MBIA Inc. (MBI) Q3 2026 Earnings Call Transcript

Operator: Hello and welcome everyone. To the MBIA Inc. Third Quarter 2026 Financial Results Conference Call. I would now like to turn the call over to Gregory R. Diamond, Managing Director of Investor and Media Relations at MBIA. Please go ahead, sir.

Gregory R. Diamond: Thank you, Leslie. Welcome to MBIA's financial results conference call. After the market closed yesterday, we issued and posted several items on our websites including our financial results, 10 Q quarterly operating supplement, and statutory financial statements for both MBIA Insurance Corporation and the National Public Finance Guarantee Corporation. We also posted updates to the listings of our insurance company's insured 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, Qs, and other SEC filings, as our company's definitive disclosures are incorporated in those documents. We urge investors to read our 10-Ks and 10-Qs as they contain our most current disclosures about the company and its financial and operating results. Those documents also contain information that may not be addressed on today's call. The definition and reconciliations of the non GAAP terms included in our remarks today are also included in our 10-Ks and 10-Qs as well as our financial results report. And the quarterly operating supplement. The recorded replay of today's call will become available on the MBIA website approximately 2 hours after the end of the call. 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-Ks 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. 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, Bill Fallon and Joe Schachinger will provide introductory comments, and then a question and answer session will follow. Now here is Bill Fallon.

William Charles Fallon: Thanks, Gregory. Good morning, everyone. Thank you for being with us today. While our third quarter 2026 net loss was greater than last year's third quarter loss, our year to date results compare favorably to last year. Joe will provide more details on this quarter's results shortly. Regarding our operations, our priority continues to be resolving National's PREPA exposure. Which remains at $390 million of gross par outstanding as of September 30, 2026. And $35 million of saleable PREPA bankruptcy claims consisting of custodial receipts and uninsured bonds. Since our last conference call, the US District Court for Puerto Rico granted permanent injunctive relief to 3 of the oversight board members that president Trump attempted to fire. The title 3 court scheduled oral argument for 11/18/2026 on summary judgment for the accounting counterclaim regarding the calculation of net revenue. The PREPA bondholders petition the First Circuit Court of Appeals for an appeal on the title 3 court stay of the bondholders filing to lift the automatic stay and appoint a receiver for PREPA, and oral arguments were heard on the administrative claim appeal to the first circuit and a ruling is pending. Regarding the balance of National's insured portfolio, those credits have continued to perform generally consistent with our expectations. The gross par amount outstanding for National's insured portfolio has declined by approximately $2.6 billion from year end 2025 to about $19.7 billion at 09/30/2026. National's leverage ratio of gross par to statutory capital was 20-to-1 at the end of the quarter down from 24 to 1 at year end 2025. As of 09/30/2026, National had total claims paying resources of $1.4 billion and statutory capital and surplus of $974 million. Now Joe will provide additional comments about our financial results.

Joseph Ralph Schachinger: Thank you, Bill, and good morning, everyone. I will begin with a review of our third quarter 26 GAAP and non GAAP results followed by an overview of our holding company liquidity and our statutory results. The company reported a consolidated GAAP net loss of $24 million or a negative $0.49 per share for the third quarter of 2026. Compared with a consolidated GAAP net loss of $8 million or a negative $0.17 per share for the third quarter of 2025. The larger GAAP net loss in the current quarter was primarily attributable to a smaller loss and LAE benefit in the third quarter of 26, we recorded a loss and LAE benefit of $12 million. This benefit was largely driven by the impact of an increase in the interest rates used to discount our loss reserves. Which lowered the present value of those reserves principally with respect to MBIA Insurance Corp.'s first lien RMBS exposures. By comparison, in the third quarter of 25, we recorded a loss and LAE benefit of $50 million. That benefit was primarily driven by revising our PREPA loss scenarios to reflect developments at that time. Including National's sale of PREPA bankruptcy claims at prices above our previous estimates. The company's adjusted net loss which is a non GAAP measure, was $3 million, or a negative $0.06 per share for the third quarter of 2026 compared with adjusted net income of $51 million, or $1.03 per share for the third quarter of 2025. The unfavorable variance was primarily driven by $3 million of losses and LAE at National in the current quarter reflecting the accrual of LAE and the accretion of loss reserves. Compared with a $54 million loss and LAE benefit in the third quarter of 25 primarily from the favorable developments associated with National's PREPA reserves and recoveries. As of 09/30/2026, MBIA Inc's book value per share was -$46.87 per share. Reflecting a decrease of $2.60 per share from year end 2025. This decrease was primarily due to our consolidated GAAP net loss of $110 million for the first 9 months of 2026 and an increase in unrealized losses on our investment portfolios recorded in other comprehensive income. The increase in unrealized investment losses largely resulted from higher interest rates, which reduced the fair value of our fixed income investments. Included in MBIA Inc.'s book value per share as of 09/30/2026 is a -$54.87 per share of MBIA Insurance Corp.'s book value. I will now turn to the corporate segment balance sheet. The corporate segment which primarily comprises the activities of the holding company, MBIA Inc, had total assets of approximately $577 million as of 09/30/2026. Within this total are the following material assets. Unencumbered cash and liquid assets held by MBIA Inc, totaled $335 million compared with $357 million at 12/31/2025. The decrease since year end 2025 primarily reflects ongoing debt service payments and operating expenses. Partially offset by investment income. We continue to manage holding company liquidity carefully with a primary focus on meeting our outstanding obligations and preserving our financial flexibility. In addition to the unencumbered cash and liquid assets, the corporate segment's assets included approximately $124 million of assets at market value pledged to guaranteed investment agreement contract holders. These assets fully collateralized the principal amounts of those contracts. The segment's assets also included $70 million of assets at MBIA Services Corp., our management services company. To support its operating obligations. I will now turn to the results of our insurance companies beginning with National. National reported net income of $18 million for the third quarter of 2026 compared with statutory net income of $73 million for the third quarter of 2025. The unfavorable variance was primarily attributable to loss and LAE activity. National recorded $4 million of statutory loss and LAE this quarter compared with a $56 million loss and LAE benefit in the third quarter of 2025. As noted earlier, the expense in the current quarter reflects the accrual of LAE and accretion of reserves, while the benefit in the third quarter of 25 was primarily driven by adjustments to our PREPA loss scenarios and assumptions and the sale of PREPA bankruptcy claims at prices above our previous. As of 09/30/2026, National's statutory capital was $974 million. Up $37 million compared with 12/31/2025. The increase was primarily driven by National's statutory net income of $39 million for the first 9 months of 2026. As of 09/30/2026, National's claims paying resources were $1.4 billion. Unchanged from year end 2025. Now I will turn to MBIA Insurance Corp. MBIA Insurance Corp reported a statutory net loss of $3 million for the third quarter of 2026 compared with a statutory net loss of $2.025 billion for the third quarter of 2025. The favorable variance was primarily attributable to lower loss and LAE. MBIA Insurance Corp. reported loss and LAE of $4 million in the current quarter compared with $25 million in the third quarter of 2025. The larger loss and LAE in the third quarter of 25 primarily reflected reserve adjustments associated with lower expected recoveries of paid claims relating to the Zohar CDOs. As of 09/30/2026, MBIA Insurance Corp's statutory capital was $102 million, reflecting an increase of $23 million from year end 2025. The increase was principally driven by MBIA Insurance Corp.'s statutory net income of $25 million for the first 9 months of 2026. Claims paying resources totaled $335 million as of 09/30/2026, increasing $18 million from year end 2025. MBIA Insurance Corp.'s insured gross par acts outstanding was just under $1.8 billion, as of 09/30/2026. Declining ~13% from year end 2025 reflecting the scheduled amortization of the insured portfolio. And now we will turn the call over to the operator to begin the question and answer session.

Operator: Thank you. If you wish to remove yourself from the queue, please press 2. We ask that when posing your question, you please pick up your handset to allow optimal sound quality. We will now take our first question from Tommy McJoynt. KBW. Please go ahead.

Tommy McJoyne: Hey. Good morning, guys. First question, what was the amount of the as of right dividend that National paid to MBIA Inc? In fourth quarter. I think that is usually in October. Versus the $63 million as of right dividend last year?

Joseph Ralph Schachinger: Hi. This is Joe. We have not yet paid the as of right dividend. We typically pay it in December Tommy, not October. So we do expect to, pay that dividend this coming December and we expect it to be in a similar amount as, the last 2 years. Perhaps slightly higher.

Tommy McJoyne: Okay. Got it. And then, from your vantage point, does the Democratic sweep in the midterms change the outlook for how you expect the oversight board to get constructed in terms of nominations from the different House and senate leaders? And do you have a viewpoint on how that could ultimately impact how creditor friendly and maybe resolution focused that oversight board will be?

William Charles Fallon: Yeah. With regard to the results of the elections and the implications that you are talking about. We do think it is possible that puts more focus on the 3 vacant positions and the current administration has the ability going through the process outlined in PROMESA to fill those 3 vacancies. In a sense, they could do it today. I do not know where the different parties stand in terms of providing lists to the president. But we do think there is an increased possibility that those 3 positions could be filled before the end of the year. Which we think would help move things along. So that is probably the biggest highlight coming out of that.

Tommy McJoyne: Okay. Got it. And then just on the litigation side, understand there is a few hearings coming up here later in the month. In terms of the case, sort of looking at the net revenue, debate in terms of how that gets calculated. And could you just kind of summarize what you are seeing there in terms of those-- that case development in terms of. If you feel like sides are getting closer together, further apart, there is a lot of stuff to track there, so we just want to understand your sort of take on that. on that case specifically. Thanks.

William Charles Fallon: Yeah. Tommy, without going into a lot of details and, obviously, people have read all the court filings, There clearly is a difference of opinion with regard to what the board thinks and what the bondholders think. Again, collectively, as 1 of the bondholders, we feel we have a very strong case on that 1. I do not know that there is really any movement in terms of the sides getting closer together as you ask that part of the question. But again, I think we feel pretty good. Hard to know with litigation what the final outcome will be? But, hopefully, we will know soon. Thanks.

Operator: Thank you for your question. We will take our next question from Patrick Stadelhofer with Kahn Brothers.

Patrick Stadelhofer: Good morning, Good morning. First question is just why have you not yet sold the custodial receipts you created in July last year. So it was sold pretty fast. It looked like prices have held up. I am just curious why you are holding on to these receipts longer than last year's batch.

William Charles Fallon: Yeah. Patrick, we continue to look at the market and look at opportunities as I think you are aware. it is not a really deep and liquid market, where I think we are pretty aware of what the possibilities are, and we wanna make sure that it is beneficial to shareholders. So we will continue to look at that. As you know, some of these court decisions could impact the price up or down. There could be other events but we are looking at that all the time.

Patrick Stadelhofer: Sounds good. And then a few years ago, you publicly announced and ran the sale process. Since then, you have mostly or substantially resolved a lot of the gating issues, it seemed. prevented a sale then. So the question is, are you running a sale process now? And if not, why are not you given the kind of rapid burn of shareholder the value from ongoing operational costs?

William Charles Fallon: Yeah. I think you summarized it correctly. We believe that a transaction would be beneficial to shareholders. We set out to do that several years ago. Everything that you just described. As I have mentioned in previous calls, I think the feedback from that process was really twofold. 1, was reduce your PREPA exposure or eliminate it. 2 was to get dividends from National up to a holding company. We clearly did the second 1 and provided the actual shareholder dividend 3 years ago, We reduced our PREPA exposure significantly. From the time we started, this is down by 2/3. As you referenced, all the custodial receipts that deal with another $35 million. While we have not started a formal process I think people know that we are in runoff. And based on the sale process, from a few years ago, we would obviously look to sell the company, sell National, do whatever it is that is beneficial to shareholders. As soon as possible.

Patrick Stadelhofer: Good. Thank you.

Operator: Thank you. Thank you. Our next question comes from Carlos Pardo, a private investor.

Carlos Pardo: Hi, good afternoon from London. Hope you are well. My first question is a [Inaudible] question, but please tie in with the [Inaudible]. The $71 million authorization that you have-- that you have in the books, Is it correct that you cannot still use it as previously? Or. you That you can use it if you if you would like to and that there are no legal or regulatory constraints in order to use it. And could it be used for dividends?

William Charles Fallon: So with regard to the $71 million authorization. And I will apologize, Carlos. You broke up there for a little bit. $71 million authorization is valid. We have the ability to use that. That applies to both the holding company and to National. There are no regulatory constraints on that.

Carlos Pardo: it is not the same as dividends. Dividends are something that the company looks at on a regular basis. And the board can at any point time. there is not an authorization ahead of time and so, therefore, the $71 million does not apply to that.

William Charles Fallon: Okay. But, MBIA Inc, the holding company, could pay a dividend in theory. Without having to go to the regulator. If we-- that is correct. We decide to-- that it is exactly. Mm-hmm.

Carlos Pardo: Perfect. Thank you. Perfect. The other question that I have. Yeah. Please go ahead.

William Charles Fallon: No. Go ahead. Yeah. No, no, you go ahead, please. Yeah. No. There is no regulatory oversight in terms of DFS with regard to the holding company. So the holding company has the ability to declare and pay dividends. Exactly.

Carlos Pardo: So it would be just a liquidity constraint rather than a regulatory constraint. Perfect. Thank you. that is that is that is very helpful. The other question that I have is that I sent you a letter with my understanding and the rationale for using the excess capacity of $71 million. And that is basically the proposal that was also supported by other shareholders. Could you please explain why this has not been done? And what is the rationale for not using this capacity at this stage?

William Charles Fallon: With regard to dividends, I think as most people know, if you go back to about the time PREPA entered Title 3, which is a little over 9 years ago, We repurchased over 80 million shares during that period at an average price of $7.74. that is not necessarily equivalent to today's share price because in addition to those share repurchases, we had the special dividend 3 years ago. which was an $8/share. Which is a little bit over $400 million in total. So during the time that PREP has been entitled 3, we have returned over $1 billion to shareholders through share buybacks and through dividends. We think given that we are in runoff, it is very important to distribute money to the shareholders via both of those approaches. We continue to look at those And with regard to the current situation and your question about repurchases of shares, as I think most of the people know, most of those share repurchases have been done through national. There has not been any capacity at National for the last couple years. That could change based on the stock price at any given time and our financial results. So therefore, over the last couple years, the dividends would have come from the holding company And there, again, as we have articulated in the past, we look at several things in terms of the use of the liquidity of the holding company, that could be shareholder dividends. It could be debt repurchases. We obviously have obligations primarily the ink debt and the MTNs of the holding company. Not only in next couple of years,, meaning 2027 and 2028, but we also have maturities beyond that. So we take all those things into account. And make decisions that we think are best for the company.

Carlos Pardo: Yeah. That is 1 specific reason not to use I understand that national is constrained, but the holding company is not constrained. And you could use the $71 million buyback authorization. What is the exact reason why you are not doing that?

William Charles Fallon: Yeah. The $71 million is not a specific amount of money. it is just an authorization. So the money would come from the holding company and the liquidity. And as I just mentioned, we look at several things in terms of utilizing that liquidity. We obviously have all the obligations I mentioned, but we look at debt and stock repurchases. At any point in time. If we think it makes sense, then we will do it.

Carlos Pardo: Okay. Perfect. We have a meeting later this month, so we can discuss it further there. The other question that I have is that the sale process. I know that it is not necessarily active at the moment. But that you would listen to offers. So, I will say, I think if you got-- I think I discussed with the representative of, if someone asked, what is-- what is the starting price for this current process? I mean, if someone would come or I would come tomorrow, and I would offer you $300 million knowing that the market cap at the moment is $225 million. Would you accept it, or is it something that you consider? I mean, what is your starting price for the bidding process?

William Charles Fallon: Yeah. I do not think it is appropriate for us to discuss price of particular transactions on this call. If for some reason you are interested in making a bid for the company, you should contact us after the call. I also wanna clarify, you have a call with Gregory R. Diamond, the head of our investor and media relations next week. Not with anybody else at the company.

Carlos Pardo: Yes, sir. So I will be discussing this issue. Then another question that I have is that the my understanding is. Now we go to the call. In the court, MBIA team is not bound by the terms of the court. So it is only national. I have been reviewing the code, and MDIA Inc would be free to act within. Without being constrained by the-- of the co-op. Is that correct?

William Charles Fallon: I think it depends on what type of actions you are talking about. Mhmm. But MBIA Inc. is not a party to the court. And the and the definition. There is no definition of affiliate. So it is the co-op is only binding on national.

Carlos Pardo: Carlos, you have a specific question? Yes. that is it. Basically, are you in-- you please confirm that MBIA Inc is not is not a party of record?

William Charles Fallon: Okay. So let's hypothetically say I agree that it is not? what is the follow-up question?

Carlos Pardo: Yeah. No. Basically, MBIA Inc. would be free to contact the Oversight Board with a proposal and negotiate directly. if it want it. I am sorry. I did not understand that. Yeah. MBIA Inc. Would be able to contact the Oversight Board, for example, and make a-- a contact proposal. If MBIA Inc. wanted. that is that is the. that is basically the. that is basically my question.

William Charles Fallon: The PREPA claims are held at national. So any proposal would come from national making a distinction in this case between National and Inc. is irrelevant in our view.

Carlos Pardo: Yeah. But I respectfully disagree. And coming also to the offer that the Oversight Board made of approximately 4 to 5 thousand. You mentioned that time, 30 to 40%. Has any counteroffer been made by the co-op?

William Charles Fallon: We cannot talk about We cannot talk about confidential negotiations that may or may not be going on between the creditors and the oversight board.

Carlos Pardo: Yeah. Well, in my opinion, at the only my opinion, I think that making a counter offer of ~60% would be beneficial for MBIA shareholders. So that is something that I will be discussing during our during our meetings later this month. Then also 1 question that I have about the co-op is that, unfortunately, our lawyers are going to be dissolved. with So my question, I mean, it is what is the process now that the Weil, Gotshal are going to be resolved? And are we going to be trying to find lawyers that are a bit more effective because their strategy did not work over the last few years? So what is tech is the process to replace them?

William Charles Fallon: Yeah. Given the announcement and the process going on at Weil, Gotshal, we are currently represented and have adequate or appropriate representation. We are very comfortable with the representation advice that Weil has provided. We are in conversations with the lawyers there. In terms of next steps. And we are comfortable that we will have legal representation without any disruption during this process.

Carlos Pardo: Perfect. I. Would you consider a different law firm if we if we suggest a different law firm that has a different strategy, is this something that you are willing to listen to?

William Charles Fallon: Well, at this point, almost by definition, we are going to end up with a different law firm at some point. Given that Weil is winding down. So stay tuned, and we will let you know how that plays out.

Carlos Pardo: Perfect. I will be proactive, and I will be suggesting something also during our conversation this week. And then also, another question I have is, what are the cost of being a member of the co-op annually?? Do you have any idea of how much the. How much this is costing in terms of your legal cost, Also, can you remind that there are some common costs with the other members of the co-op? What is the cost of having the co-op running?

William Charles Fallon: In our view, there is no incremental cost to being a member of the co-op group. No.

Carlos Pardo: You are paying. But, I mean, you are paying. But you are paying fees, so there should be some kind of figure. I mean, of course, you will have to compare to the cost of 1 week alone, but what is the cost of being a member of the call?

William Charles Fallon: There are no fees to be a member of the co op group. Well, you have to you have to pay lawyers, and the lawyers to participate in the co-op. So I just think that you have some understanding of what is the what is what is the copy to be to be in the co-op. Why do not you check with Gregory on that? Because maybe we are not understanding. But in our view, actually, it probably reduces expenses given that some of the things are shared. Different parties, but there is no incremental cost in our view.

Carlos Pardo: Okay. And finally, the co-op is now scheduled to end at the end of August 2027. What is the plan in terms of extending it?

William Charles Fallon: it is early at this point. So there is no sort of plan at this point in terms of what might happen. Come August?

Carlos Pardo: Yes. And would you consider extending it only if any of the members of the co-op would decide to buy our claims.

William Charles Fallon: The. I think those are 2 separate things. We can sell our claims if we get an attractive offer But again, mm-hmm. In terms of extending it, we think there is great benefit to the coop group at this point. And, again, August, in some ways, is a ways off, so we have plenty of time to make decisions there. But we think there is a great benefit to the co op.

Carlos Pardo: Yeah. Have we approached any of the members of the co op in order to in order to make any offer or to see whether they are interested in buying our claims.

William Charles Fallon: Yeah. Again, that is not something that we would discuss. Those would be confidential discussions and back and forth. So not anything I can comment on at this time.

Carlos Pardo: Okay. Perfect. So thank you for your time, and let's continue discussing later in the month first with Gregory and probably with you then in a different way.

William Charles Fallon: that is right. But thank you so much. Thank you for your time.

Operator: Thank you. Thank you. We will now take our next question from John Staley with Staley Advisors. Please go ahead.

John Staley: Thank you. Bill, I have a couple of questions. I am not current on it, but at 1 time, I was aware there was an incentive plan in place. That paid bonuses, so to speak. Upon exit. To yourself and a couple of other executives.

William Charles Fallon: Is that plan still in place? There is a plan that takes effect on a change of control, so sale of a company. At this point, I am the only 1 left who is covered by that. There were many other executives at 1 point who have all left the firm.

John Staley: Okay. And as they have left the firm, the incentive payment to you is still in place. And then as I recall, was reasonably substantial.

William Charles Fallon: it is all. Yes. it is all in the proxy. And that is why I know you have the information yet.

John Staley: Yes. But it is still in place.

William Charles Fallon: Okay. Yes. It is.

John Staley: Do you have any direct or indirect exposure to this commuter railroad in Florida, this Brightline.

William Charles Fallon: I can happily say no. We have no exposure whatsoever.

John Staley: Alright. Well, that leads me to a question. Assured Guaranty is deeply involved in that. And as I understand it from a very, very high level, it did a bankruptcy reconstruction in which they excluded the municipal part but I think there had to be additional investments made. But it certainly an impaired credit or at least 1 that has potential problems. Or affiliated which suggests that for them to keep their rating there are indications they may be looking to increase their capital. And I remember some time ago when I had a discussion with you about an Assured Guaranty of acquiring MBIA. I said, well, maybe because all the physicians merge and they are insuring most everything, and they get a big benefit.

William Charles Fallon: You said no. The real benefit is the capital.

John Staley: So it seems to me that if Assured Guaranty is looking to enhance its capital whether it is because of Brightline or some other credit issues. They would be more incented than normal to try to get something done with you guys. And I wondered if you had any reaction to that thought.

William Charles Fallon: Well, I think you have summarized the situation that Assured faces. With regard to BrightLine, which, as you mentioned, is the railroad down in Florida. Mhmm. Again, they would be the experts on that particular situation. We are aware of it. In terms of whether that makes a combination between MBIA and Assured Guaranty, more or less likely similar things I cannot really comment on that at this point in time.

John Staley: Okay. The other thing that has happened is that the. And he was on the call earlier. That the Kahn Brothers have come back into ownership And between the Kahn Brothers and I think it is Levin. who is a private investor. They combined have over 15% ownership. I wonder if you are getting any suggestions from them as shareholders to try to accelerate this wrap up.

William Charles Fallon: Even though I recognize from the earlier comments there seem to be a number of very significant legal decisions and court decisions that are gonna be occurring over the near term. Are you getting any encouragement from your larger shareholders?

John Staley: To get this thing wrapped up?

William Charles Fallon: Yes. I will not comment on any discussions we have with specific shareholders, but as you know, we speak to shareholders on a regular basis. Gregory, in particular, speaks to many of them. But I have had conversations with many of our investors as well. And I think the group that is most focused on wrapping this up, as you suggest, is actually the company or management. So again, as was referenced on 1 of the earlier calls by 1 of the earlier callers, we started a process at this point almost 4 years ago, I guess it was. And, you know, everything we have been doing is trying to accelerate and come up with some transaction that would benefit shareholders. So we think we are making progress towards that. We would all like it to be as fast as possible. I think the litigation has sort of delayed the timeline from what we originally set out, but we are doing everything we can to make that happen.

John Staley: Thank you very much, Bill.

William Charles Fallon: Thanks, John. Mm-hmm.

Operator: Thank you for your question. We will take our next question from Paul Sanders with Hutch Capital. Please go ahead.

Paul Sanders: Good morning, guys. Thanks for taking my call. Morning. I have got a. Just a couple sort of housekeeping questions, I guess. First 1 is the investment agreement. Principal balance was down pretty substantially, about $57 million. I know that there were maturities there. It sort of lines up with the maturities were, but I just kind of wanted to ask, were those, like, voluntary prepayments, or were those just scheduled maturity payments?

William Charles Fallon: Those were scheduled maturity payments.

Paul Sanders: Great. My other 1 is on LCOR Alexandria. The gross par insured is dropping, like, on a consistent basis. Each quarter, like, $11 million or $12 million. Is that national making claims payments on those, or is the issuer paying amortization payments, which is reducing your exposure?

William Charles Fallon: National is making claim payments. Regular claim payments on LCOR.

Paul Sanders: And, obviously, that is because LCORE is not making those? I mean, my reading of that 1 is that credit seems to be in pretty good shape, especially with some, like, meaningful positive things happening this year with leasing of 1 of those buildings. Can you provide any sort of color, I guess, on that credit? And why National's making those and not the issuer itself?

William Charles Fallon: Yeah. On that, Paul, just to be clear, LCOR is making partial payments so they are paying some of the debt service. They are just not paying 100% of it. So National then pays the difference. And everything you described is correct. There is what we think is positive activity. With regard to that credit. You mentioned the additional building being leased. So we do think despite what happened over the last couple of years, it is moving in a very positive direction.

Paul Sanders: And, yeah, I do not want to really belabor that 1 because I do not worry about it too much. But do you know or do you. Can you, like, I guess, give us your opinion?

William Charles Fallon: Do you think they will sell those buildings, or how do you think that will get settled there? I think at this point, it is hard, and it would just be speculation. But again, I think because of the sort of underlying economic conditions right now with regard to that building we are pretty optimistic about it.

Paul Sanders: Yep. Agreed. Last question for me, really, is I saw some headlines on the U.S. Virgin Islands issuing new gross tax receipts debt, and it said they were gonna issue $500 million, and the use of proceeds would be for repaying other gross receipts debt and other general corporate purposes.

William Charles Fallon: Do you-- can you tell us, are the proceeds of that new issuance?

Paul Sanders: Is that Is that happening, and is that to repay our National's debt? Or is it just kind of coming in pari passu with us?

William Charles Fallon: it is pretty much the latter. So it will not be repaying our debt to the best of our knowledge.

Paul Sanders: Got it. Okay. And, yeah, 1 more comment for me while I have you. Is I would sort of respectfully disagree a little bit with Carlos before on the share repurchases. I agree with you in that I actually think it would be better for shareholders to focus on the debt particularly, the ones that you can buy at a large discount. So I think you can kind of create similar book value expansion with some of those medium term notes. But also, obviously, which I know you are focused on probably reducing the negative carry associated with the cash and your Inc. debt as well. So that is not a question, just a comment that I wanted to add. So thanks for your time.

William Charles Fallon: Nope. Thank you.

Operator: Thank you. We will take our next question from Neil Bathon, a private investor.

Analyst: Hi. Good morning. Thank you for taking my call. Morning.

William Charles Fallon: A couple of facts I just want to confirm before my first question. Just to clarify. So the first thing, MBIA Inc.'s reported operating expenses are running roughly $65+ million a year. for 3 straight years. it is, like, $69 million in 2024, $68.25, and through last night's reporting about $48 million through the first 3 quarters of 26. That would be 1 thing I just wanna confirm. And then second, the co op term has now been extended 5 times since National joined. Now with the next extension running through August 31 and a possible extension after that through November 2027. So it does not look like there is there is really any kind of committed end date there. So is that a fair wrap up of those facts there? The operating expenses are as reported. And as we have stated, I think, already in the discussion today, the agreement goes through August And it. At your point, it is been extended in the past. You know, I cannot comment whether or not it will be at that point among all the bondholders, but it is always a possibility. Great. Okay. Yeah. Thanks. So with those $65 million-plus or minus in expenses, being reported, and the outcome pending on the coop side. I would just like to note that does the board have an internal threshold, some type of dollar amount or date beyond which it would pivot from the coop to look at other options of private transfer sale or settlement. If there is not 1, if there is not some type of threshold there, how does the board distinguish between, you know, the patients and you know, your desire to see this out versus funding the sunk cost on continuing? And I understand too that it is National and it is just PrEP related. But how does. How do you distinguish between that patience and just running the cost out? Yeah. With regard to the co op, the PREPA situation, first of all, there is nothing in the COP agreement that prevents us from selling our claims, so we have sold many in the past. As I mentioned earlier on the call, we had $1.2 billion of exposure when PREPA filed title 3 back in 2017. We reduced that by approximately 2 thirds As you know, we sold custodial receipts last year. We do have other custodial receipts right now, which, if we had what we thought was an appropriate price. We could sell those. The remaining 390, which is insured par, is a little bit more difficult to get rid of. But if, you there was an attractive price at which to do it, we could do that irrespective of the co op agreement. So again, that is not preventing us from winding down our PREPA exposure. Regarding the operating expenses, the only thing I would say is I think for shareholders, the way I think most of the shareholders look at it, is some of those expenses are associated with MBIA Inc., and the ones that really affect the shareholders of the operating expenses at the holding company and at National. Right. Okay. So, really, there is-- there is not a threshold that being looked at Yes. that is that is When you say threshold, we are trying to reduce our exposure as quickly as we can again, but it is gotta be attractive prices. So Okay. I am not sure there-- when you say threshold, what you are looking for. Yeah. Just wondering if, you know, overall, if it ends up being 4 years. If there is an extension in August and an extension in November, that potential for remaining in the co op then could look out for a total of 4 years that National is in that. And it is, you know, national not necessarily being the party that is unilaterally controlling everything there. it is largely the bondholders. I guess-- just wondering if-- I guess following up on that then, if looking down the road with the expenses, and the runoff. The company's being in the runoff. It just trying to figure out if there is any kind of deadline or a point in time where the board or management has said we are ready to pivot if we get to x, y, or z. Yeah. Again, the co op agreement is irrelevant, I think, for what you are talking about. The question is, can we reduce our PREPA exposure at attractive prices? Or does the PREPA exposure somehow prevent an attractive sale or transaction related to the company Again, I think the timeline is driven more by the litigation schedule I take your point that perhaps implicitly the bondholders could impact the litigation schedule. But for the most part, that is driven by the judges and the courts. So again, we continue to look for ways to reduce our exposure and we do not. We have never felt that the co op agreement constrains us. We have been frustrated by the pace of litigation through the court system. Right. Sure. Okay. And 1 other question, if you do not mind, So on the second quarter call, I believe you characterized the Oversight Board's proposal as roughly $0.30 to $0.40 on the dollar, against PREPA bonds trading around maybe $0.75. And looking at National's own disclosed loss LAE reserves against $508 million of insured debt service you know, that implies an expected recovery somewhere in the mid fifties, what that is implied would be well above the rejected offer in that $0.30 to $0.40 range. I am just curious if the co op Did the co-op counter an offer anywhere near that reserve applied level, or Did the co-op counter at all? Again, I cannot comment on the negotiations Those are all confidential in terms of any offers or counteroffers. Unless or until they are made public. Okay. So that is just. Okay. That cannot be disclosed. Okay. I think final question, if you do not mind. I guess, National-- So in August 25, National sold $374 million of the custodial receipts. That was the price you described as higher than your prior estimate, but that was not disclosed. What did National realize as a percentage of face? And is that something you can disclose? Ask the question again, Neil. I did not catch the last part. Is it percentage of what? Percentage of the face value. Yeah. We did not and do not disclose that. It will not be disclosed. Okay. Thanks. Okay. Thank you. That was it for me. Thank you. Thank you.

Operator: Thank you. At this time, I am showing no further questions in the queue. I would like to turn the floor back over to Gregory R. Diamond for closing remarks.

Gregory R. Diamond: Thank you, Leslie, and thanks to those of you listening to our call. Please contact me directly if you have any additional questions. We also recommend that you visit our website at mbia.com for additional information on our company. Thank you for your interest in MBIA.

Operator: Good day, and goodbye. Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.