleen Pender (2007-12-20). "Municipal bonds hit by mortgage fallout". The San Francisco Chronicle. http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/12/20/BU0BU1GHR.DTL. 
4. ^ History, MBIA website, accessed 2010 4 15
5. ^ Harrow, Elizabeth, "MBIA booted from S&P 500 Index", AOL Money & Finance, December 14th 2009.
6. ^ Richard, Christine S. (April 4, 2008). "MBIA Loses AAA Insurer Rating From Fitch Over Capital". Bloomberg.com. http://bloomberg.com/apps/news?pid=20601087&sid=a0KG6bCua6os. 
7. ^ "Moody's says will likely cut MBIA, Ambac ratings". Reuters. June 4, 2008. http://www.reuters.com/article/hotStocksNews/idUSN0425833920080604. 
8. ^ "S&P cuts top ratings for MBIA, Ambac bond insurers". Reuters. June 5, 2008. http://www.reuters.com/article/marketsNews/idUSN0519442220080605. 
9. ^ MarketWatch (June 19, 2008). "Moody's downgrades Aaa rating of Ambac, MBIA". Dow Jones. http://www.marketwatch.com/story/moodys-downgrades-aaa-rating-of-ambac-mbia. 
10. ^ Brettell, Karen (November 7, 2008). "Moody's cuts MBIA Insurance to "Baa1"". Reuters. http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSN0737320320081107. Retrieved November 2, 2010. 
11. ^ "Rating Action: MBIA Insurance", Moody's Investor Service, 25 June 2009.
12. ^ "Moody's comments on MBIA's fourth quarter earnings and ongoing litigations", Moody's Investor Service, March 5, 2010
13. ^ Cf. also later cited in Smith, Dick P., December 29, 2010, pp.13-14, inter alia.

• Smith, Dick P., "MBIA Inc. and MBIA Insurance Corp.", Standard & Poor's, Global Credit Portal : Ratings Direct, December 29, 2010

Further reading

• Barr, Alistair, "Assured Guaranty, MBIA drop on rating concern : Standard & Poor’s proposes new ratings criteria for bond insurers", MarketWatch, January 25, 2011
• Richard, Christine S., Confidence game : how a hedge fund manager called Wall Street’s bluff, Hoboken, N.J. : Wiley/John Wiley & Sons, Inc., 2010. ISBN 9780470648278

External links

• Company website