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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: January 24, 1996
Date of Earliest
Event Reported: January 23, 1996
MBIA Inc.
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(Exact name of registrant as specified in its charter)
Connecticut 1-9583 06-1185706
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(State of (Commission File Number) (IRS Employer
incorporation) Identification No.)
113 King Street, Armonk, New York 10504
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Address of principal executive offices) (Zip Code)
(914) 273-4545
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
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On January 23, 1996, the Company announced its earnings for the year ended
December 31, 1995. The press release making such announcement is filed herewith
as an exhibit.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
(c) Exhibits
20.1 MBIA Inc. Press Release dated January 23, 1996.
Page 2 of 4
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MBIA INC.
(Registrant)
Date: January 24, 1996 By /s/ Louis G. Lenzi
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Name: Louis G. Lenzi
Title: Secretary and
General Counsel
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EXHIBIT INDEX
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Exhibit No. Description
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20.1 MBIA Inc. Press
Release dated
January 23, 1996
Page 4 of 4
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EXHIBIT 20.1
MBIA MBIA INC. NEWS RELEASE
113 King Street
Armonk, NY 10504
914 273 4545
contact: Michael C. Ballinger FOR IMMEDIATE RELEASE
(914) 765-3893 ---------------------
MBIA INC. REPORTS FOURTH QUARTER EARNINGS GROWTH
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ARMONK, New York -- January 23, 1996 -- MBIA Inc. (NYSE: MBI), the holding
company for MBIA Insurance Corporation, reported today that 1995 fourth quarter
net income increased 6 percent to $68.3 million from $64.5 million in the same
1994 period. Fourth quarter earnings per share rose 5 percent to $1.61 compared
with $1.53. Operating earnings for the fourth quarter were $1.60 per share, up
5 percent from $1.53.
MBIA's 1995 net income and earnings per share increased 4 percent over 1994 to
$271.4 million from $260.2 million and to $6.43 per share from $6.18. Operating
earnings, which excludes capital gains and non-recurring items, rose 6 percent
to $6.35 per share from $6.01. Year-end book value per share was $53.19, a 30
percent gain over 1994.
MBIA's fourth quarter core earnings increased 12 percent over the same period a
year ago to $1.50 per share. For 1995, core earnings also rose 12 percent to
$5.87 per share from $5.26. Core earnings exclude the net income effects of
capital gains, premiums earned from refunded issues and non-recurring items.
David H. Elliott, chairman and chief executive officer, said, "MBIA again
produced strong financial and operating results, underscoring our ability to
deliver consistent earnings growth. We led the insured municipal market for the
fourteenth consecutive year and reported excellent results in our structured
finance, secondary market and international businesses."
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MBIA
New issue municipal financings declined 9 percent in 1995 to $141.4 billion from
$154.7 billion issued in 1994. However, the insured portion of new issue volume
rose to a record 47 percent from 40 percent in 1994. This resulted in a 6
percent increase in insured municipal volume in 1995 to $66.0 billion from $62.1
billion in 1994.
MBIA led the municipal bond insurance industry in 1995, insuring $28.0 billion
of par value, representing 42 percent of the insured market and a record 20
percent of all new municipal issues. In 1994, MBIA insured $25.1 billion of par
value, 40 percent of the insured market and 16 percent of all new issue
municipal bonds.
MBIA reported substantial gains in its domestic structured finance business,
insuring $9.0 billion of par value in 1995, a 57 percent gain over 1994. The
company's international operations also recorded strong results by insuring $2.2
billion of par value in 1995.
For 1995's fourth quarter, MBIA's gross premiums written declined 8 percent to
$79.3 million compared with $86.5 million a year earlier. For the year, gross
premiums written totaled $348.5 million, down 3 percent from $360.8 million in
1994. Gross premiums written reflects upfront premiums received for business
originated in the current period and installment premiums received for current
and prior-period business.
Because part of MBIA's business writings is collected on an installment basis,
gross premiums written do not fully reflect the premium associated with new
insurance business writings. Adjusted gross premiums originated, which captures
both upfront premiums and the present value of estimated installment premiums
from new
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MBIA
business writings, increased 3 percent in the fourth quarter to $89.9 million
from $87.4 million in the same 1994 period. For 1995, adjusted gross premiums
originated rose 2 percent to $369.2 million from $362.0 million in 1994.
Premiums earned during the fourth quarter were $54.5 million, a 2 percent
decline from 1994's fourth quarter. This included $7.2 million from refundings
of previously insured issues compared with $13.1 million in the same period in
1994. For 1995, premiums earned decreased 1 percent to $215.1 million from
$218.3 million in 1994, including $34.0 million from refundings in 1995 versus
$53.0 million in 1994. The net income effect of refunding activity was $.10 per
share for the fourth quarter of 1995 compared with $.19 per share in 1994's
fourth quarter, and was $.47 per share for the full year 1995 compared with $.74
per share in 1994.
Net investment income, excluding net realized gains and revenues from the
company's municipal investment agreement business, increased 15 percent for the
quarter to $57.0 million from $49.6 million in 1994's fourth quarter. For the
year, net investment income rose 13 percent to $219.9 million from $193.9
million in 1994. At December 31, 1995, MBIA's aggregate investment portfolio,
including fixed-income securities related to its municipal investment agreement
business, was $6.6 billion compared to $4.9 billion at the end of 1994. The
investment agreement portion increased to $2.7 billion as of December 1995, from
$1.7 billion in December 1994. The average quality of fixed-income investments
is Double-A.
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MBIA
The effect of carrying fixed-income investments at market value rather than at
amortized cost, as required by Statement of Financial Accounting Standards 115,
resulted in a $4.96 increase in book value per share at December 31, 1995 and a
$2.10 decrease at year-end 1994.
Total fourth quarter revenues were $118.8 million compared with $109.8 million
in the fourth quarter of 1994. For 1995, total revenues increased 5 percent to
$462.2 million from $439.5 million in 1994.
Total expenses for the fourth quarter were $32.0 million compared with $28.8
million in the fourth quarter of 1994. For the year, expenses were $117.2
million compared with $110.1 million in 1994.
Computed on a statutory basis, MBIA Insurance Corporation's unearned premium
reserve was $1.7 billion as of December 31, 1995, and its capital base,
consisting of capital, surplus and contingency reserve, was $2.0 billion.
Aggregate policyholders' reserves rose 11 percent to $3.8 billion in 1995 from
$3.4 billion in the prior year.
MBIA Inc., through its wholly owned subsidiary, MBIA Insurance Corporation, is
the leading insurer of municipal bonds and structured finance transactions.
MBIA is also a leading provider of investment management services to the public
sector. MBIA Insurance Corporation has a claims-paying rating of Triple-A from
Moody's Investors Service, Inc., Standard & Poor's Ratings Group and Fitch
Investors Service.
# # #
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MBIA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
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(dollars in thousands except per share amounts)
Three Months Ended Years Ended
December 31, December 31,
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1995 1994 1995 1994
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Revenues
Insurance:
Gross premiums written $ 79,288 $ 86,451 $348,487 $360,836
Ceded premiums (12,844) (10,595) (45,050) (49,281)
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Net premiums written 66,444 75,856 303,437 311,555
Increase in deferred
premium revenue (11,943) (20,397) (88,365) (93,226)
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Premiums earned 54,501 55,459 215,072 218,329
Net investment income 56,973 49,612 219,858 193,853
Net realized gains 3,225 676 11,312 10,335
Investment
management services:
Income 6,179 4,159 19,884 16,178
Net realized losses (2,732) (123) (6,092) (726)
Other 633 40 2,188 1,567
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Total revenues 118,779 109,823 462,222 439,536
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Expenses
Insurance:
Losses and loss
adjustment 2,685 2,428 10,639 8,093
Policy acquisition
costs, net 5,502 5,553 21,283 21,845
Operating 12,259 10,573 41,805 41,026
Investment management
services 3,518 3,019 12,857 10,611
Interest 7,168 6,945 28,439 27,159
Other 913 327 2,169 1,380
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Total expenses 32,045 28,845 117,192 110,114
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Income before income
taxes 86,734 80,978 345,030 329,422
Provision for
income taxes 18,462 16,508 73,611 69,213
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Net income $ 68,272 $ 64,470 $271,419 $260,209
========== ========== ========== ==========
Net income per
common share $ 1.61 $ 1.53 $ 6.43 $ 6.18
========== ========== ========== ==========
Weighted average number
of common shares
outstanding 42,418,654 42,005,970 42,240,011 42,085,943
========== ========== ========== ==========
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MBIA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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(dollars in thousands except per share amounts)
December 31, 1995 December 31, 1994
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Assets
Investments:
Fixed maturity securities held as
available-for-sale at market
(amortized cost $3,428,986
and $3,123,838) $3,652,621 $3,051,906
Short-term investments 198,035 121,384
Other investments 14,064 17,550
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3,864,720 3,190,840
Municipal investment agreement
portfolio held as available-
for-sale at market (amortized cost
$2,645,828 and $1,738,375) 2,742,626 1,675,935
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Total investments 6,607,346 4,866,775
Cash and cash equivalents 23,258 7,940
Accrued investment income 87,016 68,486
Deferred acquisition costs 140,348 133,048
Prepaid reinsurance premiums 200,887 186,492
Goodwill - net 106,569 111,252
Property and equipment - net 46,030 45,069
Receivable for investments sold 6,100 945
Other assets 49,896 36,432
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Total assets $7,267,450 $5,456,439
Liabilities and Shareholders'
Equity
Liabilities:
Deferred premium revenue $1,616,315 $1,512,211
Loss and loss adjustment expense
reserves (1) 42,505 40,148
Municipal investment agreements 2,026,709 1,334,177
Municipal repurchase agreements 615,776 191,956
Long-term debt 373,900 298,790
Short-term debt 18,000 17,000
Deferred income taxes 246,736 76,843
Payable for investments purchased 10,695 209,966
Other liabilities 82,548 70,632
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Total liabilities 5,033,184 3,751,723
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Shareholders' Equity:
Common stock 42,077 42,077
Additional paid-in capital 725,153 719,750
Retained earnings 1,261,051 1,057,092
Cumulative translation adjustment 2,849 503
Unrealized appreciation
(depreciation) - net 207,648 (86,560)
Unearned compensation - restricted stock (426) ---
Treasury stock (4,086) (28,146)
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Total shareholders' equity 2,234,266 1,704,716
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Total liabilities and
shareholders' equity $7,267,450 $5,456,439
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Book value per share $ 53.19 $ 40.96
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(1) Includes net case reserves $ 14,481 $ 21,967
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MBIA INC. AND SUBSIDIARIES
Components of core earnings per share
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Three Months Ended Years Ended
December 31, December 31,
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1995 1994 1995 1994
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Reported earnings
per share $1.61 $1.53 $6.43 $6.18
Adjustments:
Realized gains 0.01 0.01 0.08 0.15
Net effect of sold
operation --- --- --- 0.03
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Operating earnings per
share (1) 1.60 1.53 6.35 6.01
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Earnings from refunded
issues 0.10 0.19 0.47 0.74
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Core earnings
per share (1) $1.50 $1.34 $5.87 $5.26
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(1) Amounts may not add due to rounding.
Components of adjusted book value per share
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December 31, December 31,
1995 1994
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Book Value $53.19 $40.96
After-tax value of:
Net deferred premium revenue,
net of DAC 19.73 18.63
Present value of future installment
premiums 3.64 2.76
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Adjusted book value $76.56 $62.35
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7
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MBIA INSURANCE CORPORATION (1) CONSOLIDATED
(wholly-owned subsidiary of MBIA Inc.)
Selected Financial Data Computed on a Statutory Basis:
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(dollars in millions)
December 31,1995 Dec. 31, 1994
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Capital and surplus $ 1,274.1 $ 1,110.0
Contingency reserve 743.5 621.0
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Capital base 2,017.6 1,731.0
Unearned premium reserve 1,733.6 1,619.6
Loss and loss adjustment
expense reserves 6.7 22.0
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Total policyholders' reserves 3,757.9 3,372.6
Present value of
installment premiums 235.4 176.9
Standby line of credit 650.0 600.0
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Total capital resources $ 4,643.3 $ 4,149.5
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Net insurance in force $344,037.2 $304,501.6
Capital ratio (2) 171:1 176:1
Capital resources ratio (3) 87:1 86:1
(1) Formerly Municipal Bond Investors Assurance Corporation.
(2) Net debt service outstanding divided by capital base.
(3) Net debt service outstanding divided by the sum of capital base, unearned
premium reserve (after tax), loss reserve, present value of installment
premiums (after-tax) and irrevocable standby claims-paying line of credit.
