MBIA Inc (MBI) 2013 Q3 法說會逐字稿

Welcome to MBIA Incorporated's third-quarter 2013 financial results conference call. At this time, all lines are in a listen-only mode to prevent any background noise. After the prepared remarks from the company, there will be a question-and-answer session.

(Operator Instructions)

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

Thank you, Jackie.

Welcome to MBIA's conference call for our third-quarter 2013 financial results. After the market closed yesterday, we posted several items on our website, including our latest 10-Q, the operating supplement, and our financial results press release. The latter includes information for accessing the recorded replay of today's call, which will become available approximately one hour after the end of this call.

Please note that anything said on today's call is qualified by the information provided in the Company's 10-Q, 10-K, and other SEC filings, as our Company's definitive disclosures are incorporated in those documents. Please read our third-quarter 2013 10-Q, as it contains our most current disclosures about the Company and its financial and operating results. The 10-Q also contains information that may not be addressed on today's call. The definitions and reconciliations of the non-GAAP terms that are included in our remarks today may be found in the financial results release that we issued yesterday afternoon.

And 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 MBIA.com.

The Company cautions not to place undue reliance on any such forward-looking statements. The Company also undertakes no obligation to publicly correct or update any forward-looking statements if it later becomes aware that such statement is no longer accurate. For the next portion of our call today, Jay Brown and Chuck Chaplin will provide some brief comments. Then Bill Fallon and Anthony McKieranen, along with Jay and Chuck, will be available for the question-and-answer session.

And now, here is Jay.

Thank you, Greg.

As noted in our press release, there were a number of negative items that are reflected in this quarter's results. Chuck will take you through those items in a few moments after I make a few comments.

On last quarter's call, I was asked about the likely time frame for getting National back to writing domestic public finance insurance. My response then was three to six months, and I'm prepared to stand by that estimate.

The key is achieving sufficiently high ratings to support National's business plan. We are engaged in active discussions with the rating agencies at this point, and I remain optimistic about the outcome of their reviews. National's existing capitalization, earnings, and cash flow from operations, risk management, and underwriting discipline, should rank it among the very highest rated bond insurers.

We have maintained our core underwriting, surveillance, workout, legal, and financial staffing levels at full strength. And as we get going, we would expect to add to our existing marketing team. We have meetings scheduled with the rating agencies that continue over the next few weeks, and while the timing is essentially in their control, we currently anticipate concluding those processes by year end. This is our highest near-term priority.

Some credits that we have insured have been the subject to increased media attention since we spoke last. Detroit is clearly an important story, but remains in the very early stages of developing a plan that reconciles its significant obligation with its limited resources.

While our exposure to the general obligation debt here is relatively small, the position Detroit's advisors have taken to date with respect to the city's general obligation bonds, a position with which we strongly disagree, raises significant issues for the entire municipal finance market. Consequently, we are putting a very high level of resources into obtaining a resolution that reflects the special nature of unlimited tax general obligation bonds, but it is way too soon to say what that resolution will ultimately look like.

We regarded Puerto Rico as a lower quality investment grade credit that had been taking many of the right steps towards improving fiscal stability, and we still do. We think that the island has adequate near-term liquidity, but then an improving economy will ultimately be needed to support a favorable long-term outlook.

Like other low investment grade credits, the debt of various Puerto Rico issuers is not without risk, but we believe that the island's government continues to make the right decisions to foster a longer term recovery. Given their strong short-term liquidity position, and recent success in managing their pension liabilities, we do not see a loss at this time.

In MBIA Corp, we continue to wait the receipt of our first distribution from the ResCap estate, which should occur around the end of this year or early in 2014. ResCap has reached settlements with several other parties since our last call, whittling down the number of objectors to its reorganization plan to essentially just one group of note holders. So we're optimistic that the plan will be confirmed by the bankruptcy court in the near future.

As I mentioned on last quarter's call, we think that it would be prudent in the longer term to have less financial leverage at our holding company. Our game plan is to use free cash generation from the operating businesses to pay down holding company debt over time. With the receipt of the first dividend from National October, we have started that process. I also noted in our last call that we may access the capital markets at some point in the future.

Since we received a number of questions afterwards, let me be clear on that issue. We have no near term needs or plans to access the capital markets. It is merely an option that we could consider in the future under the right set of circumstances.

Finally, many of you probably noticed that our press release in 10-Q included the news that Kewsong Lee has resigned from our board of directors on Monday. Kew joined the board in early 2008 following Warburg's investment in MBIA, and he served the interests of all of our shareholders through his focus on maximizing long-term value.

His wisdom and counsel were invaluable during the most tumultuous period in the Company's history, as he personally helped me and the rest of the senior management team sort through a very complicated restructuring and navigate a web of litigation. We greatly appreciate all he has done for MBIA, and wish him much continued success in the future.

Chuck will now provide more detail on our operating activities and take you through the financial results.

Great. Thanks, Jay.

I will now go through the consolidated results on the segments in some detail and then finish up with a brief balance sheet update. Net income in the third quarter was $132 million, driven by unrealized gains on insured credit derivatives of $285 million. This compares to net income of $7 million in last year's third quarter, when we had a $33 million unrealized loss on insured derivatives.

In the third quarter of 2013, the upfront cost for protection on MBIA Insurance Corp increased from 8 to 16 points, driving the positive results. While the size of the mark to market on our balance sheet has fallen dramatically over the past few years, to about $1.4 billion from a high of nearly $6 billion, and primarily due to commutations, changes in the market perception of our credit risks still create extreme volatility in our GAAP reported earnings.

Primarily for this reason, we also continue to provide information on our non-GAAP measure adjusted pre-tax income, which treats all of our insurance policies using insurance accounting, and provides an alternative view of our financial results. We had an adjusted pre-tax loss for the third quarter of $188 million, versus a loss $118 million in the third quarter of 2012.

This year's third quarter contains a few charges to which I would like to direct your attention. First, we had a gaming revenue transaction in National for which we paid losses in the past, and have recorded an offsetting salvage asset, because we believe that the operation's future cash flows will fully repay our loss. As of June 30, 2013, the asset was $162 million.

As part of a restructuring, we and other creditors agreed to exchange our subrogation rights for unwrapped marketable bonds and we received those bonds in the third quarter. While we believe that the cash flows in the bonds will fully repay our paid losses, the limited trading in the bonds reflect the prices in the 60s. So we are reporting the difference between our June 30 carrying value and the fair value of the bonds as a $44 million increase in our incurred loss and our GAAP income statement.

It is important to note that in our statutory accounts, salvage remains subject to loss reserve accounting regardless of its form, and since we expect our paid loss to be fully reimbursed, the trading value has no impact on our statutory financials.

Secondly, we received an appraisal of our home office property in preparation for relocation, which is an element of our efforts to reduce operating expenses. As a result, we recorded a reduction of $29 million in our carrying value. We estimate that this non-cash charge will be offset in the future by lower occupancy costs. National is the owner of our home office property, and the effect can be seen in National standalone financials as well as in the consolidated accounts.

Third, we recorded $14 million of expense related to an approximate 20% reduction in our enterprise-wide work force in the third quarter, and this effect is scattered across most of the segments.

Now I would like to make a few comments on the segments and the major business entities, focusing on those elements that we believe will be part of the income statements going forward. Within our public finance segment, which is carried out in National, we had quarterly pre-tax income of $6 million compared to $164 million in the third quarter last year. The home office real estate write-down, and the incurred loss on the gaming revenue transaction that I just mentioned, contributed $73 million of the difference. National, though, also saw sharp reductions in refunding premium and investment income.

Refundings were at their historic peak level of $82 million in the third quarter of 2012, and were only $27 million in the third quarter of 2013. Now, given that municipal issuance overall is down, and our insured portfolio is higher, we weren't surprised that refundings declined. And we do expect refundings to continue to contribute to earnings, but at lower levels than the average $55 million per quarter pace of the last five quarters.

Investment income was about $30 million lower than last year. While invested assets are higher, last year National benefited from the high yielding secured loan it had extended to MBIA insurance corp. That loan was repaid in May, and we have taken a measured approach in National to reinvesting the proceeds.

So we still held about $1.5 billion of cash and short-term assets as of September 30. And of course, the new investments that we're making generally have lower coupons than did the secured loans. As a result of our reinvestment program, we expect to hold only about $600 million of cash and short-term assets by December 31.

In addition, National also had realized gains in the portfolio in last year's third quarter, as we were repositioning into taxable assets. Realized gains and losses were $20 million higher in last year's third quarter than in 2013's third quarter.

With respect to loss and loss adjustment expense, National had $9 million of reductions in incurred loss during the quarter, aside from the incurred loss on the gaming transaction that I referenced. There were modest improvements in credit outlook for a handful of credits, and no other developments that required significant increases to reserves.

Moving on, the Advisory segment had pre-tax losses of $8 million and $2 million in the third quarters of 2013 and 2012, respectively.

Our wind-down operations had pre-tax losses totaling $54 million in the quarter, compared to $77 million in the year-ago quarter. The corporate segment had pre-tax income of $36 million in the third quarter of 2013, compared to $22 million in 2012's third quarter. Combining these two segments contributes a pre-tax loss in this year's third quarter of $18 million, versus a pre-tax loss of $55 million last year. And the improvement is largely derived from a lower mark-to-market value on the liability for warrants issued to Bank of America and Warburg Pincus.

The Structured Finance and International segment operated within MBIA Corp had an adjusted pre-tax loss of $167 million in the quarter, compared to a loss of $224 million in last year's third quarter. The improvement is primarily due to lower economic losses on the insured portfolio.

This year's incurred losses were $163 million, versus $252 million last year. The drivers of economic loss in this year's third quarter were in CMBS pools and our second lien RMBS transactions. We had $98 million of loss on insured CMBS pools, where we projected higher future payments on our single A and BBB content transactions, and we also modified our commutation assumptions.

On our insured second lien RMBS transactions, we had expected a substantial reduction in voluntary prepayments because of higher interest rates, but we then observed a much smaller actual reduction in the third quarter. So as a result, we now expect lower excess spread recoveries associated with those mortgages that prepaid, and that is the driver behind the $53 million increase and economic loss in that book.

I have mentioned our expense reduction activities, but to recap, there are three streams. First, as a result of reduction in litigation and commutation activities, our legal and consulting expenses are declining. In the first half of 2013, we spent $60 million in such expenses, and in the third quarter, only $9 million. This amount should drop further in Q4 and beyond.

Second, we began to see the impact of the reduction in our work force in the third quarter, but it is more than offset by the severance expenses. When the reductions are fully implemented, we expect to save about $24 million per year across all segments.

Finally, I mentioned our relocation and potential sale of the Armonk campus. We expect a significant reduction in occupancy costs, which we will be able to put a finer point on in the next couple of quarters. Our objective continues to be to get our run rate expenses down below $200 million per year.

Now I will move on to the balance sheet. The biggest news that I have to report actually happened after September 30. In early October, the holding company received the first as of right dividend from National. That dividend, at $214 million, met all of the relevant statutory tests, and was fully disclosed to the rating agencies as they commenced work on revisiting National's ratings. And this is another step toward operating our company more normally.

We provide a measure of holding company assets in our operating supplement, and those assets were $1.9 billion as of September 30. Most of the assets are pledged as collateral for investment agreements and swaps, or are in the tax escrow. But inside that $1.9 billion, we consider our liquidity position to be $282 million, as of September 30. And obviously, it increased in October with the dividend.

In the third quarter, we repurchased or retired $43 million of debt issued by MBIA Inc or our global funding subsidiary. Since then, we have retired an additional $39 million. As Jay has said, our strategy here is to bring our leverage down over time, using cash generated from operations. Our objective is to bring financial leverage, including the impact of the MTNs issued by our global funding sub, down to levels consistent with middle investment grade ratings, over about four years.

At September 30, we had about $600 million of holding company senior debt outstanding, and about $1.6 billion of global funding MTNs. We are also seeking to reduce operating leverage, and we retired $150 million of debt in our meridian subsidiary in the third quarter, and $20 million more since September 30.

National's balance sheet continues to be extremely strong, and we believe it continued to exhibit AAA quality after payment of the dividend. As Jay mentioned in a minute ago, we are going through the rating agency process right now, and of course, we look forward to their feedback.

MBIA Corp ended the quarter with $1 billion of statutory capital, and $3.5 billion of claims paying resources. If we exclude the future premium earnings and the loss reserves of MBIA Corp's subsidiaries, the New York-regulated entity has $3 billion of claims paying resources. While the majority of these resources are illiquid today, the loan facility from the Blue Ridge investment subsidiary of Bank of America gives us the time we need to begin realizing them in cash.

Payments on second lien RMBS continued their slow decline falling to $29 million in the third quarter. We expect those net outflows to become net inflows in 2014. Total loss and loss adjustment expense payments in MBIA Corp overall were at the lowest level in many quarters. And as Jay referenced, we expect to begin receiving proceeds from the ResCap estate in the next month or so.

MBIA Corp's liquidity position at September 30 was about $97 million, having drawn $50 million on the Blue Ridge lending facility.

We did accomplish one small commutation since we spoke last, which removed one potentially volatile all day securitization from our classified list. The transaction happened after the quarter's close, and the financial impact was not material.

Clearly, MBIA Corp still bears potential future volatility. We continue to focus intensely on remediation strategies to free Corp from those risks, to give us the best possible shot at having residual equity value after resolving the surplus notes. However, this turns out, we expect that the consolidated firm's cumulative net operating loss will shield substantial future income from tax payments to the IRS, even if the residual value of MBIA Corp is minimal.

We believe that we're taking the steps necessary now to realize on future profitability and growth, as National comes back into the bond insurance market, and we are looking forward to that in the near term.

And at this point, we will open it for your questions.

(Operator Instructions)

Our first question comes from the line of Brian Charles with RW Pressprich.

A couple quick questions. One, the comments you made about the write down in expected salvage, or the reduction in expected salvage for second lien RMBS, could you go over that again? Was that a reversal of assumptions you had made in the second quarter? Or did I get that right?

Not exactly. What is going on there is that we -- in the second quarter, we adjusted our assumption for voluntary prepayments. We expected that prepayments would fall to the levels that we observed prior to the commencement of quantitative easing. So it is looking back a couple of years. And in the third quarter, the actual level of voluntary prepayments, while it did fall from the Q2 level, didn't fall nearly as much as we had forecast.

And so what we're reflecting is simply the excess spread that would have come from those loans that were prepaid in the quarter, as a reduction in the excess spread recovery assets. We haven't changed our assumption that voluntary prepayments will fall to very low levels in the future. So we still expect that. But it does appear that there has been a lag in seeing the behavior in the marketplace.

Okay. Good enough. Thanks. And also, on the change in expected payments for CMBS of $90 million. Is that -- or actually, you could talk about that a little bit? How -- if that is related to particular exposures of per rating A or BBB? And to what extent you have been negotiating commutations on that exposure during the quarter?

We -- to take the second part first. We did not consummate -- obviously, we didn't consummate any commutations of them in the second quarter -- or in the third quarter. It continues to be our objective. We think that there is a good chance we will achieve commutations, but we don't have any to report at this time. The change in the loss expectation reflects really two effects.

One is, there has been some deterioration in the transactions and some erosion of the deductibles in our single A transactions that create additional incurred loss. But then we also modified some of our assumptions about commutation, based on the experience that we're having in interacting with our counterparts.

Okay. That's all I've got for now. Thank you.

(Operator Instructions)

Our next question comes from the line of Robert Adler with EJ Ventures.

Yes, good morning. I have two questions. First, has anyone begun to put together a plan, which would be a public document, describing what the business of National is going to look like going down the road? I think that it is completely understandable, but we're spending far too much time these days talking about what happened. And if my information from this call and other conversations is, we're getting very close to being back in the municipal bond insurance business.

So my question really is what is going on in the company, to put together the information about that business, about that opportunity, about the fact that our guarantee today trades better than assured? So that is sort of the general nature of my question.

Because it is based on the fact that the future is right around the corner, and I am wondering, are we preparing to tell the world what a great company we are, and why they should be thinking about our insurance potentially, versus Assured? So that is my first question. I could ask the second question at the same time.

The second question really is, is there any thought of, as part of that, really telling the world that the guarantee has been proven? You cannot imagine a set of circumstances where a guarantee of principal and interest has been tested in more dire circumstances, and MBIA came through 100 cents on the dollar. So the gist of both my questions is, are we preparing to tell our story, and specifically, to emphasize the fact that we have paid everyone every penny in the most dire circumstances. So that is the nature of -- hopefully it is a question. I think it is.

Robert, it is Bill speaking. I think you just did a good job describing the situation at National. One, we have been telling a story, as Jay mentioned at the beginning. National is in very good shape, in terms of the infrastructure, really meaning the people, as we get to the point where we're writing business again. But to your point, we are going to continue to tell the story, and there is more that we can do.

I would also let people know that there is information with regard to the -- some of the aspects of the go forward plan on the National website. And you are correct. There are a lot of positive things about National, and as I said, we have begun to tell the story. But we are going to do it more and more frequently in the months to come, and that is in the form of presentations, conferences, analyst meetings, et cetera.

So I think that is very important. And as you say, we think the financial strengths of National, the trading value of National, even before the ratings get to the AA level that others see in the marketplace, we think is very favorable.

Just -- I'm sorry, just that piece of information, which Greg thankfully shared with me, is really a very illustrative and potent piece of information that I assure you 90% of the investors today, and 99% of potential investors don't know that, and probably don't understand it. So I'm all for getting this and I'm happy to hear that there is a plan to get this story out. Because it is a great story, but I just don't think that people are aware of it. That's my concern.

Yes. No, we appreciate your input. And then on the final point, just in terms of what has happened since the financial crisis, you are absolutely right. MBIA and its subsidiaries, including National and MBIA Insurance Corp, have paid every single claim that has been presented to it throughout its history, and we continue to do so. And so as National begins to become more visible in the marketplace, we think that is, in some ways, the best advertising that we have.

Thank you for your answer. I have been involved in the company only since it began, and I remember the belt and suspender advertisement from the dark ages, when it first came out. And the company has proven itself. And anything we can do to tell people that is going to put us in a great position. And as I shared with Greg, I get very upset seeing Assured Guaranty put themselves out there as the number one insurer. But I will be quiet now and go back to my book. (laughter)

Our next question comes from the line of Josh Bederman with Pyrrho Capital.

Hey, guys. A couple of things. First, can you give some color around the commutation environment, or some of the developments you're seeing? Or just a little more quantitative -- what you -- negotiations ongoing, et cetera?

Sure. The environment is a little bit different than it was 6 or 9 months ago, mainly because we have far fewer people to negotiate with. At one point last year, we probably had 10 or 11 different discussions going on in a simultaneous fashion, so it is harder to get appropriate reference points as to what could be achieved. I think now that we have put the better part, I think, in excess of 20 transactions behind us, we have a pretty good idea of what is an appropriate value for the couple that are remaining.

We are engaged in conversations. But as we've said repeatedly, the hardest thing to understand sometimes is it takes both parties to agree at the same time on a fair clearing price to reflect elimination of volatility going forward.

We don't know. Obviously, we don't make any clear predictions as to when, or how many transactions will take place during a particular time period. I will state pretty clearly that in terms of significant transactions, there is only a couple left that would have a material effect on changing the volatility of the organization. That's basically because there is very little volatility left, except for a couple of transactions.

So we feel pretty good about it. We remain optimistic that it is in the best interest of ourselves and our counter-parties to get that taken care of.

I would also note, because we have gotten the question from a few people, about commuting some of the remaining ABS CDO exposure. I would note that that is actually financial guarantee contracts rather than credit derivative contracts. As such, there's multiple counter-parties involved in each transaction, and so the methodology and the approach we use to try to resolve those transactions is much more complex than a single negotiation with a single counter-party. So those types of commutations and settlements take quite a bit longer.

They are a lot smaller, also. So there -- even there is a lot more parties, and so you will see that activity continue into the future. But you won't see a substantial change in any one transaction, because there just isn't enough exposure in any one individual transaction to get reflected in an individual settlement.

Okay. Great. And then last thing, can you guys comment a little bit on -- I don't know if you will, but on the Zohar transaction? There has been a lot of talk about it. Information in the market is very spotty. It seems to be a significant exposure for you guys. I'm wondering if you guys can shed some light on your perspective here, and how you guys are thinking about that? And specifically where it actually is in your books?

Sure, good morning. This Anthony McKiernan.

Hi.

These deals are in our -- in Corp's high yield CLO portfolio, and the deals, by their nature, contain higher yields, higher risk collateral. They're in the form of the middle market, in distressed company loans. We also have equity positions, in the form of collateral, as well, for many of the companies that provide additional support and coverage. This book, we have managed down from about $16 billion in 2007 to about $4 billion as of the end of this quarter.

Again, all of the deals have similar traits. And so at this time, for these transactions, they're performing adequately, passing all of their coverage tests. We haven't taken reserves on them, as we expect them to continue to perform.

Okay. Thank you.

(Operator Instructions)

Our next question comes from Nathan Slain, Private Investor.

Hi. I think last conference call, there was a thought that -- regarding S&P, that the rating would be reviewed within a 3 to 6 month time period. I think it has been more than 3 months now. So I would be curious as to whether you still believe it will happen -- a resolution in the next few months, and your sense as to what the resolution will be?

I think in my opening comments, I tried to be specific that we expected that would be completed in another 3 months. I will restate that. We continue to be optimistic that the rating should be better than it currently is. But again, rating agency decisions are opinions on their part. We can't control it. All we can do is pitch why we think a higher rating is deserved. But we do believe that there is a very, very high probability that should get resolved in the next couple of months.

Also, someone has commented that the capitalization of National was such to deserve a AAA rating. Do you have any expectation of that?

We do know that, based on -- for S&P's current capitalization models, that National, including after the dividend, before other adjustments, sits at above a AAA capital level. But it would be subject to other adjustments, primarily on the capital side. There is a large obligor test which results in at least a one notch downgrade that would take it down into at least the AA range before they look at other criteria.

We understood that going into the process. And that's one of the reasons when we talk about what our objective we would like to see, based on that criteria and other criteria compared to other companies, why National should get rated in the AA range.

Thank you.

Our next question comes from the line of [Mike Daley with Par-Four.]

Hi, guys. I just had a question on Puerto Rico. They just obviously revised their projections for GDP down. I just wondered, if that -- as that continues to happen, if that is going to be something that would potentially delay the ratings action and/or something that might put that on hold for a while?

With regard to Puerto Rico, there has been a lot of attention, as you know, and they have provided more information recently. They have taken some positive steps, as you know, with regard to pensions. They have communicated more. They have done some things with tax revenues. The budget deficit is declining. Yet some of the economic indicators are below expectation.

So in the near term, and particular with the liquidity that they have and that they emphasized on their webcast a month or so ago, and the reduction in the amount that they are going to borrow from the capital markets over the near term, things seem to be a little less volatile than they were two months ago.

Longer term, and I don't mean the next 6 months, but longer term, out 3, 5 years and beyond, the economic situation is the most important thing. And so I don't think that in terms of S&P, and they have actually come out with something the middle of last month, I think it was October 14, they published a report. And in my words, not theirs, but in terms of the impact that Puerto Rico would have on the bond insurers, it would not be material. And so therefore, we don't think that that would have anything to do with any hold-up in the process that we're going through with S&P.

Okay. Thanks, guys.

(Operator Instructions)

Your next question comes from the line of Michael Norinsberg with Nature's Best Produce.

Hi, I'm really on the outside of the business. I'm trying to get a handle on MBI. And I'm just wondering, how does S&P consider Puerto Rico not material if you guys are owed $5 billion?

Yes, with regard to what they put out -- and keep in mind, Puerto Rico has several different issuances of debt. All of those are rated investment grade by the rating agencies. And so when you look at S&P and the capital model that was referred to a little bit earlier, even if you were to downgrade the Puerto Rico bonds to below investment grade, one of the things you would look at would be the capital impact or the additional capital required to be held by the mono lines. And when you put that in context in the overall portfolio, again, we have $291 billion of insured obligations in our portfolio. The additional capital would not be a material number.

I see. Okay. Thank you.

(Operator Instructions)

Our next question comes from the line of Brian Schinderle with BAM.

Yes, hi, guys. I think there was some mention that you may look to go to a third rating agency as well. Could you speak to that? And whether or not you're in current conversations, or how that would fit in?

Brian, I think we mentioned last time that there were three rating agencies in addition to S&P and Moody's that have mentioned some interest in getting into the bond insurance rating business. Those being AM Best, Fitch, which was in it a few years ago, and Kroll. And we said we have spoken with all of those.

The only one that has a rating out on all of the mono lines is -- Kroll has rated Assured's new subsidiary MAC AA plus. And as I said, we are talking to all of them. If we believe that the rating would add value to the issuers and the investors, then we would go ahead and get the rating from any of those three rating agencies.

Got it. Also wanted to ask a quick question on the B of A credit line, at the Corp level. You have currently drawn that $50 million. Is that roughly where it is now? And would your expectation be of maximum draw on that, prior to receiving ResCap proceeds, when you would pay it off?

The balance of the loan as of September 30 is $50 million, so it remains -- we made the one draw in the quarter. The availability on the loan, of course, is $450 million additional, and we would expect to draw it as needed. We're basically drawing the loan to pay claims. It is our anticipation that we receive proceeds from the ResCap estate around year end. It could be in early 2014, but sometime in the not too distant future. And we also expect that our first distribution from the ResCap estate could be half or more of our claim, and of our full recovery.

And so that, when we receive those funds, they go first to pay down any outstandings under the Blue Ridge loan agreement. But also, the amount that we receive serves to reduce the available amount under the Blue Ridge loan facility.

So for example, if our first distribution were to be $500 million, basically the Blue Ridge loan would disappear. The balance would be paid off, and there would be no further availability under it. So we have described the Blue Ridge deal as kind of a bridge loan to the recovery from ResCap, and that is still the case.

Again, the amount that we will recover from ResCap in the first distribution is variable, but we believe that it will be very substantial, and an amount that substantially reduces the availability under the Blue Ridge loan.

Got it. Thank you very much.

(Operator Instructions) And at this time, it appears we have no further questions.

Very good. Thank you, Jackie. And thanks to all of you who have joined us for today's call.

Please contact me directly if you have additional questions. I can be reached at 914-765-3190. We also recommend that you visit our website for additional information. The address for our website is MBIA.com.

Thank you for your interest in MBIA. Good day, and goodbye.

Thank you. This concludes today's conference call. You may now disconnect.