Welcome to the NBIA Inc. First Quarter 2026 Financial Results Conference Call. I would now like to turn the call over to Greg Diamond, Managing Director of Investor and Media Relations at NBIA. Please go ahead, sir.

Thank you, Nikki. Yes, welcome to NBIA'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, the 10-Q, quarterly operating supplement, and the stat story statements for both MBIA Insurance Corporation and National Public Finance Guarantee Corporation. We also posted updates to the listings of our insurance company's insurance 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-Q, 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-Q as they contain our most current disclosures about the company and its financial and operating results. documents, those documents also contain information that may not be addressed on today's call. The definitions and reconciliations of those non-GAAP terms included in our remarks today are also included in our 10K and 10Q, as well as our financial results report and our quarterly operating supplement. The recorded replay of today's call will become available approximately two hours after the end of the call. Now for 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-Q, 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 Sackinger We'll 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. We had lower net losses for our first quarter 2026 financial results versus our first quarter 2025 results. National's losses and loss adjustment expense were essentially unchanged year over year. However, National's outstanding PREPA exposure remains unchanged from year-end 2025 at $425 million of gross par value. Our priority continues to be resolving National's PREPA exposure. In that regard, there has not been much substantive progress since our last conference call in February. Until the legal issues related to the members of the Financial Oversight and Management Board are resolved, it is unlikely that substantive progress will be made. Regarding the balance of Nationals' 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 $900 million from year-end 2025 to about $21.5 billion at March 31, 2026. National's leverage ratio of gross par to statutory capital was 23 to 1 at the end of the quarter, down from 24 to 1 at year-end 2025. As of March 31st, 2026, national had total claims paying resources of $1.4 billion and statutory capital surplus of $950 million. Now, Joe will provide additional comments about our financial results.

Thank you, Bill, and good morning, all. I will begin with a review of our first quarter 2026 GAAP and non-GAAP results and then provide an overview of our statutory results. The company reported a consolidated GAAP net loss of $40 million or a negative 80 cents per share for the first quarter of 2026 compared with a consolidated gap net loss of $62 million or a negative $1.28 per share for the first quarter of 2025. The lower gap net loss this quarter was primarily driven by several items. We reported favorable variances in foreign exchange gains and losses at MBIA Insurance Corp. and within the corporate segment. The variance at MBIA Insurance Corp. reflects losses recorded in 2025 related to the liquidation of its Mexican subsidiary with no comparable losses in 2026. The favorable variance in the corporate segment related to global funding's Euro-denominated medium-term notes and was driven by the U.S. dollar strengthening against the Euro in the first quarter of 2026 compared to a weakening of the dollar against the Euro in the first quarter of 2025. In addition, we reported a favorable variance in losses in LAE at MBIA Insurance Corp., primarily due to the impact of changes in the risk-free rates used to discount its loss reserves. In the first quarter of 2026, these rates increased, thereby reducing the present value of reserves compared with a decrease in rates in the first quarter of 2025, which increased the present value of reserves. And we reported a favorable variance in net realized investment gains and losses at National. In the first quarter of 2025, National recorded investment losses from sales of securities with no comparable activity in the first quarter of 2026. Partially offsetting these favorable variances was an unfavorable variance at MBIA Insurance Corp related to gains on the extinguishment of variable interest entity debt recorded in the first quarter of 2025 with no comparable activity in the first quarter of 2026. The company's adjusted net loss, a non-GAAP measure, was $8 million, or a negative 16 cents per share, for the first quarter of 2026, compared with an adjusted net loss of also $8 million, or a negative 16 cents per share, for the first quarter of 2025. Slightly lower revenues in the first quarter of 2026 were offset by slightly lower expenses. During the quarter, MBIA Inc.'s book value per share decreased $0.55 to a negative $44.82 per share as of March 31, 2026. This decrease was primarily due to our consolidated net loss for the first quarter of 2026. In addition, included in MBIA Inc.'s book value as of March 31, 2026, is a negative $53.59 per share of MBIA Insurance Corps' book value. I will now spend a few minutes on our corporate segment balance sheet. The corporate segment, which primarily comprises the activities of the holding company, NBIA, Inc., had total assets of approximately $639 million as of March 31, 2026. Within this total are the following material assets. Unencumbered cash and liquid assets held by MBIA Inc. totaled $353 million, reflecting a small decrease compared with $357 million as of December 31, 2025. In addition to these unencumbered cash and liquid assets, the corporate segment's assets included approximately $181 million of assets at market value pledged to guaranteed investment agreement contract holders, which fully collateralized those contracts. Now I'll turn to the insurance company's statutory results. National reported statutory net income of $11 million for the first quarter of 2026, compared with statutory net income of $4 million for the first quarter of 2025. The favorable variance was primarily driven by net realized losses on the sale of investments in the first quarter of 2025, with no comparable losses in the current quarter. National statutory capital as of March 31, 2026, was $950 million, which was up $13 million compared with December 31, 2025. The increase was mostly due to national statutory net income for the current quarter. As of March 31, 2026, 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 $1 million for the first quarter of 2026, compared with statutory net income of $2 million for the first quarter of 2025. The unfavorable variance was primarily driven by a smaller loss in LAE benefit in the current quarter compared with the first quarter of 2025. As of March 31, 2026, the statutory capital of MBIA Insurance Corp. was $79 million, unchanged from year-end 2025. As of March 31, 2026, claims-paying resources totaled $316 million, down just $1 million from year-end 2025. MBIA Insurance Corp. insured gross par outstanding was just under $2 billion as of March 31, 2026, which is down about 7% from year-end 2025. And now, we will turn the call over to the operator to begin the question and answer session.

Thank you. If you have a question at this time, please press star 1 on your telephone keypad. If you wish to remove yourself from the queue, press star 2. We ask that when posing your question, you please pick up your handset to allow optimal sound quality. We'll take our first question from Tommy McJoint with KBW. Please go ahead, your line is open.

Hi, good morning. A question on the corporate segment balance sheet looking at the liability side there. Occasionally you've been able to redeem some of those liabilities at a discount early. It didn't look like there were any actions taken in the quarter. So can you just go through the opportunity they are going forward to satisfy some of those obligations early and potentially accretively just as a use of capital that could be good for shareholders. Thanks.

Sure, Tommy. Hi, it's Joe. So we're consistently looking for opportunities in which we can buy back the holding company debt at discounts. We haven't seen a whole lot of that recently. We are focused on repaying the debt coming up in 27 and 28. The debt beyond that, once we get into the 2030s, is not yet in our liquidity window, but we expect that to be within the next couple of years. so we'll have more opportunities there and that's where we'll see more of the benefit to our capital in trying to get those back at discounts.

Thanks. And then since we last spoke around fourth quarter earnings a few months ago, have there been any updates on the strategic process to the extent of hiring advisors or bankers to explore options? Any updates over the past couple months. Thanks.

There's nothing that we've chosen to communicate to anybody at this point in time, Tommy.

Thank you. We will move next with John Staley with Staley Capital Advisors. Please go ahead. Your line is open.

Thank you. I have two questions. One, what is the projected cash requirement to meet the guarantees on the outstanding Puerto Rico PREFA debt in 2026. And secondly, this lawsuit, the Oversight Board, being a non-lawyer, strikes me as being awfully frivolous. I mean, it's an appointed position. And the entities that appointed said, well, you're not here anymore. I'm trying to understand the basis of the litigation in which they are suing to be restored. Is there a payment that they get and they're suing because they felt they should be entitled to be paid? Or what's the basis that they're suing? I had a loss. I thought it was, I don't know, there was a voluntary position, but it wasn't anything you campaigned for. You were appointed. And it seemed to me that as a non-lawyer, the president, through Congress, had the right to do whatever the hell he wants in terms of who sits on that board. Those are my two questions.

Thanks, John, and good morning. With regard to your first question, the PREPA payments, the debt service that we have, is approximately $35 million for the rest of the year. And so with regard to your second question, the Oversight Board litigation in those positions, you're correct. Those positions are not compensated, so there is no remuneration to any of the Oversight Board members. members. The lawsuit, as you mentioned, is somewhat complicated. Most of the argument, we believe, comes down to whether the process was appropriate in terminating what now are the three oversight board members who have sued to retain their positions. As you know, one judge has already put them back on saying that until the whole case is heard, that they should be on the board. That case is essentially on hold until a different case, which is the Federal Reserve, which is the Lisa Cook case, is decided, at which point then the Puerto Rico court will resume this case. So it may take a little time for this to get resolved. It is not about compensation. And it really is, we think, primarily around the process that was either followed or not followed. There is, I suppose, a long shot argument whether or not the administration, That is, the president has the right to terminate them. But we think most likely the answer to that is yes, that he does, as long as it's for cause and that there is a procedure that's followed.

Is there any timeline on it? Isn't the Cook case expected to be handed down by the Supreme Court very shortly?

Yes. And so as soon as that decision is rendered, then we believe that the case can resume in Puerto Rico, and hopefully that will move quickly. I should mention there are three open positions that the administration, with obviously the president's approval, could fill those spots after, again, the recommendations are made to the president. We think that would actually help move the process along in terms of potentially negotiating settlement between the bondholders and the oversight board. But again, no word specifically on when those three positions might be filled. Thank you. You're welcome.

Thank you. And once again, that is star and one on your telephone keypad if you would like to join the queue.

We come up next with Paul Sounders with Hutch Capital. please go ahead your line is open hey everyone thanks for taking my question can you guys hear me yes all right great so I've got just a quick question on selling the company like we've talked about our strategic actions and this is this is a hypothetical so you might not be able to answer it but I'm gonna ask it anyway just to just to get your thoughts um and and the idea behind this is just that considering the amount that you've reduced the prep exposure a couple quarters ago and the fact that you were able to sell that amount you know at your current mark now and so there's a pretty established value for the recovery there and and that balance is pretty small um it seems like that that band has gotten pretty small in terms of uncertainty. So I wanted to ask you just in a hypothetical, let's imagine PREPA doesn't exist anymore. You've satisfied all those claims. You've paid the salvage at your mark. So the adjusted book value, you know, remains the same in the kind of low 13s per share. And now you're in a position where you feel like you can sell the company. Can you kind of describe, I would imagine at that point, you know, there's bids that come in and it's some sort of discount to the book value and the discussion is really over what the size of that discount should be. So I was curious if you could kind of describe on both sides of a buyer, what's their argument for asking for what you think is an unreasonable discount to book value like what why would they be asking for that and then on the other side of that what's kind of the selling point to the buyer of why it you know should be closer to the book value per share or something like that just just to give us some context of like how people are thinking about this between the buyer and the seller yeah in some ways paul what you're describing

and again, thank you for your question, is a typical process that a company would go through when it decides to sell the company. And we went through a process along those lines at this point about three years ago. There are all different ways. And so a lot of the potential parties involved don't even use adjusted book value. So in some ways, it's hard to answer it with the construct that you put forth, they all put forth a proposed acquisition amount. We have an analysis or we do an analysis in your hypothetical situation with what all alternatives are, that is, pursuing any of those, if they're just a straight sale of the entire company, that's pretty straightforward. If it was something other than that, for example, people have suggested selling just national. People have suggested mergers. People have suggested reinsurance. People have suggested we continue or compare that to continuing to run the company off alone. So it's hard to answer in terms of the discounts to adjusted book value. I think your question gets at the right issue, which is what are all the different ways and what would be the bids for the company? and what are the choices that we have for the company going forward. So, in some ways, I think it's a pretty typical sale process.

Okay, got it. All right, that's it for me. Thank you for that.

Thank you.

Thank you. And at this time, I am showing no further questions. I would like to turn the floor back over to management for closing remarks.

Thanks again, Nikki. And thanks to those of you listening to our call. Please contact me directly if you have any additional questions. We also recommend that you visit our website at mbia.com for additional information about our company. Thank you for your interest in MBIA. Good day and goodbye.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.