Earnings Preview: MBIA

MBIA (MBI) is expected to report Q2 earnings before the market open on Thursday, August 6 with a conference call scheduled for 8 am.

Guidance

Analysts are looking for EPS of (92c) on revenue of $307.75M. The consensus range for EPS is ($1.07) to (76c), according to First Call. Only one analyst set a revenue estimate for the company while two analysts set EPS estimates. MBIA's stock is jumping $1.13, or 25.34%, to $5.59 in mid-afternoon trading. The increase in the shares may be related to speculation that bond insurers, including MBIA, will be able to avoid paying their customers for investment instruments that received high ratings from the ratings agencies. Alternatively, the surge may have been caused by short covering before MBIA reports results.

Analyst Views

Meanwhile, two ratings agencies had negative outlooks on MBIA last quarter. Moody's downgraded MBIA's senior debt rating to Ba3 from Ba1 at the end of June, and the ratings agency has a negative outlook on the debt. Moody's said the rating reflects MBIA's continued stress as a result of its exposure to ABS CDOs and RMBS securities. Moreover, Moody's significantly increased its estimate for MBIA's losses from ABS CDOs. The ratings agency predicts that MBIA will eventually settle these exposures "under terms similar to a distressed exchange."

Early in June S&P lowered its rating on MBIA's variable-rate surplus notes. S&P has concerns about MBIA's continued adverse loss development within its insured portfolio. Meanwhile, 18 financial firms sued MBIA in May for splitting its business. Claiming that one of the businesses is insolvent, the plaintiffs contend that the move by MBIA was fraudulent. MBIA investors will listen for an update about the case on Thursday.

Comments

[Gtarras]

"related to speculation that bond insurers, including MBIA, will be able to avoid paying their customers for investment instruments that received high ratings from the ratings agencies."

what does this mean????

2009 Aug 04 04:57 PM

[mbi4ever]

"related to speculation that bond insurers, including MBIA, will be able to avoid paying their customers for investment instruments that received high ratings from the ratings agencies."

what does this mean????

That means that Johny Dog and Sean are not getting any sleap tonight ;)

2009 Aug 04 06:45 PM

[Jasper M]

It Means they (bond insurers) are seeking to be excused from paying off obligations if they can convince a judge that they were defrauded by the ratings agencies (Moody's, etc.).
I have puts on MBIA, so I am watching this little soap opera with baited breath.

2009 Aug 04 08:27 PM

[johnny inca]

note there was another story today about some boston lawyer suing mortgage writers for making loans they "knew" would default.

If the legal proceedings ever get any legs, watch out.

2009 Aug 05 09:23 AM