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Schedule II - Condensed Financial Information | 12 Months Ended
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Dec. 31, 2012
Schedule II - Condensed Financial Information | SCHEDULE II MBIA INC. (PARENT COMPANY) CONDENSED BALANCE SHEETS (In millions except share and per share amounts)
|  | December 31, 2012 |  |  | December 31, 2011 |
Assets |  |  |  |  |  |  |  |
Investments: |  |  |  |  |  |  |  |
Fixed-maturity securities held as available-for-sale, at fair value (amortized cost $825 and $1,989) |  | $ | 843 |  |  | $ | 1,809 |
Fixed-maturity securities at fair value |  |  | 13 |  |  |  | 96 |
Investments pledged as collateral, at fair value (amortized cost $510 and $623) |  |  | 443 |  |  |  | 543 |
Short-term investments held as available-for-sale, at fair value (amortized cost $235 and $648) |  |  | 236 |  |  |  | 643 |
Other investments |  |  | 4 |  |  |  | 83 |
Total investments |  |  | 1,539 |  |  |  | 3,174 |
Cash and cash equivalents |  |  | 92 |  |  |  | 132 |
Investment in wholly-owned subsidiaries |  |  | 4,127 |  |  |  | 3,410 |
Deferred income taxes, net |  |  | 581 |  |  |  | 114 |
Other assets |  |  | 183 |  |  |  | 137 |
Total assets |  | $ | 6,522 |  |  | $ | 6,967 |
Liabilities and Shareholders’ Equity |  |  |  |  |  |  |  |
Liabilities: |  |  |  |  |  |  |  |
Investment agreements |  |  | 893 |  |  |  | 1,523 |
Securities sold under agreements to repurchase |  |  | 32 |  |  |  | 669 |
Long-term debt |  |  | 723 |  |  |  | 900 |
Affiliate loans payable |  |  | 1,681 |  |  |  | 1,738 |
Derivative liabilities |  |  | — |  |  |  | 356 |
Other liabilities |  |  | 20 |  |  |  | 81 |
Total liabilities |  |  | 3,349 |  |  |  | 5,267 |
Shareholders’ Equity: |  |  |  |  |  |  |  |
Preferred stock, par value $1 per share; authorized shares—10,000,000; issued and outstanding—none |  |  | — |  |  |  | — |
Common stock, par value $1 per share; authorized shares—400,000,000; issued shares—277,405,039 and 274,896,162 |  |  | 277 |  |  |  | 275 |
Additional paid-in capital |  |  | 3,076 |  |  |  | 3,072 |
Retained earnings |  |  | 2,039 |  |  |  | 805 |
Accumulated other comprehensive income (loss), net of deferred tax of $26 and $134 |  |  | 56 |  |  |  | (176) |
Treasury stock, at cost—81,733,530 and 81,752,966 shares |  |  | (2,275) |  |  |  | (2,276) |
Total shareholders’ equity of MBIA Inc. |  |  | 3,173 |  |  |  | 1,700 |
Total liabilities and shareholders’ equity |  | $ | 6,522 |  |  | $ | 6,967 |
The condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto and the accompanying notes. SCHEDULE II MBIA INC. (PARENT COMPANY) CONDENSED STATEMENTS OF OPERATIONS (In millions)
|  | Years ended December 31, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |
Net investment income |  | $ | 60 |  |  | $ | 90 |  |  | $ | 122 |
Net gains (losses) on financial instruments at fair value and foreign exchange |  |  | (119) |  |  |  | (278) |  |  |  | (117) |
Investment losses related to other-than-temporary impairments: |  |  |  |  |  |  |  |  |  |  |  |
Investment losses related to other-than-temporary impairments |  |  | (52) |  |  |  | (20) |  |  |  | (206) |
Other-than-temporary impairments recognized in accumulated other comprehensive income (loss) |  |  | (7) |  |  |  | (13) |  |  |  | 147 |
Net investment losses related to other-than-temporary impairments |  |  | (59) |  |  |  | (33) |  |  |  | (59) |
Net gains (losses) on extinguishment of debt |  |  | (2) |  |  |  | — |  |  |  | (1) |
Other net realized gains (losses) |  |  | 6 |  |  |  | (17) |  |  |  | 1 |
Total revenues |  |  | (114) |  |  |  | (238) |  |  |  | (54) |
Expenses: |  |  |  |  |  |  |  |  |  |  |  |
Operating |  |  | 40 |  |  |  | 29 |  |  |  | 31 |
Interest |  |  | 155 |  |  |  | 162 |  |  |  | 200 |
Total expenses |  |  | 195 |  |  |  | 191 |  |  |  | 231 |
Gain (loss) before income taxes and equity in earnings of subsidiaries |  |  | (309) |  |  |  | (429) |  |  |  | (285) |
Provision (benefit) for income taxes |  |  | (781) |  |  |  | (286) |  |  |  | (183) |
Gain (loss) before equity in earnings of subsidiaries |  |  | 472 |  |  |  | (143) |  |  |  | (102) |
Equity in net income (loss) of subsidiaries |  |  | 762 |  |  |  | (1,233) |  |  |  | 99 |
Net income (loss) |  | $ | 1,234 |  |  | $ | (1,376) |  |  | $ | (3) |
The condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto and the accompanying notes. SCHEDULE II MBIA INC. (PARENT COMPANY) CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (In millions)
|  | Years ended December 31, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
Net income |  | $ | 1,234 |  |  | $ | (1,376) |  |  | $ | (3) |
Other comprehensive income (loss): |  |  |  |  |  |  |  |  |  |  |  |
Unrealized gains (losses) on available-for-sale securities: |  |  |  |  |  |  |  |  |  |  |  |
Unrealized gains (losses) arising during the period, net of tax of $35, $60 and $93 |  |  | 128 |  |  |  | 234 |  |  |  | 382 |
Less: Reclassification adjustments for (gains) losses included in net income (loss), net of tax of $29, $16 and $77 |  |  | 54 |  |  |  | 30 |  |  |  | 143 |
Unrealized gains (losses) on available-for-sale securities, net |  |  | 182 |  |  |  | 264 |  |  |  | 525 |
Other-than-temporary impairments on available-for-sale securities: |  |  |  |  |  |  |  |  |  |  |  |
Other-than-temporary impairments arising during the period, net of tax of $13, $14 and $26 |  |  | 25 |  |  |  | 27 |  |  |  | (48) |
Less: Reclassification adjustments for other-than-temporary impairments included in net income (loss), net of tax of $11, $10 and $28 |  |  | 20 |  |  |  | 19 |  |  |  | 52 |
Other-than-temporary impairments on available-for-sale securities, net |  |  | 45 |  |  |  | 46 |  |  |  | 4 |
Unrealized gains (losses) on derivative instruments: |  |  |  |  |  |  |  |  |  |  |  |
Unrealized gains (losses) on derivative instruments arising during the period, net of tax of $1, $2 and $2 |  |  | 2 |  |  |  | (5) |  |  |  | (3) |
Less: Reclassification adjustments for (gains) losses included in net income (loss), net of tax of $10, $5 and $9 |  |  | 18 |  |  |  | 10 |  |  |  | 17 |
Unrealized gains (losses) on derivative instruments, net |  |  | 20 |  |  |  | 5 |  |  |  | 14 |
Foreign currency translation |  |  | (15) |  |  |  | (33) |  |  |  | (61) |
Total other comprehensive income (loss) |  |  | 232 |  |  |  | 282 |  |  |  | 482 |
Comprehensive income (loss) |  | $ | 1,466 |  |  | $ | (1,094) |  |  | $ | 479 |
The condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto and the accompanying notes. SCHEDULE II MBIA INC. (PARENT COMPANY) CONDENSED STATEMENTS OF CASH FLOWS (In millions)
|  | Years ended December 31, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
Cash flows from operating activities: |  |  |  |  |  |  |  |  |  |  |  |
Fees and reimbursements received |  | $ | 5 |  |  | $ | 31 |  |  | $ | — |
Investment income received |  |  | 118 |  |  |  | 89 |  |  |  | 145 |
Operating expenses paid |  |  | (43) |  |  |  | (30) |  |  |  | (28) |
Interest paid, net of interest converted to principal |  |  | (101) |  |  |  | (107) |  |  |  | (115) |
Income taxes (paid) received |  |  | 224 |  |  |  | 353 |  |  |  | 149 |
Net cash provided (used) by operating activities |  |  | 203 |  |  |  | 336 |  |  |  | 151 |
Cash flows from investing activities: |  |  |  |  |  |  |  |  |  |  |  |
Purchase of fixed-maturity securities |  |  | (1,017) |  |  |  | (3,737) |  |  |  | (6,259) |
Sale and redemption of fixed-maturity securities |  |  | 2,370 |  |  |  | 4,651 |  |  |  | 7,288 |
Sale (purchase) of short-term investments, net |  |  | 375 |  |  |  | 251 |  |  |  | 363 |
Sale (purchase) of other investments, net |  |  | 107 |  |  |  | 81 |  |  |  | 55 |
(Payments) proceeds for derivative settlements |  |  | (207) |  |  |  | (85) |  |  |  | 16 |
Collateral (to) from swap counterparty |  |  | (285) |  |  |  | — |  |  |  | 166 |
Contributions to subsidiaries |  |  | (12) |  |  |  | — |  |  |  | (35) |
Advances to subsidiaries, net |  |  | 1 |  |  |  | (19) |  |  |  | (21) |
Net cash provided (used) by investing activities |  |  | 1,332 |  |  |  | 1,142 |  |  |  | 1,573 |
Cash flows from financing activities: |  |  |  |  |  |  |  |  |  |  |  |
Proceeds from investment agreements |  |  | 31 |  |  |  | 65 |  |  |  | 39 |
Payments for drawdowns of investment agreements |  |  | (679) |  |  |  | (500) |  |  |  | (735) |
Payments for securities sold under agreements to repurchase |  |  | (639) |  |  |  | (835) |  |  |  | (618) |
Payments for retirement of debt |  |  | (180) |  |  |  | (70) |  |  |  | (43) |
Payments for affiliate loans |  |  | (109) |  |  |  | (37) |  |  |  | (405) |
Purchase of treasury stock |  |  | — |  |  |  | (50) |  |  |  | (30) |
Restricted stock awards settlements, net |  |  | 1 |  |  |  | (2) |  |  |  | 2 |
Net cash provided (used) by financing activities |  |  | (1,575) |  |  |  | (1,429) |  |  |  | (1,790) |
Net increase (decrease) in cash and cash equivalents |  |  | (40) |  |  |  | 49 |  |  |  | (66) |
Cash and cash equivalents—beginning of period |  |  | 132 |  |  |  | 83 |  |  |  | 149 |
Cash and cash equivalents—end of period |  | $ | 92 |  |  | $ | 132 |  |  | $ | 83 |
Reconciliation of net income (loss) to net cash provided (used) by operating activities: |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) |  | $ | 1,234 |  |  | $ | (1,376) |  |  | $ | (3) |
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: |  |  |  |  |  |  |  |  |  |  |  |
Change in: |  |  |  |  |  |  |  |  |  |  |  |
Intercompany accounts receivable |  |  | (9) |  |  |  | (10) |  |  |  | 41 |
Current income taxes |  |  | 57 |  |  |  | 124 |  |  |  | 56 |
Equity in earnings of subsidiaries |  |  | (762) |  |  |  | 1,233 |  |  |  | (99) |
Dividends from subsidiaries |  |  | 60 |  |  |  | 46 |  |  |  | 19 |
Net investment losses related to other-than-temporary impairments |  |  | 59 |  |  |  | 33 |  |  |  | 59 |
Net (gains) losses on financial instruments at fair value and foreign exchange |  |  | 119 |  |  |  | 278 |  |  |  | 117 |
Other net realized (gains) losses |  |  | (6) |  |  |  | 17 |  |  |  | (1) |
Deferred income tax benefit |  |  | (613) |  |  |  | (85) |  |  |  | (90) |
(Gains) losses on extinguishment of debt |  |  | 2 |  |  |  | — |  |  |  | 1 |
Other operating |  |  | 62 |  |  |  | 76 |  |  |  | 51 |
Total adjustments to net income (loss) |  |  | (1,031) |  |  |  | 1,712 |  |  |  | 154 |
Net cash provided (used) by operating activities |  | $ | 203 |  |  | $ | 336 |  |  | $ | 151 |
The condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto and the accompanying notes. SCHEDULE II MBIA INC. (PARENT COMPANY) NOTES TO CONDENSED FINANCIAL STATEMENTS 1. Condensed Financial Statements Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the Company’s consolidated financial statements and the notes thereto. The activities of MBIA Inc. consist of general corporate activities and funding activities, which principally include holding and managing investments, servicing outstanding corporate debt, investment agreements issued by MBIA Inc. and its subsidiaries, and posting collateral under investment agreement and derivative contracts. MBIA Inc. is subject to the same liquidity risks and uncertainties as described in footnote 1 to the Company’s consolidated financial statements. As of December 31, 2012, MBIA Inc. had $170 million of cash and highly liquid assets available for general corporate liquidity purpose, and $69 million of cash and liquid assets not pledged as collateral in its funding activities. 2. Significant Accounting Policies MBIA Inc. (the “Parent Company”) carries its investments in subsidiaries under the equity method. Certain amounts have been reclassified in prior years’ financial statements to conform to the current presentation. This includes the reclassification of amounts from “Medium-term notes” to “Affiliate loans payable” on the Parent Company’s balance sheet. This reclassification had no impact on total revenues, expenses, assets, liabilities, or shareholders’ equity for all periods presented. Previously, the Parent Company reported its statements of cash flows using the indirect method. The indirect method uses accrual accounting information to present the cash flows from operations. Effective January 1, 2012, the Parent Company elected to present its consolidated statements of cash flows using the direct method. The direct method uses actual cash flow information from the Parent Company’s operations, rather than using accrual accounting values. Using either the direct or indirect method, total cash flows from operations are consistent. In addition, the presentation of cash flows from investing and financing activities using either the direct or indirect method are consistent. The change to the direct method for calculating and presenting cash flows from operations was implemented retroactively. Use of the direct method requires a reconciliation of net income to cash flows from operations. This reconciliation is provided as a supplement directly beneath the statements of cash flows. 3. Dividends from Subsidiaries During 2012, Optinuity Alliance Resource Corporation declared and paid dividends of $53 million to MBIA Inc., Asset Finance declared and paid dividends of $6 million to MBIA Inc. and Euro Asset Acquisition Limited declared and paid dividends of $1 million to MBIA Inc. During 2011, Optinuity Alliance Resource Corporation declared and paid dividends of $38 million to MBIA Inc. and Euro Asset Acquisition Limited declared and paid dividends of $8 million to MBIA Inc. 4. Obligations under Investment Agreements The investment agreement business, as described in footnotes 2 and 10 to the Company’s consolidated financial statements, is conducted by both MBIA Inc. and its wholly owned subsidiary, MBIA Investment Management Corp. 5. Pledged Collateral Substantially all of the obligations under investment agreements require MBIA Inc. to pledge securities as collateral. As of December 31, 2012 and 2011, the fair value of securities pledged as collateral with respect to these investment agreements approximated $318 million and $428 million, respectively. The Parent Company’s collateral as of December 31, 2012, consisted principally of mortgage-backed securities, corporate obligations, and U.S. Treasury and government agency bonds, and was primarily held with major U.S. banks. Additionally, the Parent Company pledged money market securities as collateral under investment agreements in the amount of $144 million and $224 million as of December 31, 2012 and 2011, respectively. Under derivative contracts entered into by MBIA Inc., collateral postings are required by either MBIA Inc. or the counterparty when the aggregate market value of derivative contracts entered into with the same counterparty exceeds a predefined threshold. As of December 31, 2012, MBIA Inc. did not post securities to derivative counterparties. As of December 31, 2011, MBIA Inc. pledged securities with a fair value of $470 million to derivative counterparties. 6. Affiliate Loans Payable Affiliate loans payable consists of loans payable to MBIA Global Funding, LLC (“GFL”). GFL raises funds through the issuance of medium-term notes with varying maturities, which are, in turn, guaranteed by MBIA Insurance Corporation. GFL lends the proceeds of these medium-term note issuances to MBIA Inc. (“GFL Loans”). MBIA Inc. invests the proceeds of the GFL Loans in eligible investments, which consisted of investment grade securities at the time of purchase with a minimum average double-A credit quality rating. Included within “Securities sold under agreements to repurchase” on the Parent Company’s balance sheet as of December 31, 2011 is a secured loan from MBIA Insurance Corporation of $300 million. As of December 31, 2012, the outstanding balance of the secured loan was repaid in full.

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- Definition The entire disclosure for condensed financial information, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Paragraph c -Article 5 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Article 12 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 06 -Article 9 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 05 -Paragraph c -Article 7 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -SubTopic 10 -Section 45 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=7656940&loc=d3e5283-111683 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 3 -Subparagraph (SX 210.12-04) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e24072-122690 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Research Bulletin (ARB) -Number 51 -Paragraph 24 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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