MBIA just announced its 2008 fourth quarter earnings:
The Company recorded a net loss of $2.7 billion, or $12.29 per share, for the full year 2008, compared with a net loss of $1.9 billion, or $15.17 per share, for the full year 2007.
The Company recorded a net loss of $1.2 billion, or $5.30 per share, for the fourth quarter of 2008 compared with a net loss of $2.3 billion, or $18.55 per share, for the same period of 2007....
The Company increased by $642 million in the fourth quarter its expectations for pre-tax credit impairments, a non-GAAP measure, on insured credit derivatives referencing selected multi-sector CDOs.
It's not clear to me if MBIA is under-reserving for losses or if the $642m is realistic. One of the threats to MBIA, one that doesn't plague Ambac, is its exposure to commercial real estate. Since commercial real estate only started correcting recently, it's difficult to say if things will get worse for MBIA or not.
During the fourth quarter, the Company repurchased 22.8 million shares of its common stock at an average price of $5.74. The Company repurchased a total of 30.5 million shares in 2008 at an average price of $7.25.
For the full year 2008, on a consolidated basis, the Company recorded $410 million in pre-tax net gains on the extinguishment of approximately $2.0 billion of debt. In addition, in the fourth quarter MBIA repurchased perpetual preferred stock of MBIA Insurance Corporation at a substantial discount....
MBIA's Book Value per share as of December 31, 2008 was $4.78 compared with $11.37 at September 30, 2008 and $29.16 at December 31, 2007... Adjusted Book Value (ABV) per share, a non-GAAP measure, declined to $40.06 at the end of the fourth quarter from $77.89 at December 31, 2007, and increased from $37.55 at September 30, 2008.
Well, you can't complain about capital allocation decisions of MBIA. It bought back some stock and preferred shares at low prices. Timing could always be better but at least something positive is happening.
Although the stock price is way below book value--either the GAAP book value or the adjusted book value--it's difficult to say if future losses will destroy the book value.
Tags: MBIA (MBI)