<PAGE>
RULE NO. 424(b)(1)
REGISTRATION NO. 333-00217
PROSPECTUS
FEBRUARY 5, 1996
MBIA 3,530,000 SHARES
MBIA INC.
COMMON STOCK
Of the 3,530,000 Shares of Common Stock being offered hereby, 2,830,000
Shares are being offered initially in the United States and Canada by the U.S.
Underwriters and 700,000 Shares are being offered initially outside the United
States and Canada by the International Managers. See "Underwriting." Of the
3,530,000 Shares of Common Stock being offered hereby, 670,000 Shares are
being sold by the Company and 2,860,000 Shares are being sold by the Selling
Shareholder. See "Selling Shareholder." The price to the public and the
aggregate underwriting discounts and commissions per Share will be identical
for both offerings. See "Underwriting." The Company will not receive any part
of the proceeds from the sale of Shares by the Selling Shareholder. On
February 5, 1996, the last reported sale price of the Common Stock on the New
York Stock Exchange was $74 3/8.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS PROCEEDS TO
TO THE DISCOUNTS AND TO THE THE SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDER(3)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share........................ $74.375 $2.550 $71.825 $71.825
Total(4)......................... $262,543,750 $9,001,500 $48,122,750 $205,419,500
</TABLE>
- -------------------------------------------------------------------------------
(1) The Company and the Selling Shareholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. See "Underwriting."
(2) Before deducting the Company's share of expenses, estimated at $77,800.
(3) Before deducting the Selling Shareholder's share of expenses, estimated at
$332,200.
(4) The Company and the Selling Shareholder have granted to the U.S.
Underwriters an option, exercisable within 30 days hereof, to purchase up
to 100,000 and 260,000 additional shares of Common Stock, respectively, at
the price to the public less underwriting discounts and commissions,
solely to cover over-allotments, if any. If such options are exercised in
full, the total Price to the Public, Underwriting Discounts and
Commissions, Proceeds to the Company and Proceeds to the Selling
Shareholder will be $289,318,750, $9,919,500, $55,305,250 and
$224,094,000, respectively. See "Underwriting."
The Shares offered by this Prospectus are offered by the U.S. Underwriters,
subject to prior sale, when, as and if delivered to and accepted by them and
subject to various prior conditions, including their right to reject orders in
whole or in part. It is expected that delivery of the Shares will be made
against payment in New York, New York on or about February 8, 1996.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
SMITH BARNEY INC.
<PAGE>
No action has been or will be taken in any jurisdiction by the Company, the
Selling Shareholder or any Underwriter that would permit a public offering of
the Common Stock or possession or distribution of this Prospectus in any
jurisdiction where action for that purpose is required, other than in the
United States. Persons who come into possession of this Prospectus are
required by the Company, the Selling Shareholder and the Underwriters to
inform themselves about and to observe any restrictions as to the offering of
the Common Stock and the distribution of this Prospectus.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSIONER
OF INSURANCE FOR THE STATE OF NORTH CAROLINA, NOR HAS THE COMMISSIONER RULED
UPON THE ACCURACY OR ADEQUACY OF THIS DOCUMENT.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports and proxy
and information statements and other information concerning the Company may be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549
and at the following regional offices of the Commission: Northwestern Atrium
Center, 500 West Madison Street, Chicago, Illinois 60661, 14th Floor; Seven
World Trade Center, Suite 1300, New York, New York 10048, and at the offices
of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
Copies of such material can be obtained by mail from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549, at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the year ended December 31,
1994.
(2) The Company's Quarterly Report on Form 10-Q for each of the first three
calendar quarters of 1995 and a Form 10-Q/A dated November 30, 1995 relating
to the quarter ended June 30, 1995.
(3) The description of the Common Stock of the Company contained in the
Company's Registration Statement on Form 8-A filed with the Commission on June
15, 1987, as amended by the Form 8-A filed with the Commission on December 31,
1991 and by the Form 8-A filed with the Commission on October 27, 1994.
(4) The Company's Current Report on Form 8-K, filed with the Commission on
January 24, 1996.
2
<PAGE>
Any documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Shares offered hereby shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein, or contained in this Prospectus, shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by reference
(other than exhibits to such documents unless such exhibits are specifically
incorporated by reference into the foregoing documents). Any such request
should be directed to: Louis G. Lenzi, Esq., MBIA Inc., 113 King Street,
Armonk, New York 10504 (telephone: (914) 273-4545).
3
<PAGE>
THE COMPANY
MBIA Inc. (the "Company") insures municipal bonds, asset-backed securities
and other non-municipal bonds through its wholly-owned subsidiary, MBIA
Insurance Corporation ("MBIA Corp."). MBIA Corp.'s primary business is
enhancing the efficiency of public finance by guaranteeing the timely payment
of principal and interest on municipal bonds sold in the new issue market,
traded in the secondary market and held in unit investment trusts and mutual
funds. MBIA Corp. is the market leader with over 40% market share of the
insured new issue municipal business. MBIA Corp. also provides financial
guarantees for structured finance transactions (principally mortgage-backed
and asset-backed securities), investor-owned utility debt and obligations of
high-quality financial institutions. For the nine months ended September 30,
1995, MBIA Corp. insured $23.4 billion par value of new issue and secondary
market municipal bonds and $6.8 billion par value of domestic structured
finance business. As of September 30, 1995, the total net par amount of
outstanding bonds insured by MBIA Corp. was $181.5 billion and the aggregate
net insurance in force was $332.7 billion.
Financial guarantee insurance provides an unconditional and irrevocable
guarantee of the payment of the principal of and interest on insured
obligations when due. MBIA Corp. primarily insures obligations sold in the new
issue and secondary markets, including those held in unit investment trusts
and by mutual funds. It also provides surety bonds for debt service reserve
funds. The principal economic value of financial guarantee insurance to the
entity offering the obligations is the saving in interest costs resulting from
the difference in the market yield between an insured obligation and the same
obligation on an uninsured basis. In addition, for complex financings and for
obligations of issuers that are not well known by investors, insured
obligations receive greater market acceptance than uninsured obligations. All
obligations insured by MBIA Corp. are rated AAA by both Standard & Poor's
Ratings Group, a division of The McGraw-Hill Companies, Inc. and Fitch
Investors Service, L.P. and Aaa by Moody's Investors Service, Inc., the
highest ratings assigned by these rating agencies.
The Company's insurance subsidiaries derive their income from insurance
premiums earned over the life of the insured obligations and from investment
income earned on assets representing capital, retained earnings, and deferred
premium revenues. As of September 30, 1995, the Company's deferred premium
revenues were $1,599 million, its shareholders' equity was $2,090 million, and
its total investments were $5,946 million and $6,138 million at book value and
market value, respectively. As of September 30, 1995, MBIA Corp.'s investment
portfolio was $3,520 million and $3,668 million at book value and market
value, respectively, and was primarily comprised of high quality fixed income
securities with intermediate maturities.
In 1990, the Company formed a French company, MBIA Assurance S.A. ("MBIA
Assurance"), to assist in writing financial guarantee insurance in the
countries of the European Community. MBIA Assurance, which is a subsidiary of
MBIA Corp., writes policies insuring public infrastructure financings, asset-
backed transactions and certain obligations of financial institutions. As of
September 30, 1995, MBIA Corp. and MBIA Assurance had collectively insured 50
international transactions. In September 1995, MBIA Corp. entered into a joint
venture agreement with AMBAC Indemnity Corporation for the purpose of jointly
marketing financial guarantee insurance within the European Community.
Over the last three years, the Company has undertaken the development of
investment management services which capitalize on its capabilities,
reputation and marketplace relationships. The Company is delivering these
services through a group of subsidiary companies. For the nine months ended
September 30, 1995, in the aggregate, these investment management ventures
contributed $10 million to revenues.
The financial guarantee industry is subject to the direct and indirect
effects of governmental regulation, including changes in tax laws affecting
the municipal and asset-backed debt markets. No assurance can be given that
future legislative or regulatory changes might not adversely affect the
results of operations and financial condition of the Company.
The principal executive offices of the Company are located at 113 King
Street, Armonk, New York 10504. The telephone number is (914) 273-4545.
4
<PAGE>
RECENT DEVELOPMENTS
The Company's 1995 fourth quarter net income increased 6% to $68.3 million
from $64.5 million in the same 1994 period. Fourth quarter earnings per share
rose 5% to $1.61 compared with $1.53. Operating earnings for the fourth
quarter were $1.60 per share, up 5% from $1.53. In 1995 net income and
earnings per share increased 4% 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% to $6.35 per share from $6.01.
Year-end book value per share was $53.19, a 30% gain over 1994.
The Company's fourth quarter core earnings increased 12% over the same
period a year ago to $1.50 per share. For 1995, core earnings also rose 12% 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.
New issue municipal financings declined 9% 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% from 40% in 1994. This resulted in a 6% increase
in insured municipal volume in 1995 to $66.0 billion from $62.1 billion in
1994.
MBIA Corp. led the municipal bond insurance industry in 1995, insuring $28.0
billion of par value, representing 42% of the insured market and a record 20%
of all new municipal issues. In 1994, MBIA Corp. insured $25.1 billion of par
value, representing 40% of the insured market and 16% of all new issue
municipal bonds.
MBIA Corp. reported substantial gains in its domestic structured finance
business, insuring $9.0 billion of par value in 1995, a 57% 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 Corp.'s gross premiums written declined 8%
to $79.3 million compared with $86.5 million a year earlier. For the year,
gross premiums written totaled $348.5 million, down 3% 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 the Company'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 business writings, increased 3% 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% to $369.2 million from
$362.0 million in 1994.
Premiums earned during the fourth quarter were $54.5 million, a 2% 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% 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% for the
quarter to $57.0 million from $49.6 million in 1994's fourth quarter. For the
year, net investment income rose 13% to $219.9 million from $193.9 million in
1994. At December 31, 1995, the Company'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.
5
<PAGE>
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%
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 Corp.'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% to $3.8 billion in 1995 from $3.4 billion in
the prior year.
6
<PAGE>
MBIA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
DECEMBER 31, DECEMBER 31,
------------------------ ------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (AUDITED)
<S> <C> <C> <C> <C>
REVENUES
Insurance:
Gross premiums written... $ 79,288 $ 86,451 $ 348,487 $ 360,836
Ceded premiums........... (12,844) (10,595) (45,050) (49,281)
----------- ----------- ----------- -----------
Net premiums written.... 66,444 75,856 303,437 311,555
Increase in deferred pre- (11,943) (20,397) (88,365) (93,226)
mium revenue............ ----------- ----------- ----------- -----------
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
----------- ----------- ----------- -----------
Total revenues......... 118,779 109,823 462,222 439,536
----------- ----------- ----------- -----------
EXPENSES
Insurance:
Losses and loss adjust-
ment.................... 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
----------- ----------- ----------- -----------
Total expenses......... 32,045 28,845 117,192 110,114
----------- ----------- ----------- -----------
Income before income tax-
es....................... 86,734 80,978 345,030 329,422
Provision for income tax- 18,462 16,508 73,611 69,213
es....................... ----------- ----------- ----------- -----------
Net income................ $ 68,272 $ 64,470 $ 271,419 $ 260,209
=========== =========== =========== ===========
Net income per common $ 1.61 $ 1.53 $ 6.43 $ 6.18
share.................... =========== =========== =========== ===========
Weighted average number of
common shares 42,418,654 42,005,970 42,240,011 42,085,943
outstanding.............. =========== =========== =========== ===========
</TABLE>
7
<PAGE>
MBIA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1995 1994
------------ ------------
(UNAUDITED) (AUDITED)
<S> <C> <C>
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
---------- ----------
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
---------- ----------
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
---------- ----------
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
---------- ----------
Total liabilities................................ 5,033,184 3,751,723
---------- ----------
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)
---------- ----------
Total shareholders' equity....................... 2,234,266 1,704,716
---------- ----------
Total liabilities and shareholders' equity....... $7,267,450 $5,456,439
========== ==========
Book value per share............................. $ 53.19 $ 40.96
========== ==========
</TABLE>
(1) Includes net case reserves of $14,481 at December 31, 1995 and $21,967 at
December 31, 1994.
8
<PAGE>
MBIA INC. AND SUBSIDIARIES
COMPONENTS OF CORE EARNINGS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
DECEMBER 31, DECEMBER 31,
------------------- ---------------------
1995 1994 1995 1994
--------- --------- ----------- ---------
(UNAUDITED) (UNAUDITED) (AUDITED)
<S> <C> <C> <C> <C>
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
--------- --------- ----- -----
Operating earnings per share(/1/)..... 1.60 1.53 6.35 6.01
--------- --------- ----- -----
Earnings from refunded issues....... 0.10 0.19 0.47 0.74
--------- --------- ----- -----
Core earnings per share(/1/).......... $1.50 $ 1.34 $5.87 $5.26
========= ========= ===== =====
</TABLE>
- --------
(1) Amounts may not add due to rounding.
COMPONENTS OF ADJUSTED BOOK VALUE PER SHARE
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1995 1994
------------ ------------
(UNAUDITED) (AUDITED)
<S> <C> <C>
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
------ ------
Adjusted book value................................... $76.56 $62.35
====== ======
</TABLE>
9
<PAGE>
CAPITALIZATION
The following table sets forth the total capitalization of the Company at
September 30, 1995 and such capitalization as adjusted to give effect to (i)
the issuance and sale of the 670,000 newly-issued shares of Common Stock
offered by the Company and (ii) the issuance and sale on December 22, 1995 of
$75,000,000 aggregate principal amount of 7.00% Debentures due December 15,
2025. The capitalization of the Company will not be affected by the sale of
Common Stock offered by the Selling Shareholder.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1995
-------------------------------
ACTUAL AS ADJUSTED
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
Long-term debt................................. $ 298,872 $ 373,872
============== ==============
Shareholders' equity:
Preferred Stock, par value $1.00 per share;
authorized shares--10,000,000; issued and
outstanding shares--none.................... -- --
Common Stock, par value $1.00 per share;
authorized shares--200,000,000; issued
shares--42,077,387; as adjusted--42,747,387. 42,077 42,747
Additional paid-in capital................... 722,478 769,853
Retained earnings............................ 1,212,628 1,212,628
Cumulative translation adjustment............ 2,609 2,609
Unrealized appreciation of investments, net
of taxes of $67,879......................... 125,075 125,075
Treasury shares at cost (248,331 shares)..... (14,583) (14,583)
-------------- --------------
Total shareholders' equity................. 2,090,284 2,138,329
-------------- --------------
Total capitalization..................... $ 2,389,156 $ 2,512,201
============== ==============
</TABLE>
10
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND STATISTICAL DATA
The selected consolidated financial data in the table below for each of the
five years in the period ended December 31, 1994 have been derived from
audited consolidated financial statements of the Company previously filed with
the Commission. The selected consolidated financial data at September 30, 1994
and 1995 and for the nine months ended September 30, 1994 and 1995 are
unaudited but in the opinion of management include all adjustments, consisting
only of normal recurring adjustments, necessary for a fair presentation. The
following information should be read in conjunction with the consolidated
financial statements and related notes of the Company included, or
incorporated by reference, in the Company's periodic reports filed under the
Exchange Act that are incorporated by reference herein. See "Incorporation of
Certain Documents by Reference."
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED SEPTEMBER 30,
----------------------------------------------------------- ----------------------
1990 1991 1992 1993 1994 1994 1995
(UNAUDITED)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Insurance:
Gross premiums writ-
ten................... $ 211.4 $ 269.2 $ 368.7 $ 479.3 $ 360.8 $ 274.4 $ 269.2
Net premiums written... 181.5 223.0 336.1 431.8 311.6 235.7 237.0
Premiums earned........ 106.7 132.2 162.9 231.3 218.3 162.9 160.6
Net investment income.. 115.3 131.6 150.5 178.9 193.9 144.2 162.9
Net realized gains
(losses).............. (0.2) 2.9 9.8 9.7 10.3 9.7 8.1
Investment management
services:
Income................. -- 0.6 2.3 4.7 16.2 12.0 13.7
Net realized gains
(losses).............. -- -- -- 0.1 (0.7) (0.6) (3.4)
Income before income
taxes................. 165.3 189.7 244.3 324.0 329.4 248.4 258.3
Net income............. 126.6 144.7 188.7 259.0 260.2 195.7 203.1
PER SHARE DATA:
Earnings............... $ 3.33 $ 3.74 $ 4.62 $ 6.10 $ 6.18 $ 4.65 $ 4.82
Dividends:
Declared............... 0.48 0.62 0.76 0.94 1.14 0.83 0.965
Paid................... 0.44 0.59 0.72 0.89 1.09 0.78 0.930
Book value............. 24.35 27.58 33.00 38.18 40.96 41.09 49.97
BALANCE SHEET DATA:
Investments............ $ 1,724.5 $ 1,961.4 $ 2,528.7 $ 3,544.3 $ 4,866.8 $ 4,683.1 $ 6,138.4
Total assets........... 2,158.8 2,438.5 3,049.2 4,106.3 5,456.4 5,264.0 6,758.1
Deferred premium reve-
nue................... 902.1 1,018.6 1,196.2 1,402.8 1,512.2 1,488.5 1,598.6
Loss and loss adjust-
ment expense
reserves.............. 5.0 21.2 25.5 33.7 40.1 38.8 45.2
Long-term debt......... 200.0 198.7 298.6 298.7 298.8 298.8 298.9
Shareholders' equity... 931.7 1,063.3 1,382.1 1,596.4 1,704.7 1,714.2 2,090.3
SELECTED FINANCIAL RA-
TIOS:
GAAP Basis(1)(3):
Loss ratio............. 4.7% 13.0% 3.4% 3.4% 3.7% 3.5% 5.0%
Expense ratio.......... 33.7% 30.1% 32.0% 27.4% 28.8% 28.7% 28.2%
Combined ratio......... 38.4% 43.1% 35.4% 30.8% 32.5% 32.2% 33.2%
SAP Basis(2)(3):
Loss ratio............. -- 12.7% 2.4% (3.5%) 9.8% 13.1% (0.4%)
Expense ratio.......... 23.4% 20.4% 18.3% 17.6% 22.9% 22.0% 18.8%
Combined ratio......... 23.4% 33.1% 20.7% 14.1% 32.7% 35.1% 18.4%
OTHER FINANCIAL DATA:
Net par amount out-
standing.............. $ 75,979.2 $ 90,042.9 $112,483.0 $141,386.8 $164,317.9 $159,558.7 $181,481.0
Net debt service out-
standing.............. 157,706.5 184,604.3 223,056.1 266,784.3 304,501.6 295,227.2 332,741.1
</TABLE>
- ---------------------
(1) The GAAP loss ratio is the provision for losses and loss adjustment
expenses divided by net premiums earned, and the GAAP expense ratio is
underwriting expenses (adjusted for deferred policy acquisition costs) and
operating expenses (excluding interest expense) divided by net premiums
earned, in each case calculated in accordance with generally accepted
accounting principles. The combined ratio is the total of the loss and
expense ratios (see Note 2 to the Consolidated Financial Statements of
MBIA Inc. and Subsidiaries).
(2) The SAP loss ratio is the provision for losses and loss adjustment
expenses divided by net premiums earned, and the SAP expense ratio is
underwriting expenses divided by net premiums written, in each case
calculated in accordance with statutory accounting practices. The combined
ratio is the total of the loss and expense ratios.
(3) For a discussion of the principal differences between GAAP and SAP
accounting, see Note 3 to the Consolidated Financial Statements of MBIA
Inc. and Subsidiaries.
11
<PAGE>
USE OF PROCEEDS
The proceeds to the Company from the sale of the Shares, net of underwriting
discounts and expenses, are estimated to be approximately $48.0 million.
Proceeds from the sale of the Shares being offered by the Company will be used
to provide additional capital for the future needs of the Company and MBIA
Corp. and for general corporate purposes. The Company will not receive any
proceeds from the sale of the Shares being offered by the Selling Shareholder.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Company's Common Stock is traded on the New York Stock Exchange ("NYSE")
under the symbol "MBI." The table below sets forth the dividends paid per
share and the high and low closing sales prices for the Company's Common Stock
on the NYSE (as reported on the composite tape) during the periods indicated.
The last reported sale price of the Common Stock on the NYSE on February 5,
1996 was $74 3/8.
<TABLE>
<CAPTION>
DIVIDENDS
PAID PER
HIGH LOW SHARE
<S> <C> <C> <C>
1994
1st Quarter........................................ $63 7/8 $54 5/8 $.26
2nd Quarter........................................ 60 1/4 53 1/2 .26
3rd Quarter........................................ 62 56 7/8 .26
4th Quarter........................................ 59 3/8 49 1/8 .31
1995
1st Quarter........................................ $64 1/8 $55 3/4 $.31
2nd Quarter........................................ 68 7/8 60 1/4 .31
3rd Quarter........................................ 71 3/4 65 1/4 .31
4th Quarter........................................ 77 3/8 69 5/8 .34 1/2
</TABLE>
In May 1987, following the Company's commencement of operations, the Board
of Directors of the Company established the policy of declaring quarterly
dividends on the Common Stock and the Company has paid consecutive quarterly
dividends since then. The amount of dividends payable on Common Stock is
reviewed periodically by the Board of Directors in light of the Company's
earnings, financial condition and capital requirements. It is the policy of
the Board of Directors that the Company retain a portion of its earnings to
support the reasonable growth of the business.
The Company's ability to pay dividends depends on the ability of MBIA Corp.
to declare and distribute dividends to the Company. MBIA Corp.'s ability to
declare dividends is subject to restrictions contained in the New York
Insurance Law. See "Business--Regulation" in the Company's Annual Report on
Form 10-K for the year ended December 31, 1994 (the "1994 Form 10-K"). The
Company expects that such restrictions will not affect the ability of MBIA
Corp. to declare dividends sufficient to support the Company's dividend
policy.
12
<PAGE>
SELLING SHAREHOLDER
Of the 3,530,000 shares of Common Stock being offered hereby, 2,860,000
Shares are being sold by the Selling Shareholder. The Selling Shareholder will
receive all of the net proceeds from the sale of these Shares. The following
table sets forth, as of the date of this Prospectus, certain information with
respect to the ownership of shares of Common Stock by the Selling Shareholder.
Daniel P. Kearney, the executive vice president, investments/financial
services of the Selling Shareholder, currently serves on the Company's Board
of Directors. In addition, the Selling Shareholder or its affiliates have
engaged in a variety of material transactions with the Company, including (i)
entering into reinsurance transactions, (ii) providing investment advisory
services to the Company and (iii) providing insurance coverage for the
Company's directors, officers and employees. For further information, see
"Certain Relationships and Related Transactions" in the Company's 1994 Form
10-K. Beginning in January 1996, the Selling Shareholder and its affiliates no
longer provide investment advisory services to the Company.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES SHARES TO BE OWNED
OWNED PRIOR TO BEING BENEFICIALLY AFTER
THE OFFERING OFFERED THE OFFERING (1)
NAME AND ADDRESS OF ----------------------- --------- --------------------
SELLING SHAREHOLDER NUMBER PERCENT NUMBER NUMBER PERCENT
<S> <C> <C> <C> <C> <C>
The Aetna Casualty and 3,813,009 9.12% 2,860,000 953,009 2.24%
Surety Company..........
151 Farmington Avenue
Hartford, CT 06156
</TABLE>
- ---------------------
(1) If the U.S. Underwriters' over-allotment options are exercised in full,
the Selling Shareholder will sell an additional 260,000 shares of Common
Stock. As a result, the number of shares of Common Stock beneficially
owned by the Selling Shareholder after the offering would be 693,009, or
1.63%.
DESCRIPTION OF CAPITAL STOCK
The following is a summary of the terms of the Company's Amended and
Restated Certificate of Incorporation.
The Company's authorized capital stock consists of 200,000,000 shares of
Common Stock and 10,000,000 shares of Preferred Stock, par value $1.00 per
share. No shares of Preferred Stock are presently outstanding. The Company
does not presently have outstanding, and the Amended and Restated Certificate
of Incorporation does not authorize, any other classes of capital stock. The
issued and outstanding shares of Common Stock are duly authorized, validly
issued, fully paid and nonassessable.
Holders of shares of Common Stock have no preemptive, redemption or
conversion rights. The holders of Common Stock are entitled to receive
dividends when and as declared by the Board of Directors out of funds legally
available therefor. See "Price Range of Common Stock and Dividends." Upon
liquidation, dissolution or winding up of the Company, the holders of Common
Stock may share ratably in the net assets of the Company after payment in full
to all creditors of the Company and liquidating distributions to holders of
Preferred Stock, if any. Each holder of Common Stock is entitled to one vote
per share on all matters submitted to a vote of shareholders.
The Company's Amended and Restated Certificate of Incorporation requires the
approval of at least 80% of the outstanding shares of Common Stock for the
amendment of certain provisions which describe the factors the Board may
consider in evaluating proposed mergers, sales and other corporate
transactions. Further, as an insurance holding company, the Company is subject
to certain state insurance regulations that require prior approval of a change
of control. See "Business--Regulation" in the Company's 1994 Form 10-K. These
provisions and regulations may discourage attempts to obtain control of the
Company.
13
<PAGE>
In the Amended and Restated Certificate of Incorporation the Company elects
not to be subject to the provisions of Sections 33-374a through 33-374c of the
Connecticut Stock Corporation Act. If the Company had not made such elections
these provisions would require the approval of the holders of at least 80% of
the voting power of the outstanding voting stock of the Company, and at least
66 2/3% of the voting power of the outstanding voting stock of the Company
other than voting stock held by certain holders of 10% or more of such voting
power or by certain affiliates of the Company, as a condition for mergers,
liquidations and other business transactions involving the Company and the
holders of 10% or more of such voting power or certain affiliates of the
Company unless certain minimum price and procedural requirements are met.
The Board of Directors has the power, without further vote of shareholders,
to authorize the issue of up to 10,000,000 shares of Preferred Stock and to
fix and determine the terms, limitations and relative rights and preferences
of any shares of Preferred Stock that it causes to be issued. This power
includes the authority to establish voting, dividend, redemption, conversion,
liquidation and other rights of any such shares. No shares of Preferred Stock
have been issued, and the Company has no current plan to issue any such
shares, except as contemplated by the shareholder rights plan described below.
On December 12, 1991, the Company's Board of Directors declared a dividend
distribution of one Preferred Share Purchase Right (a "Right") for each share
of Common Stock. Each Right entitles the registered holder to purchase from
the Company one one-hundredth of a Junior Participating Cumulative Preferred
Share (the "Junior Preferred Stock") of the Company at a price of $160,
subject to certain adjustments to prevent dilution through stock dividends,
splits and combinations and distributions of warrants or other securities or
assets. The Junior Preferred Stock will rank senior to Common Stock, but could
rank junior to other classes of Preferred Stock that might be issued, as to
dividends and liquidating distributions, and will have 100 votes per share,
voting together with Common Stock. Initially, the Rights are attached to
shares of Common Stock and are not represented by separate certificates or
exercisable until the earlier to occur of (a) ten business days following the
public announcement by the Company (the "Shares Acquisition Date") that a
person or group of persons acquired (or obtained the right to acquire)
beneficial ownership of 10% or more of the outstanding Common Stock and (b)
ten business days (or, if determined by the Board of Directors, a later date)
following the announcement or commencement of a tender offer or exchange offer
which, if successful, would result in the bidder owning 10% or more of the
outstanding Common Stock. However, no person shall be deemed to have acquired
or obtained the right to acquire the beneficial ownership of 10% or more of
the outstanding shares of the Company's Common Stock, if the Board of
Directors determines that such acquisition is inadvertent, and such person
promptly divests itself of a sufficient number of shares to be below the 10%
ownership threshold. On such earlier date, Rights certificates would be issued
and mailed to holders of Common Stock. The Rights will expire on December 12,
2001, unless earlier redeemed or exchanged.
If an acquiring person or group acquires beneficial ownership of 10% or more
of the Common Stock (except pursuant to a tender or exchange offer for all of
the outstanding Common Stock determined by a majority of the Company's
independent directors to be fair and in the best interests of the Company and
its shareholders), then each Right (other than those held by the acquiror,
which will become void) will entitle its holder to purchase for $160 (or the
purchase price as then adjusted) that number of shares of Common Stock (or, in
certain circumstances, cash, a reduction in the purchase price, Common Stock,
other securities of the Company, other property or a combination thereof)
having a market value of $320 (or 200% of the adjusted purchase price). If,
after an acquiring person or group so acquires 10% or more of the Common Stock
in a merger or other business combination and (a) the Company shall not be the
surviving or continuing corporation, (b) the Company shall be the surviving or
continuing corporation and all or part of the Shares of Common Stock shall be
changed or exchanged, or (c) 50% or more of the Company's assets, cash flow or
earning power is sold, then proper provision shall be made so that each Right
(other than those held by the acquiror) will entitle its holder to purchase
that number of shares of common stock of the acquiring company which at the
time of such transaction would have a market value of 200% of the then-
effective purchase price.
The Company's Board of Directors may redeem all but not less than all of the
Rights at $0.01 per Right at any time prior to ten business days following the
Shares Acquisition Date. Additionally, at any time after a
14
<PAGE>
person or group acquires 10% or more but less than 50% of the outstanding
Common Stock, the Company's Board of Directors may exchange the Rights (other
than those held by the acquiror, which will become void), in whole or in part,
at an exchange ratio of one share of Common Stock per Right (subject to
adjustment). The Board of Directors may also amend the Rights at any time
prior to the Shares Acquisition Date. The Company's Rights Plan is designed to
make it more likely that all of the Company's shareholders receive fair and
equal treatment in the event of any unsolicited attempt to acquire the Company
and to guard against the use of coercive tactics to gain control of the
Company. However, the existence of the Company's Rights Plan might discourage
unsolicited merger proposals and unfriendly tender offers and may therefore
deprive shareholders of an opportunity to sell their shares at a premium over
prevailing market prices.
The Company furnishes its shareholders with annual reports containing
financial statements certified by independent public accounants and quarterly
reports containing unaudited quarterly financial statements.
CERTAIN UNITED STATES TAX CONSEQUENCES
TO NON-UNITED STATES HOLDERS OF COMMON STOCK
GENERAL
The following is a general discussion of certain United States Federal
income and estate tax consequences of the ownership and disposition of Common
Stock by a person other than (i) a citizen or resident of the United States,
(ii) a corporation, partnership or other entity created or organized in the
United States or under the laws of the United States or of any State or (iii)
an estate or trust whose income is includable in gross income for United
States Federal income tax purposes regardless of its source (referred to
hereafter as a "non-U.S. holder").
The discussion is based on provisions of the Internal Revenue Code of 1986,
as amended (the "Code") and administrative and judicial interpretations as of
the date hereof, all of which are subject to change, possibly with retroactive
effect. Furthermore, this discussion does not consider specific facts and
circumstances that may be relevant to a particular holder's tax position.
Prospective purchasers are urged to consult a tax adviser with respect to the
United States Federal income and estate tax consequences of owning and
disposing of Common Stock, as well as any tax consequences under the laws of
any other taxing jurisdiction.
INCOME TAX
DIVIDENDS. Generally, dividends paid to a non-U.S. holder of Common Stock
will be subject to U.S. Federal income tax. Except in the case of dividends
that are effectively connected with the holder's conduct of a trade or
business within the United States, this tax is imposed and withheld at the
rate of 30% of the amount of the dividend, unless reduced by an applicable
income tax treaty. Currently, dividends paid to an address in a foreign
country are presumed to be paid to a resident of such country in determining
the applicability of a treaty for such purposes. However, the Internal Revenue
Service has issued proposed regulations which, if adopted, would require a
non-U.S. holder to provide certain certifications under penalties of perjury
in order to obtain treaty benefits.
Except as may be otherwise provided in an applicable income tax treaty,
dividends which are effectively connected with the non-U.S. holder's conduct
of a trade or business within the United States are subject to tax at ordinary
Federal income tax rates, which tax is not collected by withholding (except as
described below under "Backup Withholding and Information Reporting"). All or
part of any effectively connected dividends received by a foreign corporation
may also, under certain circumstances, be subject to an additional "branch
profits" tax at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty. Non-U.S. holders of Common Stock must comply
with certain certification and disclosure requirements to claim an exception
from withholding under the rules described in this paragraph.
A non-U.S. holder that is eligible for a reduced rate of U.S. withholding
tax pursuant to a tax treaty may obtain a refund of any excess amounts
withheld by filing an appropriate claim for refund with the United States
Internal Revenue Service.
15
<PAGE>
DISPOSITION OF COMMON STOCK. Generally, non-U.S. holders will not be subject
to United States Federal income tax (or withholding thereof) in respect of
gain recognized on a disposition of Common Stock unless (i) the gain is
effectively connected with the non-U.S. holder's conduct of a trade or
business within the United States (in which case the "branch profits" tax
described above may also apply if the holder is a foreign corporation), (ii)
in the case of a non-U.S. holder who is a non-resident alien individual and
holds the Common Stock as a capital asset, such holder is present in the
United States for 183 or more days in the taxable year of the sale and certain
other conditions are met; or (iii) the Company is or has been a "United States
real property holding corporation" for Federal income tax purposes (which the
Company does not believe it has been or is currently) and the non-U.S. holder
has held directly or constructively more than 5% of the outstanding Common
Stock within the five-year period ending on the date of the disposition. The
Company currently is not and does not anticipate becoming a "U.S. real
property holding corporation."
ESTATE TAX
If an individual non-U.S. holder owns, or is treated as owning, Common Stock
at the time of his or her death, such stock would be subject to U.S. Federal
estate tax imposed on the estates of nonresident aliens, in the absence of a
contrary provision contained in any applicable tax treaty.
INFORMATION REPORTING AND BACKUP WITHHOLDING
DIVIDENDS. The Company must report annually to the Internal Revenue Service
and to each non-U.S. holder the amount of dividends and other payments
distributed to such non-U.S. holder and any tax withheld with respect to such
holder, regardless of whether withholding is required. Generally, dividends
paid on Common Stock to a non-U.S. holder at an address outside the United
States will be exempt from backup withholding tax and information reporting
requirements related thereto.
BROKER SALES. Payments of proceeds from the sale of Common Stock by a non-
U.S. holder made to or through a foreign office of a broker generally will not
be subject to information reporting or backup withholding. However, sales
through certain foreign offices, including the foreign offices of a U.S.
broker, are subject to information reporting unless the holder certifies its
non-U.S. status under penalties of perjury or otherwise establishes its
entitlement to an exemption. Payments of proceeds from the sale of Common
Stock by a non-U.S. holder to or through a U.S. office of a broker are
currently subject to both information reporting and backup withholding at a
rate of 31% unless the holder certifies its status as a non-U.S. holder under
penalties of perjury or otherwise establishes an exemption.
A non-U.S. holder may obtain a refund of any excess amounts withheld under
the backup withholding rules by filing the appropriate claim for refund with
the IRS.
UNDERWRITING
Subject to the terms and conditions contained in the Underwriting Agreement
(the "Underwriting Agreement"), the U.S. Underwriters named below (the "U.S.
Underwriters"), for whom Donaldson, Lufkin & Jenrette Securities Corporation,
Goldman, Sachs & Co., Lehman Brothers Inc. and Smith Barney Inc. are acting as
representatives (the "U.S. Representatives"), and the international managers
(the "International Managers") named below, for whom Donaldson, Lufkin &
Jenrette Securities Corporation, Goldman Sachs International, Lehman Brothers
International (Europe) and Smith Barney Inc. are acting as representatives
(the "International Representatives") have severally agreed to purchase
670,000 shares of Common Stock from the Company and 2,860,000 shares of Common
Stock from the Selling Shareholder, of which 2,830,000 shares of Common Stock
are to be purchased by the U.S. Underwriters (the "U.S. Shares") and 700,000
shares of Common Stock are to be purchased by the International Managers (the
"International Shares"). The U.S. Underwriters and the International Managers
are hereinafter collectively referred to as the "Underwriters." The U.S.
Representatives
16
<PAGE>
and the International Representatives are sometimes hereinafter referred to as
the "Representatives." The number of shares of Common Stock that each
Underwriter has agreed to purchase is set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation............. 516,250
Goldman, Sachs & Co............................................. 516,250
Lehman Brothers Inc............................................. 516,250
Smith Barney Inc. .............................................. 516,250
Bear, Stearns & Co. Inc. ....................................... 30,000
CS First Boston Corporation..................................... 30,000
Alex. Brown & Sons Incorporated................................. 30,000
BT Securities Corporation....................................... 30,000
Chase Securities, Inc. ......................................... 30,000
Chemical Securities Inc. ....................................... 30,000
Deutsche Morgan Grenfell/C. J. Lawrence Inc. ................... 30,000
A.G. Edwards & Sons, Inc. ...................................... 30,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated.............. 30,000
J. P. Morgan Securities Inc. ................................... 30,000
Morgan Stanley & Co. Incorporated............................... 30,000
Oppenheimer & Co., Inc. ........................................ 30,000
PaineWebber Incorporated........................................ 30,000
Prudential Securities Incorporated.............................. 30,000
SBC Capital Markets Inc. ....................................... 30,000
Salomon Brothers Inc ........................................... 30,000
Societe Generale Securities Corp. .............................. 30,000
Conning & Company............................................... 30,000
George K. Baum & Company........................................ 15,000
M.R. Beal & Company............................................. 15,000
Dain Bosworth Incorporated...................................... 15,000
Doft & Co. Inc. ................................................ 15,000
Dowling & Partners Securities, LLC.............................. 15,000
First Manhattan Co. ............................................ 15,000
Fox-Pitt, Kelton, Inc. ......................................... 15,000
Furman Selz LLC................................................. 15,000
Gruntal & Co., Incorporated..................................... 15,000
Edward D. Jones & Co. .......................................... 15,000
Moors & Cabot, Inc. ............................................ 15,000
Northington Capital Markets, Inc. .............................. 15,000
Pryor, McClendon, Counts & Co. ................................. 15,000
Rothschild Inc. ................................................ 15,000
The Williams Capital Group, L.P. ............................... 15,000
---------
U.S. Offering Subtotal........................................ 2,830,000
=========
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGERS SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation............. 122,500
Goldman Sachs International..................................... 122,500
Lehman Brothers International (Europe).......................... 122,500
Smith Barney Inc................................................ 122,500
Bankers Trust International PLC................................. 30,000
Conning & Company............................................... 30,000
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGERS SHARES
<S> <C>
CS First Boston Limited.......................................... 30,000
Morgan Grenfell & Co. Limited.................................... 30,000
Fox-Pitt, Kelton, N.V. .......................................... 30,000
Paribas Capital Markets.......................................... 30,000
Societe Generale................................................. 30,000
---------
International Offering Subtotal................................ 700,000
---------
Total........................................................ 3,530,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase and accept delivery of the shares of Common Stock
offered hereby are subject to approval of certain legal matters by counsel and
to certain other conditions. If any shares of Common Stock are purchased by
the Underwriters pursuant to the Underwriting Agreement, all such shares
(other than shares covered by the over-allotment option described below) must
be purchased.
The Underwriters have advised the Company and the Selling Shareholder that
they propose to offer the shares of Common Stock directly to the public at the
public offering price set forth on the cover page hereof and to certain
dealers (who may include the Underwriters) at a price which represents a
concession not in excess of $1.53 a share under the public offering price. The
Underwriters may allow, and such dealers may reallow, a concession not in
excess of $0.10 a share to other Underwriters or to certain other dealers.
The Company and the Selling Shareholder have granted the U.S. Underwriters
an option exercisable for 30 days after the date of this Prospectus to
purchase, at the price to the public less the underwriting discounts, as set
forth on the cover page of this Prospectus, up to 100,000 and 260,000
additional shares of Common Stock, respectively, to cover over-allotments, if
any. If the U.S. Underwriters exercise these over-allotment options, the U.S.
Underwriters have severally agreed, subject to certain conditions, to purchase
approximately the same percentage thereof that the number of shares to be
purchased by each of them, as shown in the foregoing table, bears to the
2,830,000 shares of Common Stock offered by the U.S. Underwriters hereby. The
U.S. Underwriters may exercise such options only to cover over-allotments in
connection with this offering.
The Company, the Selling Shareholder and the Underwriters have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act.
Subject to certain exceptions, each of the Company and the Selling
Shareholder have agreed with the Underwriters not to offer, sell, contract to
sell, grant any option to purchase, or otherwise dispose of any Common Stock
or any securities convertible into or exercisable or exchangeable for Common
Stock (other than the Shares offered hereby) for 90 days from the date of this
Prospectus, without the prior written consent of the U.S. Representatives of
the Underwriters.
Under an Amended and Restated Shareholders' Agreement among the Company, the
Selling Shareholder and certain other founding shareholders and Credit Local
de France, the Selling Shareholder is responsible for all expenses in
connection with the registration and sale of its Shares. See "Certain
Relationships and Related Transactions--Shareholders' Agreement" in the
Company's 1994 Form 10-K.
Pursuant to the Agreement Between U.S. Underwriters and International
Managers, each U.S. Underwriter has represented and agreed that, with certain
exceptions set forth below, (a) it is not purchasing any shares of Common
Stock for the account of anyone other than a United States or Canadian Person
(as defined below), and (b) it has not offered or sold, and will not offer or
sell, directly or indirectly, any shares of Common Stock or distribute this
Prospectus outside the United States or Canada or to anyone other than a
United States or Canadian Person. Pursuant to the Agreement Between U.S.
Underwriters and International Managers, each International Manager has
represented and agreed that, with certain exceptions set forth below, (a) it
is not purchasing any shares of Common Stock for the account of any United
States or Canadian Person, and (b) it has not offered or
18
<PAGE>
sold, and will not offer or sell, directly or indirectly, any shares of Common
Stock or distribute this Prospectus within the United States or Canada or to
any United States or Canadian Person. The foregoing limitations do not apply
to stabilization transactions and to certain other transactions among the
International Managers and the U.S. Underwriters. As used herein, "United
States or Canadian Person" means any national or resident of the United States
or Canada or any corporation, pension, profit-sharing or other trust or other
entity organized under the laws of the United States or Canada or of any
political subdivision thereof (other than a branch located outside the United
States and Canada of any United States or Canadian Person) and includes any
United States or Canadian branch of a person who is not otherwise a United
States or Canadian Person, and "United States" means the United States of
America, its territories, its possessions and all areas subject to its
jurisdiction.
Pursuant to the Agreement Between U.S. Underwriters and International
Managers, sales may be made between the U.S. Underwriters and the
International Managers of any number of shares of Common Stock to be purchased
pursuant to the Underwriting Agreement as may be mutually agreed. The per
share price and currency of settlement of any shares so sold shall be the
public offering price set forth on the cover page hereof, in United States
dollars, less an amount not greater than the per share amount of the
concession to dealers set forth below.
Pursuant to the Agreement Between U.S. Underwriters and International
Managers, each U.S. Underwriter has represented that it has not offered or
sold, and has agreed not to offer or sell, any shares of Common Stock,
directly or indirectly, in Canada in contravention of the securities laws of
Canada or any province or territory thereof and has represented that any offer
of Common Stock in Canada will be made only pursuant to an exemption from the
requirement to file a prospectus in the province or territory of Canada in
which such offer is made. Each U.S. Underwriter has further agreed to send to
any dealer who purchases from it any shares of Common Stock a notice stating
in substance that, by purchasing such Common Stock, such dealer represents and
agrees that it has not offered or sold, and will not offer or sell, directly
or indirectly, any of such Common Stock in Canada in contravention of the
securities laws of Canada or any province or territory thereof and that any
offer of Common Stock in Canada will be made only pursuant to an exemption
from the requirement to file a prospectus in the province or territory of
Canada in which such offer is made, and that such dealer will deliver to any
other dealer to whom it sells any of such Common Stock a notice to the
foregoing effect.
Pursuant to the Agreement Among U.S. Underwriters and International
Managers, each International Manager has represented that (i) it is not
carrying on investment business in the United Kingdom in contravention of
Section 3 of the Financial Services Act 1986 (the "1986 Act"), (ii) it has not
offered or sold and prior to the date six months after the date of issue of
the shares of Common Stock will not offer or sell any Common Stock to persons
in the United Kingdom except to persons whose ordinary activities involve them
in acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances
which have not resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities
Regulations 1995, (iii) it has complied and will comply with all applicable
provisions of the 1986 Act with respect to anything done by it in relation to
the Common Stock in, from or otherwise involving the United Kingdom, and (iv)
it has not issued or caused to be issued and will not issue or cause to be
issued in the United Kingdom any investment advertisement (within the meaning
of the 1986 Act) relating to the Common Stock or (subject to and upon Part V
of the 1986 Act coming into operation) any advertisement offering the Common
Stock, which advertisement is a primary or secondary offer within the meaning
of the 1986 Act, except in any such case in compliance with provisions
applicable under the 1986 Act or pursuant to any exemption thereunder and, in
particular, it has not given and will not give copies of this Prospectus to
any person in the United Kingdom who does not fall within Article 11(3) of the
1986 Act (Investment Advertisements) (Exemptions) Order 1995.
All of the Underwriters have provided from time to time, and expect to
provide in the future, investment banking services to the Company and its
affiliates and the Selling Shareholders and its affiliates, for which such
Underwriters have received and will receive customary fees and commissions.
On November 28, 1995, The Travelers Insurance Group Inc. and Aetna Life and
Casualty Company signed a definitive agreement for the sale of the Selling
Shareholder and certain of its affiliates to The Travelers Insurance Group
Inc. Smith Barney Inc. is a wholly-owned subsidiary of The Travelers Insurance
Group Inc.
19
<PAGE>
David C. Clapp, a limited partner of Goldman, Sachs & Co., and John A.
Rolls, President and Chief Executive Officer of Deutsche Bank North America,
an affiliate of Deutsche Morgan Grenfell/C.J. Lawrence Inc., are members of
the Board of Directors of the Company. William H. Donaldson, the Co-Founder
and Senior Advisor of Donaldson, Lufkin & Jenrette Securities Corporation, is
a member of the Board of Directors of the Selling Shareholder and certain of
its affiliates.
LEGAL OPINIONS
The validity of the Shares offered hereby will be passed upon for the
Company by Debevoise & Plimpton, 875 Third Avenue, New York, New York 10022,
and for the Underwriters by Simpson Thacher & Bartlett (a partnership which
includes professional corporations), 425 Lexington Avenue, New York, New York
10017. Such counsel will rely, as to matters of Connecticut law, upon the
opinion of Day, Berry & Howard, City Place, Hartford, Connecticut 06103,
Connecticut counsel for the Company.
EXPERTS
The consolidated financial statements and the related consolidated financial
statement schedules of the Company appearing or incorporated by reference in
the Company's Annual Report on Form 10-K for the year ended December 31, 1994,
have been audited by Coopers & Lybrand L.L.P., independent accountants, as set
forth in their reports thereon dated February 1, 1995 incorporated by
reference or included therein and incorporated herein by reference. Such
consolidated financial statements and financial statement schedules are
incorporated herein by reference in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
20
<PAGE>
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, THE SELLING SHAREHOLDER OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH AN OFFER
OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY OFFER OR SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
The Company............................................................... 4
Recent Developments....................................................... 5
Capitalization............................................................ 10
Selected Consolidated Financial and Statistical Data...................... 11
Use of Proceeds........................................................... 12
Price Range of Common Stock and Dividends................................. 12
Selling Shareholder....................................................... 13
Description of Capital Stock.............................................. 13
Certain United States Tax Consequences to Non-United States Holders of
Common Stock............................................................. 15
Underwriting.............................................................. 16
Legal Opinions............................................................ 20
Experts................................................................... 20
</TABLE>
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3,530,000 SHARES
MBIA
COMMON STOCK
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PROSPECTUS
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DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
SMITH BARNEY INC.
FEBRUARY 5 , 1996
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