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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: stomper who wrote (98079)	4/26/2001 8:32:08 AM
From: Lucretius	Read Replies (1) \| Respond to of 436258

not good

To: stomper who wrote (98079)	4/26/2001 11:42:50 AM
From: Perspective	Read Replies (1) \| Respond to of 436258

I'm not sure if that's the whole story. I dug into the annual report, and while the story is bad, I don't think it's that bad. I think the loan-loss is taken out of context. Looks like they are on the hook for $681 BILLION (not bad, that's, what, 10% of GDP? <g>) in riskier debt with ~$200M loan loss, net of pre-allocated reserves. Ah, but only 1/3rd is "structured finance"... Fun stuff from MBIA annual: MBIA Corp. issues financial guarantees for municipal bonds, asset-backed and mortgage-backed securities, investor-owned utility bonds, bonds issued by highly rated sovereign and sub-sovereign entities and collateralized obligations of corporations and financial institutions, both in the new issue and secondary markets The municipal obligations that MBIA Corp. insures include tax-exempt and taxable indebtedness of states, counties, cities, utility districts and other political subdivisions, as well as airports, higher education and health care facilities and similar authorities. The asset-backed or structured finance obligations insured by MBIA Corp. typically consist of securities that are payable from or which are tied to the performance of a specified pool of assets that have a defined cash flow, such as residential and commercial mortgages, a variety of consumer loans, corporate loans and bonds, trade and export receivables, equipment and real property leases and infrastructure projects. MBIA CORP. INSURED PORTFOLIO At December 31, 2000, the net par amount outstanding on MBIA Corp.'s insured obligations (including insured obligations of MBIA Illinois, MBIA Assurance and CapMAC, but excluding the guarantee of $5.3 billion of investment management transactions) was $418.4 billion, comprised of $349.8 billion in new issues and $68.6 billion in secondary market issues. Net insurance in force was $680.9 billion. MBIA CORP. INSURED PORTFOLIO BY BOND TYPE AS OF DECEMBER 31, 2000 (IN BILLIONS) <TABLE> <CAPTION> BOND TYPE NET PAR % OF NET AMOUNT PAR AMOUNT OUTSTANDING OUTSTANDING <S> <C> <C> Domestic Public Finance General Obligation $ 91.6 21.9% Utilities 44.6 10.6 Health Care 37.9 9.1 Special Revenue 33.2 7.9 Transportation 25.0 6.0 Higher Education 16.0 3.8 Investor Owned Utilities 15.4 3.7 Housing 12.3 2.9 ---------------------------------- Total Public Finance 276.0 65.9 ---------------------------------- Structured Finance Mortgage Backed: Home Equity 28.4 6.8 Other 14.2 3.4 First Mortgage 8.8 2.1 Asset Backed: Other 18.2 4.4 Auto 13.2 3.1 Leasing 4.5 1.1 Pooled Corp. Obligations & Other 12.6 3.0 Financial Risk 5.1 1.2 ---------------------------------- Total Structured Finance 105.0 25.1 ---------------------------------- ---------------------------------- Total Domestic 381.0 91.0 ---------------------------------- International Structured Finance* 31.9 7.7 Infrastructure 5.5 1.3 ---------------------------------- Total International 37.4 9.0 ---------------------------------- TOTAL $418.4 100.0% ================================== </TABLE> *Asset/mortgage-backed, Pooled Corporate Obligations and Financial Risk LOSSES AND RESERVES ...The total reserve is calculated by applying a loss factor, determined based on an independent rating agency study of bond defaults, to net debt service written. At December 31, 2000, $209.2 million of the $467.9 million reserve for loss and loss adjustment expenses represents case basis reserves, of which $183.9 million is attributable to a health care facility in Pennsylvania. The remaining case basis reserves represent various housing financings and structured finance transactions, the largest of which is $9.9 million. Both MBIA Illinois and CapMAC are currently inactive and their insurance business is in run-off. MBIA Corp. has reinsured their respective net liabilities on financial guarantee insurance business and maintains required reserves in connection therewith. BC