MBIA's Q3 2025 Earnings Call: Contradictions Emerge in PREPA Claims Sale and Strategic Review and Sale Process

Business Commentary:

• Improved Financial Performance:
• MBIA reported a consolidated GAAP net loss of $8 million, or a negative $0.17 per share for Q3 2025, compared to a net loss of $56 million, or a negative $1.18 per share in Q3 2024.

• The improvement was driven by lower losses and LAE at National, primarily due to the sale of $374 million of National's PREPA-related bankruptcy claims and higher estimated recoveries on National's remaining PREPA exposure.

  

• Reduced PREPA Exposure:

• MBIA's PREPA exposure, initially $1.2 billion, has been reduced to $425 million as of September 30, 2025, following the sale of bankruptcy claims.

• This reduction was due to a strategic decision to mitigate risks associated with PREPA's restructuring and to improve MBIA's overall financial position.

• Increased Statutory Capital:

• National's statutory capital increased by $82 million, from $912 million at year-end 2024 to $994 million as of September 30, 2025.

• The increase was primarily driven by National's year-to-date net income and reflects a stronger financial position for the company.

• Dividend Strategy and Shareholder Value:

• MBIA has considered and implemented strategic dividends, such as the special dividend from National to the holding company and subsequent dividend to shareholders in 2023.
• The company continues to evaluate the timing and conditions for future dividends, balancing the need to meet holding company debt obligations while maximizing shareholder value.
  

Contradiction Point 1

PREPA Claims Sale and Marketability

It involves the sale and marketability of PREPA claims, which is critical for the company's financial strategy and investor expectations.

Does the sale include any contingencies, or is it an outright sale? Can you provide more details on the identity of the bond buyer? - John Staley (Staley Capital Advisors)

2025Q3: We have sold $374 million of our bankruptcy claims. To your point, whatever now happens with the restructuring and the recovery, that’s now on the books of the buyers. - Bill Fallon(CEO)

Why isn't carving out PREPA obligations feasible in a sale? Why can't the MBIA deal exclude PREPA obligations? - Paul Saunders (Hutch Capital)

2024Q4: Offers have been inadequate. The size and complexity of the PREPA claim make it difficult for buyers to provide acceptable offers. It's better to let the PREPA situation play out. - Bill Fallon(CEO)

Contradiction Point 2

Strategic Review and Sale Process

It involves changes in the company's strategic direction and potential plans for a sale, which are critical for investors and stakeholders.

Given your reduced PREPA exposure, what are the key barriers to conducting another strategic review? If done now, would you disclose it as in 2022, or could it proceed discreetly? - Patrick Stettelhofer (Analyst, Kahn Brothers)

2025Q3: As you mentioned, about three years ago, we announced that we had engaged Barclays to initiate that sale process. We learned things during that process that led us to conclude that it was not the best time for our shareholders. - Bill Fallon(CEO)

What is your position within the creditor group and objectives in the PREPA litigation? Would you prioritize expedited resolution over maximizing recoveries in any scenarios? - Tommy McJoynt (KBW)

2024Q4: There is no process going on now. There has not been a process ongoing since the -- since about 2022. - Bill Fallon(CEO)