11:45PM New York – MBIA stock rose after it reported higher loss on mark-to-market accounting basis but said that credit asset impairment loss declined.

MBIA Inc., a bond insurer and credit protection provider today reported revenue for the first quarter of 2008 of $711.4 million down 4% from $741.7 million in last year's first quarter. First quarter net loss was $2.4 billion or loss of $13.03 per diluted share compared with net income of $198.6 million or profit of $1.46 during the same period in 2007.

Total insured portfolio was $668 billion at the end of quarter. The majority of the net loss in the quarter was the result of a pre-tax $3.6 billion unrealized loss on insured credit derivatives, which included $0.8 billion of credit impairments.

“We have ample liquidity, our balance sheet is built to withstand credit stress levels many multiples of what we’re experiencing now, and our business model is proving that we are adequately capitalized to satisfy any potential claims on our insured portfolio,” said Jay Brown, MBIA Chairman and Chief Executive Officer.

Second quarterly loss on housing related portfolio

The insurer recognized a total of $1.34 billion of pre-tax impairments and loss reserves on its housing-related insured portfolio in the quarter, bringing the cumulative total of incurred pre-tax credit losses for housing-related exposures to $2.15 billion over the past two quarters.

Rating agencies activities

In late February, Standard & Poor’s and Moody’s affirmed MBIA’s Triple-A ratings with negative outlooks. At year-end 2007, the company exceeded Standard & Poor’s target capital requirement by $400 million and met Moody’s minimum requirements for a Triple-A rating but fell short of Moody’s target capital requirement by $1.7 billion. MBIA expects to meet this target over the next two quarters.

Currently, MBIA believes that its shortfall to Moody’s target capital ratio is approximately $1.3 billion, after the first quarter’s reduction in capital requirements of roughly $400 million from a combination of amortization and retirements in the portfolio and upgrades of a handful of credits. MBIA believes that its cushion to S&P’s Triple-A requirement increased during the quarter to approximately $900 million as a result of amortization, elimination of the shareholder dividend and new business volume which was lower than plan.

The Company does not include issuance of new common equity capital as part of its current capital plan, because it expects to meet and exceed all Triple-A requirements without further issuance of common equity. MBIA does not foresee any reasonable scenario that would require more than the $1.65 billion common equity raised in the first quarter of 2008.

Premium from primary and secondary bond insurance business

The company had very little new business production until its Triple-A ratings were affirmed with negative outlooks by S&P and Moody’s in the last week of February. Since March 1, the Company wrapped 24 new public finance issues (primary market) totaling $9.1 million and 222 issues in the secondary bond market with a premium of $17.9 million.

Company claims adequate cash flow

In 2007 the 12-months operating cash flow of MBIA Insurance Corporation and its subsidiaries was $977 million. The annual cash payments the company expects to make on derivatives such as RMBS/multi-sector CDO squared and high grade and mezzanine multi-sector CDOs will peak in 2008 or 2009 at approximately $550 million. The company believes it will meet all obligations to policyholders while continuing to grow the investment portfolio. For the first quarter of 2008, operating cash flow of MBIA Insurance Corporation was $304 million, and $108 million in loss payments in the quarter were more than offset by a one-time tax refund of $178 million.

MBIA has $668 billion of net par insurance in force, of which 66% is on public finance bonds, and 34% is on structured financings. Within its structured finance portfolio, it has direct exposure to second mortgages such as home equity lines of credit and closed-end second mortgages, and indirect exposure to subprime mortgages through CDOs. MBIA’s residential mortgage-backed securities and multi-sector CDO exposures account for only 10% of the company’s net par insured, but they account for essentially all of the economic losses that the Company has sustained in this housing-led economic downturn.

MBIA also has $4.2 billion in direct exposure to subprime mortgages. However, the direct subprime mortgage exposure benefits from high subordination levels and the company does not expect to incur losses on this exposure.

Assets under management down only 1%

MBIA's asset management business continued its new business activities during the quarter, growing its external fee-for-service advisory business by almost $1 billion in assets under management. Total average assets under management for the first quarter, including conduit assets, were $64.6 billion, down 1% from $65.4 billion for the first quarter of 2007. Total average assets under management for the first quarter, including conduit assets, were $64.6 billion, down 1 percent from $65.4 billion for the first quarter of 2007.

The company pre-tax unrealized loss on insured credit derivatives (mark-to-market) was $3.6 billion in the first quarter, which includes $0.8 billion of credit impairments. The Company does not expect the full amount of cumulative mark-to-market losses to be realized, except to the extent of the $1.0 billion in impairments estimated to date.

The mark-to-market loss is far less reflective of MBIA’s business than credit impairments, and does not indicate actual or expected losses. In addition, mark-to-market losses, except for the impairment, do not affect the insurance company's statutory capital or rating agency capital requirements. Unlike financial institutions with tradable, liquid portfolios of derivative assets and liabilities, MBIA’s contingent insurance liabilities are not typically tradable, and are not subject to acceleration or collateralization.