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Insurance Premiums
 12 Months Ended
Dec. 31, 2014
Text Block [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, 2014 and 2013, premiums receivable was $875 million and $1.1 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.

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 consist 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, 2014 and 2013 was insignificant.

As of December 31, 2014 and 2013, the risk-free rate used to discount future installment premiums was 2.8% and 2.9%, respectively, and the weighted average expected collection term of the premiums receivable was 9.18 years and 9.21 years, respectively. As of December 31, 2014 and 2013, reinsurance premiums payable was $56 million and $51 million, respectively, and is included in “Other liabilities” in the Company’s consolidated balance sheets. 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, 2014 and 2013:

In millions
Adjustments
PremiumsPremiumsChanges inAccretion ofPremiums
Receivable as ofPremiumfrom NewExpectedPremiumsReceivable as of
December 31,PaymentsBusinessTerm ofReceivableDecember 31,
2013ReceivedWrittenPoliciesDiscountOther (1)2014
$1,051$(120)$6$(50)$26$(38)$875
__________
(1) - Primarily consists of unrealized gains (losses) due to foreign currency exchange rates.
In millions
Adjustments
PremiumsPremiumsChanges inAccretion ofPremiums
Receivable as ofPremiumfrom NewExpectedPremiumsReceivable as of
December 31,PaymentsBusinessTerm ofReceivableDecember 31,
2012ReceivedWrittenPoliciesDiscountOther (1)2013
$1,228$(135)$-$(45)$28$(25)$1,051
__________
(1) - 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:

Expected
Collection of
In millionsPremiums
Three months ended:
March 31, 2015$20
June 30, 201532
September 30, 201521
December 31, 201524
Twelve months ended:
December 31, 201691
December 31, 201783
December 31, 201873
December 31, 201968
Five years ended:
December 31, 2024282
December 31, 2029204
December 31, 2034 and thereafter213
Total$1,111

The following table presents the unearned premium revenue balance and future expected premium earnings as of and for the periods presented:

Total
Expected
UnearnedExpected FutureFuture
PremiumPremium EarningsPremium
In millionsRevenueUpfrontInstallmentsAccretionEarnings
December 31, 2014$1,986
Three months ended:
March 31, 20151,934$30$22$6$58
June 30, 20151,8832922657
September 30, 20151,8342821655
December 31, 20151,7862721654
Twelve months ended:
December 31, 20161,6031028121204
December 31, 20171,436937420187
December 31, 20181,286856518168
December 31, 20191,148786017155
Five years ended:
December 31, 202461329424164599
December 31, 202928817115437362
December 31, 2034 and thereafter-14614235323
Total$1,083$903$236$2,222