Detailed narrative
PREPA Litigation and Settlement Efforts
MBIA's primary focus remains on resolving National's PREPA exposure, which reduced by $35 million to $390 million gross par value due to claims paid on July 1st, 2026. Progress was noted in several litigations, including the First Circuit Court of Appeals remanding a case related to oversight board members and Judge Swain lifting a litigation stay on the net revenues calculation case.
However, the Oversight Board's increased settlement offer of approximately $3 billion was dismissed as inadequate by bondholders representing 90% of claims, indicating continued challenges in reaching a resolution.
National's Portfolio and Capital
National's insured portfolio gross par amount outstanding declined by approximately $1.5 billion from year-end 2025 to $20.8 billion at June 30, 2026. Its leverage ratio improved to 21 to one from 24 to one at year-end 2025. National reported statutory net income of $10 million for Q2 2026, up from $6 million in Q2 2025, driven by higher earned premiums and lower loss expenses.
Statutory capital increased by $31 million to $968 million from year-end 2025, primarily due to net income and unrealized investment gains.
MBIA Insurance Corp. Performance
MBIA Insurance Corp. reported a significant increase in statutory net income to $27 million for Q2 2026, compared to $4 million in Q2 2025. This favorable variance was primarily due to a larger loss and loss adjustment expense (LAE) benefit, stemming from the reassessment of recoveries related to ZOHAR CDOs.
Its statutory capital increased by $27 million to $106 million from year-end 2025, and claims paying resources totaled $342 million. The insured gross par outstanding was just under $1.8 billion, down 12% from year-end 2025.
Holding Company Liquidity and Financial Results
The consolidated GAAP net loss for Q2 2026 was $46 million (negative $0.91 per share), an improvement from a $56 million loss in Q2 2025, mainly due to a reversal of legal expenses and foreign exchange gains. The adjusted net loss (non-GAAP) was $7 million (negative $0.14 per share), also an improvement.
MBIA Inc.'s book value per share was negative $45.58, a decrease of $1.31 from year-end 2025. Holding company unencumbered cash and liquid assets totaled $337 million, down $20 million from year-end 2025, primarily due to debt service payments and operating expenses.
Strategic Options and Sale Process
Management acknowledged that the probability of a transaction, such as a sale of the company, increases as exposure to PREPA is reduced. While no specific decision has been made regarding a formal sale process, the company continuously evaluates strategic options.
They indicated that any decision to run a process similar to the one four years ago would likely be announced, but also noted the possibility of direct outreach or inbound interest from potential acquirers.