MBIA reports loss as slump deepens

MBIA Inc, the bond insurer that lost 87 percent of its market value in the past year, posted a net loss of $2.4 billion as the slump in mortgage securities deepened.

The first-quarter net loss was $13.03 a share, compared with a profit of $198.6 million, or $1.46 a share, a year earlier, Armonk, New York-based MBIA said in a regulatory filing yesterday. Unrealized losses from derivatives were $3.58 billion.

The loss was MBIA's third straight and comes less than three months after the bond insurer successfully retained its AAA credit rating. MBIA, Ambac Financial Group Inc and the rest of the industry have posted record losses after misjudging the value of collateralized debt obligations and securities backed by home-equity loans they guaranteed. MBIA, once a dominant provider of municipal bond insurance, had 2.5 percent of the market in the quarter, according to Thomson Financial data.

"We're not out of the woods yet," said Richard Larkin, senior vice-president at Herbert J. Sims & Co in Iselin, New Jersey. "I'm not sure AAA bond insurers will ever be viewed the same way as in the past."

MBIA raised $2.6 billion in capital to help convince Moody's Investors Service and Standard & Poor's to preserve its AAA rating. Chief Executive Officer Jay Brown said this week the company won't need to raise more.

"We have adequate equity capital to get through this crisis," Brown wrote in a letter to shareholders published last Tuesday.

MBIA fell 93 cents, or 9 percent, to $9.43 on Friday in New York Stock Exchange composite trading. The stock was trading above $70 a year ago.

Agencies

(China Daily 05/13/2008 page17)