MBIA Inc. Reports a 9 Percent Decrease in Earnings Per Share in First Nine Months; Operating Earnings Per Share up 5 Percent

MBIA Inc. (NYSE:MBI), the holding company for MBIA InsuranceCorporation, reported today that diluted net income per share for thefirst nine months of 2005 was $3.84, down 9 percent, compared to $4.23per share in the same period last year. Net income for the first ninemonths of 2005 was $528.3 million, compared to $616.3 million in thesame period last year, a 14 percent decrease.

Third quarter diluted net income per share declined 18 percent to$1.04 from $1.27 in last year's third quarter. Net income for thethird quarter was $141.8 million, compared to $183.2 million in lastyear's third quarter, a 23 percent decrease.

Results for the quarter and the year to date include the effectsof a $75 million accrual for the total amount that the Companyestimates, based on discussions to date, it will have to pay inconnection with any settlements of investigations by the SEC, the NewYork Attorney General's Office and the New York State InsuranceDepartment (the regulatory agencies) regarding agreements entered intoby its subsidiary, MBIA Insurance Corporation, in 1998 with AXA ReFinance S.A. (AXA Re), Muenchener Rueckversicherungs-Gesellshaft(Munich Re) and Converium Re (previously known as Zurich ReinsuranceNorth America). Excluding the effects of the accrual, year-to-date netincome per share would have been $4.36, a 3 percent increase over thesame period in 2004. Net income for the first three quarters of 2005would have been $599.8 million, a 3 percent decrease from the prioryear.

The results also reflect a restatement of the Company's financialstatements, made in connection with the potential settlements, for theMunich Re and AXA Re agreements to correct and restate its GAAP andstatutory accounting for these agreements. As a result, the Companywill account for these agreements as deposits because they did notsatisfy the risk transfer requirements for reinsurance accountingunder SFAS 113, "Accounting and Reporting for Reinsurance ofShort-Duration and Long-Duration Contracts" and under Regulation 108of the New York State Insurance Department. The restatement does nothave a significant effect on the Company's financial position.

As a result of this restatement, MBIA's financial results for 1998will reflect an additional pre-tax charge in the third quarter of $100million, which is related to the $170 million incurred loss on theMBIA-insured AHERF bonds. The estimated reduction of after-tax netincome for 1998 related to the restatement will be approximately $69million, resulting in net income for 1998 of approximately $317million, or $2.11 per share, down 18 percent from $386 million, or$2.57 per share, as previously reported. In addition, as a result ofthe restatement, MBIA estimates that its earnings will be reduced byapproximately $4 million (or 3 cents per share) in 1999 and increasedby approximately: $0.3 million (or 0 cents per share) in 2000; $2million (or 1 cent per share) in 2001; $5 million (or 3 cents pershare) in 2002; $15 million (or 10 cents per share) in 2003; $30million (or 21 cents per share) in 2004; and $5 million (or 3 centsper share) for the first nine months of 2005. As announced on March 8,2005, the Company has already restated its financial statements withrespect to its agreements with Converium Re.

The quota share agreements with Munich Re, which were entered intoin connection with the Munich Re excess-of-loss agreement, remain ineffect and obligate Munich Re to reimburse MBIA on a quota share basisfor any losses incurred on approximately $11.8 billion of debt serviceceded. As previously reported, MBIA's quota share agreements with AXARe, which were entered into in connection with the AXA Reexcess-of-loss agreement, were commuted in the fourth quarter of 2004.To date, no settlements have been approved by the regulatory agencies.Any settlements may have additional or different terms.

In addition, MBIA is restating results from 2001 to 2005 forderivative transactions that do not technically comply with SFAS 133,"Accounting for Derivative Instruments and Hedging Activities," eventhough these transactions were highly effective from an economicstandpoint. The effect of the mark-to-market restatement is anincrease to net income of $14.7 million for the first nine months of2005 and $19.7 million for the third quarter of 2005. The cumulativeeffect of these changes, from 2001 through September 2005, is anon-cash earnings increase of $6.8 million. Although the cumulativeeffect of $6.8 million is not material, since the Company is restatingits financial results for the Munich Re and AXA Re agreements, it willrestate each quarter and year affected by the prior method ofaccounting.

In light of the restatements described above, the Company expectsto file its Quarterly Report on Form 10-Q for the third quarter withthe SEC by no later than Monday November 14, 2005 and will also filewith the SEC an amended Annual Report on Form 10-K for the year endedDecember 31, 2004 as soon as practicable.

Operating income per share, which excludes the effects of netrealized gains, net gains and losses on derivative instruments andforeign exchange, and income from discontinued operations, andexcluding the accrual for penalties and disgorgement, rose 5 percentto $4.19 per share for the first nine months of 2005, compared with$3.99 per share in the same period last year. Excluding refundings,which represent the acceleration of earned premium when an issue isdefeased, operating income per share for the first nine months of 2005rose 7 percent to $3.75 from $3.52 during the same period of 2004.

For the third quarter of 2005, operating income per shareincreased 5 percent to $1.40 from $1.33 in the third quarter of 2004.Excluding refundings, third quarter 2005 operating income per sharerose 6 percent to $1.26 from $1.19 during the same period of 2004.
Diluted earnings per share information
--------------------------------------

Three Months Nine Months
Ended Ended
September 30 September 30
------------ ------------
(Restated) (Restated)
-------- --------
2005 2004 2005 2004
--------- -------- -------- --------
Net income $ 1.04 $ 1.27 $ 3.84 $ 4.23
Income from discontinued
operations (0.01) 0.00 (0.01) 0.02
--------- -------- -------- --------
Net income from continuing
operations $ 1.05 1.27 $ 3.84 4.21
Accrual for penalties and
disgorgement (0.53) 0.00 (0.52) 0.00
Net realized gains (0.03) 0.00 (0.02) 0.27
Net unrealized gains
(losses) on derivative
instruments and foreign
exchange 0.21 (0.06) 0.20 (0.05)
--------- -------- -------- --------
Operating income (1) $ 1.40 $ 1.33 $ 4.19 $ 3.99

(1) Presented on the same basis as analysts' estimates.

Gary C. Dunton, MBIA Chief Executive Officer, said, "MBIA postedacceptable business results for the first nine months of 2005 in whatcan only be described as a challenging operating environment. Steadydemand for our insurance and investment management products continued,and we remain determined to pursue high quality, profitable businesswithout compromising our underwriting and pricing standards."

Insurance Operations

Adjusted direct premium (ADP), a non-GAAP measure, which includesboth upfront premiums written and the present value of estimatedinstallment premiums for new business writings and excludes premiumsassumed or ceded, increased 15 percent to $879.8 million in the firstnine months from $762.2 million in the first nine months of 2004. Inthe third quarter of 2005, ADP increased 8 percent to $233.2 million.
Adjusted Direct Premium
-----------------------
(dollars in millions)

Three Months Nine Months
Ended Ended
September 30 September 30
------------ ------------
2005 2004 % Change 2005 2004 % Change
------ ------ -------- ------ ------ --------
Public Finance
United States $ 96.1 $ 92.2 4 $381.7 $341.7 12
Non-United States 3.5 35.1 (90) 68.6 141.8 (52)
------ ------ -------- ------ ------ --------
Total 99.6 127.3 (22) 450.3 483.5 (7)

Structured Finance
United States 59.8 62.6 (5) 231.3 167.4 38
Non-United States 73.8 26.0 184 198.2 111.3 78
------ ------ -------- ------ ------ --------
Total 133.6 88.6 51 429.5 278.7 54

Total $233.2 $215.9 8 $879.8 $762.2 15

Global public finance ADP declined 7 percent in the first ninemonths of 2005 compared with the same period last year. Domesticpublic finance production increased 12 percent for the first ninemonths of 2005, reflecting strong volume of flow business,particularly in the military housing and transportation sectors,rather than any individual, large transactions. This increase wasoffset by a decline in non-U.S. production, which dropped 52 percentas business in Europe slowed and significantly fewer transactions cameto market during this period. Credit quality for global public financetransactions remained very high, with 91 percent of insured businesswritten rated Single-A or above in the first nine months of 2005.

Global structured finance ADP in the first nine months of 2005grew 54 percent over the same period in 2004, driven by a strong flowof business. Despite continued tight spreads and investor demand foruninsured transactions, the global structured finance business remainsrobust. Year-to-date structured finance ADP was $430 million, with 72percent of insured business written rated Single-A or higher.

Premiums earned in the first nine months of 2005 declined 2percent to $628.3 million from $639.2 million in last year's firstnine months, due in part to some early policy terminations in thestructured finance book of business as well as continued refundingactivity, which results in any unearned premiums that would have beenearned over time to be earned immediately, and reduces the growth rateof scheduled earned premiums. Earned premiums from refundings declined12 percent to $100.3 million in the first nine months of 2005, butwere still a considerable amount. Scheduled earned premiums were flatfor the first nine months of the year.

Pre-tax net investment income in the first nine months of 2005,excluding net realized gains, was $362.6 million, a 2 percent increasefrom $354.1 million in the same period of 2004. The increase was dueto the increase in the Company's average asset base.

MBIA's advisory fees in the first nine months of 2005 were down 31percent to $20.2 million from $29.2 million during the same period of2004, primarily reflecting a decline in business that requiresadvisory services.

Total insurance expenses, which include the amortization ofdeferred acquisition costs and operating expenses, were up 11 percentfor the first nine months of 2005 to $153.1 million from $137.5million in last year's first nine months, due to a 17 percent increasein operating expenses over the same period last year. The jump inoperating expenses partially relates to a decrease in the percentageof expenses recorded and deferred as policy acquisition costs. Thechange, which was effective in the third quarter of 2005, resulted infewer expenses being classified as policy acquisition costs anddeferred, and therefore, a corresponding increase in operatingexpenses. Another factor contributing to the increase in operatingexpenses is an increase in loss prevention expenses.

MBIA's pre-tax operating income from insurance operationsdecreased 3 percent to $794.6 million in the first nine months of 2005from $821.9 million in last year's first nine months.

Risk Management and Loss Reserves

The Company incurred $63.4 million in loss and loss adjustmentexpenses in the first nine months of 2005, compared with $63.1 millionin last year's first nine months. Total case-incurred activity was$89.4 million for the first nine months of 2005, related totransactions in the CDO, manufactured housing and mortgage-backedsectors, and tax liens. Unallocated reserves as of September 30, 2005stand at $287.1 million.

During the third quarter, MBIA did not establish specific reservesfor its exposure to the regions impacted by hurricanes Katrina, Ritaand Wilma. While there continues to be uncertainty in the regionaffected by Hurricane Katrina, the Company does not currently expectmaterial cases of prolonged nonpayment which would result inunreimbursed losses. To date, MBIA has paid out $2.1 million in claimspayments, for which it has been fully reimbursed. The Companycontinues to work closely with affected issuers, their financialadvisors and legal counsel, and state officials to monitor thesituation.

In early October, the Court of Appeals for the Third Circuitupheld the previously announced decision of the United States DistrictCourt for the District of Delaware enforcing insurance policies issuedby Royal Indemnity that guarantee vocational loans originated byStudent Finance Corporation, which backed securities insured by MBIA.The Appeals Court also remanded the case to the District Court for adetermination of the amount of losses covered by the Royal policies.MBIA expects Royal to be required to pay all or substantially all ofthe claims made under its policies and to be reimbursed for anypayments MBIA made under its policies. As of September 30, 2005, totalclaims made under the Royal insurance policies were $351.4 million.Royal has filed a petition for a rehearing with the Circuit Court ofAppeals.

Investment Management Services

The market value of quarterly average fixed-income assets undermanagement was $44.2 billion in the third quarter of 2005, up 18percent from $37.4 billion in last year's third quarter. Pre-taxoperating income from MBIA's investment management businesses, whichexcludes the effects of net realized gains and losses, and net gainsand losses on derivative instruments and foreign exchange, increased52 percent in the first nine months of 2005 to $65.7 million from$43.2 million during the same period of 2004. Solid demand forinvestment agreements drove growth in the asset liability productssegment, as well as improved volume in advisory services where theCompany manages money for third parties.

Corporate

The corporate segment includes net investment income, interestexpense and corporate expenses. Net corporate segment expenses in thefirst nine months increased to $141.5 million from $61.0 million inthe same period last year. The increase reflects the $75 millionaccrual for penalties and disgorgement, and incremental legal andconsulting expenses related to regulatory investigations. Excludingthe accrual, net corporate expenses increased 9 percent.

Gains and Losses

In the first nine months of 2005, MBIA recorded net losses of $4.8million, compared with net gains of $60.0 million in the first ninemonths of 2004. In 2005, net realized gains and losses were impactedby a $16.1 million write-down of a receivable balance that the Companyobtained under salvage and subrogation rights. In 2004, net realizedgains were primarily the result of the sale of a common stockinvestment that the Company purchased in 2002.

The Company recorded pre-tax net unrealized gains of $42.2 millionfor the first nine months of 2005 on its derivative exposure andforeign exchange, of which $22.6 million is attributable to the SFAS133 restatement, compared with a pre-tax net unrealized loss of $11.2million for the first nine months of 2004. Net gains and losses onderivative exposure for the periods 2001 through year-to-date 2005have been restated due to derivative transactions that did nottechnically comply with SFAS 133, even though they were highlyeffective from an economic perspective. MBIA had applied the shortcutmethod of accounting for certain derivative contracts, primarily usedto hedge certain of its long-term fixed-rate investments from changesin interest rates. Under the shortcut method of accounting, asprovided for under SFAS 133, the Company can assume that the change infair value of a hedged item exactly offsets the change in value of therelated derivative. After completing a detailed review, however, theCompany determined that certain derivative instruments did not meetall of the technical requirements to permit it to use the shortcutmethod and, therefore, these transactions should have been accountedfor under the "long-haul" method. Since shortcut method documentationhas existed instead of long-haul documentation, the Company must treatthese transactions as if hedge accounting had not been applied. Thelong-haul method of accounting requires the calculation of the changein fair value of the derivative and the change in fair value of thehedged item to be calculated independently. All of the subject hedgeshave been redesignated to meet the long-haul method as of October 1,2005. It is anticipated that the mark-to-market of these derivativecontracts and hedged items will substantially offset each other in theincome statement prospectively.

Book Value and Adjusted Book Value

MBIA's book value per share at September 30, 2005 was $48.45, up 3percent from $47.05 at December 31, 2004. The increase was principallydriven by net income from operations offset by a decrease in theunrealized appreciation of the Company's investment portfolio and asignificant increase in treasury stock resulting from sharerepurchases. Adjusted book value (ABV) per share, a non-GAAP measure,at September 30, 2005 rose 5 percent to $69.89 from $66.34 at December31, 2004. ABV includes the after-tax effects of deferred premiumrevenue less prepaid reinsurance premiums and deferred acquisitioncosts, the present value of installment premiums, the present value ofthe net spread of asset/liability products, and a provision for lossand loss adjustment expenses.

Share Repurchase

The Company did not repurchase any shares in the third quarter of2005. Through the first six months of the year, the Companyrepurchased approximately 5.9 million shares at an average cost of$57.77 per share. Approximately 5 million shares remain in theCompany's share buyback program, which was authorized in August 2004.

Conference Call

MBIA will host a conference call for investors today at 11 a.m.ET. The conference call will consist of brief comments by NicholasFerreri, the company's chief financial officer, followed by a questionand answer session. The conference call will be Web cast live onMBIA's Web site at http://investor.mbia.com (then click "ConferenceCall"). Those who are unable to participate in the conference call maylisten to a replay by dialing 1-800-396-1244 in the United States and1-402-998-1607 for international calls. A recording will also beavailable on MBIA's Web site approximately two hours after the end ofthe conference call.

MBIA Inc., through its subsidiaries, is a leading financialguarantor and provider of specialized financial services. MBIA'sinnovative and cost-effective products and services meet the creditenhancement, financial and investment needs of its public and privatesector clients, domestically and internationally. MBIA Inc.'sprincipal operating subsidiary, MBIA Insurance Corporation, has afinancial strength rating of Triple-A from Moody's Investors Service,Standard & Poor's Ratings Services, Fitch Ratings, and Rating andInvestment Information, Inc. Please visit MBIA's Web site athttp://www.mbia.com.

This news release contains forward-looking statements. Importantfactors such as general market conditions and the competitiveenvironment could cause actual results to differ materially from thoseprojected in these forward-looking statements. The company undertakesno obligation to revise or update any forward-looking statements toreflect changes in events or expectations.

Explanation of Non-GAAP Financial Measures

The following are explanations of why MBIA believes that thenon-GAAP financial measures used in this press release, which serve tosupplement GAAP information, are meaningful to investors.

Operating Income: The Company believes operating income is auseful measurement of performance because it measures income fromoperations, unaffected by investment portfolio realized gains andlosses, gains and losses on derivative instruments and foreignexchange and non-recurring items. Operating income is also provided toassist research analysts and investors who use this information intheir analysis of the company.

Adjusted Direct Premiums: The Company believes adjusted directpremiums are a meaningful measure of the total value of the insurancebusiness written during a reporting period since they represent thepresent value of all premiums collected and expected to be collectedon policies closed during the period. As such, it gives investors anopportunity to measure the value of new business activities in a givenperiod and compare it to new business activities in other periods.Other measures, such as premiums written and premiums earned, includethe value of premiums resulting from business closed in prior periodsand do not provide the same information to investors.

Adjusted Book Value: The Company believes the presentation ofadjusted book value, which includes items that are expected to berealized in future periods, provides additional information that givesa comprehensive measure of the value of the Company. Since the Companyexpects these items to affect future results and, in general, they donot require any additional future performance obligation on theCompany's part, ABV provides an indication of the Company's value inthe absence of any new business activity. ABV is not a substitute forGAAP book value but does provide investors with additional informationwhen viewed in conjunction with GAAP book value.
MBIA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------

(dollars in thousands)

September December
30, 2005 31, 2004
------------ ------------
Assets Restated
------
Investments:
Fixed-maturity securities held as
available-for-sale, at fair value
(amortized cost $22,715,894 and
$18,802,894) $23,388,776 $19,679,905
Investments held-to-maturity, at
amortized cost (fair value $6,343,585
and $7,535,787) 6,374,234 7,540,218
Investment agreement portfolio pledged
as collateral, at fair value (amortized
cost $391,173 and $713,704) 409,481 730,870
Short-term investments, at amortized
cost (which approximates fair value) 1,987,668 2,405,192
Other investments 243,845 261,865
------------ ------------
Total investments 32,404,004 30,618,050

Cash and cash equivalents 311,486 366,236
Accrued investment income 378,895 312,208
Deferred acquisition costs 431,010 406,035
Prepaid reinsurance premiums 417,293 434,968
Reinsurance recoverable on unpaid losses 45,677 34,610
Goodwill 79,406 79,406
Property and equipment (net of accumulated
depreciation) 109,050 114,692
Receivable for investments sold 191,315 67,205
Derivative assets 292,255 288,564
Other assets 269,669 314,321
------------ ------------
Total assets $34,930,060 $33,036,295
============ ============

Liabilities and Shareholders' Equity
------------------------------------
Liabilities:
Deferred premium revenue $ 3,208,059 $ 3,211,181
Loss and loss adjustment expense
reserves 711,423 748,869
Investment agreements 10,061,756 8,678,768
Commercial paper 1,745,767 2,598,655
Medium-term notes 7,905,890 6,943,840
Variable interest entity floating
rate notes 801,115 600,505
Securities sold under agreements to
repurchase 603,652 647,104
Short-term debt 58,745 58,745
Long-term debt 1,313,375 1,332,540
Deferred income taxes, net 557,166 599,627
Deferred fee revenue 20,917 26,780
Payable for investments purchased 499,902 94,609
Derivative liabilities 421,918 527,455
Other liabilities 525,598 408,820
------------ ------------
Total liabilities 28,435,283 26,477,498

Shareholders' Equity:
Common stock 156,539 155,608
Additional paid-in capital 1,473,190 1,410,799
Retained earnings 5,601,993 5,187,484
Accumulated other comprehensive income 454,178 618,606
Unearned compensation - restricted stock (48,699) (34,686)
Treasury stock (1,142,424) (779,014)
------------ ------------
Total shareholders' equity 6,494,777 6,558,797

Total liabilities and shareholders'
equity $34,930,060 $33,036,295
============ ============


MBIA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------

(dollars in thousands except per share amounts)

Three Months Ended Nine Months Ended
September 30 September 30
------------------------ ------------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Restated Restated
Insurance operations
Revenues:
Gross premiums
written $220,970 $255,609 $752,554 $833,211
Ceded premiums (34,608) (42,289) (98,356) (107,340)
----------- ----------- ----------- -----------
Net premiums
written 186,362 213,320 654,198 725,871

Scheduled
premiums earned 173,302 177,808 527,964 525,756
Refunding
premiums earned 30,770 33,186 100,338 113,486
----------- ----------- ----------- -----------
Premiums earned 204,072 210,994 628,302 639,242

Net investment
income 122,435 117,363 362,583 354,060
Advisory fees 9,529 6,156 20,168 29,211
Net realized
gains (losses) (7,526) (416) (6,319) 62,812
Net gains
(losses) on
derivative
instruments
and foreign
exchange 2,485 1,897 415 3,167
----------- ----------- ----------- -----------
Total insurance
revenues 330,995 335,994 1,005,149 1,088,492

Expenses:
Losses and loss
adjustment 20,796 21,336 63,355 63,090
Amortization of
deferred
acquisition
costs 16,121 16,200 49,636 49,495
Operating 39,893 28,080 103,416 88,034
----------- ----------- ----------- -----------
Total insurance
expenses 76,810 65,616 216,407 200,619

Insurance income 254,185 270,378 788,742 887,873
----------- ----------- ----------- -----------

Investment
management services
Revenues 225,671 142,323 618,449 390,039
Net realized gains
(losses) 1,284 378 3,000 (2,565)
Net gains (losses)
on derivative
instruments and
foreign exchange 41,607 (14,324) 41,633 (14,373)
----------- ----------- ----------- -----------
Total investment
management
services
revenues 268,562 128,377 663,082 373,101

Interest expense 184,397 106,431 500,979 289,904
Expenses 18,341 19,620 51,808 56,964
----------- ----------- ----------- -----------
Total investment
management
services
expenses 202,738 126,051 552,787 346,868
----------- ----------- ----------- -----------
Investment
management
services income 65,824 2,326 110,295 26,233
----------- ----------- ----------- -----------

Municipal services
Revenues 5,611 8,245 16,545 19,956
Net realized gains
(losses) (51) (48) (136) (90)
Net gains (losses)
on derivative
instruments and
foreign exchange 64 -- 200 --
----------- ----------- ----------- -----------
Total municipal
services
revenues 5,624 8,197 16,609 19,866
Expenses 5,321 7,633 15,834 19,013
----------- ----------- ----------- -----------
Municipal services
income 303 564 775 853
----------- ----------- ----------- -----------

Corporate
Net investment
income 3,411 1,934 17,114 6,511
Net realized gains
(losses) 226 390 (1,301) (186)
Interest expense 22,080 17,798 66,141 53,343
Corporate expenses 81,391 4,174 92,470 14,134
----------- ----------- ----------- -----------
Corporate loss (99,834) (19,648) (142,798) (61,152)
----------- ----------- ----------- -----------

Income from
continuing
operations before
income taxes 220,478 253,620 757,014 853,807

Provision for
income taxes 77,601 70,409 227,656 240,206
----------- ----------- ----------- -----------

Income from
continuing
operations 142,877 183,211 529,358 613,601

Income (loss) from
discontinued
operations,
net of tax (1,093) -- (1,093) (481)
Gain on sale of
discontinued
operations, net
of tax -- -- -- 3,178
----------- ----------- ----------- -----------
Income (loss)
from
discontinued
operations (1,093) -- (1,093) 2,697

Net income $141,784 $183,211 $528,265 $616,298
=========== =========== =========== ===========

Net income per
common share:
Basic $1.07 $1.30 $3.93 $4.32
Diluted $1.04 $1.27 $3.84 $4.23

Weighted-average common shares
outstanding:
Basic 132,622,848 141,408,855 134,589,606 142,819,366
Diluted 135,822,330 144,125,409 137,722,142 145,781,763


MBIA INC. AND SUBSIDIARIES

Reconciliation of Adjusted Direct Premiums to Gross Premiums Written
--------------------------------------------------------------------
(dollars in millions)

Three Months Nine Months
Ended Ended
September 30 September 30
--------------- ---------------
2005 2004 2005 2004
------ ------- ------ -------

Adjusted direct premiums(1) $233.2 $215.9 $879.8 $762.2

Adjusted premiums assumed 0.7 0.0 1.7 (2.9)
------ ------- ------ -------
Adjusted gross premiums 233.9 215.9 881.5 759.3

Present value of estimated future
installment premiums(2) (148.2) (105.1) (524.8) (394.0)
------ ------- ------ -------
Gross upfront premiums written 85.7 110.8 356.7 365.3

Gross installment premiums
received 135.3 144.8 395.9 467.9
------ ------- ------ -------
Gross premiums written $221.0 $255.6 $752.6 $833.2
====== ======= ====== =======

(1) A non-GAAP measure.
(2) At September 30, 2005, June 30, 2005 and March 31, 2005 the
discount rate was 5.0%, 5.0% and 4.8%, respectively, and at
September 30, 2004, June 30, 2004 and March 31, 2004 the discount
rate was 4.6%, 4.7% and 4.7%, respectively.


Components of Net Income per Share(1)
------------------------------------

Three Months Nine Months
Ended Ended
September 30 September 30
--------------- ---------------
2005 2004 2005 2004
------ ------- ------ -------
Restated Restated

Net income $1.04 $1.27 $3.84 $4.23

Income (loss) from discontinued
operations (0.01) --- (0.01) 0.02
------ ------- ------ -------

Net income from continuing
operations 1.05 1.27 3.84 4.21

Penalties and disgorgement (0.53) --- (0.52) ---

Net realized gains (losses) (0.03) 0.00 (0.02) 0.27

Net gains (losses) on derivative
instruments and foreign exchange 0.21 (0.06) 0.20 (0.05)
------ ------- ------ -------

Operating income(2) $1.40 $1.33 $4.19 $3.99
====== ======= ====== =======

(1)May not add due to rounding.
(2)A non-GAAP measure.


MBIA INC. AND SUBSIDIARIES

Components of Adjusted Book Value per Share
-------------------------------------------

September 30, 2005 December 31, 2004
------------------ -----------------
Restated

Book value $48.45 $47.05
After-tax value of:
Deferred premium revenue 15.55 14.97
Prepaid reinsurance premiums (2.02) (2.03)
Deferred acquisition costs (2.09) (1.89)
--------- --------
Net deferred premium
revenue 11.44 11.05
Present value of installment
premiums(1) 10.65 10.12
Asset/liability products
adjustment 2.25 0.88
Loss provision(2) (2.90) (2.76)
--------- ---------
Adjusted book value(3) $69.89 $66.34
========= =========


(1) At September 30, 2005 and December 31, 2004, the discount rate was
5.0% and 4.8%, respectively.
(2) The loss provision is calculated by applying 12% to the following
items on an after-tax basis: (a) deferred premium revenue; (b)
prepaid reinsurance premiums; and, (c) the present value of
installment premiums.
(3) A non-GAAP measure.


CONSOLIDATED INSURANCE OPERATIONS
---------------------------------

Selected Financial Data Computed on a Statutory Basis
-----------------------------------------------------
(dollars in millions)

September 30, 2005 December 31, 2004
------------------ -----------------
Restated

Capital and surplus $3,763.4 $3,280.3
Contingency reserve 2,743.5 2,705.1
--------- ---------

Capital base 6,506.9 5,985.4

Unearned premium reserve 3,458.9 3,390.9
Present value of installment
premiums(1) 2,197.5 2,170.2
--------- ---------

Premium resources 5,656.4 5,561.1

Loss and loss adjustment
expense reserves 265.6 271.6
Soft capital credit facilities 850.0 1,100.0
--------- ---------

Total claims-paying resources $13,278.9 $12,918.1
========= =========

Net debt service outstanding $883,522.2 $890,222.1

Capital ratio(2) 136:1 149:1

Claims-paying ratio(3) 78:1 81:1


(1) At September 30, 2005 and December 31, 2004, the discount rate was
5.0% and 4.8%, respectively.
(2) Net debt service outstanding divided by the capital base.
(3) Net debt service outstanding divided by the sum of the capital
base, unearned premium reserve (after-tax), present value of
installment premiums (after-tax), loss and loss adjustment expense
reserves and soft capital credit facilities.