How did MBI's Q4 earnings surprise investors?

Mbia's (MBI) Q4 earnings report reflected a consolidated GAAP net loss of $56 million, a significant improvement from the $185 million net loss in the same quarter the previous year. Despite this positive trend, the company's actual EPS for the quarter was $37 million, which fell short of analysts' expectations. 1. **Improved Financial Performance**: The most notable improvement was the reduction in net losses, which decreased from $185 million in Q3 2023 to $56 million in Q3 2024. This significant improvement was attributed to lower losses from variable interest entities and diminished loss adjustment expenses. 2. **Challenges and Uncertainties**: However, the insured portfolio experienced a decrease, and the mediation concerning PREPA has been extended, impacting the potential sale of MBIA. These factors, coupled with the ongoing challenges in the financial guarantee insurance industry, may have contributed to the mixed results. 3. **Analyst Expectations and Market Reaction**: Analysts had expected MBI to announce earnings of ($0.16) per share for the quarter, but the company reported a EPS of $37 million, which was a surprise. This discrepancy could be due to differences in accounting practices or interpretations of financial metrics. In conclusion, while Mbia's Q4 earnings showed significant improvements in reducing net losses, the actual EPS fell below analysts' expectations, indicating a complex financial performance that was influenced by both positive and negative factors.