Thank you, Angela. Yes, welcome to MBIA's conference call for our latest financial results.

After the market closed yesterday, we issued and posted several items on our websites, including our financial results, 10-Q, quarterly operating supplement, and statutory financial statements for both MBIA Insurance Corporation and National Public Finance Guarantee Corporation. We also posted updates to the listings of our insurance companies' insured portfolios.

Regarding today's call, please note that anything said on the call is qualified by the information provided in the company's 10-K, 10-Qs, and other SEC filings, as our company's definitive disclosures are incorporated in those documents. We urge investors to read our 10-K and 10-Qs as they contain our most current disclosures about the company and its financial and operating results.

Those documents also contain information that may not be addressed on today's call. The definitions and reconciliations of the non-GAAP terms included in our remarks today are also included in our 10-K and 10-Qs, as well as our financial results report and our quarterly operating supplement.

The recorded replay of today's call will become available on the MBIA website approximately two hours after the end of the call. Now here is our Safe Harbor disclosure statement.

Our remarks on today's conference call may contain forward-looking statements. Important factors, such as general market conditions and the competitive environment, could cause our actual results to differ materially from the projected results referenced in our forward-looking statements.

Risk factors are detailed in our 10-K and 10-Qs, which are available on our website at mbia.com. The company cautions not to place undue reliance on any such forward-looking statements.

The company also undertakes no obligation to publicly correct or update any forward-looking statement if it later becomes aware that such statement is no longer accurate. For our call today, Bill Fallon and Joe Schachinger will provide introductory comments, and then a question-and-answer session will follow.

Now here is Bill Fallon.

Thanks, Greg. Good morning, everyone.

Thank you for being with us today. Our second-quarter and year-to-date financial results for 2026 provided favorable comparisons to the same periods for the prior year.

Our priority continues to be resolving National's PREPA exposure. National's outstanding PREPA exposure reduced by $35 million to $390 million of gross par value, due to the insurance policy claims paid by National on PREPA bonds that matured on July 1st, 2026.

There was also some progress on several of the litigations related to PREPA. The Director of the White House Personnel Office, which appealed the injunctive relief that was awarded to three of the Oversight Board members that were fired by President Trump, has asked the First Circuit Court of Appeals to remand that case back to the trial court in light of the US Supreme Court's rulings issued in late June regarding the Slaughter and Cook cases.

In the case about the PREPA bondholders' counterclaim for the calculation of net revenues, Judge Swain lifted the self-imposed litigation stay, and that case is currently in discovery. For the administrative claim appeal to the First Circuit, that case is now fully briefed and scheduled for oral arguments in Boston on September 15th.

Separately, the Oversight Board nearly doubled their settlement offer to PREPA bondholders from $1.6 billion to approximately $3 billion. However, bondholders representing about 90% of bondholder claims soundly dismissed the offer as unacceptable and inadequate.

Regarding the balance of National's insured portfolio, those credits have continued to perform generally consistent with our expectations. The gross par amount outstanding for National's insured portfolio has declined by approximately $1.5 billion from year-end 2025 to about $20.8 billion at June 30th, 2026.

National's leverage ratio of gross par to statutory capital was 21:1 at the end of the quarter, down from 24:1 at year-end 2025. As of June 30th, 2026, National had total claims-paying resources of $1.4 billion and statutory capital and surplus of about $970 million.

Now, Joe will provide additional comments about our financial results.

Thank you, Bill, and good morning, everyone. I will begin with a review of our second quarter 2026 GAAP and non-GAAP results, followed by an overview of our holding company liquidity and our statutory results.

The company reported a consolidated GAAP net loss of $46 million or a negative 91 cents per share for the second quarter of 2026, compared with a consolidated GAAP net loss of $56 million or a negative $1.12 per share for the second quarter of 2025. The lower GAAP net loss this quarter was primarily driven by two items.

First, we recorded a reversal of legal expenses within a consolidated variable interest entity, or VIE, related to our Zohar CDO recoveries at MBIA Insurance Corp. Second, our results benefited from foreign exchange gains in the second quarter of 2026, compared with foreign exchange losses in the same period of 2025.

These foreign exchange impacts were associated with the revaluation of euro-denominated medium-term note liabilities in our corporate segment and resulted from changes in foreign exchange rates. The company's adjusted net loss, which is a non-GAAP measure, was $7 million or a negative 14 cents per share for the second quarter of 2026, compared with an adjusted net loss of $8 million or a negative 17 cents per share for the second quarter of 2025.

The modest improvement in our adjusted net loss this quarter was primarily driven by slightly lower loss and loss adjustment expenses, or LAE, at National related to its PREPA exposure. MBIA Inc.'

s book value per share as of June 30th, 2026 was a negative $45.58 per share, reflecting a decrease of $1.31 per share from year-end 2025. This decrease was primarily due to our consolidated net loss of $86 million for the first six months of 2026.

Included in MBIA Inc.' s book value per share as of June 30th, 2026 is a negative $54.26 per share of MBIA Insurance Corp.'

s book value. I will now spend a few minutes on our corporate segment balance sheet.

The corporate segment, which primarily includes the activities of the holding company, MBIA Inc., had total assets of approximately $635 million as of June 30th, 2026. Within this total are the following material assets: unencumbered cash and liquid assets held by MBIA Inc.

totaled $337 million, compared with $357 million as of December 31st, 2025. The decrease from year-end 2025 was primarily due to ongoing debt service payments and operating expenses net of investment income.

We continue to manage holding company liquidity carefully, with a primary focus on meeting our outstanding obligations and preserving financial flexibility. In addition to the unencumbered cash and liquid assets, the corporate segment's assets included approximately $183 million of assets at market value pledged to guaranteed investment agreement contract holders.

These assets fully collateralize the principal amounts of those contracts. The segment's assets also included $66 million of assets at MBIA Services, our management services company, to support its operating obligations.

I'll now turn to the insurance companies' statutory results. National reported statutory net income of $10 million for the second quarter of 2026, compared with statutory net income of $6 million for the second quarter of 2025.

The favorable variance was primarily driven by higher earned premiums, which resulted from refundings of insured credits, and lower loss and LAE and operating expenses in the current quarter. National's statutory capital as of June 30th, 2026 was $968 million, up $31 million compared with December 31st, 2025.

The increase was mostly due to National's statutory net income for the first six months of 2026, as well as unrealized gains in its investment portfolio. As of June 30th, 2026, National's claims-paying resources were $1.4 billion, consistent with year-end 2025.

Now I'll turn to MBIA Insurance Corp. MBIA Insurance Corp.

reported statutory net income of $27 million for the second quarter of 2026, compared with statutory net income of $4 million for the second quarter of 2025. The favorable variance was primarily driven by a significantly larger loss and LAE benefit in the current quarter compared with the second quarter of 2025.

The loss and LAE benefit this quarter was driven by our ongoing reassessment of recoveries of paid claims and other amounts owed to MBIA Insurance Corp. related to the Zohar CDOs.

As of June 30th, 2026, the statutory capital of MBIA Insurance Corp. was $106 million, reflecting an increase of $27 million from year-end 2025.

This increase was primarily a result of net income of $28 million for the first six months of 2026. Claims-paying resources totaled $342 million as of June 30th, 2026, up $25 million from year-end 2025.

MBIA Insurance Corp.' s insured gross par outstanding was just under $1.8 billion as of June 30th, 2026, down approximately 12% from year-end 2025, due to regular amortization of the insured portfolio.

Now we will turn the call over to the operator to begin the question-and-answer session.

Good morning, this is Molly Knoell on for Tommy McJoynt. Thank you for taking our questions.

First, can you talk about the latest PREPA settlement proposal from the Oversight Board? From your perspective, was there anything incrementally positive about the offering terms relative to prior proposals or, in your view, are we no closer to a potential resolution than previously?

Thank you, Molly. With regard to the PREPA proposal that came across, the positive was that it was from their perspective a substantial increase.

Other than that, there's not a whole lot to talk about. As I said in my comments, the bondholders dismissed it as clearly inadequate.

Hard to say where we go from here in terms of how much time. As I mentioned, several of the litigations are moving forward and as there is some uncertainty with regard to the composition of the Oversight Board, currently only four members, three of whom are fighting the dismissal by the Trump administration.

Hard to tell with regard to timing and exactly how this will play out. Those are our thoughts with regard to that proposal.

Thank you. I guess secondly, after you paid the special dividend out of National a couple years ago, that caused National's capital ratio to dip from just over 3% to about 2%.

Should we think of any portion of the capital ratio above that roughly 2% figure as potentially being available to distribute up to the HoldCo as the insured portfolio continues to run down?

With regard to National and any distributions from National to holding company, you're correct. It was at the end of 2023 that we had a special distribution from National to holding company.

While everyone looks at different metrics and does their own financial analysis, as the book gets smaller, it becomes a very tailored analysis with regard to what's in the National portfolio. I understand how everyone looks at metrics and that's in a sense fine, but it probably has to be even a more detailed analysis to determine exactly what the potential dividend or distribution could be.

Thank you.

Thank you.

Hi. This is Carlos Pardo from London.

Good afternoon. Just hope all well.

Just a few questions. On the buybacks, I saw that the capacity is still $71 million.

I just wanted to make sure that you confirm that it is available and it still could be deployed.

That is correct. There is $71 million available.

It's basically up to you to decide when you think that this is in the interest of the shareholders. My impression is that since the share price has dropped as you have seen over the last year, maybe now it is the time to consider whether deploying these buybacks.

Of course, I will be sending you my idea of basically the levels and the volume so as to how this could be done. Basically, at the moment with yesterday's price, you could retire approximately 14 million shares.

Since I expect that the Oversight Board will have some good news in terms of the composition of the Oversight Board soon, I think that probably this drop to around $5 is a good opportunity. Just to let you know that I will be sending you a proposal.

Of course, it always up to you to decide whether to implement it.

Okay. Then

on the custodial receipts, I saw that you have done another transaction for $30 million. I assume that this $30 million correspond to the payments that we made under PREPA on the 1st of July.

I think that there was another one on the 1st of January?

With regard to the custodial receipts and the debt service payment that we made on July 1st, we paid $35 million on July 1st. $5 million was a secondary policy.

So $30 million now have been transferred into a custody account. We have the custodial receipts.

As we did last year, those could be sold. Then the $5 million that were secondary, those can be sold as well.

We have $35 million that could be sold. If we think there's an appropriate price or offer that we receive, then we would sell up to $35 million.

That's fantastic. Then on PREPA payments, the only payments that we'll have to make over the next two years is $20 million in '27 and $20 million in 2028.

It is relatively benign the payment schedule.

That's correct. The debt service payments on PREPA decline significantly over the period you just mentioned.

That's fantastic. That's good news.

Also related to the potential use of the buybacks, I think that could theoretically make sense. Of course, it's always up to you guys that you have the full picture.

Then on the COOP, the COOP has been extended until I think that is August 2027, which I think that it makes sense in terms of the recent decisions and the potential for new members of the Oversight Board. I just wanted to know, the terms of the COOP has not changed.

Basically, if only one party to the COOP is opposing an agreement that has been reached by all the other parties to the COOP, this party, let's say, for example, Assured Guaranty, could not block this agreement. Is that correct?

Are those terms still valid?

Essentially, yes.

Yeah. Basically, they could not block.

Let's say, for example, Assured Guaranty does not agree with an agreement that has been reached by the rest of the COOP members, they cannot block it. My question there is since the resolution of PREPA is so important for MBIA and we have basically put any further move on sale or similar on hold until this is resolved, how does the conversations within the COOP look like?

Are we actively seeking to propose potential solutions to the other members of the COOP or are we more on a passive mode?

I can't get into the details in terms of the views of all the different members, that is the bondholders. I can assure you we're not passive, but we obviously have a very vested interest in the outcome.

Up to 90% of the bondholders are in the co-op agreement. I think the biggest issue really has been the Oversight Board, that is the uncertainty with regard to the composition of the board

and

also the litigation related to it. We think that could be a real catalyst, that is either the appointment of the three vacant positions or the resolution of the litigation.

Hopefully that will be again a catalyst to move this forward.

When do you expect? Of course, we are dealing with the Puerto Rico bankruptcy, predicting is impossible.

After the recent decision, I think that was last week, when do you think that there will be some kind of green light for new members? What is your expectation?

Of the board.

It's very hard to predict. It really depends on how the administration wants to move forward.

Again, we hope it's as soon as possible, but it's just very hard to predict.

Yeah. Is the COOP contacting also the administration in terms of trying to get them to accelerate this situation?

Or

Again, I can't speak to the specific actions that the co-op board is taking, but I think it's reasonable to assume that not only are

we, but

all bondholders are doing everything they can to move this to a resolution.

Fantastic. I will be also sending you some kind of proposal as to what I would do in terms of trying to get the COOP to move, of course, knowing that the key catalyst, as you say, is the appointment of the new members of the board.

Send it to you for your consideration.

Okay.

Perfect. Thank you.

Thank you for your time. Thank you.

Thank you.

Thank you. Bill, a quick question.

As the offer from the Oversight Board doubled roughly, what's your estimate of how much of a spread there is between their offer and what the bondholders would consider to be reasonable? Did it have to double again or triple again?

I don't know. Like the two [unclear].

John, again, it's difficult to answer because I think every bondholder probably has a different number in mind. Roughly speaking, the offer that came across was somewhere probably in between 30 and 40 cents depending how you value everything.

That's 30 to 40 cents on the dollar of par. Just as a benchmark, the bonds right now in the marketplace, while it's not a really deep or liquid market, but the last indications, those were trading at about 75 cents.

That at least gives you some reference point between what the offer was and what the so-called marketplace is saying.

Yes, uh-huh. All right.

Perfect. As you review your current insured portfolio, do you factor in the political trends of a liberal side of the parties in the so-called blue states and this Democratic socialist group who have no respect for existing contracts?

Has that factored in for you with any potential thought that you might have some impairment because of political trends not supporting honoring existing contracts and commitments?

When we look at the portfolio, we look at obviously many factors. What you just described is one.

It's not a new factor. We have looked at the way different administrations have handled, whether it be state or local, obligations for a long time.

Clearly, you're looking at some of the trends and situations that are developing across the country right now. We look at all of those things.

Without getting into what probably could be a weeks-long discussion on the topic that you're highlighting, it is something that we factor into our analysis. There are no impairments that we have taken in this quarter specifically related to those type of administrations for some reason choosing not to meet a contractual obligation.

We hope all administrations will continue to fulfill their obligations, and we'll just continue to monitor the situation.

Thank you. I interpret the various updates you had on PREPA as being about as positive as it could be.

I don't know how the Supreme Court ruling could have been any more positive other than if they literally said that you can fire her, but they basically implied they have the right to fire anybody, I suspect this is finally moving, hopefully, to a clear resolution.

We would love for things to move quickly, just as you would.

Anyway, thank you very much.

Thank you.

Thank you.

Hi, good morning. I just wanted to ask about kind of thoughts around a potential sale process, given that all the gating items from last time you're making progress on.

Obviously, there's ongoing cash burn in the business. Just wanted to think kind of what steps are remaining for you to do so, and would you again do it as a public process the way you did three or four years ago, or would you do it behind the scenes this time around?

Thank you.

Patrick, thank you. With regard to a sale process, and again you're referring to, I guess it was four years ago, we announced we had hired Barclays to help us with a sale process.

We then decided to stop that process and pursued the distribution from National and shareholder dividend. With regard to how we would do this moving forward, the answer is it depends.

I think the probability of a transaction goes up every time we reduce our exposure to PREPA. Obviously, different potential acquirers will view the PREPA situation differently.

There are some who probably look at a resolution similar to what we might think of in terms of value or potential value. Again, at this point, we don't have any specific decision.

If we decided that we were going to run a process similar to what we did yeah, four years ago, my guess is we would announce that. There's also the possibility that individuals contact us at any point in time, or given that we probably can identify potential acquirers, we could reach out to them at any point in time if we thought it was advantageous for shareholders.

Again, nothing specific on that at this point in time, but something that we look at constantly.

That's good. Thank you.

Thank you.

Thanks again, Angela. Thanks to those of you listening to our call.

Please contact us directly if you have any additional questions. We also recommend that you visit our website at mbia.com for additional information on our company.

Thank you for your interest in MBIA. Good day and goodbye.