MBIA INC

Previous wording

Recent indicators suggest that U.S. economic activity has been expanding at a solid pace despite elevated uncertainty, in part, due to the conflict in the Middle East. The unemployment rate has been little changed in recent months and job gains have kept pace with the workforce. Inflation remains elevated. The Federal Open Market Committee (“FOMC”) seeks to achieve maximum employment and 2% inflation over the longer run and at its most recent meeting, the FOMC maintained its federal funds rate target range at 3.50% to 3.75%. 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 investment portfolio, but increase investment portfolio yield and income, and decrease the present value of loss reserves. Lower interest rates could adversely affect investment portfolio yields and income, but increase the values of our investment portfolio. Lower interest rates could also adversely affect the present value of loss reserves.

Current wording

Recent indicators suggest that U.S. economic activity has been expanding at a strong pace despite elevated uncertainty, in part, due to geopolitical developments. The unemployment rate has been little changed in recent months and job gains have kept pace with the workforce. Inflation remains elevated. The Federal Open Market Committee (“FOMC”) seeks to achieve maximum employment and 2% inflation over the longer run and at its most recent meeting, the FOMC maintained its federal funds rate target range at 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 investment portfolio, but increase investment portfolio yield and income, and decrease the present value of loss reserves. Lower interest rates could adversely affect investment portfolio yields and income, but increase the values of our investment portfolio. Lower interest rates could also adversely affect the present value of loss reserves.

Previous wording

On January 1, 2026, 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 $11 million. As of June 30, 2026, National had $554 million of insured debt service outstanding related to PREPA. In addition, on July 1, 2026, PREPA defaulted on scheduled debt service for National insured bonds and National paid gross claims in the aggregate of $46 million.

Current wording

On January 1, 2026, 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 $11 million. In addition, on July 1, 2026, PREPA defaulted on scheduled debt service for National insured bonds and National paid gross claims in the aggregate of $46 million. As of September 30, 2026, National had $508 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. 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. 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 Claim (the "Administrative Claim Motion"). 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 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 Claim Motion 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 Claim Motion litigation and required they file a Joint Status Report by November 24, 2025. Following the filing of the Joint Status Report, the Court entered an order dated December 9, 2025, lifting the litigation stay to permit the parties to litigate motions to compel solely in connection with the Administrative Claim Motion. Bondholders filed their Motion to Compel on January 9, 2026 and the Oversight Board on January 23, 2026 filed its opposition. Bondholders filed their reply brief on February 6, 2026. On March 16, 2026, the Court denied the Bondholders' Administrative Claim Motion. Bondholders filed a notice of appeal on March 27, 2026 to the First Circuit C…

Excerpt shortened here; the source contains the full paragraph.

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. 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. 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 Claim (the "Administrative Claim Motion"). 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 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 Claim Motion 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 Claim Motion litigation and required they file a Joint Status Report by November 24, 2025. Following the filing of the Joint Status Report, the Court entered an order dated December 9, 2025, lifting the litigation stay to permit the parties to litigate motions to compel solely in connection with the Administrative Claim Motion. Bondholders filed their Motion to Compel on January 9, 2026 and the Oversight Board on January 23, 2026 filed its opposition. Bondholders filed their reply brief on February 6, 2026. On March 16, 2026, the Court denied the Bondholders' Administrative Claim Motion. Bondholders filed a notice of appeal on March 27, 2026 to the First Circuit C…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Between August 1 and August 8, 2025, President Trump notified six Oversight Board members that their membership on the Oversight Board was terminated effective immediately. On September 18, 2025, three of the terminated Oversight Board members, Arthur Gonzalez, Andrew Biggs and Betty Rosa (the "Plaintiffs") sought reinstatement on the Oversight Board by filing injunctive, declaratory and legal relief (the "Termination Case"). On September 22, 2025, Plaintiffs also filed a Motion for Preliminary Injunction seeking restrictions on replacing them on the Oversight Board until the Court hears the underlying merits of their claims. On October 3, 2025, the District Court for the District of Puerto Rico granted Plaintiffs' Motion for Preliminary Injunction permitting the Plaintiffs to remain on the Oversight Board until a final hearing on the adequacy of the termination notice as well as the scope of executive authority. On December 30, 2025, the Court of Appeals for the First Circuit entered an order holding the Termination Case in abeyance until the court is notified that the Supreme Court has issued a decision in the Trump v. Cook case, heard by the Supreme Court on January 21, 2026. Following the issuance of the Cook and Slaughter decisions on June 29, 2026, the First Circuit requested the parties file motions in respect of further proceedings in the case by July 31, 2026. Motions were filed on July 31, 2026.

Current wording

Between August 1 and August 8, 2025, President Trump notified six Oversight Board members that their membership on the Oversight Board was terminated effective immediately. On September 18, 2025, three of the terminated Oversight Board members, Arthur Gonzalez, Andrew Biggs and Betty Rosa (the "Plaintiffs") sought reinstatement on the Oversight Board by filing injunctive, declaratory and legal relief (the "Termination Case"). On September 22, 2025, Plaintiffs also filed a Motion for Preliminary Injunction seeking restrictions on replacing them on the Oversight Board until the Court hears the underlying merits of their claims. On October 3, 2025, the District Court for the District of Puerto Rico granted Plaintiffs' Motion for Preliminary Injunction permitting the Plaintiffs to remain on the Oversight Board until a final hearing on the adequacy of the termination notice as well as the scope of executive authority. On December 30, 2025, the Court of Appeals for the First Circuit entered an order holding the Termination Case in abeyance until the court is notified that the Supreme Court has issued a decision in the Trump v. Cook case, heard by the Supreme Court on January 21, 2026. Following the issuance of the Cook and Slaughter decisions on June 29, 2026, the First Circuit requested the parties file motions in respect of further proceedings in the case by July 31, 2026. Motions were filed on July 31, 2026. On August 17, 2026, the First Circuit remanded the matter to the district court for further proceedings. On September 1, 2026, the District Court issued a permanent injunction reversing the termination of appellee board members. On October 19, 2026, the District Court entered a text order dismissing the Termination Case as moot "because the requested relief has been obtained."

Previous wording

In July of 2026, National transferred approximately $30 million of 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 will 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 2026, National transferred approximately $30 million of 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 were 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.

Previous wording

The following table presents a summary of our consolidated financial results for the three and six months ended June 30, 2026 and 2025:

Current wording

The following table presents a summary of our consolidated financial results for the three and nine months ended September 30, 2026 and 2025:

Previous wording

Consolidated total expenses for the three months ended June 30, 2026 included a losses and loss adjustment expense (“LAE”) expense of $9 million compared with losses and LAE expense of $8 million for the same period of 2025. 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. In addition, expenses of our consolidated VIEs decreased for the three months ended June 30, 2026 compared with the same period of 2025 primarily due to an $8 million reversal of previously recognized legal expenses.

Current wording

Consolidated total expenses for the three months ended September 30, 2026 included a losses and loss adjustment expense (“LAE”) benefit of $12 million compared with a losses and LAE benefit of $50 million for the same period of 2025. The change in losses and LAE was primarily due to our insured PREPA and first-lien residential mortgage-backed securities ("RMBS") exposures. 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. This decrease in loss and LAE benefit was partially offset by lower operating expense for the three months ended September 30, 2026 compared with the same period of 2025, primarily due to a decrease in compensation expense related to the Company's non-qualified deferred compensation plan.

Previous wording

The increase in consolidated total revenues for the six months ended June 30, 2026 compared with the same period of 2025 was principally due to favorable changes in foreign currency and net realized investment losses from sales of investments, partially offset by unfavorable changes in revenues from consolidated variable interest entities ("VIEs"). The six months ended June 30, 2026 included foreign currency gains of $3 million on euro-denominated liabilities due to the strengthening of the U.S. dollar against the euro in 2026. The six months ended June 30, 2025 included net 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 accumulated other comprehensive income ("AOCI") to net income (loss) due to the liquidation of a foreign subsidiary. The six months ended June 30, 2025 also included $6 million of net realized investment losses from the sales of investments with no comparable amount for the same period of 2026. Consolidated VIE revenue for the six months ended June 30, 2025 was a gain of $7 million with no comparable amount for the same period of 2026. Consolidated VIE revenue for the six months ended June 30, 2025 primarily related to a gain from a litigation trust we consolidated as a VIE.

Current wording

The increase in consolidated total revenues for the nine months ended September 30, 2026 compared with the same period of 2025 was principally due to favorable changes in foreign currency and in net realized losses from the sales of investments. The nine months ended September 30, 2026 included foreign currency gains of $3 million on euro-denominated liabilities due to the strengthening of the U.S. dollar against the euro in 2026. The nine months ended September 30, 2025 included net 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 accumulated other comprehensive income ("AOCI") to net income (loss) due to the liquidation of a foreign subsidiary. The nine months ended September 30, 2025 also included $6 million of net realized investment losses from the sales of investments with no comparable amount for the same period of 2026.

Previous wording

Consolidated total expenses for the six months ended June 30, 2026 included $6 million of losses and LAE compared with $16 million for the same period of 2025. This decrease in losses and LAE was primarily due to favorable changes 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. In addition, expenses of our consolidated VIEs decreased for the six months ended June 30, 2026 compared with the same period of 2025 primarily due to an $8 million reversal of previously recognized legal expenses.

Current wording

Consolidated total expenses for the nine months ended September 30, 2026 included a losses and LAE benefit of $6 million compared with a losses and LAE benefit of $34 million for the same period of 2025. This decrease in the losses and LAE benefit was primarily due to changes on our PREPA and insured first-lien RMBS exposures. 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. This decrease in loss and LAE benefit was partially offset by lower expenses of our consolidated VIEs for the nine months ended September 30, 2026 compared with the same period of 2025, primarily due to a reversal of previously recognized legal expenses and lower interest expense. Refer to the following “Interest Expense” sections of the Corporate and International and Structured Finance Insurance segments for additional information on our interest expense.

Previous wording

Three and Six Months Ended June 30, 2026 vs. Three and Six Months Ended June 30, 2025

Current wording

Three and Nine Months Ended September 30, 2026 vs. Three and Nine Months Ended September 30, 2025

Previous wording

For the three and six months ended June 30, 2026 and 2025, 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, 2026 and 2025, 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

As of June 30, 2026 and December 31, 2025, the Company’s valuation allowance against its net deferred tax asset was $1.4 billion. Notwithstanding the full valuation allowance on its net deferred tax asset, the Company believes that it may be able to use some of its net deferred tax asset before the expirations associated with that asset based upon expected earnings at National. Accordingly, the Company will continue to re-evaluate its net deferred tax asset on a quarterly basis. There is no assurance that the Company will reverse any of its valuation allowance on its net deferred tax asset in the future. Refer to “Note 8: Income Taxes” in the Notes to Consolidated Financial Statements for a further discussion of income taxes, including the valuation allowance against the Company’s net deferred tax asset and its accounting for tax uncertainties.

Current wording

As of September 30, 2026 and December 31, 2025, the Company’s valuation allowance against its net deferred tax asset was $1.4 billion. Notwithstanding the full valuation allowance on its net deferred tax asset, the Company believes that it may be able to use some of its net deferred tax asset before the expirations associated with that asset based upon expected earnings at National. Accordingly, the Company will continue to re-evaluate its net deferred tax asset on a quarterly basis. There is no assurance that the Company will reverse any of its valuation allowance on its net deferred tax asset in the future. Refer to “Note 8: Income Taxes” in the Notes to Consolidated Financial Statements for a further discussion of income taxes, including the valuation allowance against the Company’s net deferred tax asset.

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, 2026 and 2025:

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, 2026 and 2025:

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, 2026, National had total insured gross par outstanding of $20.8 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, 2026, National had total insured gross par outstanding of $19.7 billion.

Previous wording

The following table presents our U.S. public finance insurance segment results for the three and six months ended June 30, 2026 and 2025:

Current wording

The following table presents our U.S. public finance insurance segment results for the three and nine months ended September 30, 2026 and 2025:

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, 2026 and 2025, were scheduled premiums earned of $5 million and $6 million, respectively. Included in net premiums earned for the six months ended June 30, 2026 and 2025, were scheduled premiums earned of $11 million and $12 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, 2026 and 2025, were scheduled premiums earned of $5 million and $6 million, respectively. Included in net premiums earned for the nine months ended September 30, 2026 and 2025, were scheduled premiums earned of $16 million and $18 million, respectively.

Previous wording

NET REALIZED INVESTMENT GAINS (LOSSES) Net realized investment losses for the six months ended June 30, 2025 primarily related to sales of securities from the ongoing management of our U.S. public finance investment portfolio, including to generate liquidity to pay claims.

Current wording

NET REALIZED INVESTMENT GAINS (LOSSES) Net realized investment losses for the nine months ended September 30, 2025 primarily related to sales of securities from the ongoing management of our U.S. public finance investment portfolio, including to generate liquidity to pay claims.

Previous wording

LOSSES AND LOSS ADJUSTMENT EXPENSES For the three and six months ended June 30, 2026, losses and LAE incurred was primarily related to our PREPA exposure, which was driven by LAE and the accretion of net reserves, partially offset by an increase in risk-free discount rates, which caused loss reserves, net of recoveries, to decline. 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. 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, 2026, losses and LAE incurred was primarily related to our PREPA exposure, which was driven by LAE and the accretion of net reserves, partially offset by an increase in risk-free discount rates, which caused loss reserves, net of recoveries, to decline. For the three and nine months ended September 30, 2025, 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. Refer to the following “U.S. Public Finance Insurance Puerto Rico Exposures” section for additional information on our PREPA exposures.

Previous wording

Insurance loss recoverable as of June 30, 2026 increased compared with December 31, 2025 primarily due to reclassifying recoveries from loss and LAE reserve as a result of claims paid on a lease-backed transaction, partially offset by recovery collections. Loss and LAE reserves as of June 30, 2026 decreased compared with December 31, 2025 primarily due to January 2026 PREPA claim payments and an increase in risk-free rates, partially offset by accretion related to PREPA. Refer to “Note 5: Loss and Loss Adjustment Expense Reserves” in the Notes to Consolidated Financial Statements for additional information related to the Company’s insurance loss reserves and recoverables and loss reserving process.

Current wording

Insurance loss recoverable as of September 30, 2026 increased compared with December 31, 2025 primarily due to reclassifying recoveries from loss and LAE reserve as a result of claims paid on PREPA and a lease-backed transaction, partially offset by recovery collections. Loss and LAE reserves as of September 30, 2026 decreased compared with December 31, 2025 primarily due to claim payments, principally from PREPA, and higher risk-free rates. This decrease was partially offset by a reclassification of recoveries on paid claims to insurance loss recoverable and accretion. Refer to “Note 5: Loss and Loss Adjustment Expense Reserves” in the Notes to Consolidated Financial Statements for additional information related to the Company’s insurance loss reserves and recoverables and loss reserving process.

Previous wording

OPERATING EXPENSES Our U.S. public finance insurance segment's operating expenses primarily consist of inter-segment service charge from the corporate segment for support services. For the three months ended June 30, 2026 and 2025, the inter-segment service charge was $7 million. For the six months ended June 30, 2026 and 2025, the inter-segment service charge was $16 million and $17 million, respectively.

Current wording

OPERATING EXPENSES Our U.S. public finance insurance segment's operating expenses primarily consist of inter-segment service charges from the corporate segment for support services. For the three months ended September 30, 2026 and 2025, the inter-segment service charges were $6 million and $7 million, respectively. For the nine months ended September 30, 2026 and 2025, the inter-segment service charges were $22 million and $24 million, respectively.

Previous wording

As a result of prior defaults, various stays and the Title III cases, Puerto Rico failed to make certain scheduled debt service payments for National insured bonds. As a consequence, National has paid gross claims in the aggregate amount of $3.2 billion relating to GO, PBA, PREPA and HTA bonds through June 30, 2026, inclusive of the commutation payment and the additional payment in the amount of $66 million in 2019 related to COFINA and the GO and HTA acceleration and commutation payments of $277 million and $556 million, respectively, in 2022.

Current wording

As a result of prior defaults, various stays and the Title III cases, Puerto Rico failed to make certain scheduled debt service payments for National insured bonds. As a consequence, National has paid gross claims in the aggregate amount of $3.3 billion relating to GO, PBA, PREPA and HTA bonds through September 30, 2026, inclusive of the commutation payment and the additional payment in the amount of $66 million in 2019 related to COFINA and the GO and HTA acceleration and commutation payments of $277 million and $556 million, respectively, in 2022.

Previous wording

On June 23, 2023, the Oversight Board filed a fiscal plan for PREPA for fiscal year 2023, 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 payments. A standstill agreement with certain bondholders was replaced by an Amended and Restated Trust Agreement during 2025 that cured the remaining technical defaults and implemented monthly sinking-fund payments. National is not a party to the Amended and Restated Trust Agreement. As of June 30, 2026, National had $45 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 fiscal year 2023, 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 payments. A standstill agreement with certain bondholders was replaced by an Amended and Restated Trust Agreement during 2025 that cured the remaining technical defaults and implemented monthly sinking-fund payments. National is not a party to the Amended and Restated Trust Agreement. As of September 30, 2026, National had $40 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 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 Claim (the "Administrative Claim Motion"). 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 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 Claim Motion 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 Claim Motion litigation and required they file a Joint Status Report by November 24, 2025. Following the filing of the Joint Status Report, the Court entered an order dated December 9, 2025, lifting the litigation stay to permit the parties to litigate motions to compel solely in connection with the Administrative Claim Motion. Bondholders filed their Motion to Compel on January 9, 2026 and the Oversight Board on January 23, 2026, filed its opposition. Bondholders filed their reply brief on February 6, 2026. On March 16, 2026, the Court denied Bondholders' Motion for Allowance of an Administrative Expense Claim. Bondholders filed a notice of appeal on March 27, 2026 to the First Circuit Court of Appeals. On May 14, 2026, the Bondholders filed their appellate briefs. On May 21, 2026, thirteen U.S. States filed a combined Amici Curiae brief in support of the Bondholders' appeal. On July 10, 2026, the Oversight Board filed its appellate b…

Excerpt shortened here; the source contains the full paragraph.

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 Claim (the "Administrative Claim Motion"). 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 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 Claim Motion 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 Claim Motion litigation and required they file a Joint Status Report by November 24, 2025. Following the filing of the Joint Status Report, the Court entered an order dated December 9, 2025, lifting the litigation stay to permit the parties to litigate motions to compel solely in connection with the Administrative Claim Motion. Bondholders filed their Motion to Compel on January 9, 2026 and the Oversight Board on January 23, 2026, filed its opposition. Bondholders filed their reply brief on February 6, 2026. On March 16, 2026, the Court denied Bondholders' Motion for Allowance of an Administrative Expense Claim. Bondholders filed a notice of appeal on March 27, 2026 to the First Circuit Court of Appeals. On May 14, 2026, the Bondholders filed their appellate briefs. On May 21, 2026, thirteen U.S. States filed a combined Amici Curiae brief in support of the Bondholders' appeal. On July 10, 2026, the Oversight Board filed its appellate b…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Between August 1 and August 8, 2025, President Trump notified six Oversight Board members that their membership on the Oversight Board was terminated effective immediately. On September 18, 2025, the Plaintiffs sought reinstatement on the Oversight Board by filing injunctive, declaratory and legal relief. On September 22, 2025, Plaintiffs also filed a Motion for Preliminary Injunction seeking restrictions on replacing them on the Oversight Board until the Court hears the underlying merits of their claims. On October 3, 2025, the District Court for the District of Puerto Rico granted Plaintiffs' Motion for Preliminary Injunction permitting the Plaintiffs to remain on the Oversight Board until a final hearing on the adequacy of the termination notice as well as the scope of executive authority. On December 30, 2025, the Court of Appeals for the First Circuit entered an order holding the Termination Case in abeyance until the court is notified that the Supreme Court has issued a decision in the Trump v. Cook case, heard by the Supreme Court on January 21, 2026. Following the issuance of the Cook and Slaughter decisions on June 29, 2026, the First Circuit requested the parties file motions in respect of further proceedings in the case no later than July 31, 2026. Motions were filed on July 31, 2026.

Current wording

Between August 1 and August 8, 2025, President Trump notified six Oversight Board members that their membership on the Oversight Board was terminated effective immediately. On September 18, 2025, the Plaintiffs sought reinstatement on the Oversight Board by filing injunctive, declaratory and legal relief. On September 22, 2025, Plaintiffs also filed a Motion for Preliminary Injunction seeking restrictions on replacing them on the Oversight Board until the Court hears the underlying merits of their claims. On October 3, 2025, the District Court for the District of Puerto Rico granted Plaintiffs' Motion for Preliminary Injunction permitting the Plaintiffs to remain on the Oversight Board until a final hearing on the adequacy of the termination notice as well as the scope of executive authority. On December 30, 2025, the Court of Appeals for the First Circuit entered an order holding the Termination Case in abeyance until the court is notified that the Supreme Court has issued a decision in the Trump v. Cook case, heard by the Supreme Court on January 21, 2026. Following the issuance of the Cook and Slaughter decisions on June 29, 2026, the First Circuit requested the parties file motions in respect of further proceedings in the case no later than July 31, 2026. Motions were filed on July 31, 2026. On August 17, 2026, the First Circuit remanded the matter to the district court for further proceedings. On September 1, 2026, the District Court issued a permanent injunction reversing the termination of appellee board members. On October 19, 2026, the District Court entered a text order dismissing the Termination Case as moot "because the requested relief has been obtained."

Previous wording

The following table presents our scheduled gross debt service due on our PREPA insured exposures as of June 30, 2026, for the six months ending December 31, 2026, 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, 2026, for the three months ending December 31, 2026, 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, 2026 and 2025:

Current wording

The following table summarizes the consolidated results of our corporate segment for the three and nine months ended September 30, 2026 and 2025:

Previous wording

NET GAINS (LOSSES) ON FINANCIAL INSTRUMENTS AT FAIR VALUE AND FOREIGN EXCHANGE The three and six months ended June 30, 2026 included foreign currency revaluation gains of $1 million and $3 million, respectively, on euro-denominated MTN liabilities compared with foreign currency losses of $9 million and $13 million, respectively, on these liabilities for the same periods of 2025. These changes were due to the U.S. dollar strengthening against the euro in 2026 compared with the U.S. dollar weakening against the euro in 2025.

Current wording

NET GAINS (LOSSES) ON FINANCIAL INSTRUMENTS AT FAIR VALUE AND FOREIGN EXCHANGE The nine months ended September 30, 2026 included foreign currency revaluation gains of $3 million on euro-denominated MTN liabilities compared with foreign currency losses of $13 million, on these liabilities for the same period of 2025. These changes were due to the U.S. dollar strengthening against the euro in 2026 compared with the U.S. dollar weakening against the euro in 2025. In addition, the nine months ended September 30, 2026 included fair value gains on financial instruments of $7 million compared with fair value gains of $9 million for the same period of 2025.

Previous wording

FEES Corporate segment fees consist entirely of fees paid by our other segments for services provided. The decrease in fees for the six months ended June 30, 2026 compared with the same period of 2025 was due to lower inter-segment service charges to the other segments.

Current wording

FEES Corporate segment fees primarily consist of fees paid by our other segments for services provided. The decrease in fees for the nine months ended September 30, 2026 compared with the same period of 2025 was due to lower inter-segment service charges to the other segments.

Previous wording

OPERATING EXPENSE Changes in operating expenses for the three and six months ended June 30, 2026 compared with the same periods of 2025 were primarily due to changes in compensation expense related to our non-qualified deferred compensation plan.

Current wording

OPERATING EXPENSE Changes in operating expenses for the three and nine months ended September 30, 2026 compared with the same periods of 2025 were primarily due to changes in compensation expense related to our non-qualified deferred compensation plan.

Previous wording

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, 2026, MBIA Corp.’s total insured gross par outstanding was $1.8 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

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, 2026, MBIA Corp.’s total insured gross par outstanding was $1.8 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. MBIA Corp. has contributed to the Company’s NOL carryforward, which is used in the calculation of our consolidated income taxes. If MBIA Corp. becomes profitable, it is not expected to make any tax payments under our tax sharing agreement. Based on MBIA Corp.’s current projected earnings and our expectation that it will not write new business outside of remediation activities, we believe it is unlikely that MBIA Corp. will generate significant income in the near future. As a result of MBIA Corp.’s capital structure and business prospects, we do not expect its financial performance to have a material economic impact on MBIA Inc.

Previous wording

The following table presents our international and structured finance insurance segment results for the three and six months ended June 30, 2026 and 2025:

Current wording

The following table presents our international and structured finance insurance segment results for the three and nine months ended September 30, 2026 and 2025:

Previous wording

NET GAINS (LOSSES) ON FINANCIAL INSTRUMENTS AT FAIR VALUE AND FOREIGN EXCHANGE The net losses for the three and six months ended June 30, 2026 were primarily due to fair value losses on investments for which the fair value option was elected. The net losses 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.

Current wording

NET GAINS (LOSSES) ON FINANCIAL INSTRUMENTS AT FAIR VALUE AND FOREIGN EXCHANGE The net losses for the three months ended September 30, 2026 and 2025 included $7 million and $19 million, respectively, of fair value losses on investments for which the fair value option was elected. The net losses for the nine months ended September 30, 2026 and 2025 included $11 million and $20 million, respectively, of fair value losses on investments for which the fair value option was elected. In addition, the nine months ended September 30, 2025 included the reclassification of foreign currency translation losses of $5 million from AOCI to net income (loss) due to the liquidation of a foreign subsidiary.

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.

Current wording

REVENUES OF CONSOLIDATED VIEs Consolidated VIE revenue for the three months ended September 30, 2026 and the nine months ended September 30, 2026 and 2025 related to gains from a litigation trust we consolidated as a VIE.

Previous wording

LOSSES AND LOSS ADJUSTMENT EXPENSES For the three months ended June 30, 2026, the losses and LAE incurred was principally driven by accretion on our insured RMBS transactions. For the six months ended June 30, 2026, the losses and LAE benefit primarily related to an increase in risk-free rates used to discount loss reserves, which reduced the present value of loss reserves, net of recoveries, partially offset by accretion of loss reserves on our insured RMBS transactions.

Current wording

LOSSES AND LOSS ADJUSTMENT EXPENSES For the three and nine months ended September 30, 2026, the losses and LAE benefits were principally driven by an increase in risk-free rates used to discount loss reserves, which reduced the present value of loss reserves, net of recoveries, partially offset by accretion of loss reserves related to our insured RMBS transactions.

Previous wording

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.

Current wording

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 RMBS transactions. This was partially offset by credit improvements on certain RMBS transactions.

Previous wording

Due to the consolidation of VIEs, losses and LAE exclude $1 million of VIE-related losses and LAE expense for the six months ended June 30, 2025, as these amounts are eliminated upon consolidation.

Current wording

Due to the consolidation of VIEs, the losses and LAE benefit exclude $1 million of losses and LAE expense for the nine months ended September 30, 2026. For the three and nine months ended September 30, 2025, losses and LAE incurred exclude benefits of $4 million and $3 million, respectively, related to VIEs, as these amounts are eliminated upon 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. Loss and LAE reserves as of June 30, 2026 decreased compared with December 31, 2025 primarily due to an increase in risk-free rates used to discount loss reserves, which reduced the present value of loss reserves, net of recoveries, and payments on our insured RMBS reserves. These decreases were partially offset by accretion of loss reserves on our insured RMBS transactions.

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. Loss and LAE reserves as of September 30, 2026 decreased compared with December 31, 2025 primarily due to an increase in risk-free rates used to discount loss reserves, which reduced the present value of loss reserves, net of recoveries, and payments on our insured RMBS reserves. This was partially offset by accretion of loss reserves on our insured RMBS transactions. Refer to “Note 5: Loss and Loss Adjustment Expense Reserves” in the Notes to Consolidated Financial Statements for a description of the Company’s loss reserving policy and additional information related to its insurance loss recoverables and loss and LAE reserves.

Previous wording

OPERATING EXPENSES Our international and structured finance insurance segment's operating expenses primarily consist of inter-segment service charge from the corporate segment for support services. For the three months ended June 30, 2026 and 2025, the inter-segment service charges were $3 million. For the six months ended June 30, 2026 and 2025, the inter-segment service charge was $6 million and $7 million, respectively.

Current wording

OPERATING EXPENSES Our international and structured finance insurance segment's operating expenses primarily consist of inter-segment service charges from the corporate segment for support services. For the three months ended September 30, 2026 and 2025, the inter-segment service charges were $3 million and $4 million, respectively. For the nine months ended September 30, 2026 and 2025, the inter-segment service charges were $10 million and $11 million, respectively.

Previous wording

INTEREST EXPENSE Interest expense relates to MBIA Corp.’s surplus notes. The interest rate on the surplus notes is 11.26% plus 3-month Secured Overnight Financing Rate plus 0.26161%. 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. The interest rate on the surplus notes is 11.26% plus 3-month Secured Overnight Financing Rate ("SOFR") plus 0.26161%. The decrease in interest expense for the three and nine months ended September 30, 2026 compared with the same periods of 2025 were 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

EXPENSES OF CONSOLIDATED VIEs During the second quarter of 2026, we recorded an $8 million reversal of previously recognized legal expenses related to a consolidated VIE. Refer to “Note 12: Commitments and Contingencies” in the Notes to Consolidated Financial Statements for additional information.

Current wording

EXPENSES OF CONSOLIDATED VIEs For the nine months ended September 30, 2026, we recorded a reversal of previously recognized legal expenses related to a consolidated VIE. Refer to “Note 12: Commitments and Contingencies” in the Notes to Consolidated Financial Statements for additional information.