MBIA presented a brighter picture of its future on Thursday.
In a conference call concerning its third-quarter results, chief executive officer Joseph Brown said MBIA had executed several insurance commutations in the third quarter.
There were commutation agreements reached with four counterparties, totaling $8.5 billion, MBIA announced. Since the end of the quarter, the company has settled an additional $10.6 billion of exposure, primarily in commercial real estate.
"In an effort to continue commuting potentially volatile exposures, we are having ongoing discussions with other holders of our insured credit default swaps, who may also be interested in achieving negotiated settlements before the end of this year," Brown said. "So far this year, we have resolved $23 billion of exposure early, more than in all of 2010."
One financial analyst offered an opinion about the conference call that Brown and his chief financial officer Chuck Chaplin were underplaying MBIA's prospects. "I think the quarter and the present reality is better than how it was presented on the call," he said.
MBIA is probably negotiating with several banks and other parties currently, the analyst said. He said it would not surprise him if MBIA settled with several before the end of the year.
Only eight of the original 18 plaintiffs remain active against MBIA in "transformation" litigation, Brown said. This litigation challenges MBIA's 2009 decision to place its municipal insurance business into a new unit.
MBIA's problems stem from the busted real estate bubble, during which many banks made dubious loans and securitized them. MBIA and other companies insured these securities. When the recession hit in 2008, real estate values plunged, unemployment spiked, and many home owners stopped making payments on their mortgages. The securities turned out to be worth far less than had been promised.
MBIA said the banks misrepresented the loans that MBIA insured and is suing the banks.
A trial in the Article 78 process may happen in late February or early March. Article 78 of New York Civil Practice Law and Rules allows companies to overturn decisions of the New York Insurance Department on the basis that they are "arbitrary and capricious."
A different "plenary action" case challenging the transformation would, at earliest, be held at the end of 2012, Brown said.
MBIA on Wednesday announced: its adjusted book value was $35.51 per share on Sept. 30 versus $37.22 per share on June 30; its adjusted pre-tax loss was $430 million for the third quarter versus a pre-tax loss of $24 million for the third quarter of 2010.
It had net income available to common shareholders of $444 million for the third quarter compared with a net loss of $213 million for the third quarter of 2010.