MBIA Inc (MBI) 2016 Q2 法說會逐字稿

Welcome to the MBIA Inc. second quarter 2016 financial results conference call. I would now like to turn the call over to Greg Diamond, Managing Director of Investor and Media Relations at MBIA. Please go ahead.

Thank you, Crystal. Welcome to MBIA's conference call for our second quarter of 2016 financial results. After the market closed yesterday, we issued and posted several items on our websites, including our financial results press release, 10-Q, quarterly operating supplements, and statutory financial statements for MBIA Insurance Corporation and National Public Finance Guarantee Corporation. We also posted updates to the listings of our insurance portfolios.

Regarding today's call, please note that anything said on the call is qualified by the information provided in the Company's 10-K, 10-Qs and other SEC filings, as our Company's definitive disclosures are incorporated in those documents. We'd urge investors to read our 10-K and our 2016 10-Qs, as they contain our most current disclosures about the Company and its financial and operating results. The 10-K and 10-Qs also contain information that may not be addressed on today's call.

Regarding the non-GAAP terms included in our remarks today, the definitive -- I'm sorry, the definitions and reconciliations of those terms may be found in our 10-K and 10-Q, our financial results press release, and our quarterly operating supplements. The recorded replay of today's call will become available approximately two hours after the end of the call, and the information for accessing it was included in yesterday's financial results press release.

And now here's our Safe Harbor disclosure statement. Our remarks on today's conference call may contain forward-looking statements. Important factors such as general market conditions and the competitive environment could cause our actual results to differ materially from the projected results referenced in our forward-looking statements.

Risk factors are detailed in our 10-K and 10-Qs, which are 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 statement, if it later becomes aware that such statement is no longer accurate.

For our call today, Jay Brown, Anthony McKiernan and Bill Fallon will provide some introductory comments, then a question and answer session will follow. Now here's Jay.

Good morning, everyone. Thank you for taking the time to join us this morning.

Since our last conference call, we have continued to make steady progress on several fronts. While the timing and outcome for the resolution of our Puerto Rico exposures remains uncertain, the results generated from our new business efforts continue to reflect steady, albeit modest progress. We remain very confident about our business model, and our ability to deliver increased value to our shareholders over the coming quarters and beyond. We continue to believe that the concern about Puerto Rico is the biggest factor influencing our stock price, and that the market has overstated the likely long-term economic impact of Puerto Rico outcomes for both the National and the holding company.

As we disclosed in July, National paid its first insurance claims on certain Puerto Rico bonds that it insures. And it now appears likely that we will pay more claims on our Puerto Rico bonds in the future, while the PROMESA Board sort out the Island's long-term debt strategy with its many constituents. But importantly, our overall expectations regarding the resolution of our Puerto Rican exposures have not changed materially this quarter. We continue to believe that our ultimate losses will be relative -- relatively modest, and that we are well-situated for receiving meaningful recoveries on our paid claims. On a positive note, PREPA's restructuring and continues progress towards a year-end or thereabouts conclusion. However, we expect that it will take longer to address and resolve our other Puerto Rico exposures. After Anthony covers our financial results, Bill will address our Puerto Rico credits in greater detail.

Before turning it over to Anthony to go through financial results in detail, I'd like to highlight the fact that adjusted book value, or ABV, increased by $0.68 per share during the second quarter, and by $2.73 in the first half of 2016. Most but not all of the improvement in ABV per share has resulted from our share repurchases, which continue to be executed on an opportunistic basis, where we carefully take into account the holding company's current and forecasted liquidity positions. I should also note that the holding company's liquidity position is evaluated under several modeled stress scenarios.

Turning briefly to MBIA Insurance Corp., our objectives remain unchanged, to maximize the margin of safety for its policyholders, and to maximize the long-term returns for its surplus note holders. The MBIA Corp's statutory losses and loss adjustment expenses were $60 million for the second quarter, but its claims paying resources of $2.2 billion remain well above our insurance loss expectations for the MBIA Corp. insured portfolio. That said, as we have noted before, we are working on ways to ensure that MBIA Corp. has sufficient liquidity to satisfy the timing of payments that come due on its insurance obligations.

We continue to pursue the sale of MBIA UK, and are engaged in conversations with key MBIA Corp. stakeholders. We expect to announce and close an MBIA UK transaction by year end. However, we have no new specific developments to report at this time, and we'll not be providing any further updates in our comments this morning. Now Anthony will provide details on our financials, and then Bill will provide an update on National's activities.

Thanks, Jay, and good morning, everyone. Combined operating income, our primary non-GAAP metric of short-term performance, in the second quarter of 2016 was $15 million or $0.12 per diluted share, compared to $19 million or $0.11 per diluted share for the second quarter of 2015. The decrease is primarily due to lower net premiums earned, as we experienced less refundings this quarter, as well as lower scheduled premiums. The Company's share repurchases drove the increase in combined operating income per diluted share. Our focus remains on ensuring adequate liquidity at the holding company, and redeploying some of National's ample excess capital after there is reduced uncertainty regarding the outcomes for our Puerto Rico exposures.

On a GAAP basis, consolidated net loss was $27 million, $0.20 per diluted share for the second quarter of 2016, versus net income of $64 million, or $0.36 per diluted share for the second quarter of 2015. I'd like to spend a minute on the activity, that drove the quarter to quarter decrease. Similar to our operating income, the adverse comparison was due in part to lower premium earnings. But different from operating income to a much greater extent, results were driven by fair value effects, and an increase in loss and LAE expense.

The quarter to quarter comparable impact of certain fair value items was approximately a negative $164 million which was primarily due to three items; lower interest rates which impacted our fixed pay swaps related to MBIA Inc.'s GIC obligations, lower MTN gains on MBIA Inc.'s medium-term notes, and mark-to-market losses on MBIA Corp.'s insured credit derivatives, as MBIA Corp.'s CDS spreads tightened this quarter which increased our mark-to-market liability. Partially offsetting these items was a positive impact from FX gains on the MBIA GFL MTNs, as the dollar strengthened against the euro. These items typically generate quarter to quarter earnings volatility depending upon market conditions, but they're not expected to play a meaningful role on the long-term economic results of our Company. Higher loss and LAE expenses were driven primarily by first lien RMBS loss reserve increases at MBIA Corp.

Book value and adjusted book value per share both increased during the first six months of the year, primarily reflecting the favorable impact of our share repurchases. Book value per share increased from $24.61 to $26.88, and ABV per share, a non-GAAP measure, increased from $29.69 to $32.42. Share count decreased from 152 million as of year end 2015 to 136 million as of June 30, 2016. We believe this represents a substantial longer-term value for our ongoing shareholders.

During the second quarter of 2016, the Company and its subsidiaries purchased 1.7 million of its common shares; the average buyback price was $7.02 per share. There was approximately $88 million remaining under the Company's $100 million share repurchase authorization which was approved during Q1 2016. We will continue to repurchase shares on an opportunistic basis, and subject to MBIA Inc.'s current and forecast liquidity position.

Now I would like to take a few moments to walk through the highlights in the reporting segments. National's operating income was $34 million, compared to $40 million in 2015's Q2. The drivers of the reduced income were lower earned premiums, as there were lower refunded earned premiums, and National's insurance portfolio continues to decrease.

National's GAAP net income was $50 million for Q2 2016, versus $37 million the second quarter of 2015, due primarily to realized gains related to the sale of investments. Loss and LAE of $9 million for Q2 2016 was largely unchanged from the prior comparable quarter. National's capital adequacy and liquidity positions continue to be robust. The balance sheet is anchored by National's $4.4 billion investment portfolio, which is primarily comprised of highly rated marketable assets. Statutory capital and claims paying resources continued to strengthen, totaling $3.5 billion and $4.7 billion, respectively, as of June 30, 2016.

Moving briefly to the corporate segment, this segment had a second quarter 2016 operating loss of $19 million, versus an operating loss of $21 million for Q2 2015. Key metrics were essentially unchanged for this segment. As of June 30, 2016, MBIA Inc. held cash and liquid assets of $295 million, which excludes its tax escrow account balance of $273 million at quarter end, as well as approximately $800 million in assets pledged to the GICs and interest rate swaps.

Turning to MBIA Corp. and its statutory results, Corp. had statutory capital of $755 million as of the end of the second quarter, compared to $885 million as of year-end 2015. The decrease from year end was primarily due to increased loss and LAE expense. For the second quarter, Corp.'s statutory net loss was $49 million, compared with a net loss of $47 million in the second quarter of 2015. The net loss for the second quarter of 2016 was primarily due to increased loss expectations in first-lien and second-lien RMBS. Increased severities drove our first-lien RMBS losses for both our US and Mexico portfolios, and voluntary prepayments in our second-lien RMBS portfolio remain elevated, which reduced our excess spread loss recoveries.

MBIA Corp.'s liquid assets totaled $288 million as of Q2 2016, up from $264 million as of the end of the year. Claims paying resources were $2.2 billion as of June 30, 2016. As we have stated previously, MBIA Corp. is focused on managing its resources to enable it to pay claim payments when due to its policy holders.

The $772 million Zohar II maturity on January 20, 2017 is the biggest challenge facing MBIA Corp. vis-a-vis its current liquidity position. And as Jay mentioned, we are pursuing strategies intended to address that challenge, even though there is no assurance that we will be able to raise sufficient liquidity and restructure the Zohar II notes by the maturity date.

As we move forward, we continue to work towards creating shareholder value through the strategic repurchasing of our shares when optimal, and increasing National's market presence in the bond insurance market. We're also working to resolve our Puerto Rico exposures, which we will believe will both have a positive impact on National's ratings, and subject to regulatory approval, provide the ability for National to pay special dividends to the holding company. And now I will turn it over to Bill who will provide an update on National.

Thanks, Anthony. Good morning, everyone. It continues to be an interesting time for National. During the quarter, Puerto Rico generated lots of headlines, National continued growing new business production, and its financial position strengthened.

During the quarter, the PROMESA legislation became law. The seven member oversight Board should be in place by September 15. We expect to work with the Board, the Commonwealth, and other creditors to address Puerto Rico's challenges, while aggressively pursuing repayment of National's insured debt.

In July, we paid $173 million of insurance claims on Puerto Rico bonds, of which $169 million was paid for principal and interest that we insured on Puerto Rico's general obligation, or GO, bonds. The other $4 million was for highway and transportation, HTA, bonds that we insure. Before year end, $2.5 million of payments will come due on National insured Puerto Rico bonds, and [then $73 million] will come due on January 1, 2017. The claims that we paid for the July 1 debt service amounts were taken into consideration in our June 30 loss reserving assessments, and we expect to ultimately recover most, if not all, of the claims that we paid.

On the PREPA restructuring, there continues to be progress. The parties are working to implement the terms of the restructuring support agreement, which has been extended to December 15 of this year. We continue to believe that the PREPA restructuring could close before the end of the year.

In the meanwhile, some of the creditors, including National, have purchased newly issued bonds from PREPA to help replenish PREPA's financial resources. During the second quarter, National purchased $139 million of non-insured PREPA bonds that have maturities ranging from January 2018 through July of 2020. Most of it, $95 million, matures during 2018. In addition to pursuing the PREPA restructuring, we as did other creditors, initiated litigation that seeks to have Puerto Rico's moratorium law declared to be unconstitutional under the US Constitution. Outside of Puerto Rico, the other credits at National's insured portfolio are performing within our expectations.

Turning to new business, our production continues to demonstrate steady and sustainable growth. We insured $209 million of gross par during the second quarter, up from $158 million of gross par in the first quarter of this year. For the first six months of 2016, we have insured $367 million of gross par versus $311 million for the first six months of last year. But more importantly, the number of deals that we have insured has increased even more. We insured 59 deals for the first six months of 2016, versus 14 deals for the first six months of last year. We are steadily expanding the number of clients and intermediaries looking to transact with National.

The bond insurance industry penetration for the first half of 2016 was 5.7% of total municipal issuance, compared to 6.3% for the first half of 2015. Of the insurable market, that is new issue municipal bonds with BBB through A ratings, the insured penetration was 14%, which was down slightly from the first half of 2015 penetration of 15%. Low interest rates have been a challenge for the industry. We continue to believe that our industry will experience growth over the coming years, in large part due to the value that bond insurance provides to issuers, and the market has demonstrated with respect to Puerto Rico insured bonds, as well as other recent examples of municipal defaults and bankruptcies, and National is well-positioned to participate in that growth.

From a financial perspective, National reported $34 million of operating income for the quarter, and it ended the quarter with $3.5 billion of statutory capital, and $4.7 billion of claims paying resources. As National's insured portfolio continues to amortize, its capital position and its capital ratio continue to improve. During the second quarter of 2016, National's insured portfolio reduced by $12 billion of gross par, ending the quarter at $138 billion of gross par outstanding. National ended the quarter with a leverage ratio, gross par divided by stat capital of 40 to 1, down from 48 to 1 at year-end 2015.

During the second quarter, Kroll, Moody's and S&P all reaffirmed their credit ratings and outlooks for National. Under S&P stress tests, which was last assessed based on our year end 2015 insured portfolio and financial conditions, we estimated that National had approximately $1.5 billion of excess capital. Given the further delevering of National's insured portfolio and it's positive financial results over the first six months of this year, that amount of excess capital has grown.

As mentioned on previous calls, we plan to seek approval for National to pay a special dividend when there's less uncertainty regarding our insured Puerto Rico exposure. In the meanwhile, we expect National to be able to pay an [as a right] dividend of approximately $115 million during the fourth quarter of this year. Now we will open up the call for your questions.

(Operator Instructions)

Your first question comes from the line of Chas Tyson with KBW.

Hey, guys. Good morning. I just want to follow up on the special dividend, the interplay there obviously between the uncertainty in Puerto Rico, and then going to the regulator and requesting. I mean, when, what, do you think that could potentially be a 2016 event, and what do you need to see out of Puerto Rico, before you feel more comfortable making the request?

Yes, Chas. As you know, we are following Puerto Rico quite carefully. I think, one of the things we're looking for is the continued implementation of the PREPA restructuring, which as I indicated we would hope that closes this year So I think that's one key thing to focus on. Second would be, when the oversight board under PROMESA is put in place, and how they set out to start looking at the financial situation in Puerto Rico. So I think as we head towards the fourth quarter, we'll have a whole lot more information on that front.

Okay. And on the PREPA restructuring, one, do you think that -- does that, the base rate change, does that need to be permanent before you can get the securitization complete? Because I think you noted in the Q, that you wouldn't expect that until next year? And do you think that securitization will obtain an investment grade rating, because there has been some rumors in the press, as well as from creditors that it may not obtain an investment grade rating?

Yes, so two things. In terms of the special-purpose vehicle, that's part and parcel of the restructuring agreement. So again, we're hoping that all comes together before the end of the year. With regard to the investment grade rating which you referred to, PREPA will start working with the rating agencies. We would expect that process to start soon, perhaps next month. There was talk that they were expecting an investment grade rating. And as you had mentioned, there is some thought now that perhaps initially, it would not be an investment grade rating. The deal can be done, even if it doesn't have an investment grade rating. But again, PREPA has indicated that they would aspire to have an investment grade rating.

Okay. And then last one from me, I'm not sure if you gave the GAAP book value of MBIA UK, but if you have that, that would be helpful. And then, can you would you guys rule out MBIA Inc. or National purchasing MBIA UK, are they potential bidders?

With regard to the sale of the UK, other than the comments we've already made, because of the confidential nature of those negotiations, we're not going to comment further at this point in time.

Okay. Do you have the GAAP book value or no?

The GAAP book value is approximately $500 million.

Okay. Thank you.

Andrew Gadlin, Odeon Capital Group.

Hi, good morning. Thank you for taking my question. I just want to follow up on the last question about MBIA UK. It sounds like the GAAP book value for UK actually increased in the quarter?

The UK continues to be profitable, so essentially it's just increasing by the profitability of the Company.

Interesting. I mean, for a stat basis, you actually brought down the admitted, even the non-admitted valuation declined by $20 million, the admitted asset decreased by $40 million. What drove -- drives that discrepancy?

The 1408 penalty, the higher percentage the UK becomes of Corp., the more of a penalty we're taking essentially.

Got it. So it's a bigger benefit from the sale?

It's a bigger benefit how you (multiple speakers) asset versus the total assets of Corp.

Got it. And then, the derivatives at holdco, which are now tying up $311 million of cash. Can you talk about those, what those are tied to, and why that amount is increasing?

We've got swaps that are part of our legacy ALM business. The reason why the derivative liability increased, was because interest rates continued to decline over the quarter, which increased our mark-to-market liability.

Okay. Great. And then last question, on the PREPA bonds that were purchased at National, I think you said it was $139 million, can you talk about how you're marking those? Are you marking those to par, are you marking those to a discount? Obviously, they're not very liquid instruments.

We go through a process, so they are marked to fair value. And given the short maturity of those, to your point, they're not things that are trading in the marketplace. So we think at quarter end, they were very close to the value -- or excuse me, the price that we paid for them.

Got it. And then, in your -- in an answer to the previous questioner, you said that you would be thinking about the special dividend as Puerto Rico progresses through the year. And I'm just trying to think, there are additional claims coming in in January, I know it's difficult to put yourselves in the shoes of the rating agencies, but when you think about the concentration in National of the investment portfolio between your own wrapped [Cofina] bonds and these PREPA bonds, and deducting the cash that will be paid out, how do you think -- how can you help us think about the amount that a dividend could be, or the flexibility that you'd have, given those concentration levels?

I think the thing to keep in mind is, as I mentioned the rating agencies all come out, and confirm their ratings. In particular, S&P has done a separate piece with regards to the insurance industry, that is the bond insurance industry, and the exposures that people have to Puerto Rico. And even after stressing the Puerto Rico exposures, they still believe that we have in excess of the AAA capital levels. So again, we think from a capital and financial strength position, National is very well-positioned.

Okay. Thank you very much.

Brett Gibson with JPMorgan.

Great. Thank you for taking the question. With liquidity issues mounting in Corp. in advance of a possible Zohar payment, can you update us on your philosophy on National providing support to Corp? And I'm not just talking about a possible sale of UK to Corp., but whether it is through lending or any other form of support?

Yes. With regards to that, I think I've been clear in the past, unless you can tell me how that would benefit National, we won't do it.

Okay. I mean, I guess, I would say not sending Corp. into receivership could be a benefit to National's ongoing interest in writing business. But I mean, is that something that you would rule out, support or lending in any form?

We're not going to comment any further on that.

Okay. Great. Thanks. Moving on, can you update us, related to Corp. on the status of regulator discussions, regarding a possible regulator action, receivership of some sort or stop payment, what time line should we expect, before we get a decision or any kind of update?

Related to the regulator, we are in constant contact with the regulator. We are updating them on all of the initiatives that we have talked about for the last quarter, so related to raising liquidity and restructuring efforts on Zohar for MBIA Corp. So again, we have a full and transparent line of communication. We're continuing to work down the avenues that we've discussed. And again, as long as we keep moving down that path, we hope to achieve what we're going for by the time the Zohar maturity occurs.

Okay. Thank you. And then you've also talked about looking at a possible restructuring of the mature -- this is related to Zohar, possible restructuring of the maturity or reducing the outstanding principal. Can you help us understand what are the mechanics of getting that through, what level of consent do you need from holders, or any other details that can help us out in understanding that?

We're not go in any details. And then, I'll just tell you that we have identified everything we need to do, to accomplish the goals that we have in front of us.

Great. And my final question, and maybe you can't answer, but this relates to the UK. Last quarter you said there were quote, multiple interested parties, can you just update on -- us on if that's still the case? And, thank you.

Yes, as I said, we are in discussions and negotiations. And beyond that, because of the confidential nature, we can't comment any further at this time.

Okay. Fair enough. Thank you, gentlemen.

Peter Troisi, Barclays.

Hey, good morning, guys. You mentioned earlier in the script that you're engaged in conversations with key MBIA Corp. stakeholders. Is there anything more that you can say about that?

No.

I mean was that comment specific to UK, or is it -- or can we think about it more broadly?

You can think about it more broadly.

Okay, great. Thank you.

[Yao Rozato], [Banco de Santia].

Hi, thank you for taking my question. Is there any update regarding the recovery rate of Zohar 1? Because if I remember from the last call, there wasn't any. And my second question is, if the sale of MBIA UK fails, do you consider the sale of the investment portfolio to try to make for the Zohar payment, the Zohar II payment in January, or is that out of the question? Thank you.

For the first half of your question, we continue to pursue these (inaudible) [Zohar payment] we believe given the senior position we have in that transaction, we expect a solid recovery there. But that's all I can comment on, with that at this point.

With regard to the second one, the sale of the UK, again as we've commented, we're in negotiations right now. I think your question is, if for some reason that didn't proceed, could we sell the UK investment portfolio? Because the UK is a separate legal structure and is regulated by the PRA (inaudible) we couldn't use the portfolio. You'd have to get distributions out of the UK. And just given the nature of the insured portfolio, as (inaudible) as the way to monetize that is to sell it, that would be the most effective way to do so.

I was thinking specifically about the MBIA Corp., the US operation, their portfolio, which you had mentioned $400 million or something of fixed income assets?

(multiple speakers) MBIA Corp.'s liquid assets are about $288 million. Most of the other assets are investments and subsidiaries, and also tied more to our portfolio. So there wouldn't be a large sale from the MBIA Corp. portfolio to satisfy the Zohar payment.

Okay. Thank you.

[Ed Groshans] with [Height Securities].

Good morning, and thank you for taking my questions. First, do you have plans to re-up the share repurchase authority?

We currently have another $88 million outstanding. Until that's used up, we will not go back to the Board and consider additional repurchases.

Okay. And, is there any consideration of the special dividend and timing of that, relative to future authorizations, or are they separate discussions?

They're obviously intertwined in terms of having sufficient liquidity. If we were successful in getting a special dividend, it would obviously significantly alter the modeled and stressed portfolio for MBIA Inc., and that would allow us to purchase additional shares. So yes, they are linked.

Okay. And then just a couple of reporting items, do you have the schedule of exposures? And in the Puerto Rico exposure, it appears that you broke out PBA or public building authority exposures, as well as 98 subordinate transportation bonds. I guess, could you just talk about the thinking as to why to parse those out at this point in time?

We're just making sure we provide detail, that any investor, or anybody who is interested would like to have the information. There is nothing in particular about those exposures. As you said, they're not necessarily the largest exposures that we have in Puerto Rico.

No. That's correct. Also, it does appear that at least, what I am looking at, GOs now, with the breakout of GOs separate from public building authority, that those exposures did go up quarter over quarter about $40 million. Can you sort of address that?

On the GOs, if there is a small increase, I believe there's some capital appreciation in bonds that you are referring to that have gone up slightly.

Okay. And that has resulted in the change. Okay. Thank you so much, have a good day.

Thank you.

(Operator Instructions)

Adam Sklar with Monarch.

Hi, thank you for taking my question. Can you talk a little bit about your Highway 98 exposure, and how we should think about that, relative to your loss and LAE reserves of $58 million at National? The market trades those bonds on an unwrapped basis in the [20s] or [30s] implying very low recovery rates there. And so, since the passage of PROMESA, it seems like that [NV] is very vulnerable to taking substantial losses. And the second part of my question would be, how should we think about the loss and LAE reserves at National, relative to not only to the highway exposure, but also the fact that you've already paid out $173 million on your GO exposure alone?

Okay, with regard to the first, on the highways, as you know we have two different indentures, we have the 98 and we have 68. There are a lot of things going on, to your point, there is a lot of uncertainty exactly how it will get restructured. The governor has taken certain actions, which have now been challenged in court. He's clawed back different revenues. He's also moved collateral effectively under the guise of the Moratorium Act. So I think there's a lot of things there that will play out over time, with regard to litigation, as well as the restructuring of HTA.

With regard to the market prices, we go through a process, as you know under GAAP with regard to how we come up with the loss reserves. And that may or may not be the same, but there's nothing from market prices that informs what the reserve should be with regard to any of that.

Stepping away from GAAP for a second, just from your business understanding, with $4.5 billion of PV exposure and $10 billion of future value exposure, holding $58 million of reserves would imply that the best use of the cash on your balance sheet would be to go and buy Puerto Rico bonds. There is a huge delta between the market level and where you are reserving is. And so, I guess from a business perspective, living and breathing, the situation in Puerto Rico, can you just discuss how you are expecting it to play out? And where you're most concerned about losses, where you expect to take losses, and what the quantum of those losses will be?

Yes. As you know, we do not comment on any specific credit and the loss reserve associated with it. As you know we're quite familiar with everything you said, again keep in mind, there is a difference between the price of uninsured versus insured bonds. So, when we ever think about buying bonds, we're talking about buying the insured bonds, which obviously trade at a different value than what you are talking about. I think we are the first to acknowledge, the highway situation is uncertain. It remains to be seen when the oversight board gets put in place, and how they choose to deal with it. But I think that it is one where there is clearly going to be volatility in the near future. So I don't think our view is any different than what you are suggesting.

Thank you.

I'm sorry, did you have another question, Adam?

At this time, there are no further questions in queue. I will now turn the conference back to Mr. Diamond.

Thank you, Crystal, and thank you to all of you who joined the call today. Please contact me directly if you have additional questions. We also recommend that you visit our website at MBIA.com for additional information. Thank you for your interest in MBIA. Good day and goodbye.

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