MBIA's Q2 2025 Earnings Call: Unraveling Contradictions in PREPA Claims and Oversight Board Dynamics

PREPA claims transfer and marketability, oversight board removal and impact on negotiations, transparency and marketability of PREPA claims, oversight board changes and impact are the key contradictions discussed in MBIA's latest 2025Q2 earnings call.



Improved Financial Results:
- MBIA Inc. reported a consolidated GAAP net loss of $56 million or negative $1.12 per share for Q2 2025, compared to $254 million or negative $5.34 per share for Q2 2024.
- The improvement was driven by lower losses in loss and loss adjustment expense (LAE) at National, primarily on its PREPA exposure, and to a lesser extent, lower net losses on financial instruments.

PREPA Exposure and Uncertainty:
- MBIA is focused on resolving National's PREPA exposure, with the timing of resolution remaining uncertain, as it impacts the possibility of a company sale to maximize shareholder value.
- The company transferred $374 million of PREPA claims to a custodian to increase marketability and potentially facilitate sales.

Statutory Financial Performance:
- National reported statutory net income of $6 million for Q2 2025, compared to a statutory net loss of $131 million in Q2 2024.
- The positive variance reflects lower losses in LAE related to National's PREPA exposure.

Insured Portfolio and Leverage:
- National's insured portfolio gross par amount outstanding declined by approximately $1.1 billion from year-end 2024 to about $24 billion at June 30, 2025.
- The leverage ratio of gross par to statutory capital was 26:1, indicating a stable balance despite the decline in insured portfolio size.