MBIA INC

Previous wording

Recent indicators suggest that growth of U.S. economic activity has moderated in the first half of 2025. The unemployment rate remains low and labor market conditions remain solid. Inflation remains elevated. The Federal Open Market Committee (“FOMC”) seeks to achieve maximum employment and 2% inflation over the longer run, and has noted that uncertainty around the economic outlook remains elevated. At its most recent meeting, the FOMC maintained its federal funds rate target range at 4.25% to 4.50%. Economic and financial market trends could impact the Company’s financial results. Economic improvement at the state and local level strengthens the credit quality of the issuers of our insured municipal bonds, improves the performance of our insured U.S. public finance portfolio and could reduce the amount of National’s potential incurred losses. Higher interest rates could adversely affect the values of our Company’s investment portfolio, but increase investment portfolio yield and income, and decrease the present value of loss reserves.

Current wording

Available indicators suggest that U.S. economic activity has been expanding at a moderate pace. The unemployment rate remains low and job gains have slowed. Inflation remains elevated. The Federal Open Market Committee (“FOMC”) seeks to achieve maximum employment and 2% inflation over the longer run, and has noted that uncertainty around the economic outlook remains elevated. At its most recent meeting, the FOMC lowered its federal funds rate target range to 3.75% to 4.00%. Economic and financial market trends could impact the Company’s financial results. Economic improvement at the state and local level strengthens the credit quality of the issuers of our insured municipal bonds, improves the performance of our insured U.S. public finance portfolio and could reduce the amount of National’s potential incurred losses. Higher interest rates could adversely affect the values of our Company’s investment portfolio, but increase investment portfolio yield and income, and decrease the present value of loss reserves.

Previous wording

On January 1, 2025, the Puerto Rico Electric Power Authority (“PREPA”) defaulted on scheduled debt service for National insured bonds and National paid gross claims in the aggregate of $13 million. As of June 30, 2025, National had $657 million of insured debt service outstanding related to PREPA. In addition, on July 1, 2025, PREPA defaulted on scheduled debt service for National insured bonds and National paid gross claims in the aggregate of $92 million.

Current wording

On January 1, 2025, the Puerto Rico Electric Power Authority (“PREPA”) defaulted on scheduled debt service for National insured bonds and National paid gross claims in the aggregate of $13 million. In addition, on July 1, 2025, PREPA defaulted on scheduled debt service for National insured bonds and National paid gross claims in the aggregate of $92 million. As of September 30, 2025, National had $565 million of insured debt service outstanding related to PREPA.

Previous wording

On January 31, 2023, National entered into a restructuring support agreement (“PREPA RSA”) with the Financial Oversight and Management Board for Puerto Rico (the “Oversight Board”), on behalf of itself and as the sole Title III representative of PREPA. A plan of adjustment for PREPA (the "Plan") and related disclosure statement was filed on February 9, 2023. Subsequently, both the Plan and PREPA RSA were amended. The Title III Court conducted confirmation hearings in March 2024. On June 12, 2024, the First Circuit Court of Appeals reversed Judge Swain's prior rulings and supported bondholder liens and claim amounts (the "Appeal Decision"). On June 26, 2024, the Oversight Board filed a petition for a First Circuit panel rehearing, and the Unsecured Creditors Committee ("UCC") filed an en banc appeal. On November 13, 2024, the First Circuit affirmed the Appeal Decision. On November 27, 2024, the Oversight Board filed a petition for further rehearing, and on December 31, 2024, the First Circuit denied the rehearing request. On January 29, 2025, the Court extended its litigation stay through March 24, 2025, and on March 3, 2025, the Court entered an order identifying key legal issues and requiring a joint proposed litigation schedule. On March 20, 2025, the Court set a briefing schedule on a motion for allowance of an administrative expense. On June 11, 2025, the Court set June 30, 2025, as the deadline for discovery, and July 23, 2025, for oral arguments in the administrative expense claim motion. Following the hearing, the Court reserved its decision on the legal issues and permitted the parties to continue resolution of discovery disputes. Following the Appeal Decision, the Oversight Board informed the Court, National and other parties that it intended to modify National’s settlement in a forthcoming amended Plan. Thereafter, National provided notice to the Oversight Board that National did not support the board's actions and that such actions constituted a breach and termination of the PREPA RSA, as amended. There is no assurance that a plan that is substantially similar in the treatment of National's claims and rights will ultimately be confirmed and become effective. In the event of a substantially different confirmed plan, National’s PREPA loss reserves and recoveries could be materially adversely affected.

Current wording

On January 31, 2023, National entered into a restructuring support agreement (“PREPA RSA”) with the Financial Oversight and Management Board for Puerto Rico (the “Oversight Board”), on behalf of itself and as the sole Title III representative of PREPA. A plan of adjustment for PREPA (the "Plan") and related disclosure statement was filed on February 9, 2023. Subsequently, both the Plan and PREPA RSA were amended. The Title III Court conducted confirmation hearings in March 2024. On June 12, 2024, the First Circuit Court of Appeals reversed Judge Swain's prior rulings and supported bondholder liens and claim amounts (the "Appeal Decision"). On June 26, 2024, the Oversight Board filed a petition for a First Circuit panel rehearing, and the Unsecured Creditors Committee ("UCC") filed an en banc appeal. On November 13, 2024, the First Circuit affirmed the Appeal Decision. On November 27, 2024, the Oversight Board filed a petition for further rehearing, and on December 31, 2024, the First Circuit denied the rehearing request. On January 29, 2025, the Court extended its litigation stay through March 24, 2025, and on March 3, 2025, the Court entered an order identifying key legal issues and requiring a joint proposed litigation schedule. On March 20, 2025, the Court set a briefing schedule on a motion for allowance of an administrative expense. On June 11, 2025, the Court set June 30, 2025, as the deadline for discovery, and July 23, 2025, for oral arguments in the administrative expense claim motion. Following the hearing, the Court reserved its decision on the legal issues and permitted the parties to continue resolution of discovery disputes. On August 8, 2025, the Court entered an order suspending deadlines for the Administrative Expense Claim until further order of the Court. On October 22, 2025, the Court ordered the parties to meet and confer on scheduling issues in the Administrative Expense Claim litigation and required they filed a Joint Status Report by November 24, 2025. Following the Appeal Decision, the Oversight Board informed the Court, National and other parties that it intended to modify National’s settlement in a forthcoming amended Plan. Thereafter, National provided notice to the Oversight Board that National did not support the board's actions and that such actions constituted a breach and termination of the PREPA RSA, as amended. There is no assurance that a plan that is substantially similar in the treatment of National's claims and rights will ultimately be confirmed and become effective. In the event of a substantially different confirmed plan, National’s PREPA loss reserves and recoveries could be materially adversely affected.

Previous wording

In July of 2025, National transferred certain PREPA bankruptcy claims to a custodian in exchange for tradeable custodial receipts (the "Custodial Receipts"). As owner of the Custodial Receipts, National continues to hold the same rights and is entitled to the same economic benefits associated with the transferred bankruptcy claims. As a result, the Company's estimated recovery values for these bankruptcy claims continue to be recorded within "Insurance loss recoverable" on the Company's consolidated balance sheets. National may, at its discretion, sell such Custodial Receipts to qualified buyers prior to a PREPA bankruptcy settlement in order to monetize subrogation of the related bankruptcy claims.

Current wording

In July of 2025, National transferred certain PREPA bankruptcy claims to a custodian in exchange for tradeable custodial receipts (the "Custodial Receipts"). At the time of transfer, National owned the Custodial Receipts and continued to hold the same rights and was entitled to the same economic benefits associated with the transferred bankruptcy claims. In August of 2025, National sold the Custodial Receipts in a series of transactions through the transfer of ownership of approximately $374 million face amount of the Custodial Receipts, representing approximately 47% of the principal amount of National’s then current bond claims in the PREPA Title III case. This transaction reduced potential volatility and ongoing risk of remediation around National’s remaining PREPA exposure, for which the Title III case continues to remain uncertain and National continues to use its best efforts to strengthen its position. Subsequent to the sale of these Custodial Receipts, National does not retain any additional Custodial Receipts for sale. The sales price of the Custodial Receipts was higher than National's previous estimate, which resulted in National recording a gain included in "Losses and loss adjustment" on our consolidated statements of operations for the three and nine months ended September 30, 2025. These sales also reduced National's "Insurance loss recoverable" related to PREPA on the Company's consolidated balance sheet as of September 30, 2025. Refer to the following “U.S. Public Finance Insurance Segment - Losses and Loss Adjustment Expenses” section for additional information on the sales of our Custodial Receipts.

Previous wording

The Company commenced the process of dissolving MBIA Corp.' s wholly-owned subsidiary, MBIA México, S.A. de C.V. (“MBIA Mexico”) under Mexican law and during the six months ended June 30, 2025, MBIA Mexico returned approximately $12 million of capital to MBIA Corp. Refer to the following “Liquidity and Capital Resources- Capital Resources- Insurance Statutory Capital" section for additional information.

Current wording

The Company commenced the process of dissolving MBIA Corp.' s wholly-owned subsidiary, MBIA México, S.A. de C.V. (“MBIA Mexico”) and during the nine months ended September 30, 2025, MBIA Mexico returned approximately $12 million of capital to MBIA Corp. Refer to the following “Liquidity and Capital Resources- Capital Resources- Insurance Statutory Capital" section for additional information.

Previous wording

The following table presents a summary of our consolidated financial results for the three and six months ended June 30, 2025 and 2024:

Current wording

The following table presents a summary of our consolidated financial results for the three and nine months ended September 30, 2025 and 2024:

Previous wording

The increase in consolidated total revenues for the three months ended June 30, 2025 compared with the same period of 2024 was principally due to favorable changes from fair valuing investments and revenues from consolidated variable interest entities ("VIEs"), partially offset by unfavorable changes from foreign currency and net investment income. The three months ended June 30, 2025 included $5 million of gains from fair valuing investments compared with $59 million of losses for the same period of 2024. The three months ended June 30, 2024 included $13 million of consolidated VIE losses primarily from the reclassification of credit risk losses from accumulated other comprehensive income ("AOCI") to net income (loss) due to the deconsolidation of a VIE, with no comparable amounts for the same period of 2025. The three months ended June 30, 2025 included foreign currency losses of $9 million on euro-denominated liabilities compared with foreign exchange gains of $1 million on these liabilities for the same period of 2024. This unfavorable change was due to the weakening of the U.S. dollar against the euro in 2025 compared with the U.S. dollar strengthening against the euro in 2024. In addition, net investment income decreased $3 million for the three months ended June 30, 2025 compared with the same period of 2024 primarily due to a lower average asset base and a lower investment yield.

Current wording

The decrease in consolidated total revenues for the three months ended September 30, 2025 compared with the same period of 2024 was principally due to unfavorable changes from fair valuing investments, partially offset by favorable changes from foreign currency revaluations. The three months ended September 30, 2025 included $14 million of losses from fair valuing investments compared with $3 million of gains for the same period of 2024. The three months ended September 30, 2024 included foreign currency losses of $4 million on euro-denominated liabilities compared with immaterial foreign currency losses on these liabilities for the same period of 2025. The higher losses for the three months ended September 30, 2024 was due to a greater weakening of the U.S. dollar against the euro compared to the same period of 2025.

Previous wording

Consolidated total expenses for the three months ended June 30, 2025 included $8 million of losses and loss adjustment expense (“LAE”) compared with $142 million for the same period of 2024. The losses and LAE were primarily due to unfavorable changes in PREPA net reserves. Refer to the following “Losses and Loss Adjustment Expenses” sections of the U.S. Public Finance Insurance and International and Structured Finance Insurance segments for additional information on our losses and LAE.

Current wording

Consolidated total expenses for the three months ended September 30, 2025 included a losses and loss adjustment expense (“LAE”) benefit of $50 million compared with a losses and LAE expense of $11 million for the same period of 2024. The favorable change to losses and LAE was primarily due to our insured PREPA exposure. Refer to the following “Losses and Loss Adjustment Expenses” sections of the U.S. Public Finance Insurance and International and Structured Finance Insurance segments for additional information on our losses and LAE.

Previous wording

The increase in consolidated total revenues for the six months ended June 30, 2025 compared with the same period of 2024 was principally due to favorable changes from fair valuing investments and revenues from consolidated VIEs, partially offset by unfavorable changes from foreign currency and net investment income. The six months ended June 30, 2025 included $1 million of gains from fair valuing investments compared with $59 million of losses for the same period of 2024. Consolidated VIE revenue for the six months ended June 30, 2025 was a gain of $7 million compared with a loss of $38 million for the same period of 2024. Consolidated VIE revenue for the six months ended June 30, 2025 related to a gain from a litigation trust we consolidated as a VIE. The consolidated VIE loss for the six months ended June 30, 2024 was primarily from the reclassification of credit risk losses from AOCI to net income (loss) due to early redemptions of VIE liabilities and the deconsolidation of a VIE. The six months ended June 30, 2025 included foreign currency losses of $13 million on euro-denominated liabilities due to the weakening of the U.S. dollar against the euro in 2025 and foreign currency translation losses of $5 million reclassified from AOCI to net income (loss) due to the liquidation of a foreign subsidiary. The six months ended June 30, 2024 included foreign currency gains of $4 million related to gains on euro-denominated liabilities due to the strengthening of the U.S. dollar against the euro in 2024. In addition, net investment income decreased $8 million for the six months ended June 30, 2025 compared with the same period of 2024 primarily due to a lower average asset base and a lower investment yield.

Current wording

The increase in consolidated total revenues for the nine months ended September 30, 2025 compared with the same period of 2024 was principally due to favorable changes in revenues from consolidated variable interest entities ("VIEs") and fair valuing investments. These increases were partially offset by unfavorable changes from foreign currency and net investment income. Consolidated VIE revenue for the nine months ended September 30, 2025 was a gain of $9 million compared with a loss of $37 million for the same period of 2024. Consolidated VIE revenue for the nine months ended September 30, 2025 primarily related to a gain from a Zohar litigation trust we consolidated as a VIE. The consolidated VIE loss for the nine months ended September 30, 2024 was primarily from the reclassification of credit risk losses from accumulated other comprehensive income ("AOCI") to net income (loss) due to early redemptions of VIE liabilities and the deconsolidation of a VIE. The nine months ended September 30, 2025 included $13 million of losses from fair valuing investments compared with $56 million of losses for the same period of 2024. The nine months ended September 30, 2025 included foreign currency losses of $13 million on euro-denominated liabilities due to the weakening of the U.S. dollar against the euro in 2025 and foreign currency translation losses of $5 million reclassified from AOCI to net income (loss) due to the liquidation of MBIA Mexico, compared with immaterial foreign currency losses for the same period of 2024. In addition, net investment income decreased $11 million for the nine months ended September 30, 2025 compared with the same period of 2024 primarily due to a lower average asset base and an overall lower investment portfolio yield.

Previous wording

Consolidated total expenses for the six months ended June 30, 2025 included $16 million of losses and LAE compared with $160 million for the same period of 2024. The losses and LAE were primarily due to unfavorable changes in PREPA net reserves. In addition, there were unfavorable changes in losses and LAE on our insured first-lien residential mortgage-backed securities ("RMBS") exposure primarily related to the impact of changes in risk-free interest rates used to present value loss reserves. Refer to the following “Losses and Loss Adjustment Expenses” sections of the U.S. Public Finance Insurance and International and Structured Finance Insurance segments for additional information on our losses and LAE.

Current wording

Consolidated total expenses for the nine months ended September 30, 2025 included a losses and LAE benefit of $34 million compared with a losses and LAE expense of $171 million for the same period of 2024. The favorable change in losses and LAE was primarily due to our insured PREPA exposure. Refer to the following “Losses and Loss Adjustment Expenses” sections of the U.S. Public Finance Insurance and International and Structured Finance Insurance segments for additional information on our losses and LAE.

Previous wording

Three and Six Months Ended June 30, 2025 vs. Three and Six Months Ended June 30, 2024

Current wording

Three and Nine Months Ended September 30, 2025 vs. Three and Nine Months Ended September 30, 2024

Previous wording

For the three and six months ended June 30, 2025 and 2024, our effective tax rate applied to our loss before income taxes was below the U.S. statutory tax rate of 21% due to the full valuation allowance on the changes in our net deferred tax asset, which included our net operating loss (“NOL”).

Current wording

For the three and nine months ended September 30, 2025 and 2024, our effective tax rate applied to our loss before income taxes was below the U.S. statutory tax rate of 21% due to the full valuation allowance on the changes in our net deferred tax asset, which included our net operating loss (“NOL”).

Previous wording

The following table presents our adjusted net income (loss) and adjusted net income (loss) per diluted common share and provides a reconciliation of GAAP net income (loss) to adjusted net income (loss) for the three and six months ended June 30, 2025 and 2024:

Current wording

The following table presents our adjusted net income (loss) and adjusted net income (loss) per diluted common share and provides a reconciliation of GAAP net income (loss) to adjusted net income (loss) for the three and nine months ended September 30, 2025 and 2024:

Previous wording

Our U.S. public finance insurance portfolio is managed through National. The financial guarantees issued by National provide unconditional and irrevocable guarantees of the payment of the principal of, and interest or other amounts owing on, insured obligations when due or, in the event National has exercised, at its discretion, the right to accelerate the payment under its policies upon the acceleration of the underlying insured obligations due to default or otherwise. National’s guarantees insure municipal bonds, including tax-exempt and taxable indebtedness of U.S. political subdivisions, as well as utility districts, airports, healthcare institutions, higher educational facilities, housing authorities and other similar agencies and obligations issued by private entities that finance projects that serve a substantial public purpose. Municipal bonds and privately issued bonds used for the financing of public purpose projects are generally supported by taxes, assessments, user fees or tariffs related to the use of these projects, lease payments or other similar types of revenue streams. As of June 30, 2025, National had total insured gross par outstanding of $24.2 billion.

Current wording

Our U.S. public finance insurance portfolio is managed through National. The financial guarantees issued by National provide unconditional and irrevocable guarantees of the payment of the principal of, and interest or other amounts owing on, insured obligations when due or, in the event National has exercised, at its discretion, the right to accelerate the payment under its policies upon the acceleration of the underlying insured obligations due to default or otherwise. National’s guarantees insure municipal bonds, including tax-exempt and taxable indebtedness of U.S. political subdivisions, as well as utility districts, airports, healthcare institutions, higher educational facilities, housing authorities and other similar agencies and obligations issued by private entities that finance projects that serve a substantial public purpose. Municipal bonds and privately issued bonds used for the financing of public purpose projects are generally supported by taxes, assessments, user fees or tariffs related to the use of these projects, lease payments or other similar types of revenue streams. As of September 30, 2025, National had total insured gross par outstanding of $23.2 billion.

Previous wording

National continues to monitor and remediate its existing insured portfolio and has pursued and may continue to pursue other transactions that could enhance shareholder value. Regarding its insured portfolio, some state and local governments and territory obligors that National insures are experiencing financial and budgetary stress which could lead to an increase in defaults by such entities on the payment of their obligations and, while such stress has not yet occurred materially, losses or impairments on a greater number of the Company’s insured transactions. In particular, PREPA had been experiencing significant fiscal stress and constrained liquidity. Refer to the “U.S. Public Finance Insurance Puerto Rico Exposures” section for additional information on our PREPA exposures. We continue to monitor and analyze these situations and other stressed credits closely, and the overall extent and duration of stress affecting our insured credits remains uncertain.

Current wording

National continues to monitor and remediate its existing insured portfolio and has pursued and may continue to pursue other transactions that could enhance shareholder value. Regarding its insured portfolio, some state and local governments and territory obligors that National insures are experiencing financial and budgetary stress which could lead to an increase in defaults by such entities on the payment of their obligations and, while such stress has not yet occurred materially, losses or impairments on a greater number of the Company’s insured transactions. In particular, PREPA had been experiencing significant fiscal stress and constrained liquidity. Refer to the “U.S. Public Finance Insurance Puerto Rico Exposures” section for additional information on our PREPA exposure. We continue to monitor and analyze these situations and other stressed credits closely, and the overall extent and duration of stress affecting our insured credits remains uncertain.

Previous wording

The following table presents our U.S. public finance insurance segment results for the three and six months ended June 30, 2025 and 2024:

Current wording

The following table presents our U.S. public finance insurance segment results for the three and nine months ended September 30, 2025 and 2024:

Previous wording

NET PREMIUMS EARNED Net premiums earned on financial guarantees represent gross premiums earned net of premiums ceded to reinsurers, and include scheduled premium earnings and premium earnings from refunded issues. Refunding activity over the past several years has accelerated premium earnings in prior years and reduced the amount of scheduled premiums that would have been earned in the current year. Refunding activity can vary significantly from period to period based on issuer refinancing behavior. Included in net premiums earned for the three months ended June 30, 2025 and 2024, were scheduled premiums earned of $6 million. Included in net premiums earned for the six months ended June 30, 2025 and 2024, were scheduled premiums earned of $12 million and $13 million, respectively.

Current wording

NET PREMIUMS EARNED Net premiums earned on financial guarantees represent gross premiums earned net of premiums ceded to reinsurers, and include scheduled premium earnings and premium earnings from refunded issues. Refunding activity over the past several years has accelerated premium earnings in prior years and reduced the amount of scheduled premiums that would have been earned in the current year. Refunding activity can vary significantly from period to period based on issuer refinancing behavior. Included in net premiums earned for the three months ended September 30, 2025 and 2024, were scheduled premiums earned of $6 million and $7 million, respectively. Included in net premiums earned for the nine months ended September 30, 2025 and 2024, were scheduled premiums earned of $18 million and $20 million, respectively.

Previous wording

NET INVESTMENT INCOME The decrease in net investment income for the three and six months ended June 30, 2025 compared with the same periods of 2024 was primarily due to a lower average invested asset base.

Current wording

NET INVESTMENT INCOME The decreases in net investment income for the three and nine months ended September 30, 2025 compared with the same periods of 2024 were primarily due to a lower average invested asset base and lower yielding assets.

Previous wording

LOSSES AND LOSS ADJUSTMENT EXPENSES For the three and six months ended June 30, 2025 losses and LAE incurred was primarily due to extending the timing of a settlement on our PREPA exposure. For the three and six months ended June 30, 2024, losses and LAE incurred primarily related to changes in PREPA reserves as a result of the developments in the then PREPA remediation. In addition, the six months ended June 30, 2024 incurred loss included reserves on a U.S. public finance lease-backed transaction. Refer to the following “U.S. Public Finance Insurance Puerto Rico Exposures” section for additional information on our PREPA exposures.

Current wording

LOSSES AND LOSS ADJUSTMENT EXPENSES For the three and nine months ended September 30, 2025 the losses and LAE benefits were primarily due to the sale of PREPA Custodial Receipts at a price above prior estimates and updated scenarios and weightings for potential PREPA settlement outcomes. These benefits were partially offset by extending the timing of a settlement on our PREPA exposure. For the nine months ended September 30, 2024, losses and LAE incurred primarily related to changes in PREPA reserves as a result of the developments in the then PREPA remediation. In addition, the nine months ended September 30, 2024 incurred loss included reserves on a U.S. public finance lease-backed transaction. Refer to the following “U.S. Public Finance Insurance Puerto Rico Exposures” section for additional information on our PREPA exposure.

Previous wording

The insurance loss recoverable decreased slightly from December 31, 2024 primarily due to the sale of unwrapped PREPA bonds received via subrogation for secondary claims, mostly offset by the reclassification of expected recoveries on paid claims related to a lease-backed transaction from loss and LAE, and accretion. The loss and LAE reserves decreased from December 31, 2024 primarily due to PREPA claim payments, partially offset by the reclassification of recoveries as previously discussed, the extended PREPA settlement timeline, and accretion.

Current wording

The insurance loss recoverable decreased from December 31, 2024 primarily due to the sale of PREPA Custodial Receipts associated with the transfer of certain of National's PREPA-related bankruptcy claims and unwrapped PREPA bonds received via subrogation for fully paid secondary insured claims. This decrease was partially offset by the reclassification from Losses and LAE of expected recoveries related to paid claims for PREPA and a lease-backed transaction. The loss and LAE reserves decreased from December 31, 2024 primarily due to claim payments for PREPA and a lease-backed transaction, as well as updated PREPA loss reserve scenarios and weightings for possible settlement outcomes. This decrease was partially offset by the reclassification of expected recoveries related to paid claims, an estimated extended timeline of a PREPA settlement, and accretion of loss reserves.

Previous wording

POLICY ACQUISITION COSTS AND OPERATING EXPENSES U.S. public finance insurance segment expenses for the three and six months ended June 30, 2025 and 2024 are presented in the following table:

Current wording

POLICY ACQUISITION COSTS AND OPERATING EXPENSES U.S. public finance insurance segment expenses for the three and nine months ended September 30, 2025 and 2024 are presented in the following table:

Previous wording

On June 23, 2023, the Oversight Board filed a fiscal plan for PREPA for FY2023, which provided for approximately $2.4 billion of distributions to PREPA bondholders. The University of Puerto Rico (the "University") is not a debtor in Title III and continues to be current on its debt service payment. However, the University is subject to a standstill agreement with its senior bondholders, which has been extended to May 31, 2025. National is not a party to the standstill agreement. As of June 30, 2025, National had $50 million of insured debt service outstanding related to the University.

Current wording

On June 23, 2023, the Oversight Board filed a fiscal plan for PREPA for FY2023, which provided for approximately $2.4 billion of distributions to PREPA bondholders. The University of Puerto Rico (the "University") is not a debtor in Title III and continues to be current on its debt service payment. However, the University is subject to a standstill agreement with its senior bondholders, which has been extended to May 31, 2025. National is not a party to the standstill agreement. As of September 30, 2025, National had $46 million of insured debt service outstanding related to the University.

Previous wording

On January 31, 2023, National entered into the PREPA RSA with the Oversight Board, on behalf of itself and as the sole Title III representative of PREPA. The Plan and related disclosure statement was filed on February 9, 2023. Subsequently, both the Plan and PREPA RSA were amended. The Title III Court conducted confirmation hearings in March 2024. On June 12, 2024, following the Appeal Decision, the Oversight Board informed the Court that it intended to file an amendment to the Plan it believed would account for the changes required by the First Circuit opinion. On June 26, 2024, the Oversight Board filed a petition for a First Circuit panel rehearing, and the UCC filed an en banc appeal. On November 13, 2024, the First Circuit affirmed its decision. On November 27, 2024, the Oversight Board filed a petition for further rehearing, and on December 31, 2024, the First Circuit denied the rehearing request. On January 29, 2025, the Court extended its litigation stay through March 24, 2025, and on March 3, 2025, entered an order identifying key legal issues and requiring a joint proposed litigation schedule. On March 20, 2025, the Court set a briefing schedule on a motion for allowance of an administrative expense. On June 11, 2025, the Court set June 30, 2025, as the deadline for discovery, and July 23, 2025, for oral arguments in the administrative expense claim motion. Following the hearing, the Court reserved its decision on the legal issues and permitted the parties to continue resolution of discovery disputes. Following the Appeal Decision, the Oversight Board informed the Court, National and other parties that it intended to modify National’s settlement in a forthcoming amended Plan. Thereafter, National provided notice to the Oversight Board that National did not support the board's actions and that such actions constituted a breach and termination of the PREPA RSA, as amended.

Current wording

On January 31, 2023, National entered into the PREPA RSA with the Oversight Board, on behalf of itself and as the sole Title III representative of PREPA. The Plan and related disclosure statement was filed on February 9, 2023. Subsequently, both the Plan and PREPA RSA were amended. The Title III Court conducted confirmation hearings in March 2024. On June 12, 2024, following the Appeal Decision affirming the Bondholder liens, the Oversight Board informed the Court that it intended to file an amendment to the Plan it believed would account for the changes required by the First Circuit opinion. Thereafter, National provided notice to the Oversight Board that National did not support the board's actions and that such actions constituted a breach and termination of the PREPA RSA, as amended. On June 26, 2024, the Oversight Board filed a petition for a First Circuit panel rehearing, and the UCC filed an en banc appeal. On November 13, 2024, the First Circuit affirmed its decision. On November 27, 2024, the Oversight Board filed a petition for further rehearing, and on December 31, 2024, the First Circuit denied the rehearing request. On January 29, 2025, the Court extended its litigation stay through March 24, 2025, and on March 3, 2025, entered an order identifying key legal issues and requiring a joint proposed litigation schedule. On March 20, 2025, the Court set a briefing schedule on a motion for allowance of an administrative expense. On June 11, 2025, the Court set June 30, 2025, as the deadline for discovery, and July 23, 2025, for oral arguments in the administrative expense claim motion. Following the hearing, the Court reserved its decision on the legal issues and permitted the parties to continue resolution of discovery disputes. On August 8, 2025, the Court entered an order suspending deadlines for the Administrative Expense Claim until further order of the Court. On October 22, 2025, the Court ordered the parties to meet and confer on scheduling issues in the Administrative Expense Claim litigation and required they filed a Joint Status Report by November 24, 2025.

Previous wording

The following table presents our scheduled gross debt service due on our PREPA insured exposures as of June 30, 2025, for the six months ending December 31, 2025, for each of the subsequent four years ending December 31, and thereafter:

Current wording

The following table presents our scheduled gross debt service due on our PREPA insured exposures as of September 30, 2025, for the three months ending December 31, 2025, for each of the subsequent four years ending December 31, and thereafter:

Previous wording

The following table summarizes the consolidated results of our corporate segment for the three and six months ended June 30, 2025 and 2024:

Current wording

The following table summarizes the consolidated results of our corporate segment for the three and nine months ended September 30, 2025 and 2024:

Previous wording

NET GAINS (LOSSES) ON FINANCIAL INSTRUMENTS AT FAIR VALUE AND FOREIGN EXCHANGE The three and six months ended June 30, 2025 included foreign currency losses of $9 million and $13 million, respectively, on euro-denominated liabilities compared with foreign currency gains of $1 million and $4 million, respectively, on these liabilities for the same periods of 2024. These decreases were due to the U.S. dollar weakening against the euro in 2025 compared with the U.S. dollar strengthening against the euro in 2024. In addition, the three and six months ended June 30, 2025 included fair value gains on financial instruments of $5 million and $4 million, respectively, compared with fair value gains of $4 million and $9 million, respectively, on these instruments for the same periods of 2024.

Current wording

NET GAINS (LOSSES) ON FINANCIAL INSTRUMENTS AT FAIR VALUE AND FOREIGN EXCHANGE The three months ended September 30, 2025 included fair value gains on financial instruments of $5 million compared with fair value losses of $3 million on these instruments for the same period of 2024. In addition, the three months ended September 30, 2024 included foreign currency losses of $4 million on euro-denominated liabilities with no comparable amount on these liabilities for the same period of 2025. This decrease was due to the weakening of the U.S. dollar against the euro for the three months ended September 30, 2024.

Previous wording

OPERATING EXPENSE Changes in operating expenses for the three and six months ended June 30, 2025 compared with the same periods of 2024 are primarily due to changes in compensation expense related to our non-qualified deferred compensation plan.

Current wording

OPERATING EXPENSE Change in operating expenses for the three months ended September 30, 2025 compared with the same period of 2024 were primarily due to changes in compensation expense related to our non-qualified deferred compensation plan.

Previous wording

Our international and structured finance insurance portfolio is managed through MBIA Corp. The financial guarantees issued by MBIA Corp. generally provide unconditional and irrevocable guarantees of the payment of the principal of, and interest or other amounts owing on, non-U.S. public finance and global structured finance insured obligations when due or, in the event MBIA Corp. has the right, at its discretion, to accelerate insured obligations upon default or otherwise. MBIA Corp. insures sovereign-related and sub- sovereign bonds, utilities, privately issued bonds used for the financing of projects that include toll roads, bridges, public transportation facilities, and other types of infrastructure projects serving a substantial public purpose. MBIA Corp. also insures structured finance and asset-backed obligations repayable from expected cash flows generated by a specified pool of assets, such as residential and commercial mortgages, consumer loans and structured settlements. MBIA Insurance Corporation insures the investment agreements written by MBIA Inc., and if MBIA Inc. were to have insufficient assets to pay amounts due upon maturity or termination, MBIA Insurance Corporation would be required to make such payments under its insurance policies. MBIA Insurance Corporation also insures debt obligations of GFL and obligations under certain types of derivative contracts. As of June 30, 2025, MBIA Corp.’s total insured gross par outstanding was $2.2 billion. In addition, MBIA Corp. consolidates insured transactions as VIEs if it determines it is the primary beneficiary, and deconsolidates such VIEs when it is no longer the primary beneficiary.

Current wording

Our international and structured finance insurance portfolio is managed through MBIA Corp. The financial guarantees issued by MBIA Corp. generally provide unconditional and irrevocable guarantees of the payment of the principal of, and interest or other amounts owing on, non-U.S. public finance and global structured finance insured obligations when due or, in the event MBIA Corp. has the right, at its discretion, to accelerate insured obligations upon default or otherwise. MBIA Corp. insures sovereign-related and sub- sovereign bonds, utilities, privately issued bonds used for the financing of projects that include toll roads, bridges, public transportation facilities, and other types of infrastructure projects serving a substantial public purpose. MBIA Corp. also insures structured finance and asset-backed obligations repayable from expected cash flows generated by a specified pool of assets, such as residential and commercial mortgages, consumer loans and structured settlements. MBIA Insurance Corporation insures the investment agreements written by MBIA Inc., and if MBIA Inc. were to have insufficient assets to pay amounts due upon maturity or termination, MBIA Insurance Corporation would be required to make such payments under its insurance policies. MBIA Insurance Corporation also insures debt obligations of GFL and obligations under certain types of derivative contracts. As of September 30, 2025, MBIA Corp.’s total insured gross par outstanding was $2.1 billion. In addition, MBIA Corp. consolidates insured transactions as VIEs if it determines it is the primary beneficiary, and deconsolidates such VIEs when it is no longer the primary beneficiary.

Previous wording

The following table presents our international and structured finance insurance segment results for the three and six months ended June 30, 2025 and 2024:

Current wording

The following table presents our international and structured finance insurance segment results for the three and nine months ended September 30, 2025 and 2024:

Previous wording

NET GAINS (LOSSES) ON FINANCIAL INSTRUMENTS AT FAIR VALUE AND FOREIGN EXCHANGE The net loss for the six months ended June 30, 2025 was primarily due to the reclassification of foreign currency translation losses from AOCI to net income (loss) due to the liquidation of a foreign subsidiary. The net losses for the three and six months ended June 30, 2024 were primarily due to fair value losses on investments for which the fair value option was elected.

Current wording

NET GAINS (LOSSES) ON FINANCIAL INSTRUMENTS AT FAIR VALUE AND FOREIGN EXCHANGE The net losses for the three and nine months ended September 30, 2025 and the nine months ended September 30, 2024 were primarily due to fair value losses on investments for which the fair value option was elected. In addition, the net loss for the nine months ended September 30, 2025 included the reclassification of foreign currency translation losses from AOCI to net income (loss) due to the liquidation of MBIA Mexico.

Previous wording

REVENUES OF CONSOLIDATED VIEs Consolidated VIE revenue for the six months ended June 30, 2025 related to a gain from a litigation trust we consolidated as a VIE. The net losses of consolidated VIE revenues for the three and six months ended June 30, 2024 primarily included the reclassification of $9 million and $28 million, respectively, of credit risk losses from AOCI to net income (loss). These reclassifications were due to early redemptions of VIE liabilities and the deconsolidation of a VIE.

Current wording

REVENUES OF CONSOLIDATED VIEs Consolidated VIE revenue for the nine months ended September 30, 2025 related to a gain from a Zohar litigation trust we consolidated as a VIE. The net losses of consolidated VIE revenues for the nine months ended September 30, 2024 primarily included the reclassification of $28 million of credit risk losses from AOCI to net income (loss). These reclassifications were due to early redemptions of VIE liabilities and the deconsolidation of a VIE.

Previous wording

LOSSES AND LOSS ADJUSTMENT EXPENSES For the three and six months ended June 30, 2025, losses and LAE incurred primarily related to a decrease in risk-free rates used to discount loss reserves, which caused the present value of loss reserves, net of recoveries to increase and accretion of loss reserves on our insured RMBS transactions. For the three months ended June 30, 2024, losses and LAE incurred primarily related to accretion of loss reserves. For the six months ended June 30, 2024, the incurred loss and LAE benefit primarily related to an increase in risk-free rates, used to discount loss reserves, which caused the present value of loss reserves, net of recoveries, to decline on our insured RMBS transactions. This was partially offset by an increase in the secured overnight financing rate ("SOFR"), which increased estimated interest expense on floating rate liabilities on our insured RMBS transactions. The incurred loss benefit was also partially offset by accretion of loss reserves.

Current wording

LOSSES AND LOSS ADJUSTMENT EXPENSES For the three and nine months ended September 30, 2025, losses and LAE incurred were primarily due to a decrease in risk-free rates used to discount loss reserves, which caused the present value of loss reserves, net of recoveries, to increase. In addition, losses and LAE incurred for both periods include accretion of loss reserves related to our insured residential mortgage-backed securities ("RMBS") transactions. This was partially offset by credit improvements on certain RMBS transactions. For the three months ended September 30, 2024, losses and LAE incurred primarily related to a decline in risk-free rates which caused future liabilities, net of recoveries, to increase. In addition, losses and LAE incurred include accretion of loss reserves related to our insured RMBS transactions. This was partially offset by a decline in the secured overnight financing rate ("SOFR"), which decreased estimated reserves related to policies insuring floating rate liabilities. For the nine months ended September 30, 2024, the incurred loss primarily related to accretion of our insured RMBS loss reserves.

Previous wording

As a result of the consolidation of VIEs, loss and LAE excludes losses and LAE expense of $1 million for the six months ended June 30, 2025 and excludes loss and LAE expense of $25 million and $21 million for the three and six months ended June 30, 2024, respectively, as VIE losses and LAE are eliminated in consolidation.

Current wording

As a result of the consolidation of VIEs, loss and LAE excludes losses and LAE benefits of $4 million and $3 million for three and nine months ended September 30, 2025, respectively and excludes an immaterial loss and LAE benefit and loss and LAE expense of $21 million for the three and nine months ended September 30, 2024, respectively, as VIE losses and LAE are eliminated in consolidation.

Previous wording

The insurance loss recoverable primarily relates to reimbursement rights arising from the payment of claims on MBIA Corp.’s policies insuring certain RMBS transactions. Such payments also entitle MBIA Corp. to exercise certain rights and remedies to seek recovery of its reimbursement entitlements. The increase in Loss and LAE reserves from December 31, 2024 primarily relates to a decrease in risk-free rates and accretion on our insured RMBS transactions, as discussed above.

Current wording

The insurance loss recoverable primarily relates to reimbursement rights arising from the payment of claims on MBIA Corp.’s policies insuring certain RMBS transactions. Such payments also entitle MBIA Corp. to exercise certain rights and remedies to seek recovery of its reimbursement entitlements. The increase in Loss and LAE reserves from December 31, 2024 primarily related to the impact of a decrease in risk-free rates and accretion of loss reserves related to our insured RMBS transactions, partially offset by claim payments.

Previous wording

POLICY ACQUISITION COSTS AND OPERATING EXPENSES International and structured finance insurance segment expenses for the three and six months ended June 30, 2025 and 2024 are presented in the following table:

Current wording

POLICY ACQUISITION COSTS AND OPERATING EXPENSES International and structured finance insurance segment expenses for the three and nine months ended September 30, 2025 and 2024 are presented in the following table:

Previous wording

INTEREST EXPENSE Interest expense relates to MBIA Corp.’s surplus notes that are indexed to 3-month SOFR. The decreases in interest expense for the three and six months ended June 30, 2025 compared with the same periods of 2024 were primarily due to a decrease in SOFR. Refer to the following “Liquidity and Capital Resources” section for more information about MBIA Corp.’s surplus notes.

Current wording

INTEREST EXPENSE Interest expense relates to MBIA Corp.’s surplus notes that are indexed to 3-month SOFR. The decreases in interest expense for the three and nine months ended September 30, 2025 compared with the same periods of 2024 were primarily due to a decrease in SOFR. Refer to the following “Liquidity and Capital Resources” section for more information about MBIA Corp.’s surplus notes.

Previous wording

The credit quality of our international and structured finance insured portfolio is assessed in the same manner as our U.S. public finance insured portfolio. As of June 30, 2025 and December 31, 2024, 25% and 24%, respectively, of our international and structured finance insured portfolio was rated below investment grade, before giving effect to MBIA’s guarantees, based on MBIA’s internal ratings, which are generally more current than the underlying ratings provided by S&P and Moody’s for this subset of our insured portfolio. As of June 30, 2025, below investment grade insurance policies primarily include our first-lien RMBS exposures.

Current wording

The credit quality of our international and structured finance insured portfolio is assessed in the same manner as our U.S. public finance insured portfolio. As of September 30, 2025 and December 31, 2024, 24% of our international and structured finance insured portfolio was rated below investment grade, before giving effect to MBIA’s guarantees, based on MBIA’s internal ratings, which are generally more current than the underlying ratings provided by S&P and Moody’s for this subset of our insured portfolio. As of September 30, 2025, below investment grade insurance policies primarily include our first-lien RMBS exposures.

Previous wording

MBIA Corp. insures RMBS backed by residential mortgage loans, including first-lien alternative A-paper and subprime mortgage loans directly through RMBS securitizations. As of June 30, 2025 and December 31, 2024, MBIA Corp. had $532 million and $554 million, respectively, of first-lien RMBS gross par outstanding. These amounts include the gross par outstanding related to transactions that the Company consolidates under accounting guidance for VIEs and includes international exposure of $30 million and $36 million, as of June 30, 2025 and December 31, 2024, respectively.

Current wording

MBIA Corp. insures RMBS backed by residential mortgage loans, including first-lien alternative A-paper and subprime mortgage loans directly through RMBS securitizations. As of September 30, 2025 and December 31, 2024, MBIA Corp. had $512 million and $554 million, respectively, of first-lien RMBS gross par outstanding. These amounts include the gross par outstanding related to transactions that the Company consolidates under accounting guidance for VIEs and includes international exposure of $29 million and $36 million, as of September 30, 2025 and December 31, 2024, respectively.

Previous wording

As of June 30, 2025, the aggregate amount of insured par outstanding ceded by MBIA to reinsurers under reinsurance agreements was $592 million compared with $671 million as of December 31, 2024. Under National’s reinsurance agreement with MBIA Corp., if a reinsurer of MBIA Corp. is unable to pay claims ceded by MBIA Corp. on U.S. public finance exposure, National will assume liability for such ceded claim payments. For a further discussion of the Company’s reinsurance, refer to “Note 12: Insurance in Force” in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Current wording

As of September 30, 2025, the aggregate amount of insured par outstanding ceded by MBIA to reinsurers under reinsurance agreements was $583 million compared with $671 million as of December 31, 2024. Under National’s reinsurance agreement with MBIA Corp., if a reinsurer of MBIA Corp. is unable to pay claims ceded by MBIA Corp. on U.S. public finance exposure, National will assume liability for such ceded claim payments. For a further discussion of the Company’s reinsurance, refer to “Note 12: Insurance in Force” in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Previous wording

Information about our consolidated cash flows by category is presented on our consolidated statements of cash flows. The following table summarizes our consolidated cash flows for the six months ended June 30, 2025 and 2024:

Current wording

Information about our consolidated cash flows by category is presented on our consolidated statements of cash flows. The following table summarizes our consolidated cash flows for the nine months ended September 30, 2025 and 2024: