<SEC-DOCUMENT>0001193125-12-437761.txt : 20121218
<SEC-HEADER>0001193125-12-437761.hdr.sgml : 20121218
<ACCEPTANCE-DATETIME>20121026164757
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001193125-12-437761
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20121026

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MBIA INC
		CENTRAL INDEX KEY:			0000814585
		STANDARD INDUSTRIAL CLASSIFICATION:	SURETY INSURANCE [6351]
		IRS NUMBER:				061185706
		STATE OF INCORPORATION:			CT
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		113 KING ST
		CITY:			ARMONK
		STATE:			NY
		ZIP:			10504
		BUSINESS PHONE:		914-273-4545

	MAIL ADDRESS:	
		STREET 1:		113 KING ST
		CITY:			ARMONK
		STATE:			NY
		ZIP:			10504
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
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<TITLE>Response Letter to the SEC</TITLE>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">THE USE OF THE FOLLOWING NOTATION IN THIS LETTER INDICATES THAT A CONFIDENTIAL PORTION HAS BEEN OMITTED
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [*]. </FONT></P> <P STYLE="margin-top:24px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>[Letterhead of MBIA Inc.] </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">October&nbsp;26, 2012 </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>BY EDGAR AND UPS OVERNIGHT </U></B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Mr.&nbsp;Jim&nbsp;B. Rosenberg </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Senior
Assistant Chief Accountant </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Securities and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Division of Corporation Finance </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">450 Fifth Street, N.W., Stop 4-5 </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Washington, D.C. 20549 </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">Re:</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">MBIA Inc. </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Form 10-K filed
February&nbsp;29, 2012 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Form 10-Q filed May&nbsp;10, 2012 </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Form 8-K filed May&nbsp;10, 2012 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT
STYLE="font-family:Times New Roman" SIZE="2">File No.&nbsp;001-09583 </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Dear Mr.&nbsp;Rosenberg: </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">As requested by your colleague, Mark Brunhofer, in our conversation with him on October&nbsp;16, 2012, MBIA Inc. (&#147;MBIA,&#148; the
&#147;Company,&#148; or &#147;we&#148;) is pleased to submit this revised response to Comment 1 from your letter dated September&nbsp;4, 2012 in which you provided comments to our letter dated August&nbsp;10, 2012. For your convenience, we have
reproduced your comment followed by our response. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">We originally responded to your comments in a letter dated September&nbsp;18, 2012. A
portion of our September&nbsp;18, 2012 response to Comment 1 was provided to you in paper form as supplemental information (the &#147;Supplemental Information&#148;) in accordance with Rule 12b-4 promulgated under the Securities Exchange Act of
1934, as amended. Per Mr.&nbsp;Brunhofer&#146;s instructions, we have revised our response to Comment 1 to include the Supplemental Information. We request that you return the September&nbsp;18, 2012 paper copy of the Supplemental Information to us
in the pre-paid mailing envelope provided in connection with our September&nbsp;18, 2012 response letter. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Because of the commercially
sensitive nature of certain information contained in the Supplemental Information, the electronic copy of this Letter filed via EDGAR has been redacted to exclude the portions sought to be excluded from the public record (the &#147;Confidential
Portions&#148;). The omitted material has been separately filed with the Securities and Exchange Commission and we have filed a confidential treatment request with the Office of Freedom of Information and Privacy Act Operations, pursuant to Rule 83
of the Securities and Exchange Commission&#146;s Rules on Information and Requests [17 C.F.R. &#167; 200.83], with respect to such omitted material. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><U>Form 10-Q for the quarterly period ended March&nbsp;31, 2012 </U></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>Notes to Consolidated
Financial Statements </U></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>Note 5: Loss and Loss Adjustment Expense Reserves </U></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><U>Second-lien RMBS Recoveries, page 20 </U></FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>SEC Comment: </B></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">1.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">We acknowledge your response to comment 3. Please address the following: </FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Please tell us the amount of the incremental loss reserve recorded related to GMAC and RFC exposures during the first quarter as well as the amount of the related additional expected recoveries. In
addition, tell us the amount of the offsetting reductions to your expected recoveries for the same period associated with the increased probability of GMAC and RFC entering bankruptcy. Tell us how you incorporated these amounts into the loss reserve
and recoveries rollforwards presented on page 28. Please tell us what assumptions changed leading to you recording the incremental loss reserve. To the extent the amounts are material, please provide us proposed revised disclosure accompanying the
rollforwards to be included in future periodic reports that explains the impact of GMAC and RFC exposures on your loss reserves and recoveries during the first quarter of 2012. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">On page 84 of your June&nbsp;30, 2012 Form 10-Q you indicate that the bankruptcy filings of GMAC and RFC resulted in an eight percent drop in your expected recoveries since December&nbsp;31, 2011. Please
tell us the amount of this decline and where you reflect it in your recoveries rollforward on page 28 of your June&nbsp;30, 2012 Form 10-Q. To the extent the decline is material, please provide us proposed revised disclosure accompanying the
rollforward to be included in future periodic reports that explains the impact of the GMAC and RFC bankruptcy filings on your recoveries. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>MBIA Response: </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>Background
</U></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">MBIA utilizes multiple probability-weighted scenarios to estimate put-back recoveries.&nbsp;As of December&nbsp;31, 2011, we utilized five
scenarios that incorporated full recovery of our incurred losses and discounted recovery (i.e., less than full recovery) of our incurred losses. Discounted recoveries reflected potential litigation delays and risks and/or financial distress
associated with sellers/servicers. Probabilities were assigned to these scenarios with most of the weightings on scenarios with discounted recoveries. The sum of the probability-weightings assigned to all scenarios was 100%.</FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">During the first quarter of 2012, there were increased indications that ResCap (the parent of GMAC and RFC) would file for bankruptcy.&nbsp;In response
to these increased indications of an impending bankruptcy filing by ResCap, in the first quarter of 2012, the Company increased the discount applied to its recovery scenarios, which had the effect of reducing the value of recoveries expected from
put-backs against GMAC and RFC.&nbsp;However, also in the first quarter of 2012, we increased our estimate of incurred losses related to GMAC and RFC exposures, which generated a corresponding increase in our aggregate estimated recoveries as the
amount of our recoveries are based on incurred losses.&nbsp;The net result was an immaterial decrease in the value of our estimated recoveries from put-backs against these companies. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">In the second quarter of 2012, ResCap, as well as GMAC and RFC, filed for bankruptcy and, as a result, we revised our probability-weighted scenarios to reflect new information that became available,
including the context of the bankruptcy proceedings. These revised scenarios reflect the strength of our put-back claims given the bankruptcy filing of ResCap, as well as a range of estimated assets available to unsecured creditors of the ResCap
companies. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>First Quarter 2012 Impact </U></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Our exposure to GMAC and RFC includes transactions executed with variable interest entities (&#147;VIEs&#148;) which we consolidate, as well as those that we do not consolidate, in our financial
statements. Insurance reserves and recoveries established with regard to consolidated VIEs are eliminated upon the consolidation of such VIEs. Before these eliminations, our calculation of put-back recoveries related to GMAC and RFC for all
transactions (consolidated VIEs and non-consolidated VIEs) during the first quarter of 2012 included the following: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>[*] </B></FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The table of estimated recoveries from ineligible mortgage loans at the bottom of page 28 includes insurance
loss recoveries for VIEs not consolidated as well as loan repurchase commitments of consolidated VIEs. Loan repurchase commitments of consolidated VIEs represent assets of consolidated VIEs generated from the sellers&#146;/servicers&#146; put-back
obligation to the VIE. We record &#147;put-backs&#148; as loan repurchase commitments when we are required to account for the transaction as a consolidated VIE. Changes in estimated recoveries from ineligible mortgage loans related to GMAC and RFC
without regard to our balance sheet classification are included in the table at the bottom of page 28 as follows: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>[*] </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The below presents how we incorporated these amounts in the loss reserve and recovery rollforward tables on page 28 of our Form&nbsp;10-Q for the
quarterly period ended March&nbsp;31, 2012: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>[*] </B></FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><U>Second Quarter 2012 Impact </U></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The eight percent reduction in our expected recoveries from
GMAC and RFC as disclosed on page 84 of our Form 10-Q for the quarterly period ended June&nbsp;30, 2012 totaled <B>[*]</B>. The below table presents how we incorporated this amount in the table of estimated recoveries from ineligible loans on page
28 of our Form 10-Q for the quarterly period ended June&nbsp;30, 2012: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>[*] </B></FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><U>Disclosures </U></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">In preparing our disclosures, within the objective of providing information
that we believe is material to investors, we consider the impact on investors of disclosing a level of detail that may adversely impact MBIA&#146;s competitive advantage. We do not believe the detailed information requested about the loss reserves
and recovery amounts specific to GMAC and RFC is material to investors because of the relative size of these amounts to our aggregate loss reserves and recoveries as of March&nbsp;31, 2012 or June&nbsp;30, 2012, which we have disclosed, and in light
of the general disclosures we have provided about factors that affected our expected recoveries against GMAC and RFC, including their entry into bankruptcy. Therefore, we are not proposing revised disclosure to accompany our rollforward tables. In
the future, we will continue to evaluate whether additional level of detailed disclosures would be material to investors. We would only disclose loss reserve or recovery balances, or changes thereto, related to specific counterparties if we deem
such disclosures to be meaningful to investors, as such disclosures may have an adverse effect on our ability to negotiate settlements of such balances with counterparties. </FONT></P> <P STYLE="margin-top:24px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="2">**** </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">In connection with responding to your comments, we acknowledge that: </FONT></P>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">the Company is responsible for the adequacy and accuracy of the disclosures in its filings; </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">SEC Staff comments or changes to disclosures in response to SEC Staff comments do not foreclose the Commission from taking action with respect to such
filings; and </FONT></P></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">the Company may not assert SEC Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities
laws of the United States. </FONT></P></TD></TR></TABLE>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">I hope you find our response helpful in your review of our filings on Form 10-K, Form 10-Q and Form 8-K.
Please feel free to contact me at 914-765-3925 with any comments or questions you may have with respect to our response. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><DIV ALIGN="right">
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Very truly yours,</FONT></TD></TR>
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<TD HEIGHT="16"></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:1px;border-bottom:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2">/s/ C. Edward Chaplin</FONT></P></TD></TR>
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">C. Edward Chaplin</FONT></TD></TR>
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