MBIA 8-K 2011
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Item 8.01. OTHER EVENTS.
The following information is being filed pursuant to Item 8.01 – Other Events of Form 8-K.
On December 15, 2011, MBIA Inc. (the “Company”) announced that from the beginning of the fourth quarter of 2011 to date, MBIA Insurance Corporation (“MBIA Corp.”) agreed to commute approximately $20 billion of gross insured exposure, which includes agreements reached in the fourth quarter related to $10.6 billion of gross insured exposure that were previously announced in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011. The commuted transactions were primarily comprised of commercial real estate exposures. The total amount MBIA Corp. agreed to pay to commute the above transactions exceeded its aggregate statutory loss reserves for the transactions as of September 30, 2011 by approximately $500 million. The amounts paid for these commutations reflected the elimination of substantial future loss volatility.
In consideration for the commutation of insured transactions, including the transactions described above, the Company has made and may in the future make payments to the counterparties the amounts of which, if any, may be less than or greater than any statutory loss reserves established for the respective transactions. The Company’s ability to commute insured transactions may be limited by available liquidity as determined based on management’s assessment of the Company’s available liquidity and its potential liquidity needs.
This Current Report on Form 8-K 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, 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 collateralized debt obligations, including multi-sector, commercial mortgage backed security and commercial real estate collateralized debt obligations, and residential mortgage backed securities, uncertainty regarding whether the Company will realize, or will be delayed in realizing, insurance loss recoveries expected in disputes with sellers/servicers of residential mortgaged backed securities transactions at the levels recorded in its financial statements, the possibility that loss reserve estimates are not adequate to cover potential claims, 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 asset/liability management 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.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.