MBIA Inc. Reports Fourth Quarter and Full Year 2012 Financial Results

  MBIA Inc. Reports Fourth Quarter and Full Year 2012 Financial Results

Highlights

  *MBIA Inc.’s (the Company’s) Adjusted Book Value (ABV), a non-GAAP measure,
    was $30.68 per share at December 31, 2012 compared with $30.64 per share
    at September 30, 2012 and $34.50 per share at December 31, 2011.
  *MBIA Inc.’s adjusted pre-tax income, a non-GAAP measure, was $110 million
    for the fourth quarter of 2012 compared with an adjusted pre-tax loss of
    $252 million for the fourth quarter of 2011.
  *MBIA Inc. recorded net income available to common shareholders of $636
    million, or $3.26 per share, for the fourth quarter of 2012, compared with
    a net loss of $626 million, or $3.23 per share, for the fourth quarter of
    2011.
  *MBIA Inc.’s net income available to common shareholders for the twelve
    months ended December 31, 2012 was $1.2 billion, or $6.33 per share,
    compared with a net loss of $1.3 billion, or $6.69 per share, for the
    twelve months ended December 31, 2011.

Business Wire

ARMONK, N.Y. -- February 27, 2013

MBIA Inc. (NYSE: MBI) today reported Adjusted Book Value (ABV) per share (a
non-GAAP measure defined in the attached Explanation of Non-GAAP Financial
Measures) of $30.68 per share at December 31, 2012 compared with $30.64 per
share at September 30, 2012 and $34.50 per share at December 31, 2011. Book
value per share was $16.22 as of December 31, 2012.

MBIA Inc.’s adjusted pre-tax income (a non-GAAP measure defined in the
attached Explanation of Non-GAAP Financial Measures) for the fourth quarter of
2012 was $110 million compared with an adjusted pre-tax loss of $252 million
for the fourth quarter of 2011. The improvement in adjusted pre-tax income for
the three months ended December 31, 2012 was driven primarily by lower net
losses on insured exposures. ABV and adjusted pre-tax income (loss) provide
investors with additional views of the Company’s operating results that
management finds useful in measuring financial performance. Reconciliations of
adjusted book value to book value calculated in accordance with GAAP and
adjusted pre-tax income (loss) to pre-tax income (loss) calculated in
accordance with GAAP are attached.

Net income available to common shareholders for the fourth quarter of 2012 was
$636 million, or $3.26 per share, compared with a net loss of $626 million, or
$3.23 per share, for the fourth quarter of 2011. The improvement in net income
was primarily the result of changes in the fair value of insured credit
derivatives. In the three months ended December 31, 2012, the Company recorded
a $411 million net gain on insured credit derivatives compared with a $1.7
billion net loss on insured credit derivatives in the comparable period of
2011. The net gain on insured credit derivatives in the fourth quarter of 2012
resulted from unrealized gains driven by a less favorable market perception of
MBIA Insurance Corporation's (MBIA Corp.) credit quality, favorable movements
in credit spreads and pricing on collateral within the transactions and
shorter weighted-average lives due to the passage of time, partially offset by
collateral erosion. The net loss on insured credit derivatives in the fourth
quarter of 2011 resulted primarily from an improved market perception of MBIA
Corp.'s credit quality. In 2011, realized losses associated with settlement
and claim payments on multi-sector CDO and CMBS transactions were largely
offset by the reversal of previously booked unrealized losses on those
transactions. The Company is required to adjust the values of its derivative
liabilities for the market's perception of its non-performance risk. A
decrease in the value of the derivative liabilities attributable to an
increase in non-performance risk is reflected as an unrealized gain while an
increase in the value of the derivative liabilities attributable to a decline
in non-performance risk is reflected as an unrealized loss on the income
statement.

“Our ongoing objective is to put our firm on a stable financial footing so
that we can pursue growth in the future,” said MBIA Inc. President and Chief
Financial Officer Chuck Chaplin. “In the fourth quarter we were able to amend
our senior debt indentures to reduce risk and permit the holding company
greater financial flexibility going forward. In 2013, most of our attention
will continue to be on collecting outstanding recoverables arising from
ineligible mortgages on securitizations we insured, remediating and reducing
potentially volatile insured exposures and resolving litigation over the
formation of National.”

Full Year 2012 Results
                                               
$ in millions                         2012      2011
Full Year Net Income (Loss)            $ 1,234     $ (1,319)
Full Year Adj. Pre-tax Income (Loss)  $ (708)   $ (497)

Net income available to common shareholders for the twelve months ended
December 31, 2012 was $1.2 billion, or $6.33 per share, compared with a net
loss of $1.3 billion, or $6.69 per share, for the twelve months ended December
31, 2011. The improvement in net income was primarily the result of $1.5
billion of net gains on insured credit derivatives in the year ended December
31, 2012, compared with $2.8 billion of net losses on insured credit
derivatives for the year ended December 31, 2011. The net gains on insured
credit derivatives in 2012 were principally associated with the reversal of
unrealized losses from commutations, the effects of MBIA’s nonperformance risk
on its derivative liabilities and the result of favorable movements in credit
spreads and pricing on collateral in the insured transactions, partially
offset by settlements and claim payments. The net losses on insured credit
derivatives in 2011 principally resulted from favorable changes in the
market’s perception of MBIA Corp.’s credit risk on its derivative liabilities,
reduced collateral pricing and collateral erosion, partially offset by the
reversal of unrealized losses from settlements prior to maturities and
terminations.

The adjusted pre-tax loss for the twelve months ended December 31, 2012 was
$708 million compared with an adjusted pre-tax loss of $497 million for the
twelve months ended December 31, 2011. The unfavorable change for the twelve
months ended December 31, 2012 was primarily due to lower net investment
income, an increase in legal and litigation related costs and increased losses
on insured exposures.

Adjusted Book Value and Book Value

The following is a summary of ABV and book value per share data by segment as
of December 31, 2012:

           U.S.      Structured      Advisory               Wind-down
         Public   Finance and    Services  Corporate  Segments   Consolidated
           Finance   International
12/31/12
ABV per   $ 25.05  $11.86         $0.12     $(2.92)    $(3.43)    $30.68
share
12/31/12
BV per    $20.33   $2.39          $0.12     $(3.10)    $(3.52)    $16.22
share

Fourth Quarter 2012 Segment Results

The following is a summary of pre-tax results by segment for the fourth
quarter of 2012:

$ in       U.S.      Structured      Advisory               Wind-down
millions  Public   Finance and    Services  Corporate  Segments   Consolidated
           Finance   International
4Q 2012
Pre-tax   $202     $715           $1        $(13)      $(51   )   $839
Income
(Loss)
4Q 2011
Pre-tax   $163     $(1,121   )    $9        $41        $(161  )   $(1,074   )
Income
(Loss)

Fourth Quarter 2012 Adjusted Pre-Tax Income

The following is a summary of adjusted pre-tax income (loss) for the fourth
quarter of 2012 where such results differ from pre-tax income calculated in
accordance with GAAP:

                                     Structured
$ in millions                       Finance and    Consolidated
                                     International
4Q 2012 Adj. Pre-tax Income (Loss)  $(13     )     $110
4Q 2011 Adj. Pre-tax Income (Loss)  $(300    )     $(252    )

U.S. Public Finance Insurance Results

The Company’s U.S. public finance insurance business is primarily conducted
through its National Public Finance Guarantee Corp. (National) subsidiary.

The U.S. public finance insurance segment recorded $202 million of pre-tax
income in the fourth quarter of 2012 compared with $163 million of pre-tax
income in the fourth quarter of 2011.

Total premiums earned in the U.S. public finance insurance segment were $122
million in the fourth quarter of 2012, up 8 percent from $113 million of total
premiums earned in the fourth quarter of 2011, reflecting an increase in
refunding premiums earned partially offset by a decrease in scheduled premiums
earned.

Net investment income for the U.S. public finance insurance segment was $51
million in the fourth quarter of 2012, flat with the fourth quarter of 2011.

Net gains on financial instruments at fair value and foreign exchange totaled
$78 million in the fourth quarter of 2012, compared with $74 million in the
fourth quarter of 2011. The gains in both periods were driven by asset sales
within the U.S. public finance insurance segment’s investment portfolios.

In the fourth quarter of 2011, other realized losses totaled $32 million and
were associated with the write-off of goodwill. There was no corresponding
other realized gain or loss in the fourth quarter of 2012.

The U.S. public finance insurance segment’s loss and loss adjustment expenses
totaled $6 million in the fourth quarter of 2012 compared with a benefit of $1
million in the fourth quarter of 2011.

Expenses associated with the amortization of deferred acquisition costs
totaled $28 million in the fourth quarter of 2012, compared with $25 million
in the fourth quarter of 2011, reflecting higher premiums earned.

Operating expenses were $17 million in the fourth quarter of 2012, compared
with $22 million in the comparable period of 2011, primarily due to lower
compensation expense.

As of December 31, 2012, National’s statutory capital was $3.2 billion and its
claims-paying resources (as described in the attached Explanation of Non-GAAP
Financial Measures) totaled $5.7 billion.

Structured Finance and International Insurance Results

The structured finance and international insurance business is primarily
conducted through MBIA Corp. and its subsidiaries.

The structured finance and international insurance segment had an adjusted
pre-tax loss of $13 million for the fourth quarter of 2012 compared with an
adjusted pre-tax loss of $300 million for the fourth quarter of 2011. Premiums
earned, net investment income, fees and reimbursements, and premiums and fees
on insured derivatives totaled $115 million in the fourth quarter of 2012. All
other line items in the aggregate, except losses and credit impairments (a
non-GAAP measure defined in the attached Explanation of Non-GAAP Financial
Measures) and loss-related expenses, had a net $90 million negative impact on
the adjusted pre-tax loss. Losses, credit impairments and loss-related
expenses on insured exposures totaled $38 million in the fourth quarter of
2012, compared with $309 million in the fourth quarter of 2011.

The following is a summary of MBIA Corp.’s insured portfolio economic loss (a
non-GAAP measure defined in the attached Explanation of Non-GAAP Financial
Measures) activity in the fourth quarter.

4Q 2012
Economic Loss                                                  
(Benefit)
Activity
($ in            Second-     First-Lien   ABS
millions)       Lien       RMBS        CDOs    CMBS     Other   Total
                 RMBS
Change in
Expected         $80         $45          ($87 )   $ 311     $0       $349
Payments
Change in
Expected         (326  )     (3  )   23      (2  )   (3 )   (311 )
Salvage
Total Economic
Losses           ($246 )  $42        ($64 )  $309     ($3)  $38    
(Benefit)

In the fourth quarter, the Company increased its expectations of future
payments on second-lien RMBS exposures by $80 million reflecting slower than
expected declines in early stage delinquencies within these transactions.
Expected salvage increased by $326 million primarily reflecting a change in
the Company’s expectations regarding the collectability of expected recoveries
from contractual claims related to ineligible mortgage loans that were
improperly included in the insured securitizations. The Company’s estimates
for expected recoveries related to “put-backs” of ineligible mortgage loans
totaled $3.6 billion as of December 31, 2012. However, based on its assessment
of the strength of its contract claims, the Company continues to believe it is
entitled to collect the full amount of its cumulative incurred losses on these
transactions, which totaled $5.1 billion as of December 31, 2012. In addition,
the Company is entitled to receive interest on any judgment it obtains in any
litigation seeking to collect these unpaid contract claims and such amounts
are not reflected in the Company’s estimated recoveries.

Economic losses on first-lien RMBS exposures totaled $42 million in the fourth
quarter due to higher than expected loan loss severities due to recoveries of
servicer advances and write-downs from loan modifications.

Fourth quarter economic losses on multi-sector ABS CDOs were a benefit of $64
million, driven by revised expectations for future claims payments and changes
to the Company’s projections of future interest rates.

In the fourth quarter of 2012, the Company estimated $309 million of
incremental economic losses on certain insured transactions backed by pools of
CMBS. The increase reflects adjustments to certain commutation scenarios in
the Company’s loss modeling as well as additional deterioration within some
insured transactions.

There were no material commutations of insured exposure during the fourth
quarter of 2012. During the fourth quarter, MBIA Corp. agreed with a credit
default swap counterparty on a commutation of certain potentially volatile
policies insuring ABS CDOs, structured CMBS pools and CRE CDO transactions.
The agreement was subject to the receipt of certain approvals and
non-disapprovals from the New York State Department of Financial Services
(NYSDFS). Subsequent to December 31, 2012, the NYSDFS declined to provide such
approvals and non-disapprovals.

Portions of the $38 million of total economic losses are on policies subject
to insurance accounting while other amounts relate to losses on insured
variable interest entities (VIEs) or insured credit derivatives for which GAAP
specifies different accounting. The following is a summary of fourth quarter
economic losses based on those categories:

4Q 2012 Economic Losses (Benefit)                              
$ in millions
Change in Expected Payments                                      $15
Change in Insurance Recoveries                                    (301  )
Loss & LAE Expense on Policies Subject to Insurance Accounting    ($286 )
                                                                 
Credit Impairments on Insured VIEs                               $5
                                                                 
Credit Impairments on Insured Credit Derivatives                 $317
LAE on Insured Credit Derivatives                                 2     
Credit Impairments and LAE on Insured Credit Derivatives         $319
                                                                 
Total Economic Losses (Benefit)                                  $38     

Net payment activity on second-lien RMBS exposures consisted of the following:

$ in millions                 Q4 2011  Q1 2012  Q2 2012  Q3 2012  Q4 2012
Paid Claims                   $146     $169     $139     $107     $92
Collections on Paid Claims      (93 )     (7 )     (6 )     (6 )     (8 )
and Putback Recoveries
Paid LAE (net of               43      14     35     29     37 
collections)
Net Payments                  $96     $176    $168    $130    $121  

Net payments on insured second-lien RMBS exposures totaled $121 million in the
fourth quarter of 2012 compared with $130 million in the third quarter of 2012
and $96 million in the fourth quarter of 2011.

As of December 31, 2012, MBIA Corp.’s statutory balance sheet reflected $1.0
billion in cash and invested assets. Cash, short-term investments and other
highly liquid investments available to meet liquidity demands, excluding
amounts held by subsidiaries, totaled $345 million.

MBIA Corp. had statutory capital of $1.5 billion and claims-paying resources
totaling $5.3 billion at December 31, 2012.

As previously announced, the NYSDFS denied MBIA Corp.’s request to make the
January 15, 2013 scheduled interest payment on its 14% Fixed-to-Floating Rate
Surplus Notes due 2033 (Surplus Notes). Accordingly, MBIA Corp. was not
permitted or required to make the January 15, 2013 scheduled interest payment
under the terms of the Fiscal Agency Agreement governing the Surplus Notes,
and the non-payment does not constitute a default under the Fiscal Agency
Agreement or any other MBIA Corp. or MBIA Inc. agreement. The deferred
interest payment will be due on the first business day on or after which MBIA
Corp. obtains approval to make such payment. No interest will accrue on the
deferred interest.

The Company’s expected liquidity and capital forecast for MBIA Corp. for 2013
reflects adequate resources to pay expected claims. However, there is a
significant risk to this forecast as MBIA Corp.’s forecast assumes a
comprehensive settlement with Bank of America and its affiliates that includes
a commutation of the insured CMBS exposure held by Bank of America/Merrill
Lynch and the collection of a substantial portion of MBIA Corp.’s put-back
claims against Bank of America/Countrywide. The Company believes that a timely
settlement will occur because it believes a comprehensive settlement is in the
best interests of both MBIA Corp. and Bank of America. A settlement would
substantially alleviate the liquidity stress caused by Bank of
America/Countrywide’s failure to repurchase the billions of dollars of
ineligible loans in MBIA-insured securitizations. While the Company believes
it is more likely than not that a timely settlement will be reached, there can
be no assurance such a settlement will be reached on mutually acceptable terms
and in a timely manner. As previously disclosed, if MBIA Corp. is not able to
reach a comprehensive settlement with Bank of America within a reasonable
period of time and Bank of America or its affiliates presents substantial
claims on its policies covering CMBS pools, MBIA Corp. may have insufficient
resources to cover such claims. Consequently, the Company has concluded that
there is a significant risk of MBIA Corp. being placed into a rehabilitation
or liquidation proceeding by the NYSDFS and, therefore, substantial doubt
exists about MBIA Corp.’s ability to continue as a going concern. However,
even in such event, the Company believes that MBIA Inc. and National, as well
as MBIA Inc.’s non-insurance subsidiaries, remain viable with sound future
business plans and that similar going concern considerations do not apply to
these entities.

Advisory Services

The Company’s Advisory Services business is primarily conducted in its
Cutwater Asset Management subsidiaries. Cutwater recorded pre-tax income of $1
million in the fourth quarter of 2012 compared with pre-tax income of $9
million in the fourth quarter of 2011. The decrease in pre-tax income in the
fourth quarter of 2012 compared with the fourth quarter of 2011 was primarily
the result of lower fees from affiliates.

MBIA Inc. Holding Company

MBIA Inc. contains the Corporate segment and Wind-down Operations. General
corporate activities are conducted through the Corporate segment. The
Company’s corporate operations primarily consist of holding company
activities, including its service company, Optinuity. The Company’s wind-down
operations comprise its ALM and Conduit segments, both of which are in
run-off.

The Corporate segment recorded a pre-tax loss of $13 million in the fourth
quarter of 2012 compared with pre-tax income of $41 million in the fourth
quarter of 2011. The decline in the Corporate segment's pre-tax income was
driven by lower fees from an affiliate and a gain from an insurance settlement
in the fourth quarter of 2011 that did not recur in the fourth quarter of
2012, partially offset by lower net losses on financial instruments at fair
value and foreign exchange. The fees for affiliate services may vary
significantly from period to period.

The Company’s wind-down operations recorded a pre-tax loss of $51 million in
the fourth quarter of 2012 compared with a pre-tax loss of $161 million in the
fourth quarter of 2011. The pre-tax loss in the fourth quarter of 2012 was
driven by negative net interest spread in the ALM business and by a $25
million fee paid to a non-insurance affiliate. The pre-tax loss in the fourth
quarter of 2011 was driven by a $78 million net loss on financial instruments
at fair value and foreign exchange resulting primarily from mark-to-market
losses due to an improved market perception of MBIA Corp.'s credit quality and
by a $65 million service fee paid to a non-insurance affiliate. Ongoing
negative net interest spread in the ALM business, a portion of which is
included in net gains (losses) on financial instruments at fair value and
foreign exchange, totaled approximately $25 million in the fourth quarter of
2012 and $31 million in the fourth quarter of 2011.

During the fourth quarter, the Company successfully completed a consent
solicitation resulting in the amendments to indentures governing its 6.40%
Senior Notes due 2022, 7.00% Debentures due 2025, 7.15% Debentures due 2027,
6.625% Debentures due 2028 and 5.70% Senior Notes due 2034 (the "Notes")
described in the Company's consent solicitation statement dated November 7,
2012. The amendments substitute one of the Company's subsidiaries, National,
for another subsidiary, MBIA Corp., in the definitions of "Restricted
Subsidiary" in the Indenture, dated as of August 1, 1990, and "Principal
Subsidiaries" in the Senior Indenture, dated as of November 24, 2004, pursuant
to which the Notes were issued. MBIA repurchased approximately $172 million of
outstanding principal amount of Notes issued under the 2004 Indenture in
privately negotiated seller initiated reverse inquiry transactions directly
from holders as of the record date that had consented pursuant to the consent
solicitation described above.

As of December 31, 2012, MBIA Inc. had liquidity of $239 million comprising
cash and liquid assets of $170 million held in the corporate segment available
for general corporate liquidity purposes, excluding the amounts held in escrow
under its tax sharing agreement, and $69 million not pledged directly as
collateral held in the asset/liability products segment. MBIA Inc. seeks to
maintain sufficient liquidity and capital resources to meet its general
corporate needs as well as the needs of the asset/liability products
operations. During the first quarter of 2013, MBIA Inc. received $115 million
that was previously held in escrow under the MBIA group tax sharing agreement.
The amount represents National’s liability under the tax sharing agreement for
the 2010 tax year, and was released pursuant to the terms of the agreement
following the expiration of National’s two-year net operating loss carry-back
period under U.S. tax rules.

Conference Call

The Company will host a webcast and conference call for investors tomorrow,
Thursday, February 28, 2013 at 8:00 AM (EST) to discuss its fourth quarter and
full year 2012 financial results and other matters relating to the Company.
The webcast and conference call will consist of brief remarks followed by a
question and answer session.

The dial-in number for the call is (877) 694-4769 in the U.S. and (404)
665-9935 from outside the U.S. The conference call code is 93735620. A live
webcast of the conference call will also be accessible on www.mbia.com.

A replay of the call will be available approximately two hours after the
completion of the call on February 28 until 11:59 p.m. on March 14 by dialing
(800) 585-8367 in the U.S. or (404) 537-3406 from outside the U.S. The replay
call code is also 93735620. In addition, a recording of the call will be
available on the Company's website approximately two hours after the
completion of the call.

Forward-Looking Statements

The information contained in this press release should be read in conjunction
with our filings made with the Securities and Exchange Commission. This
release includes statements that are not historical or current facts and are
“forward-looking statements” made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. The words “believe,”
“anticipate,” “project,” “plan,” “expect,” “intend,” “will likely result,”
“looking forward” or “will continue,” and similar expressions identify
forward-looking statements. These statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected, including,
among other risks and uncertainties, whether the Company will realize, or will
be delayed in realizing, insurance loss recoveries expected in disputes with
sellers/servicers of RMBS transactions at the levels recorded in its financial
statements, the possibility that the Company will experience severe losses or
liquidity needs due to increased deterioration in its insurance portfolios and
in particular, due to the performance of CDOs including multi-sector, CMBS and
CRE CDOs and RMBS, the failure to obtain regulatory approval to implement our
risk reduction and liquidity strategies, the possibility that loss reserve
estimates are not adequate to cover potential claims, the risk that MBIA
Insurance Corporation will be placed in a rehabilitation or liquidation
proceeding by the NYSDFS, the Company’s ability to access capital and the
Company’s exposure to significant fluctuations in liquidity and asset values
within the global credit markets, in particular in the ALM business, the
Company’s ability to fully implement its strategic plan, including its ability
to achieve high stable ratings for National or any other insurance
subsidiaries, and the Company’s ability to commute certain of its insured
exposures, including as a result of limited available liquidity, the Company’s
ability to favorably resolve litigation claims against the Company, and
changes in general economic and competitive conditions. These and other
factors that could affect financial performance or could cause actual results
to differ materially from estimates contained in or underlying the Company’s
forward-looking statements are discussed under the “Risk Factors” section in
MBIA Inc.’s most recent Annual Report on Form 10-K and Quarterly Report on
Form 10-Q, which may be updated or amended in the Company’s subsequent filings
with the Securities and Exchange Commission. The Company cautions readers not
to place undue reliance on any such forward-looking statements, which speak
only to their respective dates. The Company undertakes no obligation to
publicly correct or update any forward-looking statement if it later becomes
aware that such result is not likely to be achieved.

MBIA Inc., headquartered in Armonk, New York is a holding company whose
subsidiaries provide financial guarantee insurance, as well as related
reinsurance, advisory and portfolio services, for the public and structured
finance markets, and asset management advisory services. The Company services
its clients around the globe with offices in New York, Denver, San Francisco,
Paris, London, Madrid and Mexico City. Please visit MBIA's website at
www.mbia.com.

Explanation of Non-GAAP Financial Measures

The following are explanations of why MBIA believes that the non-GAAP
financial measures used in this press release, which serve to supplement GAAP
information, are meaningful to investors.

Adjusted Book Value: Adjusted Book Value (ABV), a non-GAAP measure, is used by
the Company to supplement its analysis of GAAP book value. The Company uses
ABV as a measure of fundamental value and considers the change in ABV an
important measure of periodic financial performance. ABV adjusts GAAP book
value to remove the impact of certain items which the Company believes will
reverse over time, as well as to add in the impact of certain items which the
Company believes will be realized in GAAP book value in future periods. The
Company has limited such adjustments to those items that it deems to be
important to fundamental value and performance and which the likelihood and
amount can be reasonably estimated. ABV assumes no new business activity. The
Company has presented ABV to allow investors and analysts to evaluate the
Company using the same measure that MBIA’s management regularly uses to
measure financial performance. ABV is not a substitute for and should not be
viewed in isolation from GAAP book value.

ABV is calculated on a consolidated basis and a segment basis. ABV by segment
provides information about each segment’s contribution to consolidated ABV and
is calculated using the same formula. ABV per share represents that amount of
ABV allocated to each common share outstanding at the measurement date.

Adjusted Pre-tax Income (Loss): Adjusted pre-tax income (loss), a non-GAAP
measure, is used by the Company to supplement its analysis of GAAP pre-tax
income (loss). The Company uses adjusted pre-tax income (loss) as a measure of
fundamental periodic financial performance. Adjusted pre-tax income (loss)
adjusts GAAP pre-tax income (loss) to remove the effects of consolidating
insured VIEs and gains and losses related to fair valuing insured credit
derivatives, which the Company believes will reverse over time, and adds in
changes in the present value of insurance claims the Company expects to pay on
insured credit derivatives based on its ongoing insurance loss monitoring and
loss adjustment expenses. Adjusted pre-tax income (loss) is not a substitute
for and should not be viewed in isolation from GAAP pre-tax income (loss) and
the Company’s definition of adjusted pre-tax income (loss) may differ from
that used by other companies.

Claims-paying Resources (CPR): CPR is a key measure of the resources available
to National and MBIA Corp. to pay claims under their respective insurance
policies. CPR consists of total financial resources and reserves calculated on
a statutory basis. CPR has been a common measure used by financial guarantee
insurance companies to report and compare resources and continues to be used
by MBIA’s management to evaluate changes in such resources. The Company has
provided CPR to allow investors and analysts to evaluate National and MBIA
Corp. using the same measure that MBIA’s management uses to evaluate their
resources to pay claims under their respective insurance policies. There is no
directly comparable GAAP measure.

Credit Impairments on Insured Derivatives: Credit impairments on insured
derivatives represent actual net payments for the period plus the present
value of the Company’s estimate of expected future net claim payments for such
transactions, using a discount rate required by statutory accounting
principles, plus loss adjustment expenses.  Since the Company’s insured credit
derivatives have similar terms, conditions, risks, and economic profiles to
its financial guarantee insurance policies, the Company evaluates them for
impairment periodically in the same way that it estimates loss and LAE for its
financial guarantee insurance policies. Credit impairments on insured
derivatives are equal to the Company’s statutory losses and loss adjustment
expenses for such contracts.

Credit impairments on insured derivatives may differ from the fair values
recorded in the Company’s financial statements. The Company expects that the
majority of its exposure written in derivative form will not be settled at
fair value. The fair value of an insured derivative contract will be
influenced by a variety of market and transaction-specific factors that may be
unrelated to potential future claim payments. In the absence of credit
impairments or the termination of derivatives at losses, the cumulative
unrealized losses recorded from fair valuing insured derivatives should
reverse before or at the maturity of the contracts. Contracts also may be
settled prior to maturity at amounts that may be more or less than their
recorded fair values. Those settlements can result in realized gains or
losses, and the reversal of unrealized losses. For these reasons, the Company
believes its disclosure of credit impairments on insured derivatives provides
additional meaningful information to investors about potential realized losses
on these contracts.

Economic Losses: Economic losses for a reporting period represent the change
in the discounted values of net payments without regard to the manner in which
they are presented in the Company’s financial statements. Economic losses are
calculated in accordance with GAAP, with the exception of those related to
insured credit derivative impairments. The amounts reported for insured credit
derivative impairments are calculated in accordance with U.S. STAT because
GAAP does not contain a comparable measurement basis for these contracts.
Losses and recoverables on VIEs that are eliminated in consolidation are
included because the consolidation of these VIEs does not impact whether or
not the Company will be required to make payments under insurance contracts.
As a result of the different accounting bases of amounts, the total economic
losses represent a non-GAAP measure.

MBIA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions except share and per share amounts)
                                                          
                                            December 31,       December 31,
                                             2012                2011
Assets
Investments:
Fixed-maturity securities held as
available-for-sale, at fair value
(amortized cost
$4,347 and $6,259)                           $  4,485            $  6,177
Fixed-maturity securities at fair value         244                 295
Investments pledged as collateral, at fair      443                 543
value (amortized cost $489 and $642)
Short-term investments held as
available-for-sale, at fair value
(amortized
cost $662 and $1,577)                           669                 1,571
Other investments (includes investments at     21                107     
fair value of $12 and $96)
Total investments                               5,862               8,693
                                                                 
Cash and cash equivalents                       814                 473
Premiums receivable                             1,228               1,360
Deferred acquisition costs                      302                 351
Insurance loss recoverable                      3,648               3,046
Property and equipment, at cost (less           69                  69
accumulated depreciation of $146 and $139)
Deferred income taxes, net                      1,199               1,745
Other assets                                    268                 243
Assets of consolidated variable interest
entities:
Cash                                            176                 160
Investments held-to-maturity, at amortized
cost
(fair value $2,674 and $3,489)                  2,829               3,843
Fixed-maturity securities held as
available-for-sale, at fair value
(amortized cost $637 and $473)                  625                 432
Fixed-maturity securities at fair value         1,735               2,884
Loans receivable at fair value                  1,881               2,046
Loan repurchase commitments                     1,086               1,077
Derivative assets                               -                   450
Other assets                                   2                 1       
Total assets                                 $  21,724          $  26,873  
Liabilities and Equity
Liabilities:
Unearned premium revenue                     $  2,938            $  3,515
Loss and loss adjustment expense reserves       853                 836
Investment agreements                           944                 1,578
Medium-term notes (includes financial
instruments carried at
fair value of $165 and $165)                    1,598               1,656
Securities sold under agreements to             -                   287
repurchase
Long-term debt                                  1,662               1,840
Derivative liabilities                          2,934               5,164
Other liabilities                               315                 391
Liabilities of consolidated variable
interest entities:
Variable interest entity notes (includes
financial instruments carried
at fair value of $3,659 and $4,754)             7,124               8,697
Long-term debt                                  -                   360
Derivative liabilities                          162                 825
Other liabilities                              -                 1       
Total liabilities                              18,530            25,150  
                                                                 
Equity:
Preferred stock, par value $1 per share;
authorized shares─10,000,000;
issued and outstanding ─ none                   -                   -
Common stock, par value $1 per share;
authorized shares─400,000,000;
issued shares ─ 277,405,039 and                 277                 275
274,896,162
Additional paid-in capital                      3,076               3,072
Retained earnings                               2,039               805
Accumulated other comprehensive income
(loss), net of
tax of $21 and $105                             56                  (176    )
Treasury stock, at cost ─ 81,733,530 and       (2,275  )          (2,276  )
81,752,966 shares
Total shareholders' equity of MBIA Inc.         3,173               1,700
Preferred stock of subsidiary and              21                23      
noncontrolling interest
Total equity                                   3,194             1,723   
Total liabilities and equity                 $  21,724          $  26,873  

MBIA INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(in millions)
                                                                                                      
                                Structured
                   U.S.         Finance and
                   Public       International   Advisory
                   Finance
Three months
ended December     Insurance    Insurance       Services                 Wind-down
31, 2012
                   (National)  (MBIA Corp.)   (Cutwater)  Corporate  Operations  Subtotal  Eliminations  Consolidated
Revenues:
Premiums
earned:
Scheduled
premiums           $    53      $     36        $    -       $  -        $   -        $ 89       $   (8    )    $   81
earned
Refunding
premiums               69           -            -        -          -        69         (9    )       60    
earned
Total premiums          122           36             -          -            -          158          (17   )        141
earned
Net investment          51            7              -          3            6          67           (25   )        42
income
Fees and                1             37             13         44           -          95           (81   )        14
reimbursements
Change in fair
value of
insured
derivatives:
Realized gains
(losses) and
other
settlements
on insured              1             13             -          -            -          14           -              14
derivatives
Unrealized
gains (losses)         -            397          -        -          -        397        -            397   
on insured
derivatives
Net change in
fair value of           1             410            -          -            -          411          -              411
insured
derivatives
Net gains
(losses) on
financial
instruments at
fair value and
foreign                 78            20             (1  )      (1   )       (7   )     89           (16   )        73
exchange
Net gains
(losses) on             -             -              -          (1   )       1          -            -              -
extinguishment
of debt
Revenues of
consolidated
VIEs:
Net investment          -             13             -          -            3          16           -              16
income
Net gains
(losses) on
financial
instruments at
fair value and
foreign                -            33           -        -          -        33         2            35    
exchange
Total revenues          253           556            12         45           3          869          (137  )        732
                                                                                                                
Expenses:
Losses and
loss                    6             (286  )        -          -            -          (280 )       -              (280  )
adjustment
Amortization
of deferred             28            31             -          -            -          59           (45   )        14
acquisition
costs
Operating               17            20             11         44           3          95           (21   )        74
Interest                -             62             -          14           23         99           (29   )        70
Expenses of
consolidated
VIEs:
Operating               -             4              -          -            26         30           (27   )        3
Interest                -             10             -          -            2          12           -              12
                                                                                                         
Total expenses         51           (159  )       11       58         54       15         (122  )       (107  )
                                                                                                                
Pre-tax income     $    202     $     715      $    1      $  (13  )   $   (51  )   $ 854     $   (15   )        839
(loss)
                                                                                                                
Provision
(benefit) for                                                                                                      203   
income taxes
                                                                                                                
Net income                                                                                                      $   636   
(loss)

MBIA INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(in millions)
                                                                                                             
                                    Structured
                       U.S.         Finance and
                       Public       International   Advisory
                       Finance
Three months ended     Insurance    Insurance       Services                 Wind-down
December 31, 2011
                       (National)   (MBIA Corp.)    (Cutwater)   Corporate   Operations   Subtotal     Eliminations   Consolidated
Revenues:
Premiums earned:
Scheduled premiums     $   63       $   49          $     -      $  -        $   -        $ 112        $   (10   )    $  102
earned
Refunding premiums        50         -               -        -          -        50           (9    )      41      
earned
Total premiums             113          49                -         -            -          162            (19   )       143
earned
Net investment             51           12                -         2            19         84             -             84
income
Fees and                   3            26                21        87           -          137            (128  )       9
reimbursements
Change in fair value
of insured
derivatives:
Realized gains
(losses) and other
settlements
on insured                 -            (1,772  )         -         -            -          (1,772 )       -             (1,772  )
derivatives
Unrealized gains
(losses) on insured       -          90              -        -          -        90           -           90      
derivatives
Net change in fair
value of insured           -            (1,682  )         -         -            -          (1,682 )       -             (1,682  )
derivatives
Net gains (losses)
on financial
instruments at
fair value and             74           47                -         (24  )       (78  )     19             (4    )       15
foreign exchange
Investment losses
related to
other-than-temporary
impairments:
Investment losses
related to
other-than-temporary       -            (97     )         -         (3   )       -          (100   )       -             (100    )
impairments
Other-than-temporary
impairments
recognized
in accumulated other      -          39              -        4          -        43           -           43      
comprehensive loss
Net investment
losses related to
other-than-temporary       -            (58     )         -         1            -          (57    )       -             (57     )
impairments
Other net realized         (32  )       -                 -         25           -          (7     )       -             (7      )
gains (losses)
Revenues of
consolidated VIEs:
Net investment             -            13                -         -            3          16             1             17
income
Net gains (losses)
on financial
instruments at
fair value and             -            58                -         -            (1   )     57             (1    )       56
foreign exchange
Other net realized         -            255               -         -            -          255            -             255
gains (losses)
                                                                                                               
Total revenues             209          (1,280  )         21        91           (57  )     (1,016 )       (151  )       (1,167  )
                                                                                                                      
Expenses:
Losses and loss            (1   )       (284    )         -         -            -          (285   )       -             (285    )
adjustment
Amortization of
deferred acquisition       25           29                -         -            -          54             (42   )       12
costs
Operating                  22           40                12        36           3          113            (30   )       83
Interest                   -            38                -         14           31         83             (8    )       75
Expenses of
consolidated VIEs:
Operating                  -            6                 -         -            65         71             (66   )       5
Interest                   -            12                -         -            5          17             -             17
                                                                                                               
Total expenses            46         (159    )        12       50         104      53           (146  )      (93     )
                                                                                                                      
Pre-tax income         $   163     $   (1,121  )   $     9      $  41      $   (161 )   $ (1,069 )   $   (5    )       (1,074  )
(loss)
                                                                                                                      
Provision (benefit)                                                                                                     (448    )
for income taxes
                                                                                                                      
Net income (loss)                                                                                                     $  (626    )

MBIA INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(in millions)
                                                                                                             
                                      Structured
                         U.S.         Finance and
                         Public       International   Advisory
                         Finance
Twelve months ended      Insurance    Insurance       Services                 Wind-down
December 31, 2012
                         (National)  (MBIA Corp.)   (Cutwater)  Corporate  Operations  Subtotal   Eliminations  Consolidated
Revenues:
Premiums earned:
Scheduled premiums       $    221     $    179        $    -       $  -        $   -        $ 400       $   (28   )    $  372
earned
Refunding premiums           271         -             -        -          -        271         (38   )      233    
earned
Total premiums                492          179             -          -            -          671           (66   )       605
earned
Net investment                218          28              -          14           43         303           (89   )       214
income
Fees and                      6            146             55         177          -          384           (323  )       61
reimbursements
Change in fair value
of insured
derivatives:
Realized gains
(losses) and other
settlements
on insured                    1            (407   )        -          -            -          (406  )       -             (406   )
derivatives
Unrealized gains
(losses) on insured          -           1,870         -        -          -        1,870       -           1,870  
derivatives
Net change in fair
value of insured              1            1,463           -          -            -          1,464         -             1,464
derivatives
Net gains (losses)
on financial
instruments at
fair value and                121          38              (1  )      18           (177 )     (1    )       56            55
foreign exchange
Investment losses
related to
other-than-temporary
impairments:
Investment losses
related to
other-than-temporary          -            (6     )        -          -            (52  )     (58   )       -             (58    )
impairments
Other-than-temporary
impairments
recognized
in accumulated other         -           (39    )       -        (4   )      (4   )    (47   )      -           (47    )
comprehensive loss
Net investment
losses related to
other-than-temporary          -            (45    )        -          (4   )       (56  )     (105  )       -             (105   )
impairments
Net gains (losses)
on extinguishment of          -            -               -          (2   )       2          -             -             -
debt
Other net realized            -            1               -          5            1          7             -             7
gains (losses)
Revenues of
consolidated VIEs:
Net investment                -            53              -          -            11         64            3             67
income
Net gains (losses)
on financial
instruments at
fair value and                -            8               -          -            -          8             10            18
foreign exchange
Net gains (losses)
on extinguishment of         -           -             -        -          49       49          -           49     
debt
Total revenues                838          1,871           54         208          (127 )     2,844         (409  )       2,435
                                                                                                                       
Expenses:
Losses and loss               21           29              -          -            -          50            -             50
adjustment
Amortization of
deferred acquisition          103          112             -          -            -          215           (165  )       50
costs
Operating                     145          135             59         123          16         478           (97   )       381
Interest                      -            237             -          57           102        396           (112  )       284
Expenses of
consolidated VIEs:
Operating                     -            20              -          -            98         118           (101  )       17
Interest                      -            42              -          -            13         55            -             55
                                                                                                                
Total expenses               269         575           59       180        229      1,312       (475  )      837    
                                                                                                                       
Pre-tax income           $    569     $    1,296     $    (5  )   $  28      $   (356 )   $ 1,532    $   66           1,598
(loss)
                                                                                                                       
Provision (benefit)                                                                                                      364    
for income taxes
                                                                                                                       
Net income (loss)                                                                                                      $  1,234  

MBIA INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(in millions)
                                                                                                              
                                      Structured
                         U.S.         Finance and
                         Public       International   Advisory
                         Finance
Twelve months ended      Insurance    Insurance       Services                 Wind-down
December 31, 2011
                         (National)  (MBIA Corp.)   (Cutwater)  Corporate  Operations  Subtotal    Eliminations  Consolidated
Revenues:
Premiums earned:
Scheduled premiums       $   283      $   222         $     -      $  -        $   -        $ 505        $   (49   )    $  456
earned
Refunding premiums          171        8               -        -          -        179          (30   )      149     
earned
Total premiums               454          230               -         -            -          684            (79   )       605
earned
Net investment               216          77                -         2            78         373            10            383
income
Fees and                     8            116               67        154          -          345            (295  )       50
reimbursements
Change in fair value
of insured
derivatives:
Realized gains
(losses) and other
settlements
on insured                   2            (2,373  )         -         -            -          (2,371 )       -             (2,371  )
derivatives
Unrealized gains
(losses) on insured         -          (441    )        -        -          -        (441   )      -           (441    )
derivatives
Net change in fair
value of insured             2            (2,814  )         -         -            -          (2,812 )       -             (2,812  )
derivatives
Net gains (losses)
on financial
instruments at
fair value and               96           69                -         23           (283 )     (95    )       (4    )       (99     )
foreign exchange
Investment losses
related to
other-than-temporary
impairments:
Investment losses
related to
other-than-temporary         -            (99     )         -         (14  )       (12  )     (125   )       -             (125    )
impairments
Other-than-temporary
impairments
recognized
in accumulated other        -          37              -        6          (19  )    24           -           24      
comprehensive loss
Net investment
losses related to
other-than-temporary         -            (62     )         -         (8   )       (31  )     (101   )       -             (101    )
impairments
Net gains (losses)
on extinguishment of         -            -                 -         -            24         24             2             26
debt
Other net realized           (31  )       1                 -         25           4          (1     )       -             (1      )
gains (losses)
Revenues of
consolidated VIEs:
Net investment               -            52                -         -            15         67             3             70
income
Net gains (losses)
on financial
instruments at
fair value and               -            30                -         -            12         42             17            59
foreign exchange
Other net realized           -            255               -         -            -          255            8             263
gains (losses)
                                                                                                                 
Total revenues               745          (2,046  )         67        196          (181 )     (1,219 )       (338  )       (1,557  )
                                                                                                                        
Expenses:
Losses and loss              4            (84     )         -         -            -          (80    )       -             (80     )
adjustment
Amortization of
deferred acquisition         89           136               -         -            -          225            (162  )       63
costs
Operating                    77           145               64        114          12         412            (104  )       308
Interest                     -            138               -         58           129        325            (25   )       300
Expenses of
consolidated VIEs:
Operating                    -            31                -         -            68         99             (70   )       29
Interest                     -            43                -         -            19         62             -             62
                                                                                                                 
Total expenses              170        409             64       172        228      1,043        (361  )      682     
                                                                                                                        
Pre-tax income           $   575     $   (2,455  )   $     3      $  24      $   (409 )   $ (2,262 )   $   23           (2,239  )
(loss)
                                                                                                                        
Provision (benefit)                                                                                                       (920    )
for income taxes
                                                                                                                        
Net income (loss)                                                                                                       $  (1,319  )

MBIA INC. AND SUBSIDIARIES
ADJUSTED PRE-TAX INCOME (LOSS) ^  RECONCILIATION ^(1)
(in millions)
                                                               
                                Three Months Ended      Twelve Months Ended
                                December 31,            December 31,
                                2012       2011         2012        2011
                                                                    
Adjusted pre-tax income         $ 110      $ (252   )   $ (708  )   $ (497   )
(loss)
Additions to adjusted pre-tax
income (loss):
     Impact of consolidating      17         (117   )     79          (49    )
     certain VIEs
     Mark-to-market gain
     (loss) on insured credit     397        361          1,870       (310   )
     derivatives
Subtractions from adjusted
pre-tax income (loss):
     Impairments on insured
     credit derivatives and      (315 )    1,066      (357  )    1,383  
     LAE
Pre-tax income (loss)           $ 839     $ (1,074 )   $ 1,598    $ (2,239 )
                                                                    
                                                                    
STRUCTURED FINANCE & INTERNATIONAL INSURANCE (MBIA CORP.)
ADJUSTED PRE-TAX INCOME (LOSS) ^  RECONCILIATION ^(1)
(in millions)
                                                                    
                                Three Months Ended      Twelve Months Ended
                                December 31,            December 31,
                                2012       2011         2012        2011
                                                                    
Adjusted pre-tax income         $ (13  )   $ (300   )   $ (983  )   $ (688   )
(loss)
Additions to adjusted pre-tax
income (loss):
     Impact of consolidating      16         (116   )     52          (74    )
     certain VIEs
     Mark-to-market gain
     (loss) on insured credit     397        361          1,870       (310   )
     derivatives
Subtractions from adjusted
pre-tax income (loss):
     Impairments on insured
     credit derivatives and      (315 )    1,066      (357  )    1,383  
     LAE
Pre-tax income (loss)           $ 715     $ (1,121 )   $ 1,296    $ (2,455 )
                                                                    
                                                                    
                                                                    
^(1) A non-GAAP measure; please see Explanation of Non-GAAP Financial
     Measures.

MBIA INC. AND SUBSIDIARIES
                                                             
Components of Adjusted Book Value per Share:
                                                                   
                                                                   
                                       December      December
                                       31,           31,           Change
                                       2012          2011
                                                                   
                                                                   
Reported                               $16.22        $8.80         $7.42
Book Value
                                                                   
Adjustments for items included in
book value per share (after-tax):
                                                                   
Cumulative net loss from               0.59          0.82          ($0.23)
consolidating certain VIEs ^ (1)
                                                                   
Cumulative unrealized loss on          9.70          16.12         ($6.42)
insured credit derivatives
                                                                   
Net unrealized (gains) losses          (0.47)        0.85          ($1.32)
included in OCI
                                                                   
Adjustments for items not included
in book value per share (after-tax):
                                                                   
Net unearned premium revenue ^ (2)     9.49          11.65         ($2.16)
(3)
                                                                   
Cumulative impairments on insured      (4.85)        (3.74)        ($1.11)
credit derivatives
                                                                 
Adjusted Book Value ^(4)               $30.68        $34.50        ($3.82)
                                                                   
^(1)    Represents the impact on consolidated total equity of VIEs that are
        not considered business enterprises of the Company.
^(2)    The discount rate on financial guarantee installment premiums was the
        risk free rate as defined by accounting principles for financial
        guarantee insurance contracts and the discount rate on insured
        derivative installment revenue and impairments was 5.0%.
^(3)    The amounts consist of installment and upfront financial guarantee
        premiums, insured derivative revenue and deferred
        commitment/structuring fees, net of deferred acquisition costs.
^(4)    A non-GAAP measure; please see Explanation of Non-GAAP Financial
        Measures.
                                                                   
Net Income (Loss) per Common Share:
                         Three Months Ended          Twelve Months Ended
                         December 31,                December 31,
                         2012          2011          2012          2011
              Basic      $3.27         ($3.23)       $6.36         ($6.69)
              Diluted    $3.26         ($3.23)       $6.33         ($6.69)
                                                                   
                                                                   
Weighted-Average Number of Common Shares Outstanding:
                                                                   
              Basic      194,086,613   193,304,376   193,842,435   197,019,968
              Diluted    195,104,544   193,304,376   194,904,830   197,019,968

INSURANCE OPERATIONS
                                                       
Selected Financial Data Computed on a Statutory Basis
(dollars in millions)
                                                             
National Public Finance Guarantee Corporation
                                                             
                                       December 31, 2012     December 31, 2011
                                                             
  Policyholders' surplus               $    1,999            $   1,424
  Contingency reserve                      1,249              1,385     
                                                             
  Statutory capital                         3,248                2,809
                                                         
  Unearned premium reserve                  2,041                2,485
  Present value of installment             217                239       
  premiums ^(1)
                                                             
  Premium resources ^ (2)                   2,258                2,724
                                                             
  Net loss and loss adjustment              (109     )           (3        )
  expense reserves ^(1)
  Salvage reserves                         262                161       
  Gross loss and loss adjustment            153                  158
  expense reserves
                                                             
                                                            
  Total claims-paying resources        $    5,659           $   5,691     
                                                             
                                                             
  Net debt service outstanding         $    519,458          $   635,653
                                                             
  Capital ratio ^ (3)                       160:1                226:1
                                                             
  Claims-paying ratio ^ (4)                 107:1                134:1
                                                             
                                                             
                                                             
  MBIA Insurance Corporation
                                       December 31, 2012    December 31, 2011
                                                             
  Policyholders' surplus               $    965              $   1,597
  Contingency reserve                      493                706       
                                                             
  Statutory capital                         1,458                2,303
                                                             
  Unearned premium reserve                  600                  607
  Present value of installment             1,035              1,226     
  premiums ^(5)
                                                             
  Premium resources ^ (2)                   1,635                1,833
                                                             
  Net loss and loss adjustment              (2,448   )           (2,266    )
  expense reserves ^(5)
  Salvage reserves ^(6)                    4,628              4,249     
  Gross loss and loss adjustment            2,180                1,983
  expense reserves
                                                             
                                                            
  Total claims-paying resources        $    5,273           $   6,119     
                                                             
                                                             
  Net debt service outstanding         $    145,763          $   180,805
                                                             
  Capital ratio ^ (3)                       100:1                79:1
                                                             
  Claims-paying ratio ^ (4)                 31:1                 33:1

^(1)  At December 31, 2012 and December 31, 2011 the discount rate was 4.54%
       and 4.77%, respectively.
^(2)   The amounts consist of Financial Guarantee premiums and Insured
       Derivative premiums.
^(3)   Net debt service outstanding divided by statutory capital.
^(4)   Net debt service outstanding divided by the sum of statutory capital,
       unearned premium reserve (after-tax), present
       value of installment premiums (after-tax), net loss and loss adjustment
       expense reserves and salvage reserves.
^(5)   At December 31, 2012 and December 31, 2011 the discount rate was 5.72%
       and 5.59%, respectively.
^(6)   The amount primarily consists of expected recoveries related to the
       Company's put-back claims of ineligible
       mortgage loans.

Contact:

MBIA Inc.
Media:
Kevin Brown, +1-914-765-3648
or
MBIA Inc.
Investor Relations:
Greg Diamond, +1-914-765-3190
 
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