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Schedule II- Parent Company Financials | 12 Months Ended
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Dec. 31, 2018
Condensed Financial Information of Parent Company Only Disclosure [Abstract] |
Condensed Financial Information of Parent Company Only Disclosure |
SCHEDULE II
MBIA INC. (PARENT COMPANY)
CONDENSED BALANCE SHEETS
(In millions except share and per share amounts)
|  |  |  | December 31, 2018 |  | December 31, 2017
Assets |  |  |  |  |  |
Investments: |  |  |  |  |  |
| Fixed-maturity securities held as available-for-sale, at fair value (amortized cost $815 and $590) |  | $ | 839 |  | $ | 639
| Investments carried at fair value |  |  | 7 |  |  | 8
| Investments pledged as collateral, at fair value (amortized cost $49 and $155) |  |  | 46 |  |  | 148
| Short-term investments held as available-for-sale, at fair value (amortized cost $83 and $283) |  |  | 83 |  |  | 283
| Other investments |  |  | - |  |  | 1
|  | Total investments |  |  | 975 |  |  | 1,079
Cash and cash equivalents |  |  | 40 |  |  | 10
Investment in wholly-owned subsidiaries |  |  | 1,876 |  |  | 2,290
Other assets |  |  | 130 |  |  | 144
|  | Total assets |  | $ | 3,021 |  | $ | 3,523
Liabilities and Shareholders' Equity |  |  |  |  |  |
Liabilities: |  |  |  |  |  |
| Investment agreements |  | $ | 276 |  | $ | 301
| Long-term debt |  |  | 577 |  |  | 576
| Affiliate loans payable |  |  | 729 |  |  | 772
| Income taxes payable |  |  | 138 |  |  | 237
| Other liabilities |  |  | 182 |  |  | 224
|  | Total liabilities |  |  | 1,902 |  |  | 2,110
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--283,625,689 |  |  |  |  |  |
|  | and 283,717,973 |  |  | 284 |  |  | 284
| Additional paid-in capital |  |  | 3,025 |  |  | 3,171
| Retained earnings |  |  | 966 |  |  | 1,095
| Accumulated other comprehensive income (loss), net of tax |  |  | (156) |  |  | (19)
| Treasury stock, at cost--193,803,976 and 192,233,526 shares |  |  | (3,000) |  |  | (3,118)
|  | Total shareholders' equity of MBIA Inc. |  |  | 1,119 |  |  | 1,413
|  | Total liabilities and shareholders' equity |  | $ | 3,021 |  | $ | 3,523
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,
|  |  |  |  | 2018 |  | 2017 |  | 2016
Revenues: |  |  |  |  |  |  |  |  |
| Net investment income |  | $ | 35 |  | $ | 35 |  | $ | 29
| Net gains (losses) on financial instruments at fair value and foreign exchange |  |  | 20 |  |  | (34) |  |  | (13)
| Investment losses related to other-than-temporary impairments: |  |  |  |  |  |  |  |  |
|  | Investment losses related to other-than-temporary impairments |  |  | - |  |  | - |  |  | (1)
|  | Other-than-temporary impairments recognized in accumulated other |  |  |  |  |  |  |  |  |
|  |  | comprehensive income (loss) |  |  | - |  |  | - |  |  | -
|  |  | Net investment losses related to other-than-temporary impairments |  |  | - |  |  | - |  |  | (1)
| Net gains (losses) on extinguishment of debt |  |  | 3 |  |  | 28 |  |  | 5
| Other net realized gains (losses) |  |  | (2) |  |  | (3) |  |  | (5)
|  |  | Total revenues |  |  | 56 |  |  | 26 |  |  | 15
Expenses: |  |  |  |  |  |  |  |  |
| Operating |  |  | 11 |  |  | 13 |  |  | 16
| Interest |  |  | 93 |  |  | 87 |  |  | 90
|  |  | Total expenses |  |  | 104 |  |  | 100 |  |  | 106
| Gain (loss) before income taxes and equity in earnings of subsidiaries |  |  | (48) |  |  | (74) |  |  | (91)
Provision (benefit) for income taxes |  |  | (35) |  |  | 507 |  |  | (15)
| Gain (loss) before equity in earnings of subsidiaries |  |  | (13) |  |  | (581) |  |  | (76)
Equity in net income (loss) of subsidiaries |  |  | (283) |  |  | (1,024) |  |  | (262)
|  |  | Net income (loss) |  | $ | (296) |  | $ | (1,605) |  | $ | (338)
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,
|  |  |  |  | 2018 |  | 2017 |  | 2016
Cash flows from operating activities: |  |  |  |  |  |  |  |  |
| Fees and reimbursements received |  | $ | - |  | $ | - |  | $ | 4
| Investment income received |  |  | 132 |  |  | 141 |  |  | 144
| Operating expenses paid |  |  | (17) |  |  | (27) |  |  | (18)
| Interest paid, net of interest converted to principal |  |  | (91) |  |  | (101) |  |  | (93)
| Income taxes (paid) received |  |  | (16) |  |  | 26 |  |  | 73
|  |  | Net cash provided (used) by operating activities |  |  | 8 |  |  | 39 |  |  | 110
Cash flows from investing activities: |  |  |  |  |  |  |  |  |
| Purchases of available-for-sale investments |  |  | (495) |  |  | (164) |  |  | (129)
| Sales of available-for-sale investments |  |  | 175 |  |  | 172 |  |  | 165
| Paydowns and maturities of available-for-sale investments |  |  | 101 |  |  | 152 |  |  | 90
| Purchases of investments at fair value |  |  | (9) |  |  | (70) |  |  | (57)
| Sales, paydowns and maturities of investments at fair value |  |  | 10 |  |  | 71 |  |  | 58
| Sales, paydowns and maturities (purchases) of short-term investments, net |  |  | 262 |  |  | (34) |  |  | 1
| (Payments) proceeds for derivative settlements |  |  | (24) |  |  | (30) |  |  | (37)
| Collateral (to) from counterparty |  |  | - |  |  | 4 |  |  | 52
| Contributions to subsidiaries, net |  |  | 51 |  |  | (12) |  |  | (10)
| Advances to subsidiaries, net |  |  | 3 |  |  | (3) |  |  | -
|  |  | Net cash provided (used) by investing activities |  |  | 74 |  |  | 86 |  |  | 133
Cash flows from financing activities: |  |  |  |  |  |  |  |  |
| Proceeds from investment agreements |  |  | 11 |  |  | 15 |  |  | 16
| Principal paydowns of investment agreements |  |  | (35) |  |  | (72) |  |  | (71)
| Proceeds from long-term debt |  |  | 40 |  |  | 127 |  |  | -
| Payments for affiliate loans |  |  | (71) |  |  | (142) |  |  | (111)
| Purchases of treasury stock |  |  | - |  |  | (65) |  |  | (108)
| Restricted stock awards settlements |  |  | 4 |  |  | 11 |  |  | 8
|  |  | Net cash provided (used) by financing activities |  |  | (51) |  |  | (126) |  |  | (266)
Effect of exchange rates on cash and cash equivalents |  |  | (1) |  |  | (2) |  |  | 1
Net increase (decrease) in cash and cash equivalents |  |  | 30 |  |  | (3) |  |  | (22)
Cash and cash equivalents - beginning of year |  |  | 10 |  |  | 13 |  |  | 35
Cash and cash equivalents - end of year |  | $ | 40 |  | $ | 10 |  | $ | 13
Reconciliation of net income (loss) to net cash provided (used) by operating activities: |  |  |  |  |  |  |  |  |
| Net income (loss) |  | $ | (296) |  | $ | (1,605) |  | $ | (338)
| Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: |  |  |  |  |  |  |  |  |
|  | Change in: |  |  |  |  |  |  |  |  |
|  |  | Intercompany accounts receivable |  |  | (9) |  |  | (22) |  |  | (8)
|  |  | Current income taxes |  |  | (15) |  |  | 48 |  |  | 78
|  | Equity in earnings of subsidiaries |  | 283 |  |  | 1,024 |  |  | 262
|  | Dividends from subsidiaries |  | 112 |  |  | 118 |  |  | 118
|  | Net (gains) losses on financial instruments at fair value and foreign exchange |  | (20) |  |  | 34 |  |  | 13
|  | Deferred income tax provision (benefit) |  | (35) |  |  | 485 |  |  | (20)
|  | (Gains) losses on extinguishment of debt |  | - |  |  | (28) |  |  | (5)
|  | Other operating |  | (12) |  |  | (15) |  |  | 10
|  | Total adjustments to net income (loss) |  | 304 |  |  | 1,644 |  |  | 448
|  |  | Net cash provided (used) by operating activities |  | $ | 8 |  | $ | 39 |  | $ | 110
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. This includes the statements of comprehensive income (loss) which is exactly the same as the Company’s consolidated statements of comprehensive income (loss). 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 o f MBIA Inc. (the “Parent Company”) consist of general corporate activities and funding activities, which principally include holding and managing investments, servicing outstanding corporate debt, investment agreements issued by the Parent Company and its subsidiaries, and posting collateral under investment agreement and derivative contracts. The Parent Company 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, 2018, the liquidity position of the Parent Company, which included cash and cash equivalents or short-term investments comprised of highly rated commercial paper, money market funds and municipal, U.S. agency and corporate bonds for general corp orate purposes, excluding the amount held in escrow under its tax sharing agreement, was $457 million. During 2018, National Public Finance Guarantee Corporation (“National”) purchased from the Parent Company, $44 million principal amount of MBIA Inc. 5.700% Senior Notes due 2034 and $10 million principal amount of MBIA Inc. 7.000% Debentures due 2025 that were previously repurchased by the Parent Company and had not been retired. During 2017, National purchased from the Parent Company, $1 29 million principal amount of MBIA Inc. 5.700% Senior Notes due 2034 that were previously repurchased by the Parent Company and had not been retired. The MBIA Inc. 5.700% Senior Notes due 2034 and the MBIA Inc. 7.000% Debentures that were purchased by Nat ional are eliminated from the Parent Company’s condensed balance sheet. 2. Accounting Policies T he Parent Company carries its investments in subsidiaries under the equity method. Certain amounts have been reclassified in prior years’ financial statements t o conform to the current presentation. This includes a change in the classification of certain cash receipts and cash payments on the Company’s consolidated statements of cash flows resulting from the adoption of Accounting Standards Update (“ASU”) 2016-15, “Statement of Cash Flows (Topic 230)”. This classification change affected “Interest paid, net of interest converted to principal”, in operating cash flows, and “Principal paydowns of investment agreements” and “Payments for affiliate loans”, in financin g cash flows, on the Company’s consolidated statements of cash flows for the prior periods. Such reclassifications did not materially impact total revenues, expenses, assets, liabilities, shareholders’ equity, operating cash flows, investing cash flows, or financing cash flows for all periods presented. For a further discussion of significant accounting policies and recent accounting pronouncements, refer to footnotes 2 and 3 to the Company’s consolidated financial statements. 3. Dividends from Subsidiaries During 2018, National declared and paid a dividend of $108 million to its ultimate parent, MBIA Inc. In addition, National Public Finance Guarantee Holdings, Inc. declared and paid a dividend of $1 million to the Parent Company and MBIA Capital Corp. declared and paid a dividend of $3 million to the Parent Company. During 2017 and 2016, National Public Finance Guarantee Holdings, Inc. declared and paid a dividend of $118 million to the Parent Company. 4. Deferred Tax Asset, Net of Valuation Allowance The Parent Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred ta x assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on tax assets and liabilities is recognized in income in the period that includes the enactment date. Valuation allowances are established to reduce deferred tax assets to the amount that more likely than not will be realized. The Parent Comp any considered all available positive and negative evidence as required by generally accepted accounting principles, to estimate if sufficient taxable income will be generated to use its net deferred tax asset. After considering all positive and negative e vidence, including the Parent Company’s inability to objectively identify and forecast future sources of taxable income, the Parent Company concluded in the second quarter of 2017 it did not have sufficient positive evidence to support its ability to use i ts net deferred tax asset before it would expire. Acc ordingly, the Parent Company established a full valuation allowance against its net deferred tax asset. For a further discussion of the net deferred tax asset, refer to footnote 11 to the Company’s conso lidated financial statements. 5. Obligations under Investment Agreements I nvestment agreement s, as described in footnote 10 to the Company’s consolidated financial statements, are conducted by both the Parent Company and its wholly-owned subsidiary, MBIA Investment Management Corp. 6. Pledged Collateral Substantially all of the obligations under investment agreements require the Parent Company and its subsidiaries to pledge securities as collateral. As of December 31, 2018 and 2017, the fair value o f securities pledged as collateral with respect to these investment agreements approximated $314 million and $350 million, respectively. The Parent Company’s collateral as of December 31, 2018, consisted principally of U.S. Treasury and government agenc y and state and municipal bonds, and was primarily held with major U.S. banks. Under derivative contracts entered into by the Parent Company, collateral postings are required by either the Parent Company 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, 2018 and 2017, the Parent Company and its subsidiaries pledged securities with a fair value of $2 05 million and $237 million, respecti vely, to derivative counterparties. 7. Affiliate Loans Payable Affiliate loans payable consists of loans payable to MBIA Global Funding, LLC (“GFL”). GFL raise d funds through the issuance of medium-term notes with varying maturities, which were, in turn, guaranteed by MBIA Corp. GFL len t the proceeds of these medium-term note issuances to the Parent Company.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -SubTopic 10 -Section 45 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=108774443&loc=d3e5283-111683 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 235 -Section S99 -Paragraph 2 -Subparagraph (SX 210.9-06) -URI http://asc.fasb.org/extlink&oid=6882215&loc=d3e537971-122884 + Details
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