Options Wonderland

[langlui]

My god! Did I miss the MBI & ABK puts or what?! MBI going to go down to $1 tomorrow

$2.3billion or $18.04 net loss per share for FY2007. CDOs CMOs those securitization is the cause of all these subprime mess. Dang it


MBIA Inc. Reports Fourth Quarter and Full Year 2007 Results
Thursday January 31, 12:06 am ET
Results Consistent with Previously Announced Estimates; New Capital Plan Positions Company for Continued Market Leadership

ARMONK, N.Y.--(BUSINESS WIRE)--MBIA Inc. (NYSE: MBI - News), the holding company for MBIA Insurance Corporation (“the Company”), today reported financial results for its fourth quarter and full year ended December 31, 2007.
The results, as compared with the same period of the prior year, were as follows:

Net loss for the full year 2007 was $1.9 billion, compared with net income of $819.3 million in 2006.
Net loss per share for the full year 2007 was $15.22, compared with net income per share of $5.99 in 2006.
Gary Dunton, MBIA Chairman and Chief Executive Officer, said, “We are disappointed in our operating results for the year, as the performance of our insured prime, second-lien mortgage portfolio and three insured CDO-squared transactions led to unprecedented loss reserving and impairment activity. The effect of these reserving and impairment activities on our capital position will be more than offset by the successful completion of our capital plan, which will increase our capital position by well over $2 billion. We have raised $1.5 billion to date through our $1 billion surplus notes offering and the Warburg Pincus’ $500 million investment in MBIA common stock, which closed yesterday. Additionally, we have a commitment from Warburg Pincus to backstop a $500 million rights offering, and we are considering this and other steps to raise equity. We believe that these steps, along with reduced capital requirements resulting from slower business growth, will result in our capital position surpassing rating agency Triple-A requirements as currently articulated and will allow us to continue serving the needs of our clients and investors.”

The decline in net income for the year was primarily due to the previously announced pre-tax net loss which amounted to $3.5 billion, or on an after-tax basis, $2.3 billion or $18.04 per share, on financial instruments at fair value (“mark-to-market”) and foreign exchange. Significantly wider spreads and ratings downgrades of securities backing Collateralized Debt Obligations (“CDO”) during the fourth quarter adversely affected the mark-to-market valuation of the Company’s insured credit derivatives portfolio. As MBIA previously announced on January 9, 2008, the Company estimates a credit impairment of $200 million included in the pre-tax net loss of $3.5 billion on its insured credit derivatives portfolio for three CDO-squared transactions on which the Company expects to incur actual losses in the future. MBIA continues to believe that the balance of the mark-to-market losses are not predictive of future claims and, in the absence of further credit impairment, the cumulative marks should reverse over the remaining life of the insured credit derivatives. Additionally, the mark-to-market does not affect rating agency evaluations of MBIA’s capital adequacy, except to the extent of impairments.

Also contributing to the Company’s pre-tax net loss was $713.5 million of pre-tax loss and loss adjustment expense comprising case loss activity of $613.5 million and a special addition of $100 million to the unallocated loss reserve for MBIA’s prime, second-lien mortgage exposure. The case loss activity reflects MBIA’s best estimate of probable and reasonably estimable losses.

Mark-to-market losses during the fourth quarter on insured credit derivatives that were reinsured for MBIA by Channel Re (a financial guarantee reinsurer in which MBIA has a 17.4 percent equity ownership interest) resulted in the Company adjusting the carrying value of its ownership interest from $85.7 million to zero. The adjustment is reflected in net losses on financial instruments at fair value. Absent further credit impairment, MBIA believes that substantially all of the mark-to-market losses on the business reinsured by Channel Re are not predictive of future claims and should reverse over time; therefore, the carrying value of MBIA’s investment in Channel Re would be adjusted accordingly in the future.

Operating income per share, a non-GAAP measure (defined in the attached Explanation of Non-GAAP Financial Measures) that excludes the effects of non-cash net realized gains and losses, net gains and losses on financial instruments at fair value (with the exception of credit impairment) and foreign exchange, was as follows:


After-tax operating income for 2007 declined to $192.9 million from $793.7 million in 2006.
Operating income per share was $1.52 in 2007 compared with $5.81 in 2006.
Excluding accelerated income from refunded issues, operating income per share in 2007 was down 81 percent to $0.95 from $5.10 in 2006. The decline in operating income per share was primarily due to the $713.5 million of loss reserving activity and the $200 million of credit impairments in the insured derivatives portfolio in the fourth quarter.

Net loss for the fourth quarter of 2007 was $2.3 billion compared with net income of $181.0 million for the same period of 2006. For the fourth quarter of 2007, net loss per share was $18.61 compared with net income per share of $1.32 for the fourth quarter of 2006.

After-tax operating loss for the fourth quarter of 2007 was $407.8 million compared with after-tax operating income of $179.2 million for the fourth quarter of 2006. Operating loss per share was $3.30 for the fourth quarter of 2007, compared with operating income per share of $1.31 for the fourth quarter of 2006. Excluding accelerated income from refunded issues, operating loss per share for the fourth quarter of 2007 was $3.38, compared with operating income per share of $1.16 for the same period of 2006.