MBIA Inc (MBI) 2009 Q2 法說會逐字稿

Good morning and welcome to the MBIA Inc. second-quarter 2009 financial results conference call. At this time all lines are in listen-only mode two to prevent any background noise. After the prepared remarks from the Company, there will be a question-and-answer session. (Operator Instructions)

I'd now like to turn the call over to Greg Diamond, Director of Investor Relations at MBIA. Please go ahead.

Thank you. Welcome to MBIA's conference call for our second-quarter 2009 financial results. We're going to follow the same format as last quarter's call. Chuck will provide some brief comments and then we will start the question-and-answer session. We have posted several items on our web site including the Form 10-Q for the quarter. We've also posted remodeled quarterly operating supplements for both the first and second quarters of 2009. And the information for accessing the recorded replay of today's call is in our financial results press release which is also available on our website. Our Company's definitive disclosures are incorporated in our SEC filings. The purpose of today's call is to discuss some of the points raised in our most recent 10-Q to facilitate a greater understanding for our investors. The 10-Q also contains information that will not be addressed on today's call. Please note that anything we say on this call is qualified by the fuller information provided in the 10-Q and our SEC filings. You should read our Form 10-Q as it contains our most comprehensive disclosures as of the end of the second quarter about the Company and our financial and operating performance. For the Q&A session of today's call we have Jay Brown, CEO; and Chuck Chaplin, President, CFO, and Chief Administrative Officer.

Now for our Safe Harbor disclosure statement. Our remarks on this conference call may contain forward-looking statements. Important factors such as general market conditions and the competitive environment could cause actual results to differ materially from those projected in our forward-looking statements. Risk factors are detailed in our 10-K which is available on our website at www.MBIA.com. The Company undertakes no obligation to revise or update any forward-looking statements to reflect changes in events or expectations. In addition, the definitions of the non-GAAP terms that are included in our remarks today may also be found on our website. Before we begin the Q&A session Chuck Chaplin will provide a few introductory comments. Chuck?

Thanks, Greg. And good morning, everyone. Last week the latest GDP numbers were reported for the first quarter and second quarter of 2009. As the economy continues to contract, the last two quarters have been part of the longest and deepest recessions that we've seen since GDP records have been kept starting in 1947. While the rate of decline slowed in the second quarter, the economy in the first six months of this year continued to modestly underperform our expectations and affect our loss assumptions. Nonetheless, even as we've increased our expectations of payments to investors, those losses still remain within our means. All things considered so far in 2009 we've made good progress in reducing risk in our businesses, remediating troubled credits and pursuing recoveries of losses based on misrepresentations.

This continues to be a year in which we focus on maintaining balance sheet strength in the face of an adverse credit environment. On a consolidated basis the Company has more than adequate assets to fund all of its liabilities and expected payments on contingent liabilities. Since we operate through multiple regulated entities, let me comment on the major ones.

National Public Finance Guarantee Corp., our newly formed domestic municipal finance company, has a solid balance sheet with $1.7 billion in statutory capital and total claims paying resources of $5.5 billion. Its cash flow is being used to grow its investment portfolio and surplus. MBIA Insurance Corp., our structured finance and international bond insurer, held $1.2 billion in cash and short-term assets as of June 30, 2009, and had $4.2 billion in statutory capital and $7.8 billion in total claims paying resources. As we expected, MBIA Insurance Corp. is experiencing negative operating cash flows in 2009 and thus holds a substantial portion of its assets in near cash investments. We believe that it has sufficient resources to carry all of its obligations and fund its expected contingent liabilities and maintain a cushion.

Our holding company comprises the corporate operations and the asset liability management business. In our corporate operations, we had about $378 million of liquid assets at June 30, enough to cover all of our expected cash outflows well into 2011, including scheduled debt maturities. In the second quarter, we used about $10 million at the holding company level to purchase $101 million of preferred stock of MBIA Insurance Corp. In the ALM portfolio, we had cash and short-term investments of $1.3 billion at June 30. Total liabilities were $8.8 billion, down from $23.5 billion at June 30 last year. The book now has positive operating cash flow beginning in May, and we've been successful at repurchasing some of this debt at discount.

The ALM business has a $2 billion obligation to MBIA Insurance Corp. which we expect to be repaid through ALM's positive cash flows and reduced collateral requirements as liabilities and related hedges wind down or are repurchased and as credit market liquidity improves. It also benefits from a $600 million advance from the corporate operations which can only be repaid after the obligation to MBIA Insurance Corp. is retired. Finally, it has a $1.7 billion asset swap relationship with National which will wind down as ALMs guaranteed investment contracts mature or are terminated.

Let's turn now from the balance sheet to our operating performance. I'll talk about consolidated results for the six months of 2009 and then make some comments about the second quarter at the segment level. On a consolidated basis, we had pretax income in the six months of 2009 of nearly $2.5 billion, of which $2 billion was associated with unrealized gains on insured credit derivatives in MBIA Insurance Corp. We do not believe that these derivative gains reflect fundamental performance of our business, just as the unrealized losses we've seen on insured derivatives in other periods did not reflect fundamental underperformance. About $455 million of our pretax income is associated with business operations compared with a $512 million loss on the same basis in 2008.

The drivers of this improvement were lower provisions for insured losses, higher realized and unrealized gains on hedging derivatives, and lower impairments of invested assets. Our future performance will depend in part on the direction of the global economy. Because there continues to be great uncertainty about the progress of this recession and the markets to which we're exposed, it's too soon for us to expect a return to any kind of normality in our P&L. And we expect to continue to have the volatility and reported earnings that the mark to market on insured credit derivatives brings.

Now to comment on the performance of each business in the second quarter of 2009. National Public Finance performed in line with expectations in the second quarter with $146 million in pretax income. This is pretty much a run rate level of earnings for National. Some one-time expenses associated with the organization of the Company affected the quarter, but they were basically offset by realized investment gains. Loss and loss adjustment expense was consistent with our historical average of roughly 5% of premiums. National didn't write any material new business in the quarter. However, once we prevailed in the transformation-related litigation, we expect that both our ratings and our new business outlooks will improve.

At MBIA Insurance Corp., once again have increased our payment expectations for our insured second lien RMBS transactions. We now project that our payments will remain elevated for the rest this year and then reduce materially by late 2010. This is an extension beyond the expectation we had last quarter. The trend that we see today in early stage delinquencies or over last few months as shown on page 47 of our operating supplement is supportive of our projections, but clearly there is risk associated with any assumptions that we make about the future performance of these deals.

It's important to note that virtually all of the payments made by MBIA serve to reduce the principal balances of the bonds, and ultimately these securitizations will contain only performing loans. Excess spread on those remaining performing mortgages will partially offset our higher payments, and we expect the net cash flows ultimately to be positive in aggregate commencing sometime in 2011. You can see this in the graphic in our supplement on page 49. The portion of the bars that are below the zero line represent cash inflows. The net increase in expected payments in this quarter was approximately $393 million.

Our financial assessments for this quarter also reflect our decision to account for an initial assessment of recoveries on ongoing mortgage file reviews on deals with certain seller servicers. Based upon the loan level forensic analysis of our experts, we believe that a vast number of loans were inappropriately included in some of our insured second lien RMBS transactions. As I stated this is just an initial investment. The analysis is ongoing and the recovery reflected in our financials only reflects the most serious violations of mortgage loan eligibility criteria for loans that we've been able to re-underwrite.

Our loan level forensic review experts have re-underwritten nearly 24,000 loan files from 24 securitizations originated by four seller servicers, and they have found that over 18,000 have serious breaches of reps and warranties. We are processing these loans under the put-back rights associated with our policies, and we've commenced legal actions against two of the seller servicers to compel their performance under these contracts.

To provide some color, our initial assessment of loans eligible for repurchase is primarily composed of loans that either had a credit breach or had both credit and compliance breaches. An example of a credit breach would be a loan that has -- that exceeds the debt to income or combined loan-to-value ratio guidelines for the relevant program. Compliance breaches would be things like missing good faith estimates or Reg Z forms in the files. The total recovery value reflected in our financial statements is approximately $1.1 billion, and the total reduction in our cumulative incurred loss from the combination of the higher payments that I referenced, the recovery, and all other effects was $735 million in the second quarter.

Again, the recovery is based on our contractual rights under the transaction document. To provide some scale on our efforts to date, the loans that we've re-underwritten over many, many months are only 27% of the delinquent and charged off loans in these securitizations. We are pursuing recoveries on these other loans and additional sums via legal proceedings. We also intend to aggressively enforce our contractual remedies, and as such, we're also conducting forensic reviews of mortgage files and securitizations of other seller servicers. However, we have not included any recoveries from these additional claims at this time.

Now while we're on the subject of credit performance, I will address our insured credit derivatives. You can't see the credit performance directly in our GAAP numbers, but you can in the non-GAAP measure ABV and in our statutory books. That's because in those two places we estimate impairments or record loss reserves for those policies just as we do for regular financial guarantee policies. These reserves reflect the expected cash cost of settling claims on these policies as opposed to the policy fair values which is required by GAAP. In the quarter, we increased those reserves by approximately $287 million.

We have learned through -- again through detailed forensic analysis that some of our insured CDOs are affected by misrepresentations of the characteristics of their collateral, and we have commenced legal actions against one of the arrangers whose deals represent a majority of our incurred loss.

On the GAAP side, instead of expected cash payments you have the mark to market. Once again this quarter it has a significant impact on MBIA Corp.'s income statement. You'll see in the attribution table that was included in our press release as well as our operating supplement that the drivers of the $424 million positive change in our cumulative mark to market were lower spreads on collateral in the CDOs. That positive change is reduced by the impact of the market's perception of MBIA's nonperformance risk. All of the columns in our attribution table except the nonperformance risk column can be thought of as having been calculated excluding credit risk, and then the nonperformance risk component converts that raw result to a fair value which is shown in the far right column. So even if there's no change in MBIA's credit default swap spread, which is essentially what happened this quarter, there will always be an offset to the other column in this column. If the other components of our fair value have a net positive value as they do this quarter, the nonperformance risk will have a negative value and vice-versa.

Turning now to the investment management services business, the ALM business had pretax income in the second quarter of $96 million of which $95 million came from gains on the extinguishment of debt. Other than that, unrealized gains on swaps and foreign exchange of $116 million more than offset asset impairments of $107 million. We continue to work on reducing the underlying negative spread on this book as it continues to wind down. Our third-party asset management business continues to post solid investment performance, and as a result has added new mandates and fixed income as well as in our short-term pool programs. Year to date we've added 23 new portfolios and third party assets under management, in total grew by $3.8 billion since year end. The contribution to pretax earnings from the third-party asset management business at our conduit operations were $1 million and $18 million respectively in the quarter. Repurchases of conduit debt at discounts make up most of its contribution.

To sum up the quarterly financial results then, we had $1.5 billion of pretax income, about half of that came from adjustments to loss reserves for recoveries, and approximately 30% came from favorable mark to market movement in MBIA Insurance Corp. The balance came from the underlying mechanics of our businesses. For management purposes, we also track our adjusted book value or ABV. ABV is a non-GAAP concept that removes the effects of unrealized gains and losses. ABV does, however, include the impact of any expected cash losses on insured credit derivatives as well as invested assets. At June 30, ABV was $40.01, flat against year end 2008 ABV of $40.06. Adverse insured credit performance in MBIA Insurance Corp. reduced ABV by about $1.14 per share, and this was nearly offset by other sources of earning including the impact of debt buybacks at $0.39 per share. With that I'd like to open the floor to your questions.

Thank you. (Operator Instructions) Your first question comes from the line of Daniel Kim with JPMorgan.

Good morning, guys.

Morning.

So I guess my first question is about the $1.1 million refund. Who are the counterparties? The estimated refund -- that recovery?

Sure. We have made public some of the names of the fellow servicers that we do business with. Countrywide is the largest of our -- of the seller servicers with whom we have putbacks. We have also disclosed that Rescap is one of the players, and the two of them account for the lion's share of the putback rights that we have at this time.

And is this estimate based on your conversations with them and -- or just based on your assumptions on the performance of the collaterals?

No. It's based on an evaluation of the mortgage loan files themselves relative to the underwriting and compliance guidelines that the seller servicers reps to us at the time of the securitization.

Okay. And am I correct in understanding that to date you haven't actually received any recoveries yet?

We have received some recoveries, yes.

How much would that be?

The recoveries that we've received is not material to this -- at this point relative to the amount of the recovery that we're taking into the income statement this quarter.

Okay. A couple more questions. The CMBS to synthetic CDO obligations, are they all pay as you go?

Our synthetic CDO transactions, including the CMBS pools, are all -- have the characteristic where as credit events occur and are reported to us, we count those credit events against a deductible. And then when the credit event gets to be in excess of the deductible or if they become in excess of the deductible, we would pay on each then subsequent credit event.

Okay. So are they -- are they all like that, or only some of them?

I would say the lion's share are -- .

Lion's share?

Have that characteristic, yes.

And of the about $35 [million] of synthetic CMBS you mentioned, what was the average attachment point on those deals?

I think -- yes. In our disclosure we do have -- we do provide some information on that. And I believe what we show is that the range of attachment points is 5% to about 80%.

Depends on the underlying collateral attachment point. So for lower investment grade collateral you'll have much higher attachment points, 30 to 80%. For AAA collateral underlying, you'll have high single digit-type collateral.

And just to follow up on Chuck's point on the payment of our synthetic CDO portfolio, portion is as Chuck described was deductible based. Another portion is based on a timely interest in ultimate principle concept where principle is well out in the 40 to 50-year category. And that's -- that's the majority of our multisector CDO portfolio that contains mortgage backed collateral.

Okay. Understood. Just last question, there -- obviously there's a -- a [sequential fall] between the assets and liabilities and asset management business, ALM business. How do you plan on uncovering the shortfall going forward?

Yes. The liabilities are about $8.8 billion at June 30. The value of the assets is about $8.1 billion at book. There is unrealized loss associated with some of the assets. Our expectation is that the difference between that $8.1 billion and the $8.8 billion will be closed over time, in part by repurchases of some of the debt of the asset liability management portfolio at discount. And you look at what we've done in this quarter and prior quarters, we have been relatively active in that regard.

Thanks, guys. This was very helpful. Thank you.

Okay.

Your next question comes from the line of Darin Arita with Deutsche Bank.

Good morning.

Good morning.

Looking at that $1.1 billion recovery, I guess where do you -- the 24,000 second lien mortgage loans that have been reviewed thus far, were those chosen in any particular order?

They are all -- they are almost all loans that have been charged off or are delinquent. We would not say that it's a statistically significant sample of the entire population of roughly 500,000.

I guess I was thinking, it seemed -- there seems to be close to 100,000 defaulted second lien mortgages. So within the full you've reviewed about 24,000 thus far. So within that full, there wasn't a particular order. Those were chosen.

These were done over the past 18-month period. The initial ones that we requested were the ones that were delinquent or defaulted early in the process. We have pulled subsequent loans where the seller servicers are still providing individual files, we do have situations where the seller services are no longer providing files, which is one of the reasons there's the major gap between the 24,000 files we've had the ability to review so far and the approximately 100,000 files that are either delinquent or defaulted.

And was there a particular pattern in terms of -- as you progress with your review, the percentage that reached the representations and warranties?

It's a good question. One of the things that we're looking for is whether there would be a difference between the first pool of loans we pulled and the subsequent pools. So far, all of the loans have not shown any significant difference between when they went delinquent or when they defaulted. Basically each and every group of files we looked at has exhibited the same patterns. There is a difference by seller servicer in terms of the quality of the loans against their representations. But for the two largest seller services that Chuck mentioned earlier, in both cases a huge percentage, well over 80% of the loans we've looked at, do not meet the representations and warranties that they included in their individual securitizations with us.

Okay. That's helpful. And to what extent can a similar loss mitigation approach be used toward the multisector CDOs?

It can be used in some of the multisector CDOs. We have in fact done, as Chuck mentioned, forensic analysis on a number of the transactions. We have found both -- both individual securitizations where we believe there's misrepresentations. You've seen that we filed a lawsuit against one of the arrangers of those CDOs. We've also looked at a number of other transactions where we didn't find evidence of any misrepresentations and have chosen, obviously in those cases, not to pursue any action against the arrangers.

All right. And -- and can we get a little more color on the nine insured credit derivative transactions that matured or were terminated in the quarter in terms of what transactions were those?

The details would cover two different sectors. They're all mortgage related or multisector CDOs. A couple of them were terminated at the request of the issuer, and a few were terminated for violation of the terms of the contract. And a couple of them just matured. So it's kind of the range across there -- you can see if you look at our detail we provide on the CDOs, you can see where the reductions occurred. Most of the significant reduction would be because of terminations.

Were there any reserves booked against those that were terminated?

No.

All right. Thank you very much.

Your next question comes from the line of Philip Gutfleish of Elm Ridge Capital Management.

Morning, guys. I just had a couple questions. On page 49, Chuck, can you explain the note -- note four at the bottom. I'm not sure I'm understanding that. Are you expecting to pay out another $1.5 billion in just the second half, or is that the entire year? Because it doesn't really jibe with the bar chart.

Yes.

And the second question relates to the cash flow for MBIA Corp., and if you could explain what the 273 in "Other" was, and I think that's on page 37.

Okay. On page 49, what you're seeing there is a bar that represents a full year for every year except 2009. So the bar for 2009 is really the second half, okay. That does reflect the comments that I made earlier that we're now expecting that the elevated level of payments that we've been making on the insured RMBS transaction continues basically for the balance of the year.

Right. So more or less at the levels that you paid out in the first couple of quarters, right? Because I think this last quarter was in the $700 million range, right?

Yes. Pretty much. There is a shift in that the projection for the second liens is actually going down in the second half. But we are beginning to pay on some of the multisector CDOs in the second half this year.

Okay.

And the other question was what are the other outflows?

No, it's an in-flow actually. On page 37, you've got $273 million in-flow.

Oh, at the top.

Yes.

Let me just find the 237. Looking at the second quarter?

Yes.

Oh. The 273?

Yes.

273 is going to include -- there are a number of categories there, Philip. I'd have to follow up with you offline. But it's -- there are inter-company settlements and things like that within that category, including taxes under our tax-sharing agreement. I can provide you more detail on it.

Okay.

I don't have it right in front of me.

All right. Thank you very much, appreciate it.

Sure.

Our next question comes from the line of Arun Kumar with JPMorgan.

Yes, hi, this is Brad Gibson in for Arun. Most of our questions have been answered. One clarification on the 1.1 recovery. Just wondering if that's a gross number, or if there have been any type of allowance book against that recovery, or any other previous recoveries that you guys have marked?

Yes. The way to think about this is -- a good question. The-- our expected recoveries on these transactions will be well in excess of the $1.1 billion recovery that we have booked in the second quarter. Again, what we did here was to take recoveries only for those files that have actually been reviewed in which there are clear violations of reps and warranties. We have only reviewed 27% of the files that we have paid or expect to pay claims on. And given the proportion of ineligibility that we observed in this group, we expect that there will be very substantial contractual put-back rights in the remainder, in the 73% that we have not yet reviewed. If you want to think about -- is the 1.1 that we're taking, does it reflect a discount of any kind, the answer is yes. It reflects an enormous discount relative to what we think the ultimate contractual put-back right will be.

Okay. And would you care to quantify that at all?

No. Because of the fact that we really are only taking, from an accounting perspective, those cases where we've already reviewed the file. So it's -- as I said, we don't have a statistically significant sample, so while we have our expectations about what we're going to find when we go through those other files, we don't yet know.

Okay. Great. Thank you very much.

Your next question comes from the line of Amanda Lyman with Goldman Sachs.

Good morning. It's actually Donna Halverstadt. I had another question on that $1.1 billion. And I understand that you've taken only from an accounting perspective those cases where you've reviewed the files. But after you review the files there's obviously a process there. And you've said that you started the legal process against two sellers. Can you just give us more color on -- do you expect to have to litigate for almost every penny of that expected recovery, and how long does that process take and how confident are you that that amount will actually get in the door? I mean, so what's the process between reviewing the file and actually affecting the recovery?

There's two types of processes in those cases where we're not in litigation. The files are actually -- the individual loans are put back. There's a 90-day period under which they can either replace the loans, substitute cash, or deny the individual putbacks. The end of that period, if they've chosen not to respond, then we have to make an evaluation on whether we should pursue any litigation. In the case of both RFC and in the case of Countrywide, that decision was made last year because all of the initial files were essentially rejected after the 90-day period. And that was the decision process in those two cases. In terms of litigation, the litigation is going to be extended. It is not something that will get resolved over a short time period. In our estimates, we have estimated that it will take at least three years to achieve those recoveries. And that's included in terms of how we've estimated the impact of the recoveries. We have basically estimated a discounted value based on that three-year time horizon, and that's both reflected in our estimates of incurred loss. It also shows up in terms of how Chuck has laid out the expected cash flows that were mentioned earlier in terms of when recoveries might occur.

Okay. And then just one follow up. I think you said with respect to RFC and Countrywide that the bulk of the 1.1 related to their files. With respect to that other 73%, what percent of that do you think will end up in litigation versus just going through the putback process?

The vast majority of it -- of all of our Countrywide -- of all of our second liens, there's 24 deals involved. The vast majority are in fact from Countrywide and RFC. So it's easily 60%, 70% of the remaining loans that have to be examined will come from those two individual issuers.

Great. Thank you.

Your next question comes from the line of Scott Frost with HSBC.

Hey, thanks. Arun and Donna's questions have covered a lot of mine. I just want to again go over the $1.1 billion here. The $1.1 billion, now is that a -- and I came late so you may have gone over this. The $1.1 billion, is that the balance sheet transaction or did the 735 go through the P&L this quarter, is that how that worked?

Yes. It's a contra-expense if you will.

Okay. That's the 735 but not the full 1.1. The difference would go through balance sheet? Is that how it works?

No. The 735 is the net of the $1.1 billion recovery --

Okay, okay --

-- and the increase in expected net payments.

Okay. And just to reiterate, there is a valuation allowance against your claimed receivable, but you're not going to disclose that at present, is that right?

The claim receivable is estimated to be less than the full amount of our claims.

Okay. And that's -- okay. Again, the timetable's three years to get recovery. Is that what -- that's what you expect. And you've used the discounted value to get the 1.1. Could you tell us what the discount rate is?

About 1.6 or 1.7%. It's a risk-free rate for GAAP. For statutory it will be a different number.

Okay. So that -- that increases. A higher discount rate would lower the present value, okay. And how much is due from -- can you give us an idea of how much is really due from Rescap? That seems to be -- I would think that would be the one with the most sort of risk of -- risk that you might not realize the return?

We don't provide any breakdown between the individual issuers of the securities.

Okay. Thank you very much.

Welcome.

Your next question comes from the line of [Allister London] with CQS.

Actually most of my questions have been covered. I just have one supplementary on this $1.1 billion. Is there a precedent other than Amback that to actually take a future claim that is uncertain actually through your P&L? Is there a -- has this been done by any other companies or just monoline?

All of the other monolines over the past couple of years have established exactly the same types of reserves based on their own forensic analysis. Up until this point, we were the only company in our industry that hadn't done so.

Right. And there's no actual evidence of significant excessive returns?

I'm sorry, I didn't hear the question.

And there's no actual evidence of successful claims being made historically? You're saying that you had a small amount of recovery to date?

Actually, that's not true. There has been significant recoveries by some of our competitors with smaller claims because the dollars aren't as large. But we've all used the exact same types of firms. We've discussed among ourselves the types of analysis that's been done. It would appear the industry across the board is using similar types of analysis at the individual loan file level, even though each individual securitization has different reps and warranties which have to be matched against the loan files that were from those individual securitizations. The techniques in the firms that are doing this are approaching in a very consistent fashion.

And of course the recognition in general of contractual rights in the insurance industry is very well established.

Over this three-year period, at what stage will you have more clarity as to exactly what this number is going to be and how likely you are to see it?

It's not going to happen in the near term. The litigation in both cases is in a fairly early stage. I would not expect a lot of clarity for the next 18 to 24 months.

Brandi?

Your final question comes from the line of [Matthew Cohen] from Third Point.

Hey, guys, thanks for taking my call. A quick question. In the asset liability -- asset liability book, what's the fair value of the assets?

The fair value of the assets are actually included in our --

Sure, yes. It's actually reported in the data, but --

I think it was -- I know it was the presentation last quarter. I just didn't see it in the supplement this morning.

Sure. It's -- I'm looking at the -- I think it's in the operating supplement. But you have a book value of $8.1 billion.

Yes.

And you have about a $2.1 billion difference between that and fair value to the negative, because obviously spreads have widened. That's actually been improved since last quarter by about $100 million to $200 million just as spreads have tightened a little bit through the end of the quarter.

Okay. Great. So fair value is like 6.1 or something?

Yes. That's about right.

Okay. And then during the quarter was there any provision taken against the CMBS portfolio?

No.

Okay. Those are my questions.

This concludes the Q&A session. Greg, your closing remarks.

Thank you, Brandi. Thanks to all of you who joined us for today's call. In addition to Jay Brown and Chuck Chaplin who responded to questions we also had Cliff Corso, our Chief Investment Officer, and Anthony McKiernan, Head of our Structured Finance Surveillance area. If you have additional questions, I can be reached at 914-765-3190. We also recommend that you visit our website at www.MBIA.com for additional information. Thank you for your interest in MBIA, good day, and good-bye.

This concludes today's MBIA Inc. second-quarter 2009 financial results conference call. You may now disconnect.