MBIA 2Q Profit Reflects Sign Of Credit-Market Recovery

New York, NY (AHN) - Bond insurer MBIA Inc. reported on Friday that the second quarter profit from derivatives, but downgrades prevented the company from receiving new business.

The Armonk, New York-based second largest bond insurer in the U.S. reported $1.7 billion or $7.14 a share, compared to $212 million or $1.61 a share profit a year earlier.

The firm announced on Friday that its profit included the non-cash pretax gains of $3.3 billion on its derivatives portfolio, following MBIA's downgrade in June by Moody's and S&P.

MBIA had reported a loss of $2.4 billion in the first quarter this year, led by the exposure to bonds related to subprime mortgages.

"While the deterioration in the housing and mortgage markets continued over the past three months, it has been consistent with what we projected when we established reserves and impairments for our housing-related portfolio in the first quarter," Jay Brown, MBIA's chairman and chief executive, said in a statement.

"As such, we did not increase our loss reserves or credit derivative impairment estimates during the second quarter beyond our normal accretion adjustments and quarterly loss reserving formula."

MBIA's reported that its operating earnings, excluding special non-cash gains and charges, were $228.9 million or 96 cents per share in the quarter ended June 30, compared to $206.9 million, or $1.57 per share, posted a year earlier.

Shares of the firm gained by as much as 8 percent during early session on Friday on the New York Composite trading.