PURCHASE, NY, December 7, 2023–(BUSINESS WIRE)–MBIA Inc. (NYSE:MBI) today announced that its board of directors declared an extraordinary cash dividend on MBIA common stock in the amount of $8.00 per share to shareholders of record on December 18th to be paid on December 22nd, representing a total value of approximately $409 million based on 51.1 million shares outstanding. The information is also available in the Current Report on Form 8-K dated December 7, 2023, available at sec.gov.
The Company also announced on December 7, 2023 that the New York Department of Financial Services (“NYDFS”) approved an extraordinary dividend of $550 million to be paid by its wholly owned subsidiary, National Public Finance Guarantee Corporation (“National”) should be paid to MBIA. and separately, the Company received a dividend of $97.245 million from National on November 20, 2023.
The remainder of National’s dividends will be retained by MBIA and intended to be used for general corporate purposes, including, but not limited to, future operating expenses and debt service obligations.
Bill Fallon, CEO of MBIA Inc., said: “We are pleased to deliver this exceptional distribution of shareholder value to our shareholders and significantly improve MBIA’s liquidity for its stakeholders. “We will continue to pursue additional measures to enhance shareholder value as we take the appropriate steps to reach the Company’s final resolution.”
MBIA expects that National will continue to seek approval to pay additional extraordinary dividends to MBIA in the coming years. However, there can be no assurance as to whether or when NYDFS will approve such applications and, if NYDFS approves such dividends, in what amount. In addition, any future dividend payments from MBIA to stockholders will be at the sole discretion of our Board of Directors and will depend on, among other things, the receipt of additional extraordinary dividends from National, our results of operations, working capital needs, capital expenditure requirements, financial condition, leverage ratio, contractual restrictions with respect to to the payment of dividends, business opportunities, expected cash needs, provisions of applicable law and other factors that our board of directors may deem relevant.
For U.S. federal income tax purposes, distributions made by MBIA to a U.S. stockholder, other than holders of unvested restricted shares, will generally constitute dividends only in an amount equal to our current and accumulated earnings and profits (“E&P”) As of September 31, 2023, we have no current and cumulative E&P and based on our current analysis, we expect that we will not have any current or cumulative E&P through December 31, 2023. Therefore, we assume that the dividend is treated as a tax-free return of capital up to an investor’s adjusted cost basis for their shares, and that if an investor’s adjusted cost basis falls to zero, the remaining portion of the dividend is taxed as a capital gain. Future dividends, if any, may or may not receive similar tax treatment.
The process of determining current and cumulative E&P requires a final determination of our financial results for the year and a review of certain other factors, which will be announced together with our full year 2023 financial results on February 28, 2024, if actual current or cumulative in 2023 E&P exists, the dividend will be taxed as a dividend to the extent of this current or cumulative E&P. The amount of dividend payable to holders of unvested restricted stock is taxed as ordinary income. Shareholders should consult their own tax advisors regarding receipt of this dividend.
All forward-looking statements made in this press release reflect MBIA’s current views with respect to future events and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words “believe”, “anticipate”, “predict”. “,” “plan,” “expect,” “estimate,” “intend,” “will likely occur,” “look forward,” or “will continue” and similar expressions identify forward-looking statements. Such statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in such statements. These risks and uncertainties include, but are not limited to, increased credit losses or impairment of public financial obligations that National has issued by state, local and territorial governments, as well as financial authorities and other providers of public services in the United States or abroad, are under financial stress; the possibility that loss reserve estimates will be insufficient to cover potential claims; a disruption in National’s cash flow or inability to access capital markets and our risk of exposure to significant fluctuations in liquidity and asset values in global credit markets due to collateral posting requirements; our ability to fully implement our strategic plan; the possibility that MBIA Insurance Corporation may not have sufficient liquidity or resources to pay claims on a timely basis due to greater than expected losses on certain insured transactions or due to a delay or failure in collecting expected refunds, which could result in the NYDFS MBIA orders Insurance Corporation to commence reorganization or liquidation proceedings pursuant to Article 74 of the New York Insurance Law and/or to take such other action as the NYDFS deems necessary to protect the interests of MBIA Insurance Corporation’s policyholders; deterioration in economic conditions and financial markets in the United States or abroad, real estate market developments, credit spreads, interest rates and foreign currency levels; and the impact of changes in government regulations, including insurance laws, securities laws, tax laws, legal precedent and accounting standards, and other risk factors set forth in the Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year , which ended on December 31, 2022. Readers are cautioned not to place undue reliance on these forward-looking statements, which are made as of December 7, 2023. MBIA undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
MBIA Inc., headquartered in Purchase, New York, is a holding company whose subsidiaries provide financial guarantee insurance to the public and structured finance markets. Please visit MBIA’s website at www.mbia.com.
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Greg Diamond, 914-765-3190
Head of Investor and Media Relations