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Operator: [Abrupt start] MBIA Inc. First Quarter 2025 Financial Results Conference Call. I would now like to turn the call over to Greg Diamond, Managing Director of Investor and Media Relations at MBIA. Please go ahead sir.

Greg Diamond: Thank you, Chelsea. Yes, welcome to MBIA’s conference call for our first quarter 2025 financial results. After the market closed yesterday, we issued and posted several items on our websites including our financial results, 10-Q, quarterly operating supplement, and statutory statements for both MBIA Insurance Corporation and National Public Finance Guarantee Corporation. We also posted updates to the listings of our insurance companies insured portfolios. Regarding today’s call, please note that anything said on the call is qualified by the information provided in the company’s 10-K, 10-Q, and other SEC filings as our company’s definitive disclosures are incorporated in those documents. We urge investors to read our 10-K and 10-Q as they contain our most current disclosures about the company and its financial and operating results.

Those documents also contain information that may not be addressed on today’s call. The definitions and reconciliations of the non-GAAP terms included in our remarks today are also included in our 10-K and 10-Q as well as our financial results report in our quarterly operating supplement. The recorded replay of today’s call will become available on the MBIA website in approximately two hours after the end of this call. Now, for our Safe Harbor disclosure statement. Our remarks on today’s conference call may contain forward-looking statements. Important factors such as general market conditions and the competitive environment could cause our actual results to differ materially from the projected results referenced in our forward-looking statements.

Risk factors are detailed in our 10-K and 10-Q, which are available on our website at mbia.com. The company cautions not to place undue reliance on any such forward-looking statements. Company also undertakes no obligation to publicly correct or update any forward-looking statement if it later becomes aware that such statement is no longer accurate. On our call today, Bill Fallon and Joe Schachinger will provide introductory comments and then a question-and-answer session will follow. Now, here is Bill Fallon.

Bill Fallon: Thanks Greg. Good morning everyone. Thank you for being with us today. Our first quarter 2025 financial results had a lower net loss than the comparable period for 2024. Compared to 2024, our first quarter 2025 financial results benefited from favorable variances on revenues of consolidated VIEs and losses in LAE as well as lower operating expenses, primarily due to reduced compensation-related expense. Our priority continues to be resolving National’s PREPA exposure where the path and timing of that resolution remains largely uncertain. The Title III Court has lifted stays on selected litigation matters related to PREPA, which should facilitate its resolution. Given the uncertainty associated with the possible outcomes for National’s PREPA bankruptcy claim, which is in excess of $800 million, we continue to believe that the process to sell the company and maximize shareholder value will likely require substantially reducing the uncertainty regarding PREPA.

Regarding the balance of National’s insured portfolio, those credits have continued to perform generally consistent with our expectations. The gross par amount outstanding for National’s insured portfolio has declined by approximately $500 million from year-end 2024 to about $25 billion at March 31st, 2025. National’s leverage ratio of gross par to statutory capital was 27:1 at the end of the first quarter. As of March 31st, 2025 National had total claims paying resources of $1.5 billion and statutory capital and surplus in excess of $900 million. Now, Joe will provide additional comments about our financial results.

Joe Schachinger: Thank you, Bill and good morning all. I will begin with a review of our first quarter 2025 GAAP and non-GAAP results and then provide an overview of our statutory results. The company reported a consolidated GAAP net loss of $62 million or a negative $1.28 per share for the first quarter of 2025 and compared with a consolidated GAAP net loss of $86 million or a negative $1.84 per share for the first quarter of 2024. The lower GAAP net loss this quarter was driven by several items. First was a favorable change in revenues of consolidated variable interest entities at MBIA Insurance Corp. In the first quarter of 2024 we purchased insured debt of a consolidated VIE as part of our de-risking efforts, which resulted in a net loss in earnings most of which was reclassified from accumulated other comprehensive income.

In the first quarter of 2025, we did not have any comparable activity. We also reported a favorable change in losses in LAE in the first quarter of 2025 compared with the first quarter of 2024. The Lower losses in LAE in the current quarter were primarily driven by lower losses at National on its PREPA exposure partially offset by higher losses at MBIA Insurance Corp. on its first lien RMBS exposure. The higher losses at MBIA Insurance Corp. were primarily driven by the impact of a decrease in interest rates used to discount its GAAP loss reserves. In addition, consolidated operating expenses are lower in the first quarter of 2025 compared with the first quarter of 2024 and primarily due to lower compensation-related costs. Partially offsetting these positive variances were unfavorable variances related to foreign exchange losses at MBIA Insurance Corp.

and at our Corporate segment due to a weakening of the US dollar during the quarter and to a lesser extent fair value net losses on investments this quarter compared with fair value net gains in the first quarter of 2024. The company’s adjusted net loss a non-GAAP measure was $8 million or a negative $0.16 per share for the first quarter of 2025 compared with an adjusted net loss of $24 million or a negative $0.52 per share for the first quarter of 2024. The favorable change was primarily due to the lower losses in LAE at National. During the quarter MBIA Inc.’s book value per share decreased $1.23 to a negative $42.22 per share as of March 31, 2025 from a negative $40.99 per share as of December 31, 2024. This decrease was primarily due to our consolidated net loss for the first quarter of 2025 partially offset by a decrease in unrealized losses on investments recorded in accumulated other comprehensive income.

Included in MBIA Inc.’s book value as of March 31, 2025 is MBIA Insurance Corp.’s negative book value of $50.78 per share versus a negative $49.48 per share as of December 31, 2024. I will now spend a few minutes on our corporate segment balance sheet. The corporate segment which primarily comprises the activities of the holding company MBIA Inc. had total assets of approximately $685 million as of March 31, 2025. Within this total are the following material assets. Unencumbered cash and liquid assets held by MBIA Inc. totaled $378 million, reflecting a slight decrease compared with $380 million as of December 31, 2024. In addition to the unencumbered cash and liquid assets the corporate segment’s assets included approximately $212 million of assets at market value pledged to guaranteed investment agreement contract holders, which fully collateralize those contracts.

Now I’ll turn to the insurance companies statutory results. National reported statutory net income of $4 million for the first quarter of 2025 compared with a statutory net loss of $11 million for the first quarter of 2024. The positive variance reflects lower losses in LAE primarily related to National’s PREPA exposure partially offset by lower net investment gains compared to the first quarter of 2024. National statutory capital as of March 31, 2025 was $919 million up $7 million compared with December 31, 2024. Claims paying resources were $1.5 billion consistent with December 31, 2024. Now I’ll turn to MBIA Insurance Corp. MBIA Insurance Corp. reported statutory net income of $2 million for the first quarter of 2025 and compared with a statutory net loss of $35 million for the first quarter of 2024.

The favorable variance was primarily due to lower losses in LAE. The losses in LAE benefit in the current quarter was driven by favorable adjustments to adjustments to recoveries of paid claims associated with the Zohar CDOs. While losses in LAE in the first quarter of 2024 were primarily driven by unfavorable adjustments to Zohar-related recoveries and to a lesser extent an increase in reserves on first lien RMBS exposures. As of March 31, 2025, the statutory capital of MBIA Insurance Corp. was $88 million, consistent with year-end 2024. PREPA paying resources totaled $349 million at March 31, 2025 compared with $356 million at December 31, 2024. MBIA Insurance Corp.’s insured gross par outstanding was $2.3 billion as of March 31, 2025 consistent with year-end 2024.

And now, we will turn the call over to the operator to begin the question-and-answer session.

Operator: [Operator Instructions] And our first question will come from John Staley with Staley Capital Advisers. Please go ahead.

John Staley: Bill, I think I missed the last call, it’s nice to be back on this one. This whole PREPA thing, I mean it’s just so clearly a political process. There’s some recent articles written about the absolute obstruction approach of the oversight committee suggesting Trump administration think about just removing it — it’s run its course. That’s then followed by a blackout on the island which I don’t I don’t feel bad about what it does to the people want to live there, but it certainly underscores the desperate need to get this resolved and get the PREPA whole grid back functional with a Republican head of the Island, what are you doing politically to get the Trump administration’s focus. So clearly wants to do something positive for the citizens of Puerto Rico given the nonsense he had to put up post Matson Square Garden in the campaign.

What are you doing proactively politically to get this whole thing result as opposed to this nonsense that’s going on with the Oversight Committee when if you didn’t have that committee you could negotiate this and get it over with? I’m very puzzled why politically with the Republican leadership in Puerto Rico, a Republican leadership in Congress and Republican leadership in the White House this isn’t resolved. Enlighten me. I don’t get it.

Bill Fallon: Yes, John, good morning. I’m not sure I can necessarily enlighten you, but you’ve touched on a lot of aspects and there are many parts to the PREPA situation as you’ve just highlighted. I do think in terms of Governor Gonzales that fixing PREPA whatever that might mean is at the top of her priority list? It will take some time. We obviously have conversations in D.C. as do other people. We also think that finally that the court schedule will move along some of the key litigation issues which should help we think with the perspective of the Oversight Board. And so there are a lot of parties as you mentioned, they all do need to come together. Hopefully it is moving towards that end. We’ve all lived through what is now depending on how you want to mark the beginning of this probably at least an 8-year process if not longer.

But it feels as though all the right focus is coming to PREPA and it’s the parties that you just mentioned. So, we’re becoming a little bit more optimistic that we’re moving into perhaps a different phase here at this time.

John Staley: Thank you. And you have no — you said all the other credits are performing. So, you’re not staring at with national concerns of further write-offs.

Bill Fallon: As we said, our portfolio is performing within our expectation. So it’s PREPA that is getting all the attention.

John Staley: All right. It certainly has my attention. Thank you, Bill very much.

Bill Fallon: Thank you.

Operator: Thank you. [Operator Instructions] All right. And at this time, we have no further questions. So I’d like to turn the call back over to Greg Diamond for any additional or closing remarks.

Greg Diamond: Thank you, Chelsea and thanks to all of you listening to our call today. Please contact us directly if you have additional questions. We also recommend that you visit our website at mbia.com for additional information about our company. Thank you for your interest in MBIA. Good day and goodbye.

Operator: Thank you ladies and gentlemen. This concludes today’s program and we appreciate your participation. You may disconnect at any time.