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Insurance Premiums | 12 Months Ended
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Dec. 31, 2011
Insurance Premiums [Abstract] |
Insurance Premiums | Note 5: Insurance Premiums The Company recognizes and measures premiums related to financial guarantee (non-derivative) insurance and reinsurance contracts in accordance with the accounting principles for financial guarantee insurance contracts. As of December 31, 2011 and 2010, the Company reported premiums receivable of $1.4 billion and $1.6 billion, respectively, primarily related to installment policies for which premiums will be collected over the estimated term of the contracts. Premiums receivable for an installment policy is initially measured at the present value of premiums expected to be collected over the expected period or contract period of the policy using a risk-free discount rate. Premiums receivable for policies that use the expected period of risk due to expected prepayments are adjusted in subsequent measurement periods when prepayment assumptions change using the risk-free discount rate as of the remeasurement date. As of December 31, 2011 and 2010, the weighted average risk-free rate used to discount future installment premiums was 2.8% and 3.1%, respectively, and the weighted average expected collection term of the premiums receivable was 9.13 years and 9.16 years, respectively. The Company evaluates whether any premiums receivable are uncollectible at each balance sheet date. If the Company determines that premiums are uncollectible, it records a write-off of such amounts in current earnings. The majority of the Company's premiums receivable consists of the present values of future installment premiums that are not yet billed or due primarily from structured finance transactions. Given that premiums due to MBIA typically have priority over most other payment obligations of structured finance transactions, the Company determined that the amount of uncollectible premiums as of December 31, 2011 and 2010 was insignificant. As of December 31, 2011 and 2010, the Company reported reinsurance premiums payable of $64 million and $71 million, respectively, which represents the portion of the Company's premiums receivable that is due to reinsurers. The reinsurance premiums payable is accreted and paid to reinsurers as premiums due to MBIA are accreted and collected. The following tables present a roll forward of the Company's premiums receivable for the years ended December 31, 2011 and 2010:
In millions |  |  |  |  |  |  |  | Adjustments |  |  |  |  |  |  |
Premiums Receivable as of December 31, 2010 |  | Premium Payments Received |  |  | Premiums from New Business Written |  |  | Changes in Expected Term of Policies |  |  | Accretion of Premiums Receivable Discount |  |  | Other (1) |  |  | Premiums Receivable as of December 31, 2011 |  |  | Reinsurance Premiums Payable as of December 31, 2011 |
$ 1,589 |  | $ | (212 | ) |  | $ | — |  |  | $ | (76 | ) |  | $ | 40 |  |  | $ | 19 |  |  | $ | 1,360 |  |  | $ | 64 |
(1)—Primarily consists of unrealized gains (losses) due to foreign currency exchange rates.
In millions |  |  |  |  |  |  |  |  |  |  | Adjustments |  |  |  |  |  |  |
Premiums Receivable as of December 31, 2009 |  | Accounting Transition Adjustment(1) |  |  | Premium Payments Received |  |  | Premiums from New Business Written |  |  | Changes in Expected Term of Policies |  |  | Accretion of Premiums Receivable Discount |  |  | Other(2) |  |  | Premiums Receivable as of December 31, 2010 |  |  | Reinsurance Premiums Payable as of December 31, 2010 |
$ 2,021 |  | $ | (150 | ) |  | $ | (253 | ) |  | $ | 12 |  |  | $ | (42 | ) |  | $ | 48 |  |  | $ | (47 | ) |  | $ | 1,589 |  |  | $ | 71 |
(1)—Reflects the adoption of the accounting principles for the consolidation of VIEs. (2)—Primarily consists of unrealized gains (losses) due to foreign currency exchange rates. The following table presents the undiscounted future amount of premiums expected to be collected and the period in which those collections are expected to occur:
In millions |  | Expected Collection of Premiums |
Three months ended: |  |  |  |
March 31, 2012 |  | $ | 38 |
June 30, 2012 |  |  | 57 |
September 30, 2012 |  |  | 34 |
December 31, 2012 |  |  | 43 |
Twelve months ended: |  |  |  |
December 31, 2013 |  |  | 146 |
December 31, 2014 |  |  | 129 |
December 31, 2015 |  |  | 120 |
December 31, 2016 |  |  | 111 |
Five years ended: |  |  |  |
December 31, 2021 |  |  | 419 |
December 31, 2026 |  |  | 283 |
December 31, 2031 and thereafter |  |  | 351 |
Total |  | $ | 1,731 |
The following table presents the unearned premium revenue balance and future expected premium earnings as of and for the periods presented:
|  |  |  |  | Expected Future Premium Earnings |  |  |  |  |  |  |
In millions |  | Unearned Premium Revenue |  |  | Upfront |  |  | Installments |  |  | Accretion |  |  | Total Expected Future Premium Earnings |
December 31, 2011 |  | $ | 3,515 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Three months ended: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
March 31, 2012 |  |  | 3,420 |  |  | $ | 55 |  |  | $ | 40 |  |  | $ | 9 |  |  | $ | 104 |
June 30, 2012 |  |  | 3,328 |  |  |  | 54 |  |  |  | 38 |  |  |  | 9 |  |  |  | 101 |
September 30, 2012 |  |  | 3,240 |  |  |  | 53 |  |  |  | 35 |  |  |  | 9 |  |  |  | 97 |
December 31, 2012 |  |  | 3,156 |  |  |  | 51 |  |  |  | 33 |  |  |  | 8 |  |  |  | 92 |
Twelve months ended: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
December 31, 2013 |  |  | 2,835 |  |  |  | 195 |  |  |  | 126 |  |  |  | 32 |  |  |  | 353 |
December 31, 2014 |  |  | 2,543 |  |  |  | 180 |  |  |  | 112 |  |  |  | 30 |  |  |  | 322 |
December 31, 2015 |  |  | 2,275 |  |  |  | 165 |  |  |  | 103 |  |  |  | 28 |  |  |  | 296 |
December 31, 2016 |  |  | 2,030 |  |  |  | 150 |  |  |  | 95 |  |  |  | 26 |  |  |  | 271 |
Five years ended: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
December 31, 2021 |  |  | 1,099 |  |  |  | 581 |  |  |  | 350 |  |  |  | 99 |  |  |  | 1,030 |
December 31, 2026 |  |  | 533 |  |  |  | 346 |  |  |  | 220 |  |  |  | 61 |  |  |  | 627 |
December 31, 2031 and thereafter |  |  | — |  |  |  | 296 |  |  |  | 237 |  |  |  | 63 |  |  |  | 596 |
Total |  |  |  |  |  | $ | 2,126 |  |  | $ | 1,389 |  |  | $ | 374 |  |  | $ | 3,889 |

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