UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| x |
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarter Ended September 30, 2002
OR
| o |
TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period from __________ to __________
| Commission File No. 1-9583 |
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I.R.S. Employer Identification No. 06-1185706 |
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| MBIA INC. | ||
| A Connecticut Corporation | ||
| 113 King Street, Armonk, N. Y. 10504 | ||
| (914) 273-4545 | ||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
| Yes |
x |
No |
o |
As of November 4, 2002 there were outstanding 145,111,181 shares of Common Stock, par value $1 per share, of the registrant.
INDEX
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PAGE |
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| PART I |
FINANCIAL INFORMATION |
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| Item 1. |
Financial Statements (Unaudited) MBIA Inc. and Subsidiaries |
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Consolidated Balance Sheets – September 30, 2002 and December 31, 2001 |
3 |
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Consolidated Statements of Income – Three months and nine months ended September 30, 2002 and 2001 |
4 |
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Consolidated Statement of Changes in Shareholders’ Equity – Nine months ended September 30, 2002 |
5 |
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Consolidated Statements of Cash Flows – Nine months ended September 30, 2002 and 2001 |
6 |
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7-11 | |
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| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
12-26 |
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| Item 3. |
27 | |
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| Item 4. |
27 | |
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| PART II |
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| Item 1. |
27-28 | |
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| Item 6. |
28 | |
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| 29 | ||
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| Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
30-33 | |
(2)
MBIA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands except per share amounts)
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September 30, 2002 |
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December 31, 2001 |
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| Assets |
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Investments: |
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Fixed-maturity securities held as available-for-sale at fair value (amortized cost $7,583,697 and $7,274,848) |
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$ |
8,204,090 |
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$ |
7,421,023 |
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Short-term investments, at amortized cost (which approximates fair value) |
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581,591 |
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293,791 |
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Other investments |
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112,929 |
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135,376 |
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8,898,610 |
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7,850,190 |
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Investment agreement portfolio held as available-for-sale at fair value (amortized cost $6,094,696 and $5,957,089) |
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6,442,409 |
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6,079,066 |
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Investment agreement portfolio pledged as collateral at fair value (amortized cost $1,516,925 and $577,790) |
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1,569,539 |
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586,915 |
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Total investments |
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16,910,558 |
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14,516,171 |
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Cash and cash equivalents |
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175,696 |
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115,040 |
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Accrued investment income |
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199,314 |
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181,984 |
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Deferred acquisition costs |
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287,409 |
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277,699 |
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Prepaid reinsurance premiums |
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518,813 |
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507,079 |
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Reinsurance recoverable on unpaid losses |
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44,335 |
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35,090 |
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Goodwill |
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90,041 |
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97,772 |
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Property and equipment, at cost (less accumulated depreciation of $82,986 and $72,088) |
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129,504 |
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129,004 |
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Receivable for investments sold |
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104,805 |
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157,864 |
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Other assets |
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252,764 |
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181,982 |
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Total assets |
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$ |
18,713,239 |
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$ |
16,199,685 |
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| Liabilities and Shareholders’ Equity |
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Liabilities: |
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Deferred premium revenue |
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$ |
2,635,925 |
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$ |
2,565,096 |
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Loss and loss adjustment expense reserves |
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568,174 |
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518,389 |
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Investment agreement obligations |
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5,651,907 |
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5,150,374 |
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Investment repurchase agreement obligations |
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608,667 |
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904,744 |
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Long-term debt |
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1,115,259 |
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805,062 |
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Short-term debt |
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17,650 |
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47,751 |
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Securities sold under agreements to repurchase |
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1,315,716 |
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555,496 |
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Current income taxes |
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— |
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22,419 |
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Deferred income taxes |
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536,761 |
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272,665 |
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Deferred fee revenue |
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26,189 |
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27,629 |
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Payable for investments purchased |
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252,722 |
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130,098 |
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Other liabilities |
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502,548 |
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417,324 |
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Total liabilities |
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13,231,518 |
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11,417,047 |
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Shareholders’ Equity: |
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Preferred stock, par value $1 per share; authorized shares – 10,000,000; issued and outstanding – none |
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— |
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— |
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Common stock, par value $1 per share; authorized shares – 400,000,000; issued shares – 152,529,263 and 151,950,991 |
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152,529 |
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151,951 |
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Additional paid-in capital |
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1,221,607 |
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1,195,802 |
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Retained earnings |
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3,802,664 |
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3,415,517 |
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Accumulated other comprehensive income, net of deferred income tax provision of $333,695 and $91,222 |
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605,551 |
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145,321 |
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Unallocated ESOP shares |
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(1,002 |
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(1,983 |
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Unearned compensation – restricted stock |
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(14,077 |
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(11,335 |
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Treasury stock – 6,925,968 and 3,516,921 shares |
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(285,551 |
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(112,635 |
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Total shareholders’ equity |
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5,481,721 |
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4,782,638 |
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Total liabilities and shareholders’ equity |
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$ |
18,713,239 |
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$ |
16,199,685 |
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The accompanying notes are an integral part of the consolidated financial statements.
(3)
MBIA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands except per share amounts)
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Three months ended |
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Nine months ended |
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2002 |
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2001 |
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2002 |
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2001 |
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| Insurance |
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Revenues: |
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Gross premiums written |
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$ |
237,753 |
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$ |
218,722 |
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$ |
630,337 |
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$ |
610,186 |
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Ceded premiums |
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(57,661 |
) |
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(75,264 |
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(146,131 |
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(173,409 |
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Net premiums written |
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180,092 |
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143,458 |
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484,206 |
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436,777 |
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Scheduled premiums earned |
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129,401 |
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120,276 |
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378,469 |
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345,471 |
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Refunding premiums earned |
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25,199 |
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14,174 |
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52,938 |
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37,353 |
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Premiums earned (net of ceded premiums of $49,117, $43,512, $137,819 and $123,765) |
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154,600 |
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134,450 |
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431,407 |
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382,824 |
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Net investment income |
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108,975 |
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105,312 |
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323,544 |
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309,429 |
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Advisory fees |
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18,962 |
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6,757 |
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38,306 |
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27,607 |
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Total insurance revenues |
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282,537 |
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246,519 |
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793,257 |
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719,860 |
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Expenses: |
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Losses and LAE incurred |
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15,528 |
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10,325 |
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45,416 |
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41,366 |
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Amortization of deferred acquisition costs |
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12,799 |
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11,139 |
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34,944 |
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31,009 |
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Operating |
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20,315 |
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19,729 |
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59,650 |
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58,611 |
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Total insurance expenses |
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48,642 |
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41,193 |
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140,010 |
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130,986 |
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Insurance income |
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233,895 |
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205,326 |
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653,247 |
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588,874 |
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| Investment management services |
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Revenues |
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27,534 |
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34,994 |
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83,112 |
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98,712 |
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Expenses |
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14,714 |
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16,868 |
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43,099 |
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49,228 |
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Investment management services income |
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12,820 |
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18,126 |
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40,013 |
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49,484 |
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| Municipal services |
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Revenues |
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5,986 |
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6,299 |
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17,585 |
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20,227 |
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Expenses |
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5,887 |
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7,000 |
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17,293 |
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22,532 |
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Municipal services income (loss) |
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99 |
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(701 |
) |
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292 |
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(2,305 |
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| Corporate |
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Net investment income |
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2,565 |
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1,537 |
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6,825 |
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4,881 |
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Interest expense |
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15,141 |
< | |||||||||||