Bill,
This weeks S&P outlook commented on MBIA
AUGUST 22, 2001 MBIA INC.
As the number one insurer of municipal bonds, MBIA is well positioned to produce double-digit premium and operating earnings growth this year and next. Results will be aided by higher demand for bond insurance, an interest-rate-driven increase in municipal bond issuance and refundings, as well as contributions from the companys forays into the international and structured finance markets. Overall demand for municipal bond insurance has been growing, as evidenced by the rising percentage of insured bonds among all new issues, which totaled 53.5% on June 30, up from 44.5% a year earlier.
Although our outlook is tempered by MBIAfs significant exposure to the troubled California utilities, PG&E Corp. and Edison International, as well as its mixed record of leveraging the growth opportunities in the structured finance and international markets, we believe the shares are undervalued. At current levels, the stock is trading close to the companyfs underlying operating earnings growth rate, which represents a discount to its peer group of property-casualty insurers. We estimate that operating earnings, which exclude net realized investment gains or losses, will rise to $3.75 a share in 2001 and to $4.20 in 2002. Based on MBIAfs above-average long-term growth prospects, the shares (MBI, 57, NYSE šššš; Quality ranking: A) are attractive. We have a six to 12-month price target of $63. |
