<SEC-DOCUMENT>0001193125-16-513639.txt : 20160322
<SEC-HEADER>0001193125-16-513639.hdr.sgml : 20160322
<ACCEPTANCE-DATETIME>20160322172431
ACCESSION NUMBER:		0001193125-16-513639
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20160322
ITEM INFORMATION:		Regulation FD Disclosure
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20160322
DATE AS OF CHANGE:		20160322

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:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-09583
		FILM NUMBER:		161521799

	BUSINESS ADDRESS:	
		STREET 1:		1 MANHATTANVILLE ROAD
		STREET 2:		SUITE 301
		CITY:			PURCHASE
		STATE:			NY
		ZIP:			10577
		BUSINESS PHONE:		914-273-4545

	MAIL ADDRESS:	
		STREET 1:		1 MANHATTANVILLE ROAD
		STREET 2:		SUITE 301
		CITY:			PURCHASE
		STATE:			NY
		ZIP:			10577
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>d135486d8k.htm
<DESCRIPTION>FORM 8-K
<TEXT>
<HTML><HEAD>
<TITLE>Form 8-K</TITLE>
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 <P STYLE="line-height:1.0pt;margin-top:0pt;margin-bottom:0pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P> <P STYLE="margin-top:4pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>UNITED STATES </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>SECURITIES AND EXCHANGE COMMISSION </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Washington, D.C. 20549 </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center>
<P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>FORM 8-K
</B></P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center> <P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>CURRENT REPORT </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>PURSUANT
TO SECTION&nbsp;13 OR 15(d) OF </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>THE SECURITIES EXCHANGE ACT OF 1934 </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Date of Report (Date of earliest event reported): March&nbsp;22, 2016 </B></P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center> <P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>MBIA INC. </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>(Exact name
of registrant as specified in its charter) </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center>
<P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD VALIGN="top" ALIGN="center"><B>Connecticut</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>1-9583</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>06-1185706</B></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:8pt">
<TD VALIGN="top" ALIGN="center"><B>(State or other jurisdiction of incorporation)</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>(Commission File Number)</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>(IRS Employer Identification No.)</B></TD></TR>
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<TD WIDTH="48%"></TD></TR>


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<TD VALIGN="top" ALIGN="center"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>1 Manhattanville Road, Suite 301</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>Purchase, New York</B></P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom" ALIGN="center"><B>10577</B></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:8pt">
<TD VALIGN="top" ALIGN="center"><B>(Address of principal executive offices)</B></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" ALIGN="center"><B>(Zip Code)</B></TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>Registrant&#146;s telephone number, including area code: 914-273-4545 </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>Not Applicable</B> </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(Former
name or former address, if changed since last report) </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center>
<P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Check the
appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></TD>
<TD ALIGN="left" VALIGN="top">Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></TD>
<TD ALIGN="left" VALIGN="top">Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></TD>
<TD ALIGN="left" VALIGN="top">Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></TD>
<TD ALIGN="left" VALIGN="top">Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) </TD></TR></TABLE> <P STYLE="font-size:8pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="line-height:1.0pt;margin-top:0pt;margin-bottom:0pt;border-bottom:1px solid #000000">&nbsp;</P> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>

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<TR>
<TD WIDTH="10%" VALIGN="top" ALIGN="left"><B>Item&nbsp;7.01.</B></TD>
<TD ALIGN="left" VALIGN="top"><B>REGULATION FD DISCLOSURE. </B></TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">MBIA Inc. (the &#147;Company&#148;) issued a Letter to Owners on
March&nbsp;22, 2016. A copy of the Letter to Owners is attached as Exhibit 99.1 hereto. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The information in the Letter to Owners is being furnished, not
filed, pursuant to Item&nbsp;7.01 of Form 8-K. Accordingly, the information in Item&nbsp;7.01 of this Current Report, including Exhibit 99.1, will not be incorporated by reference into any registration statement filed by the Company under the
Securities Act of 1933, as amended, unless specifically identified therein as being incorporated by reference. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="10%" VALIGN="top" ALIGN="left"><B>Item&nbsp;9.01.</B></TD>
<TD ALIGN="left" VALIGN="top"><B>FINANCIAL STATEMENTS AND EXHIBITS. </B></TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">99.1 Letter to Owners from Jay Brown, Chief Executive Officer, and
Bill Fallon, President and Chief Operating Officer, of MBIA Inc., dated March&nbsp;22, 2016. </P>

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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>SIGNATURES </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><DIV ALIGN="right">
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<TD VALIGN="top" COLSPAN="3">MBIA INC.</TD></TR>
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<TD HEIGHT="32"></TD>
<TD HEIGHT="32" COLSPAN="2"></TD></TR>
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<TD VALIGN="top">By:</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">/s/ Ram D. Wertheim</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">Ram D. Wertheim</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">Chief Legal Officer</TD></TR>
</TABLE></DIV> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Date: March&nbsp;22, 2016 </P>

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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>EXHIBIT INDEX TO CURRENT REPORT ON FORM 8-K </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B></B>Dated March&nbsp;22, 2016<B> </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">99.1</TD>
<TD ALIGN="left" VALIGN="top">Letter to Owners from Jay Brown, Chief Executive Officer, and Bill Fallon, President and Chief Operating Officer, of MBIA Inc., dated March&nbsp;22, 2016. </TD></TR></TABLE>
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<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>d135486dex991.htm
<DESCRIPTION>EX-99.1
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right"><B>Exhibit 99.1 </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt;margin-bottom:0pt">


<IMG SRC="g135486g29h77.jpg" ALT="LOGO">
 </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">March&nbsp;22, 2016 </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Dear Owners: </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Over the last few years, we have accomplished much in the way of expense reduction and establishing our municipal bond insurance business, National Public
Finance Guarantee, as a viable and profitable participant in the public finance market. We also were able to take advantage of our capital position and adequate liquidity to repurchase a meaningful portion of our outstanding shares. Through these
measures, we have made important strides to position the company for growth that will enhance its future value. Unfortunately, these achievements are not yet fully reflected in our stock price. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Before touching on the direct value creation we achieved in the past year, a few comments are warranted about what we believe is one of the primary
contributing factors in the disappointing performance of our stock price. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">We have no doubt that the level of uncertainty associated with our insured
Puerto Rico credits factored very heavily into the negative movements in the price of our shares. While we acknowledge that the potential for losses from our Puerto Rico credits presents our biggest current challenge, we continue to believe that the
market has overstated the likely impact on MBIA. The statements and communications by and on behalf of the Puerto Rico government have undoubtedly contributed to the uncertainty about what will happen to Puerto Rico&#146;s debt obligations. However,
we are not going to fall into the &#147;perception trap&#148; that many in the press have &#150; there is no aggregate amount of debt owed by a single Puerto Rico entity. In fact, there are different obligors with distinct legal debt structures,
with different debt loads and different revenue streams available to support those obligations. While the Puerto Rico government has invoked &#147;clawback&#148; provisions that temporarily divert certain revenues from select debt obligations to
service Commonwealth general obligation debt, it is also true that most debts of the Commonwealth and its instrumentalities are supported by independent, dedicated revenue sources for their repayment. And those debt obligations were issued through
discrete debt indentures that include and incorporate specific rights and remedies for their bondholders. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In our case, we currently have just under $4
billion in gross par exposure spread across eight different credit profiles. Our exposure to the Puerto Rico Government Development Bank was fully retired in 2015, and we saw meaningful paydowns of other credits in 2015 &#150; over $675 million of
gross par has been retired from our Puerto Rico exposure since year-end 2014. We&#146;ve also made significant progress with our largest exposure &#150; $1.4 billion of gross par to the Puerto Rico Electric Power Authority (PREPA) &#150; and we are
a participant in a consensual restructuring that was agreed to by the majority of its creditors. If implemented, the restructuring agreement presents a promising path forward for PREPA, its debt holders and their customers, but additional conditions
need to be satisfied before the transaction can be completed later this year. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">MBIA Inc. 1
Manhattanville Road, Suite 301, Purchase, NY 10577 +1 (914) 273-4545 </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">www.mbia.com </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Our two Highway&nbsp;&amp; Transportation Authority (HTA) credits, with $0.7 billion in gross par exposure, are
secured by revenues that have been partially impaired due to the clawback provisions, but they also have fully funded debt service reserve funds, which should cover at least 12 months of debt service payments. As such, we wouldn&#146;t be at risk to
pay potential claims until July 2017 at the earliest, which gives us time to achieve a favorable resolution. In 2014, the legislature passed additional petroleum taxes that would have been sufficient to refinance some of the HTA debt and provide
adequate funds for the HTA and another agency, the Puerto Rico Infrastructure Financing Authority (PRIFA). However, the Puerto Rico decision makers didn&#146;t go forward with the refinancing and instead focused on enlisting congressional support
for a debt restructuring (reduction) for the HTA and most other Puerto Rico credits, including the Commonwealth itself. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Our $1.0 billion of gross par
exposure to the Commonwealth&#146;s General Obligation (GO) debt remains well protected by the Puerto Rico constitution and the clawback provisions have enhanced revenues available to service this debt. We continue to believe that the overall level
of GO debt service is not an unreasonable portion of the government budget and we remain convinced that this debt should not be impaired under any circumstance. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">We also have exposure to $0.7 billion gross par value ($1.0 billion in accreted value) of Puerto Rico Sales Tax Financing Corporation (COFINA) bonds, which
are long-dated capital appreciation obligations with the first payments not coming due until 2040. The current sales tax collections, without relying on growth in tax receipts, cover the future debt service on our insured bonds by an adequate
margin. Importantly, the bonds guaranteed by National have senior lien status. We are so confident in their security that we purchased $100 million of our insured bonds for National&#146;s investment portfolio at around 70% of the then $149 million
accreted value. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The remaining three credits total $121 million in gross par outstanding after this past January&#146;s payments. While we expect that the
resolution of all the issues surrounding our Puerto Rico exposures will be a multi-year endeavor, we continue to believe that the achievement of the PREPA financing in 2016 will be the key to demonstrating that a consensual restructuring for each
credit is both preferable to a court proceeding and achievable. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Turning to our efforts at the consolidated level, we have shifted the company&#146;s
performance metrics from a focus on survival and value conservation to a more traditional emphasis on value creation and income/profitability. In conjunction with this change, we re-introduced new and revised measures of operating income and
adjusted book value at the end of 2014. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Share repurchases have been our most impactful and beneficial way to create value, given the magnitude of stock
price undervaluation. Adjusted Book Value increased by $5 to $30 per share during 2015. And we will see a further increase of $2.55 per share (all other things being equal), after accounting for the additional 15&nbsp;million shares repurchased in
the first two months of 2016. Book value increased in a similar fashion, from $20 per share to $25 during 2015. Sixteen million of the shares repurchased in 2015 were coordinated with Warburg Pincus&#146; sale of their 46&nbsp;million shares of our
company. While we continue to evaluate alternative strategic initiatives, the value created by share repurchases overwhelms the potential returns from all of the alternatives that we have analyzed. </P>

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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">We are also focused on maximizing National&#146;s value, which we expect to grow with the resurgence of the bond
insurance industry. Since 2012, insurance penetration has grown from 3.5% to 6.7% for 2015. Insured bond volume increased 37% in 2015 versus 2014 and National saw increasing activity throughout the year. Despite two major industry challenges &#150;
low interest rates and the negative headlines regarding Puerto Rico &#150; we still believe that National&#146;s long-term value proposition &#150; to provide issuers with lower cost debt financing and investors with higher quality insured bonds
&#150; remains compelling. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">National also benefited from significant insured portfolio runoff. In 2015, National&#146;s portfolio declined 27% from $222
billion to $161 billion of gross par outstanding, which led to its leverage ratio (gross par/statutory capital) declining from 68:1 to 48:1. In addition, our estimate of excess capital to the triple-A capital level as measured by the S&amp;P model,
increased from approximately $1 billion to $1.5 billion during 2015. As we have previously mentioned, we expect to seek approval for special dividends from National in the near future once there is greater clarity regarding the outcome of our Puerto
Rico credit exposures. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">We also continued to focus on achieving additional expense reductions, and we have established a goal of getting total annual
operating expenses at or under $100 million in the next few years from our peak of over $380 million in 2012. What we have accomplished so far has resulted from selling our headquarters building and relocating to a lower cost facility, selling our
Cutwater investment management business, and reducing headcount and employee compensation. And we&#146;ve achieved overall cost reductions despite adding several employees at National to facilitate its long-term growth. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">While we don&#146;t believe MBIA Insurance Corp. will have any material financial impact on shareholder value one way or the other, we are focusing on
managing its portfolio to ensure all of its policyholders&#146; claims are met, and to maximize its value for its other stakeholders, who have largely become its surplus notes holders. Our major short-term goal is enhancing liquidity to enable MBIA
Insurance Corp. to pay any claims on the Zohar II notes, as we have not yet been provided with a clear plan for achieving 100% payoff of the notes by their January 2017 maturity. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">At the end of 2014, our board established four broad long-term objectives that remain in place: 1) Organic Growth Strategies; 2) Insured Portfolio Management
and Loss Mitigation; 3) Capital and Liquidity Management; and 4) Pursue Strategic Alternatives. Much of the above pertains to the first three objectives. While we evaluated and assessed selected strategic alternatives during 2015, we have not
pursued any, as yet. As we already mentioned, none of the identified alternatives have offered a return greater than share buybacks. However, we continue to evaluate such opportunities. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">There were several changes in our board&#146;s composition and leadership during the past year. After 23 years, our Chairman Dan Kearney stepped down from our
board. Dan&#146;s long years of service covered both our best and toughest time periods. In addition to Dan, Sean Carney left last fall and in May, Dave Coulter will also be leaving the board. Warburg Pincus was instrumental in the $2.6 billion
capital raise that took place before we began our restructuring efforts in early 2008. Our company was well served by their thought leadership and capital market experience over the past eight years. We clearly benefited from the contributions these
individuals made and we wish them well in their future endeavors. </P>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">To succeed Dan, the board elected Charlie Rinehart as our next chairman. Charlie has been a board member since
2008 and has a strong record advocating for shareholder value while meeting the fiduciary responsibilities of a regulated financial institution. Recognizing that the company&#146;s future lies in successfully reestablishing a meaningful growth
trajectory in U.S. public finance, we were pleased to be able to add two new board members with direct municipal expertise, Keith Curry and Lois Scott. Both Keith and Lois have served in public offices and have provided much-needed consulting
services to public finance clients. We continue to look for additional board members who can augment the skills and experiences of our existing board. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In
addition to changes at the board level, we have had a few changes within our senior management ranks. Chuck Chaplin made the decision to move on to his next set of career challenges. Chuck was a mainstay as we worked through our complicated
restructuring plan and has trained a great team of skilled finance professionals to carry the company forward. We wish Chuck nothing but the best as he explores a myriad of opportunities in both the business and non-profit universe. Consistent with
our objective of smooth management succession planning, Anthony McKiernan has stepped into Chuck&#146;s role as our chief financial officer. Anthony has been prepping for this position for the past 18 months as the portfolio in MBIA Insurance Corp.
has continued to wind down. And Chuck will be around until year-end to ensure the transition will be a smooth one. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Although the board and senior
management get most of the external visibility, we again say thanks to all MBIA employees for their continued commitment, contributions and perseverance. It is because of their efforts and enthusiasm that we remain confident in the future of your
company. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Finally, fellow shareholders, thank you for your continued support and patience. We are looking forward to adding more value to each outstanding
share in 2016 and beyond. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="75%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">/s/ Jay Brown</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">/s/&nbsp;Bill Fallon</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Jay Brown</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">Bill&nbsp;Fallon</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">CEO</P></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">President&nbsp;&amp;&nbsp;COO</TD></TR>
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