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Insurance Premiums | 12 Months Ended
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Dec. 31, 2018
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, 2018 and 2017, premiums receivable were $296 million and $369 m illion, respectively, primarily related to installment policies for which premiums will be collected over the e stimated term of the contracts. Premiums r eceivable 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 exp ected 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. Premiums receivable also includes the current amount of premi ums due from installment policies insuring consolidated VIEs when the premiums are payable by third-parties on behalf of the consolidated VIEs. The Company evaluates whether any premiums receivable are uncollectible at each balance sheet date. If the Compa ny 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 s of the present values of future installment premiums that are not yet billed or due, prima rily 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, 2018 and 2017 was insignificant. As of December 31, 2018 and 2017, the weighted average risk-free rate s used to discount future installment premiums were 3% and 2.8%, respectively, and the weighted average expected collect ion term of the premiums receivable was 9.59 years and 9.45 years, respectively. As of December 31, 2018 and 2017, reinsurance premiums payable was $20 million and $25 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, 2018 and 2017.
In millions |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  | Adjustments |  |  |
Premiums |  |  |  | Premiums |  | Changes in |  | Accretion of |  |  |  | Premiums |
Receivable as of |  | Premium |  | from New |  | Expected |  | Premiums |  |  |  | Receivable as of |
December 31, |  | Payments |  | Business |  | Term of |  | Receivable |  |  |  | December 31, |
2017 |  | Received |  | Written |  | Policies |  | Discount (1) |  | Other (2) |  | 2018 |
$ | 369 |  | $ | (74) |  | $ | - |  | $ | 2 |  | $ | 9 |  | $ | (10) |  | $ | 296 |
__________ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(1) - Recorded within premiums earned on MBIA's consolidated statement of operations.
(2) - Primarily consists of realized gains due to changes in foreign currency exchange rates.
In millions |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  | Adjustments |  |  |
Premiums |  |  |  | Premiums |  | Changes in |  | Accretion of |  |  |  | Premiums |
Receivable as of |  | Premium |  | from New |  | Expected |  | Premiums |  |  |  | Receivable as of |
December 31, |  | Payments |  | Business |  | Term of |  | Receivable |  |  |  | December 31, |
2016 |  | Received |  | Written |  | Policies |  | Discount (1) |  | Other (2) |  | 2017 |
$ | 409 |  | $ | (50) |  | $ | 3 |  | $ | (15) |  | $ | 10 |  | $ | 12 |  | $ | 369 |
__________ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(1) - Recorded within premiums earned on MBIA's consolidated statement of operations.
(2) - Primarily consists of realized gains due to changes in 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 millions |  | Premiums |
| Three months ending: |  |  |  |
| March 31, 2019 |  | $ | 4 |
| June 30, 2019 |  |  | 12 |
| September 30, 2019 |  |  | 6 |
| December 31, 2019 |  |  | 12 |
| Twelve months ending: |  |  |  |
| December 31, 2020 |  |  | 32 |
| December 31, 2021 |  |  | 30 |
| December 31, 2022 |  |  | 26 |
| December 31, 2023 |  |  | 23 |
| Five years ending: |  |  |  |
| December 31, 2028 |  |  | 86 |
| December 31, 2033 |  |  | 54 |
| December 31, 2038 and thereafter |  |  | 72 |
| Total |  | $ | 357 |
The following table presents the unearned premium revenue balance and future expected premium earnings as of and for the periods presented:
|  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  | Expected |
|  |  | Unearned |  | Expected Future |  |  |  |  | Future |
|  |  | Premium |  |  | Premium Earnings |  |  |  |  | Premium |
| In millions |  | Revenue |  | Upfront |  | Installments |  | Accretion |  | Earnings |
| December 31, 2018 |  | $ | 587 |  |  |  |  |  |  |  |  |  |  |  |  |
| Three months ending: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| March 31, 2019 |  |  | 569 |  | $ | 9 |  | $ | 9 |  | $ | 2 |  | $ | 20 |
| June 30, 2019 |  |  | 552 |  |  | 9 |  |  | 8 |  |  | 2 |  |  | 19 |
| September 30, 2019 |  |  | 535 |  |  | 9 |  |  | 8 |  |  | 2 |  |  | 19 |
| December 31, 2019 |  |  | 518 |  |  | 9 |  |  | 8 |  |  | 2 |  |  | 19 |
| Twelve months ending: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| December 31, 2020 |  |  | 456 |  |  | 32 |  |  | 30 |  |  | 7 |  |  | 69 |
| December 31, 2021 |  |  | 401 |  |  | 28 |  |  | 27 |  |  | 6 |  |  | 61 |
| December 31, 2022 |  |  | 352 |  |  | 25 |  |  | 24 |  |  | 6 |  |  | 55 |
| December 31, 2023 |  |  | 309 |  |  | 22 |  |  | 21 |  |  | 5 |  |  | 48 |
| Five years ending: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| December 31, 2028 |  |  | 158 |  |  | 81 |  |  | 70 |  |  | 20 |  |  | 171 |
| December 31, 2033 |  |  | 79 |  |  | 42 |  |  | 37 |  |  | 12 |  |  | 91 |
| December 31, 2038 and thereafter |  |  | - |  |  | 33 |  |  | 46 |  |  | 11 |  |  | 90 |
| Total |  |  |  |  | $ | 299 |  | $ | 288 |  | $ | 75 |  | $ | 662 |

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- Definition The entire disclosure for financial guarantee insurance contracts (as defined) issued by the entity. Such disclosure is intended to enable users of the financial information to understand the factors affecting the present and future recognition and measurement of the entity's financial guarantee insurance contracts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -URI http://asc.fasb.org/topic&trid=2303980 + Details
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