Frequently Asked Questions

The Chief Executive Officer of National is Bill Fallon, the Chief Risk Officer is Adam Bergonzi, the General Counsel is Bill Rizzo and the Chief Financial Officer is Christopher H. Young.

Yes. The U.S. public finance business of Financial Guaranty Insurance Company (FGIC) that was reinsured by MBIA Insurance Corporation in 2008 has since been novated to National. The Novation Agreement between National and FGIC (effective as of August 19, 2013) replaces FGIC with National as the primary insurer on covered policies as if National originally insured such policies. Claims for payment must be made directly to National, in accordance with the terms of the applicable insurance agreements.

For more information on the FGIC-insured credits novated to National, please see the “Policyholders Documentation" web page on National’s website, click here.

The reinsurance and assignment agreements between MBIA Insurance Corporation and National Public Finance Guarantee Corporation (National), formerly known as MBIA Insurance Corporation of Illinois, which became effective as of January 1, 2009, enable covered policyholders to make claims for payment directly to National in accordance with the terms of the applicable agreements. National has also issued a second-to-pay insurance policy for the benefit of the policyholders covered by the reinsurance and assignment agreements. The second-to-pay insurance policy is held by The Bank of New York Mellon as insurance trustee on behalf of the policyholders. This insurance policy provides that if MBIA Insurance Corporation does not pay valid claims to the policyholders and ceding insurers under the applicable policies or agreements, these policyholders and ceding insurers will then be able to make a claim directly against National under the second-to-pay insurance policy.

For more information, please see the “Policyholders Documentation" web page on National’s website, click here.

For additional information on National, please see National's website, click here.

The second-to-pay policy provides policyholders that are covered under the cut-through reinsurance agreement with a direct policy claim on National Public Finance Guarantee Corporation (National). 

For more information, please see the "Policyholders Documentation" web page on National's website, click here.

Under GAAP accounting, National’s ownership of MBIA Inc. common shares is recorded as treasury stock in the MBIA Inc. and Subsidiaries consolidated financial statements.

Under statutory accounting and New York Insurance Law, National's ownership of MBIA Inc. common shares is recorded as an investment in National’s statutory financial statements and measured at fair value. However, the value of the investment that can be admitted by National is subject to limitation. The non-admitted value of the investment is based on the ratio of the statutory surplus of National to the GAAP consolidated shareholders’ equity of MBIA Inc. and Subsidiaries.

As of December 31, 2023, National owned 88.9 million shares of MBIA Inc. common stock. As of December 31, 2023, the fair value of MBIA Inc. common shares owned by National was $544 million and was non-admitted in its entirety.

As of December 31, 2023, National did not hold Puerto Rico bonds in its investment portfolio.

National Public Finance Guarantee Corporation entered into a Master Services Agreement ("MSA") with MBIA Services Corporation, a direct subsidiary of MBIA Inc., whereby MBIA Services Corporation provides specified administrative services to National, including accounting, audit and financial administrative services.

Administrative fees due, as a result of services provided from one entity to another, are actual costs incurred and include any fees for third party providers associated with the provision of the necessary services.

National's claims-paying resources were $1.7 billion and $2.4 billion as of December 31, 2023 and December 31, 2022, respectively.

For additional information about claims-paying resources please click here to access our most recently filed Form 10-K.

MBIA Inc.'s insurance companies are required under GAAP to recognize and measure premium revenue based on the amount of insurance protection provided for the period in which the insurance protection is provided by using a constant rate yield method. A constant rate is applied to the insured principal amount outstanding in that given period to determine the premium earned. Thus, a proportionate share of the premium received or expected to be received on a financial guarantee insurance contract is allocated and recognized in the period in which the insurance protection is provided. A constant rate for each respective financial guarantee insurance contract is determined as the ratio of (a) the present value of premium received or expected to be received over the period of the contract to (b) the sum of all insured principal amounts outstanding during each period over the term of the contract. As premium revenue is recognized, unearned premium revenue liability is reduced.

An issuer of an insured financial obligation may retire the obligation prior to its scheduled maturity through legal defeasance in satisfaction of the obligation according to its indenture. MBIA insurance companies recognize any remaining unearned premium revenue on the insured obligation as premium revenue in the period the obligation is legally defeased.

The Company collects insured related fees for services performed in connection with certain transactions. Depending upon the type of fee received and whether it is related to an insurance policy, the fee is either recognized when it is received or deferred and recognized as the related service has been completed. Waiver and consent and termination fees are recognized when the related service is complete, which is generally the same time the fee is received. 

New York Insurance Law (NYIL) regulates the payments of dividends by financial guarantee insurance companies (such as MBIA Insurance Corp. and National) and provides that such companies may not declare or distribute dividends except out of statutory earned surplus. Under NYIL, the sum of (i) the amount of dividends declared or distributed during the preceding 12-month period and (ii) the dividend to be declared, may not exceed the lesser of (a) 10% of policyholders' surplus, as reported in the most recent statutory statements or (b) 100% of adjusted net investment income for such 12-month period (the net investment income for such 12-month period plus the excess, if any, of net investment income over dividends declared or distributed during the two-year period preceding such 12-month period), unless the Superintendent of the New York State Department of Financial Services approves a greater dividend distribution based upon a finding that the insurer will retain sufficient surplus to support its obligations.

Due to its significant negative earned surplus, MBIA Insurance Corp. has not had the statutory capacity to pay dividends since December 31, 2009 and is not expected to have any statutory capacity to pay any dividends in the near term.

On December 7, 2023, National paid a $550 million special dividend approved by the New York State Department of Financial Services (“NYSDFS”) to its ultimate parent, MBIA Inc. In addition, in November of 2023, National declared and paid an as-of-right dividend of $97 million to its ultimate parent, MBIA Inc. In the fourth quarter of 2022, National declared and paid an as-of-right dividend of $72 million to its ultimate parent, MBIA Inc.

Net insured debt service outstanding divided by the sum of statutory policyholders' surplus and contingency reserve yields the capital ratio.

The claims-paying resources ratio is calculated by dividing net insured debt service outstanding by total claims-paying resources. Total claims-paying resources are equal to the sum of the statutory policyholders' surplus plus contingency reserve, unearned premium reserve (after tax, if applicable), gross loss and loss adjustment expense reserves (which is equal to net loss and loss adjustment expense reserves excluding salvage reserves on paid claims) and present value of future installment premiums (after tax, if applicable).

Case basis loss reserves are established on a transaction by transaction basis, by calculating the present value of probability-weighted estimated loss payments, net of estimated recoveries. MBIA Inc. insurance subsidiaries take into account a number of variables in establishing specific case basis reserves for individual insurance policies that depend primarily on the nature of the underlying insured obligation. These variables include the nature and creditworthiness of the issuers of the insured obligations, expected recovery rates on unsecured obligations and the projected cash flow or market value of any assets pledged as collateral on secured obligations, and the expected rates of recovery, cash flow or market values on such obligations or assets. Factors that may affect the actual ultimate realized losses for any policy include economic conditions and trends, political developments, levels of interest rates, rates of inflation, borrower behavior, the default rate and salvage values of specific collateral, and our ability to enforce contractual rights through litigation and otherwise. The remediation strategy for an insured obligation that has defaulted or is expected to default may also have an impact on the insurance company's loss reserves.

Loss and loss adjustment expense (LAE) reserves are established by loss reserve committees in both of our major operating insurance companies (National Public Finance Guarantee Corporation and MBIA Insurance Corporation) and reviewed by our executive Loss Reserve Committee, which consists of members of senior management. Loss and LAE reserves include case basis reserves and accruals for LAE incurred. Case basis reserves represent our estimate of expected losses to be paid under an insurance contract, net of potential recoveries on insured obligations that have defaulted or are expected to default.

For a complete description of MBIA Inc.'s loss reserving, please click here to access our most recently filed 10-Q and 10-K.

In establishing case basis loss reserves, the present value of probability-weighted estimated loss payments, net of estimated recoveries, is calculated using a discount rate appropriate for the requisite accounting basis. That is, the company reports financial information in accordance with generally accepted accounting principles (GAAP) in the United States of America and accounting practices (statutory accounting) prescribed or permitted by the New York State Department of Financial Services (“NYSDFS”).

In accordance with GAAP, MBIA Corp. and National Public Finance Guarantee Corporation each uses discount rates equal to the risk-free rates applicable to the currency and the weighted-average remaining lives of the insurance contracts to calculate case basis loss reserves. Yields on U.S. Treasury offerings are used to discount loss reserves denominated in U.S. dollars, which represent the majority of the company’s loss reserves. Similarly, yields on foreign government offerings are used to discount loss reserves denominated in currencies other than the U.S. dollar.

In accordance with accounting practices prescribed or permitted by the NYSDFS, MBIA Corp. and National Public Finance Guarantee Corporation each uses a discount rate equal to the yield-to-maturity of its respective fixed-income investment portfolio, excluding investments in cash and cash equivalents and other investments not intended to defease long-term liabilities, to calculate case basis loss reserves.

LAE reserves are expected to be settled within a one year period and are generally not discounted. For additional information about the discount rates used by MBIA Corp. and National Public Finance Guarantee Corporation for loss reserving, please click here to access our most recently filed 10-Q and 10-K.