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Business Segments
 6 Months Ended
Jun. 30, 2020
Text Block [Abstract]  
Business Segments
Note 10: Business Segments
As defined by segment reporting, an operating segment is a component of a company (i) that engages in business activities from which it earns revenue and incurs expenses, (ii) whose operating results are regularly reviewed by the Chief Operating Decision Maker to assess the performance of the segment and to make decisions about the allocation of resources to the segment and, (iii) for which discrete financial information is available.
The Company manages its businesses across three operating segments: 1) U.S. public finance insurance; 2) corporate; and 3) international and structured finance insurance. The Company’s U.S. public finance insurance business is operated through National and its international and structured finance insurance business is operated through MBIA Corp.
The following sections provide a description of each of the Company’s reportable operating segments.
U.S. Public Finance Insurance
The Company’s U.S. public finance insurance portfolio is managed through National. The financial guarantees issued by National provide unconditional and irrevocable guarantees of the payment of the principal of, and interest or other amounts owing on, U.S. public finance insured obligations when due. The obligations are not subject to acceleration, except that National may have the right, at its discretion, to accelerate insured obligations upon default or otherwise. National’s guarantees insure municipal bonds, including tax-exempt and taxable indebtedness of U.S. political subdivisions, as well as utilities, airports, health care institutions, higher educational facilities, student loan issuers, housing authorities and other similar agencies and obligations issued by private entities that finance projects that serve a substantial public purpose. Municipal bonds and privately issued bonds used for the financing of public purpose projects are generally supported by taxes, assessments, fees or tariffs related to the use of these projects, lease payments or other similar types of revenue streams.
Corporate
The Company’s corporate segment consists of general corporate activities, including providing support services to MBIA Inc.’s subsidiaries as well as asset and capital management. Support services are provided by the Company’s service company, MBIA
 
Services, and include, among others, management, legal, accounting, treasury, information technology, and insurance portfolio surveillance, on a fee-for-service basis. Capital management includes activities related to servicing obligations issued by MBIA Inc. and its subsidiaries, MBIA Global Funding, LLC (“GFL”) and MBIA Investment Management Corp. (“IMC”). MBIA Inc. issued debt to finance the operations of the MBIA group. GFL raised funds through the issuance of MTNs with varying maturities, which were in turn guaranteed by MBIA Corp. GFL lent the proceeds of these MTN issuances to MBIA Inc. IMC, along with MBIA Inc., provided customized investment agreements, guaranteed by MBIA Corp., for bond proceeds and other public funds for such purposes as construction, loan origination, escrow and debt service or other reserve fund requirements. The Company has ceased issuing new MTNs and investment agreements and the outstanding liability balances and corresponding asset balances have declined over time as liabilities matured, terminated or were called or repurchased. All of the debt within the corporate segment is managed collectively and is serviced by available liquidity.
International and Structured Finance Insurance
The Company’s international and structured finance insurance segment is principally conducted through MBIA Corp. The financial guarantees issued by MBIA Corp. generally provide unconditional and irrevocable guarantees of the payment of principal of, and interest or other amounts owing on, non-U.S. public finance and global structured finance insured obligations when due, or in the event MBIA Corp. has the right, at its discretion, to accelerate insured obligations upon default or otherwise. MBIA Corp. insures the investment contracts written by MBIA Inc., and if MBIA Inc. were to have insufficient assets to pay amounts due upon maturity or termination, MBIA Corp. would make such payments. MBIA Corp. insures debt obligations of the following affiliates:
 
 
•
 
MBIA Inc.;
 
•
 
GFL;
 
 
•
 
IMC;
 
 
•
 
MZ Funding LLC; and
 
 
•
 
LaCrosse Financial Products, LLC, a wholly-owned affiliate, to which MBIA Insurance Corporation has written insurance policies guaranteeing the obligations under CDS. Certain policies cover payments potentially due under CDS, including termination payments that may become due in certain circumstances, including the occurrence of certain insolvency or payment defaults under the CDS or derivatives contracts by the insured counterparty or by the guarantor.
MBIA Corp. insures non-U.S. public finance and global structured finance obligations, including asset-backed obligations. MBIA Corp. has insured sovereign-related and sub-sovereign bonds, utilities, privately issued bonds used for the financing of projects that include toll roads, bridges, airports, public transportation facilities, and other types of infrastructure projects serving a substantial public purpose. Global structured finance and asset-backed obligations typically are securities repayable from expected cash flows generated by a specified pool of assets, such as residential and commercial mortgages, insurance policies, consumer loans, corporate loans and bonds, trade and export receivables, and leases for equipment, aircraft and real estate property. MBIA Corp. has also written policies guaranteeing obligations under certain other derivative contracts, including termination payments that may become due upon certain insolvency or payment defaults of the financial guarantor or the issuer. The Company is no longer insuring new CDS contracts except for transactions related to the restructuring of existing exposures. MBIA Corp. has not written any meaningful amount of business since 2008.
Segments Results
The following tables provide the Company’s segment results for the three months ended June 30, 2020 and 2019:
 
          
          
          
          
          
 
  
Three Months Ended June 30, 2020
 
 
  
 
 
 
 
 
 
International
 
 
 
 
 
 
 
 
  
U.S. Public
 
 
 
 
 
and Structured
 
 
 
 
 
 
 
 
  
Finance
 
 
 
 
 
Finance
 
 
 
 
 
 
 
In millions
  
Insurance
 
 
Corporate
 
 
Insurance
 
 
Eliminations
 
 
Consolidated
 
Revenues
(1)
  
$
26 
 
  
$
5 
 
  
$
8 
 
  
$
- 
 
 
$
39 
 
Net gains (losses) on financial instruments at fair value and foreign exchange
  
 
25 
 
  
 
- 
 
  
 
(1)
 
  
 
- 
 
 
 
24 
 
Revenues of consolidated VIEs
  
 
- 
 
  
 
- 
 
  
 
51 
 
  
 
- 
 
 
 
51 
 
Inter-segment revenues
(2)
  
 
8 
 
  
 
17 
 
  
 
3 
 
  
 
(28)
 
 
 
- 
 
  
 
 
     
 
 
     
 
 
     
 
 
    
 
 
  
Total revenues
  
 
59 
 
  
 
22 
 
  
 
61 
 
  
 
(28)
 
 
 
114 
 
Losses and loss adjustment
  
 
72 
 
  
 
- 
 
  
 
64 
 
  
 
- 
 
 
 
136 
 
Operating
  
 
3 
 
  
 
19 
 
  
 
3 
 
  
 
- 
 
 
 
25 
 
Interest
  
 
- 
 
  
 
16 
 
  
 
29 
 
  
 
- 
 
 
 
45 
 
Expenses of consolidated VIEs
  
 
- 
 
  
 
- 
 
  
 
14 
 
  
 
- 
 
 
 
14 
 
Inter-segment expenses
(2)
  
 
11 
 
  
 
6 
 
  
 
11 
 
  
 
(28
)
 
 
 
- 
 
  
 
 
     
 
 
     
 
 
     
 
 
    
 
 
  
Total expenses
  
 
86 
 
  
 
41 
 
  
 
121 
 
  
 
(28
 )
 
 
 
220 
 
  
 
 
     
 
 
     
 
 
     
 
 
    
 
 
  
Income (loss) before income taxes
  
$
(27)
 
  
$
(19)
 
  
$
(60
 )
 
  
$
- 
 
 
$
(106
 )
 
  
 
 
     
 
 
     
 
 
     
 
 
    
 
 
  
Identifiable assets
  
$
3,868 
 
  
$
1,021 
 
  
$
4,077 
 
  
$
(2,353)
(3)
 
 
 
$
6,613 
 
  
 
 
     
 
 
     
 
 
     
 
 
    
 
 
  
 
(1) -
 Represents the sum of third-party financial guarantee net premiums earned, net investment income, insurance-related fees and reimbursements and other fees.
(2) -
 Represents intercompany premium income and expense and intercompany interest income and expense pertaining to intercompany receivables and payables.
(3) -
 Consists principally of intercompany reinsurance balances.
          
          
          
          
          
 
  
Three Months Ended June 30, 2019
 
 
  
 
 
 
 
 
 
International
 
 
 
 
 
 
 
 
  
U.S. Public
 
 
 
 
 
and Structured
 
 
 
 
 
 
 
 
  
Finance
 
 
 
 
 
Finance
 
 
 
 
 
 
 
In millions
  
Insurance
 
 
Corporate
 
 
Insurance
 
 
Eliminations
 
 
Consolidated
 
Revenues
(1)
  
$
38 
 
  
$
8 
 
  
$
7 
 
  
$
- 
 
  
$
53 
 
Net change in fair value of insured derivatives
  
 
- 
 
  
 
- 
 
  
 
(1)
 
  
 
- 
 
  
 
(1)
 
Net gains (losses) on financial instruments at fair value and foreign exchange
  
 
17 
 
  
 
(33)
 
  
 
(10)
 
  
 
- 
 
  
 
(26)
 
Net investment losses related to other-than-temporary impairments
  
 
(9)
 
  
 
- 
 
  
 
- 
 
  
 
- 
 
  
 
(9)
 
Other net realized gains (losses)
  
 
- 
 
  
 
- 
 
  
 
1 
 
  
 
- 
 
  
 
1 
 
Revenues of consolidated VIEs
  
 
20 
 
  
 
- 
 
  
 
(9)
 
  
 
1 
 
  
 
12 
 
Inter-segment revenues
(2)
  
 
8 
 
  
 
14 
 
  
 
6 
 
  
 
(28)
 
  
 
- 
 
  
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Total revenues
  
 
74 
 
  
 
(11)
 
  
 
(6)
 
  
 
(27)
 
  
 
30 
 
Losses and loss adjustment
  
 
106 
 
  
 
- 
 
  
 
34 
 
  
 
- 
 
  
 
140 
 
Operating
  
 
2 
 
  
 
16 
 
  
 
3 
 
  
 
- 
 
  
 
21 
 
Interest
  
 
- 
 
  
 
20 
 
  
 
32 
 
  
 
- 
 
  
 
52 
 
Expenses of consolidated VIEs
  
 
- 
 
  
 
- 
 
  
 
24 
 
  
 
- 
 
  
 
24 
 
Inter-segment expenses
(2)
  
 
12 
 
  
 
5 
 
  
 
10 
 
  
 
(27)
 
  
 
- 
 
  
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Total expenses
  
 
120 
 
  
 
41 
 
  
 
103 
 
  
 
(27)
 
  
 
237 
 
  
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Income (loss) before income taxes
  
$
(46)
 
  
$
(52)
 
  
$
(109)
 
  
$
- 
 
  
$
(207)
 
  
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
 
(1) -
 Represents the sum of third-party financial guarantee net premiums earned, net investment income, insurance-related fees and reimbursements and other fees.
(2) -
 Represents intercompany premium income and expense and intercompany interest income and expense pertaining to intercompany receivables and payables.
The following tables provide the Company’s segment results for the six months ended June 30, 2020 and 2019:
 
          
          
          
          
          
 
  
Six Months Ended June 30, 2020
 
 
  
 
 
 
 
 
 
International
 
 
 
 
 
 
 
 
  
U.S. Public
 
 
 
 
 
and Structured
 
 
 
 
 
 
 
 
  
Finance
 
 
 
 
 
Finance
 
 
 
 
 
 
 
In millions
  
Insurance
 
 
Corporate
 
 
Insurance
 
 
Eliminations
 
 
Consolidated
 
Revenues
(1)
  
$
57 
 
  
$
11 
 
  
$
14 
 
  
$
- 
 
 
$
82 
 
Net gains (losses) on financial instruments at fair value and foreign exchange
  
 
7 
 
  
 
(56)
 
  
 
10 
 
  
 
- 
 
 
 
(39)
 
Revenues of consolidated VIEs
  
 
- 
 
  
 
- 
 
  
 
65 
 
  
 
- 
 
 
 
65 
 
Inter-segment revenues
(2)
  
 
14 
 
  
 
35 
 
  
 
8 
 
  
 
(57)
 
 
 
- 
 
  
 
 
     
 
 
     
 
 
     
 
 
    
 
 
  
Total revenues
  
 
78 
 
  
 
(10)
 
  
 
97 
 
  
 
(57)
 
 
 
108 
 
Losses and loss adjustment
  
 
120 
 
  
 
- 
 
  
 
259 
 
  
 
- 
 
 
 
379 
 
Operating
  
 
5 
 
  
 
34 
 
  
 
6 
 
  
 
- 
 
 
 
45 
 
Interest
  
 
- 
 
  
 
32
 
  
 
60 
 
  
 
- 
 
 
 
92 
 
Expenses of consolidated VIEs
  
 
- 
 
  
 
- 
 
  
 
31 
 
  
 
- 
 
 
 
31 
 
Inter-segment expenses
(2)
  
 
25 
 
  
 
11 
 
  
 
21 
 
  
 
(57)
 
 
 
- 
 
  
 
 
     
 
 
     
 
 
     
 
 
    
 
 
  
Total expenses
  
 
150 
 
  
 
77 
 
  
 
377 
 
  
 
(57)
 
 
 
547 
 
  
 
 
     
 
 
     
 
 
     
 
 
    
 
 
  
Income (loss) before income taxes
  
$
(72)
 
  
$
(87)
 
  
$
(280)
 
  
$
- 
 
 
$
(439)
 
  
 
 
     
 
 
     
 
 
     
 
 
    
 
 
  
Identifiable assets
  
$
3,868 
 
  
$
1,021 
 
  
$
4,077 
 
  
$
(2,353)
(3)
 
 
 
$
6,613 
 
  
 
 
     
 
 
     
 
 
     
 
 
    
 
 
  
 
(1) -
 Represents the sum of third-party financial guarantee net premiums earned, net investment income, insurance-related fees and reimbursements and other fees.
(2) -
 Represents intercompany premium income and expense and intercompany interest income and expense pertaining to intercompany receivables and payables.
(3) -
 Consists principally of intercompany reinsurance balances.
          
          
          
          
          
 
  
Six Months Ended June 30, 2019
 
  
 
 
 
 
 
 
International
 
 
 
 
 
 
 
 
  
U.S. Public
 
 
 
 
 
and Structured
 
 
 
 
 
 
 
 
  
Finance
 
 
 
 
 
Finance
 
 
 
 
 
 
 
In millions
  
Insurance
 
 
Corporate
 
 
Insurance
 
 
Eliminations
 
 
Consolidated
 
Revenues
(1)
  
$
76
 
 
$
15
 
 
$
17
 
 
$
-
 
 
$
108
 
Net change in fair value of insured derivatives
  
 
-
 
 
 
-
 
 
 
13
 
 
 
-
 
 
 
13
 
Net gains (losses) on financial instruments at fair value and foreign exchange
  
 
57
 
 
 
(51
) 
 
 
(10
) 
 
 
-
 
 
 
(4
) 
Net investment losses related to other-than-temporary impairments
  
 
(37
) 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
(37
) 
Other net realized gains (losses)
  
 
1
 
 
 
(1
) 
 
 
2
 
 
 
-
 
 
 
2
 
Revenues of consolidated VIEs
  
 
6
 
 
 
-
 
 
 
(9
) 
 
 
1
 
 
 
(2
) 
Inter-segment revenues
(2)
  
 
15
 
 
 
33
 
 
 
9
 
 
 
(57
) 
 
 
-
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Total revenues
  
 
118
 
 
 
(4
) 
 
 
22
 
 
 
(56
) 
 
 
80
 
Losses and loss adjustment
  
 
56
 
 
 
-
 
 
 
46
 
 
 
-
 
 
 
102
 
Operating
  
 
4
 
 
 
38
 
 
 
9
 
 
 
-
 
 
 
51
 
Interest
  
 
-
 
 
 
39
 
 
 
65
 
 
 
-
 
 
 
104
 
Expenses of consolidated VIEs
  
 
-
 
 
 
-
 
 
 
49
 
 
 
-
 
 
 
49
 
Inter-segment expenses
(2)
  
 
27
 
 
 
11
 
 
 
18
 
 
 
(56
) 
 
 
-
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Total expenses
  
 
87
 
 
 
88
 
 
 
187
 
 
 
(56
) 
 
 
306
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Income (loss) before income taxes
  
$
31
 
 
$
(92
) 
 
$
(165
) 
 
$
-
 
 
$
(226
) 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
(1) - Represents
 
the sum of third-party financial guarantee net premiums earned, net investment income, insurance-related fees and reimbursements and other fees.
(2) - Represents
intercompany premium income and expense and intercompany interest income and expense pertaining to intercompany receivables and payables.