MBIA settles lawsuit, to incur first-quarter loss
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- April
- 2
MBIA said that the settlement covers litigation that it filed in 2002 to enforce insurance policies that Royal Indemnity Co. issued guaranteeing the student loans. There were losses on eight of the bonds backed by the loans. That hurt MBIA because it had insured repayment of the bonds.
“We are pleased to resolve this longstanding matter and to eliminate the additional expense and risks associated with further litigation,� MBIA General Counsel Ram Wertheim said in a written statement.Royal’s payments under the settlement will be enough to repay $362 million of the bonds insured by MBIA as well as to reimburse MBIA for part of the claims that it has paid under its insurance policies, MBIA said. The expected first-quarter loss represents a reduction to MBIA’s expected recoveries for claims it has paid, the company added. Royal is based in Charlotte, N.C. The case was handled in U.S. District Court in Delaware.
MBIA’s profits dropped 1 percent during the fourth quarter as the world’s largest insurer of municipal bonds faced greater competition to write new business.
The company’s shares rose 21.4 percent last year while it earned $819.3 million on revenues of $2.71 billion.
Its shares closed at $64.88 today, down 61 cents, or 0.9 percent.
This entry was posted
on Monday, April 2nd, 2007 at 5:29 pm by Jay Loomis.
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Category: Earnings season, In the courts
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