Greg Diamond - Investor and Media Relations Jay Brown - Chief Executive Officer William Fallon - President and Chief Operating Officer Anthony McKiernan - Executive Vice President and Chief Financial Officer.

Chas Tyson - Keefe, Bruyette & Woods Andrew Gadlin - Odeon Capital Group LLC Wayne Cooperman - Cobalt Capital Brett Gibson - JP Morgan.

Welcome to the MBIA, Inc., First Quarter 2016 Financial Results Conference Call. I would now like to turn the call over to Greg Diamond, Managing Director of Investor and Media Relations at MBIA. Please go ahead..

Thank you, Crystal. Welcome to MBIA's conference call for our first quarter of 2016 financial results.

After the market closed yesterday, we issued and posted several items on our websites, including our financial results, press release, 10-Q, quarterly operating supplements, and statutory financial statements for MBIA Insurance Corporation and National Public Finance Guarantee Corporation.

We also posted updates to the listings of our 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 our first quarter 2016 10-Q as they contain our most current disclosures about the Company and its financial and operating results. The 10-K and 10-Q also contain information that may not be addressed on today's call.

Regarding the non-GAAP terms included in our remarks today, the definitions and reconciliations of those items may be found in our 10-K and 10-Q, our financial results press release and/or our quarterly operating supplements.

The recorded replay of today's call will become available approximately one hour after the end of the call, and the information for accessing it was included in yesterday's financial results press release. 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-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, Jay Brown, Bill Fallon and Anthony McKiernan, will provide some brief introductory comments. Then a question-and-answer session will follow. Now, here's Jay..

Good morning. Thank you for joining us this morning. It has only been about two months since our fourth quarter conference call and for the most part from our perspective not too much has changed.

While some key situations remain in flux and continue to be challenging we remain confident with our circumstances and our opportunities to overcome these challenges and to deliver increased value to our shareholders over the coming quarters and beyond.

I will begin with a few comments about Puerto Rico which Bill will address in greater detail shortly.

As we noted in our letter to owners that was issued in late March, while concerns about Puerto Rico are no doubt weighing on the price of our common shares we continue to believe that the market has overstated the likely long-term economic impact on both national and the MBIA holding company.

There is no doubt that the lack of constructive resolutions has certainly worsened those concerns. Approximately 95% or $3.7 billion of principal without accretions or $4.2 billion with accretions of our total Puerto Rico outstanding exposure is represented by just four credits.

Bill will address those credits during his remarks, but suffice it to say that given the profile of those credits we expect acceptable ultimate resolutions for each of those credits with modest aggregate losses across all the credits that would not be burdensome for us to satisfy from a financial perspective.

That said, we will continue to pursue the best resolutions that we see as appropriate under the circumstances as they develop. Regarding share repurchases, we spent almost $400 million to repurchase 55 million shares during 2015 and the first quarter of 2016. Maintaining adequate liquidity at MBIA Inc. is among our highest priorities.

Eventually we will seek regulatory approval for special dividend from National when there is reduced uncertainty regarding the resolutions of our Puerto Rico exposures. All of these share buybacks have been executed on an opportunistic basis with a very careful focus on MBIA Inc.'s current and its modeled stressed liquidity position.

The difference now is that we've essentially spent the $114 million dividend that we received in the fourth quarter of last year and the $105 million that was released from the tax escrow facility in January of this year. We continue to have adequate liquidity that satisfies both our expected and more importantly our modeled stress scenarios.

On the new business and which Bill will also elaborate, National had very favorable year-over-year production for the quarter and nearly surpassed its fourth quarter 2015 production. Given that the first quarter of each year typically has the lowest issuance of municipal debt our first quarter activity demonstrates continued improvement.

We clearly have a long way to go, but we have made some strong inroads. Please note that we will continue to be disciplined about both credit risk and pricing returns and pricing returns remain particularly challenging in the current low interest rate environment.

Regarding our financial results, while our operating income per share declined from $0.18 per share in 1Q 2015, to $0.12 per share in first quarter 2016, adjusted book value per share increased by another $2.05 since year end.

Operating income per share declined primarily due to lower premiums earned as both scheduled and refunded premium earnings declined and the $15 million of unfavorable variance in our loss and loss expense. The 7% improvement in ABV since year end was primarily driven by our share repurchases.

Anthony will have more detail on our financial results in a moment. At MBIA Insurance Corp. we continue work to maximize the margin of safety for its policyholders and to maximize long-term returns for its surplus noteholders. MBIA Corp. continues to face uncertainly relating to the Zohar CDOs it has insured.

We continue to believe that it is likely that we will eventually recover 100% of the $149 million plus interest that we paid last year on the Zohar I notes. As everyone is well aware at March 31 there were $776 million of gross outstanding on the Zohar II notes which are scheduled to mature in January of next year.

We are working on ensuring that MBIA Corp. has sufficient liquidity to enable it to honor its insurance obligations when they come due and we are working on a number of things in that regard. In addition, we are also working to reduce the outstanding principal amount of the Zohar II notes and/or a possible restructuring of the maturity of those notes.

That said, given the various particulars there's not much more that we can say beyond our prepared remarks regarding the Zohar situation. Now Bill will provide an update on National's activities..

Thanks Jay. Good morning everyone. As Jay has noted, we continue to be pleased with National's progress. Regarding its new business production we ensured $158 million upon the first quarter which was equal to the amount we wrote in the fourth quarter of last year.

Bearing in mind that the first quarter of each year is typically the lowest quarter for muni bond issuance, ensuring as much in the first quarter as we had in the prior fourth quarter is noteworthy.

From another perspective, the amount that we insured in the first quarter of this year was more than four times greater than the amount we insured in the first quarter of last year. The bond insurance industry penetration for the first quarter of 2016 was 5.9% of total in its par issuance compared to 5.8% for the first quarter of 2015.

Of the insurable market that is new issue municipal bonds with triple B to single-A ratings the insured penetration was 14.1% which was up from first the quarter 2015 penetration.

Due to the value-added by insurance, we believe our industry will experience steady positive growth over the coming years and National is positioned to benefit from that growth. However, as Jay also noted, we remain committed to both our underwriting standards and our pricing return requirements.

In the meanwhile, we are encouraged by the expanded use and recognition of National's bond insurance. We are improving our ability to capitalize on future opportunities when the business environment is more favorable for bond insurance. In the meantime, our value creation will largely come from capital management.

From a financial perspective, National reported $37 million of operating income for the quarter and it ended the quarter with $3.4 billion in statutory capital and $4.7 billion of claims paying resources. As National's insured portfolio continues to amortize its capital and claims paying ratios continue to improve.

During the first quarter of 2016 National's insured portfolio reduced by $11 billion of gross par came in the quarter at $150 billion of gross par outstanding. National ended the quarter with a leverage ratio gross par to stat capital of 44 to 1 down from 48 to 1 at year-end 2015.

We estimate the National has approximately $1.5 billion of excess capital as we measure it against Standard & Poor's AAA capital standards. We manage our capital conservatively and we expect always all the cushion to the capital requirements relevant to our company.

Achieving the highest possible ratings and optimizing our capital structure are among our highest priorities. Now let's turn to our Puerto Rico credits. As Jay mentioned, 95% of the $3.9 billion of gross par of Puerto Rico debt insured by National consists of four credits.

PREPA is the largest of those credits with $1.4 billion in gross par outstanding. It is also the credit where we have made the most progress. On our two HTA credits we have $715 million of gross par outstanding at March 31.

These credits have fully funded debt service reserve funds which are sufficient to cover our insured obligations for at least the next two payments in July of this year and January of next year.

As such, we wouldn't expect to be called upon to pay claims on these credits any earlier than July 2017 which gives us time to work on a favorable resolution. Our second largest Puerto Rico exposure is to their General Obligation or GO bonds where we have $985 million of insured gross par outstanding at March 31.

The GO debt has the highest priority for repayment under the Puerto Rico Constitution. About $1 billion senior lean COFINA exposure which is repaid from sales and used taxes collected on the island has been neglecting more than twice the amount needed to pay the future debt service on our insured bonds which don't begin to mature until 2040.

The secured nature of the COFINA credit has been confirmed by Puerto Rico officials. We are also proactively monitoring and evaluating several other developments or anticipated developments related to Puerto Rico's debt obligations while the moratorium law passed by Puerto Rico has not yet impacted our insured debt.

We also didn't have any insurance on the May 1, debt obligations that Puerto Rico failed to satisfy. Legislation being developed by the U.S. Congress remains uncertain, but we continue to actively monitor the situation.

In the meanwhile, we have $350 million of National insured Puerto Rico debt service, both principal and interest payments that are due for payment on July 1. Almost half or $173 million is coming due on the GO bonds. Another $139 million is due on the PREPA bonds.

As I said last quarter, we believe that we will see some additional clarity on Puerto Rico exposures over the course of 2016 and it will probably take several years and resumption of economic growth before the situation in Puerto Rico normalizes.

Outside of Puerto Rico, the balance of National's insured portfolio is performing within our expectations. With that, I'll turn it over to Anthony for a review of our financial highlights..

Thanks Bill and good morning everyone. Our primary metric of short-term performance combined operating income in the first quarter of 2016 was $16 million or $0.12 per share compared to $34 million or $0.18 per share in the year ago quarter. The decrease is primarily due to lower net premiums earned as well as higher loss and loss adjustment expense.

The lower net premiums earned result from lower earnings from refunded exposures in the continuing runoff of National's back book. There was a $15 million unfavorable variance regarding loss related expenses.

Expense of $9 million this quarter versus a benefit of $6 million in the Q1 2015 due primarily to loss reserves related to certain Puerto Rico credits.

Our focus remains on ensuring adequate liquidity at the holding company and redeploying some of National's ample excess capital after there is reduced uncertainty regarding the outcomes for our Puerto Rico exposures.

On a GAAP basis, consolidated net loss was $78 million $0.58 per diluted share for the first quarter of 2016 versus net income of $69 million or $0.37 per diluted share for the first quarter of 2015. I'd like to spend a minute on the activity that drove the quarterly loss.

Similar to our operating earnings, the adverse comparison was due in part to lower premium earnings and the unfavorable loss expense, but for GAAP it was driven by as much greater extent by fair value effects.

The total impact of fair value items for the quarter was approximately a negative $80 million which was primarily due to three items; lower interest rates which impacted our fixed pay swaps related to the GIC obligations, foreign exchange, unrealized losses associated with the MBIA GFL euro denominated medium-term notes as the dollar weakened against the euro and mark-to-market losses on MBIA Corp.'s insured credit derivatives as MBIA Corp.'s CDS spreads tightened this quarter which increased our derivative liability.

These items typically generate quarter-to-quarter earnings volatility depending upon market conditions, but they are not expected to play a meaningful role in the long-term economic results of our company.

Turning to our balance sheet, book value and adjusted book value per share both grew during the quarter, primarily reflecting the favorable effect of share repurchases. Book value per share increased from $24.61 to $26.42 per share and ABV per share increased from $29.69 to $31.74 per share.

Share count decreased from $152 million at year end 2015 to $137 million at March 31, 2016. The average buyback price was $6.30 per share during the first quarter of 2016. We believe this represents substantial longer-term value for our ongoing shareholders.

During our last call on March 1 we indicated that we fully used the $100 million share repurchase authorization the board had approved during the fourth quarter of 2015. Most of those buybacks occurred in the first eight weeks of 2016. We also stated that the board had approved a new $100 million share repurchase authorization during Q1 2016.

As Jay noted, we will continue to repurchase shares on an opportunistic basis and subject to MBIA Inc.'s current and forecast liquidity position. Now I would like to take a few moments to walk through highlights in the reporting segments. National's operating income was $37 million compared to $56 million in 2015's Q1.

The drivers of the reduced income were lower earned premiums as there were lower refunded earned premiums and National's portfolio continues to decrease, as well as an unfavorable variance of loss and loss adjustment expenses.

We added to our loss and LAE reserves for some of our Puerto Rico exposures reflecting the uncertainty that exists in the ever-changing political and legislative environment. Year-over-year variance in loss expense was $15 million and expensive $9 million this year versus a benefit of $6 million last year.

National's capital adequacy and liquidity positions continue to be strong. Bill has referenced our estimate of National's excess capital level when compared to the S&P AAA standard at nearly $1.5 billion. The balance sheet is anchored by National's $4.5 billion investment portfolio which is primarily comprised of highly rated marketable assets.

Moving briefly to the corporate segment, this segment had a first quarter 2016 operating loss of $21 million versus $22 million for Q1 2015. Key metrics were essentially unchanged for this segment. I'd now like to discuss it MBIA Corp. and its statutory results.

It had a statutory capital at the end of the first quarter of $844 million compared to $885 million at the end of 2015. The decrease was primarily due to increased loss and LAE expense related to modest adjustments to several different items; RMBS, CMBS, International Public Finance and the Zohar CDOs.

Voluntary prepayments in our second lien RMBS portfolio remained elevated which reduced our excess spread loss recoveries and there was a small adverse change in assumptions related to loss severities in our one distressed CMBS exposure.

We also made a small change in the loss severity assumption for one international public finance credit during the quarter. MBIA Corp.'s liquid assets totaled $278 million at Q1 2016 versus $264 million at the end of the year. At MBIA Corp.

we are focused on ensuring that there are adequate resources to support claims payments to all of its policyholders. In that regard we are working to accumulate the liquid resources necessary to satisfy the claims that might arise on the Zohar II transaction if there is no resolution restructuring or paydown by its maturity date of January 20, 2017.

As part of those endeavors, we have engaged Barclays Capital to assist us in the sale of MBIA Corp.'s MBIA UK subsidiary. The sales process is underway and we are pleased by the number of parties that have expressed interest in the company. We anticipate closing the transaction by year-end.

While we have posted a loss reserve for Zohar based upon statements the sponsor has made publicly and in court filings, we believe there is sufficient value in the assets backing the Zohar CDOs to ultimately pay off the Zohar notes and reimburse MBIA Corp. for any claims it pays and therefore we expect the issues for Corp.

to be the magnitude of January 20, 2017 claim payment and the timing for recoveries. Zohar II's insured par was $776 million at the end of the quarter. While there may be additional paydown's between now and maturity, it is not possible at this point to ascertain whether this is likely.

We were encouraged that Alvarez & Marsal was appointed collateral manager all three Zohar CDOs given their experience and complex restructuring. However, the new collateral manager has already filed litigation against Patriarch last month alleging failure by Patriarch to provide the information it is required to provide to the new collateral manager.

As we have stated previously, while the outcome of this is relevant to MBIA Corp.'s ongoing policyholders and to its surplus noteholders, based on the separation of MBIA Corp. from MBIA Inc. we don't believe that there will be any material financial impact on the holding company.

As we move forward we continue to work towards creating shareholder value to the strategic repurchasing of our shares in the near-term while strengthening National's market presence in the bond insurance market.

We are also working to resolve our Puerto Rico exposures which we believe will both have positive impacts on National's ratings and subject to regulatory approval provide the ability for National to pay special dividends to the holding company. Now we're happy to take any of your questions..

Operator:.

[Operator Instructions] Your first question comes from the line of Chas Tyson with KBW..

Hey guys, good morning.

So the first question, I'm just trying to think about the accounting for potential July 1 defaults in Puerto Rico, first does that get included in 2Q earnings will it be a little bit after the quarter? And second, it seems like you've booked some recoveries on Puerto Rico already and how do you feel about the recoverability of any potential loss that are paid out on July 1?.

So from the standpoint of our accounting, we've done is look at various scenarios for our Puerto Rico exposures, looked at scenarios where there may be claim payments and recoveries over time and really the differentiation in our reserves from GAAP and stat is related to the discounting of those reserves.

But we are looking at different possibilities on payments and recoveries..

Chas, it will be whatever effects happen on July 1 and its implications on our models would be included as a 2Q event. We look at all information up until we file our Q in terms of look at our second quarter 10-Q to be able to determine what is the appropriate adjustment standing prior carried reserves.

So based on whatever actually happens on July 1 it is it is likely to have some effect, hopefully positive, but we won't know until we actually see what happens during the quarter and it will affect obviously our estimates of any recoveries we would make and any payments we would make..

Okay and then I guess maybe something back from the accounting, but just from a National perspective for any potential payments you make on July 1, how do you guys feel about the recoverability of those payments?.

On the recoverability Chas, as you know, in any of our reserving we look at what payments might occur and then the recovery when we set reserves, so it depends credit by credit, but generally where we see there may be some payments we think the amount of recoveries would be quite high, but again it will all depend on what else we learn on July 1.

But generally speaking, we feel good about the long-term situation in terms of recovery..

Okay and I saw you guys put some language in the Q on the Supreme Court the Recovery Act and a potential decision coming in the next couple of months.

How should we think about the effective of a potential favorable decision for Puerto Rico on your exposures? I guess at that point is this Puerto Rico essentially by your reading the right to restructure debt is the Recovery Act or are there incremental challenges that you can make it to the law at that point?.

With regard to the Supreme Court decision which many people expect to occur perhaps next month, if the Supreme Court confirms the lower court then the Recovery Act doesn't exist to a point if it is favorable I guess for Puerto Rico in terms of the fact that they appealed to the Supreme Court. The answer is it depends.

There are several different scenarios that could play out from that point. The Supreme Court could send it back to the lower court. They could rule on narrow issues. Realistically it is unlikely that in the near term the Recovery Act as it was put forth year a ago by Puerto Rico has any material impact over negotiations and restructuring this year.

And as you recall the Recovery Act really dealt with the public corporations. And when you look at that PREPA there has been a restructuring agreement that was agreed to it at the end of last year beginning of this year and while we don't have exposure to PRASA which is the water company.

Generally people think that is not one that would go into Chapter 9, if Chapter 9 or something similar which is what was contemplated on the Recovery Act was in effect. So I'm not sure that is going to have a material change in anything that is being discussed right now..

Okay, thank you very much guys..

Your next question comes from the line of Andrew Gadlin with Odeon Capital..

Good morning, thank you. I was wondering if we could review MBIA Inc. their bids cash balances, I see about $1.4 billion of cash and investments, $450 million of GIC liabilities that are match funded possibly to little premium as much as 104% and then a tax escrow amount of about $218 million.

So I know you focused in the operating supplement on liquidity but net-net that looks like about $700 million, $725 million, is that about right?.

You've talked about the debt obligations, but we look at from the holding company standpoint we look at the cash flow and liquidity for the end of the quarter we've got about $375 million of liquidity at this point. The inflows that have come in recently are the right dividend from National as well as a tax escrow release.

You are talking about the obligations, the debt obligations?.

No, I'm trying to focus on how much beyond the really liquid assets I think you defined those as obligations, debt instruments or cash that come due I less than a year. I'm trying to focus on you owned some other debt instruments there that have longer maturities and not included in the $375 million liquidity figure.

I'm trying to figure out how much of that is unrestricted, meaning not in you know matched funded to the GICs account, not held in escrow for the tax escrow account..

We look at the $375 million as the free liquidity at this point..

Okay.

On National side, can you talk about the new business that was originated, was it primary or secondary, what kind of deals were these, were these GOs any color would be helpful?.

Yes, in the first quarter of this year, most of the business was primary. We've seen quite a bit of activity in the third and fourth quarter of last year that was secondary, secondary was a little bit less of the mix for the first quarter and they cut across different sectors.

But yes, you are seeing some GOs, you're seeing some down in Texas which is utility, initially utility districts, so redevelopment agencies out in California, some school districts, so it really is a smattering of different things at this point in time..

Okay great. A question on Puerto Rico, there is a general perception that GOs and COFINAs are going to be fighting over the same revenue pool, the sales in use tax.

So how do you see that conflict playing out or do you think that it won't really materialize?.

We don’t necessarily see it as one or the other fighting for the same resources. It would be interesting to see given some of the statements that have been made by the governor, but as you know they have been calling back money to support the GOs.

This administration has confirmed that they cannot touch the sales and use tax as it supports COFINA and so it really is the other revenues that they are calling back to support the GOs. They have not tried to do anything with the sales is use tax at this point in time.

So it is not clear to us that it is an either or between the two credits that you mentioned..

So Bill, understanding that you have no COFINA debt service due for 20 plus years, is it your expectation at this point that COFINA debt service would be paid this July and August?.

Yes, they have sufficient money that is coming from the sales and use tax. In fact even right now as I mentioned it’s sort of more than two times what’s needed to support current obligations as well in terms of debt service on the COFINA..

Got it. Okay. Well and then again in Puerto Rico there is an ad hoc group of GO bondholders that have presented a plan to extend maturities five years.

Is that something that National would be interested in participating in? And the second question is, if Congress is able to pass a bill, I guess from a different perspective, if Congress is able to pass a bill before July 1, is it your expectation that Puerto Rico would then make GO debt service on July 1?.

Let me deal with the second one first. As you know, there is a belief that tomorrow Chairman Bishop, excuse me, under their Natural Resources Committee will put forth the revised bill and then it could go to the committee next week for a vote and I think his hope is that it could even be in front of the President before July 1.

We’ll wait and see if that happens. So I think we’ll have more detail on what’s in the proposed bill tomorrow with regard to exactly how it goes forward. With regard to your first question or regard to the proposal that you referred to from an ad hoc group, we’re obviously aware of the proposal.

We don’t comment on the ongoing negotiations in that level of details. So we’ll wait and see how this unfolds. There are several proposals as you’re aware that have imploded, but we will wait and see what the response is from the different parties including the Commonwealth..

Okay, great. Thank you very much..

Your next question comes from the line of Wayne Cooperman with Cobalt Capital..

Hey guys. Just on PREPA, I mean we've had an agreement in place for a while that is not being implemented and I assume everybody is waiting for the Supreme Court, but you guys have rights to really force the issue there I think and you've kind of held off on that.

Could you talk about that a little bit and what might get you guys to be more aggressive and enforce the agreement? And second unrelated question would just be the size of your UK business that you’re currently marketing for sale?.

Yes, on the first one with regard to PREPA, you’re correct, there has been some extensions. The biggest issue right now as you’re aware is that the Commonwealth passed a law in Puerto Rico that allows the Governor to declare moratorium really on all debt service across all credits. That therefore applies to PREPA as it was constructed.

There have been proposals around the amendments to carve out PREPA, but as of today, there has not been one that has been approved or approved and signed by the Governor. And so that’s creating the complication, the fact that under this Moratorium Act he could not pay the debt service under PREPA.

So that really is the focus again, there has been I think positive articles about an attempt to try to put forth an amendment, but we just don’t have one at this point in time. In terms of what actions we may take, again that really falls under the details or negotiations which we don’t comment on at this point in time.

And the other issue I think Anthony will comment with regard to the size of our UK operations..

So Wayne, the size of the UK we carried on our statutory balance sheet at $375 million at this point, but that takes into account a discount just due to statutory requirements as far as how much of the subsidiary can be the assets of the company is about $90 million discount that we need to take on it. So that is how we have it valued..

I know as far as book value on GAAP book value?.

Yes it’s additive..

It’s $465 million approximately on GAAP book value..

Okay..

[Operator Instructions] Your next question comes from the line of Brett Gibson with JP Morgan..

Great, thank you.

Guys, thanks for some of the new details on plans to build liquidity Insurance Corp, I apologize and I may have misheard, but can you address or did you address how you might handle a mismatch in timing with respect to possible Zohar II payment when you make your proceeds from some of these other transactions you’re talking about?.

We are working towards ensuring that we can bring the resources to bear prior to that – to that payment. At this point we are aiming to for example close the UK sale by year end.

We’re also working on other avenues both within and outside the Zohar deals in order to again ensure that we can meet that timeline to the degree that we are in a position where we are able to get an extension for example of the maturity to other things that can be potentially negotiated besides just the absolute claim payment on the 20.

So we have all those options on the table right now..

I think the key point to remember when you’re looking at MBIA Corp in regards to the Zohar, it’s our view, it’s a liquidity issue; it’s not a solvency issue.

There are numerous ways to solve short term liquidity issues which is why we’re addressing them at this point in time, to make sure that we don’t put the situation take a liquidity situation and turning into a solvency situation. That is our objective and we expect to get that accomplished before January of next year..

Okay, thank you.

And then can you comment on whether you have been able to monetize any of the Zohar assets at this point for with respect to the Zohar I potentially a recovery there?.

We can’t comment on that..

Okay, fair enough. And the last one from me is, I understand that there are actions in place to address Zohar, but obviously there is a lot of concern in the market and you’ve raised a lot of concern in your regulatory filings about a possible rehabilitation.

Can you address or talk about discussions you’ve had with the New York Insurance Regulator on the impact of Zohar to Corp and the possible need for rehabilitation? And related just what happens to Corp have a possible connection to any future special dividend you may or may not be able to take from National given that it is the same regulator? Thank you..

So first of all, we are in consistent communication with the regulator on our plans and everything we’re doing on Zohar II. So the lines of communication are certainly clear at this point and second, as far as any impact of Corp rehabilitation we believe it will have no impact on any of the other MBIA entities..

Thank you, thank you gentlemen..

Our final question comes from the line of Chas Tyson with KBW..

On MBIA UK, similar type of assets, I guess other legacy financial guarantee assets have been sold in the marketplace for kind of 60% or 70% of book value, would that be a valuation or that would be acceptable to you to liquidate that?.

No comments..

Okay.

And then on PREPA, what is your valuation of that and its ability to make the July 1 payment and if they are not able to make the July 1 payment are you willing to inject additional liquidity beyond what you’ve agreed to into that public conversion?.

I think it’s difficult when you look out approximately two months given the landscape in Puerto Rico is changing on a day to day basis to accurately forecast what we were willing or not willing to do.

When July 1 comes we will look at the circumstances in making appropriate long-term decision that we think is in the best interest of National and actually in the best instance of PREPA.

The biggest issue we have and I think this is what is confusing to the marketplace of all Puerto Rico credits is the lack of verifiable audited financial statements from any of the entities. The general government, the GDB, PREPA, PRASA, it really doesn’t matter, it’s very, very difficult to get reliable information upon which to make plans.

As you know, one of the key ingredients that has been included in the Congressional proposed bill is the Financial Control Board and a lot of people emphasize that control aspects of that what is equally important from our point of view is to get reliable financial information.

Compared to other workouts we’ve had, one of the most frustrating parts of working with Puerto Rico is dealing with stale, outdated and often totally inconsistent information plus the belief on our part and perhaps on others that there is a reluctance on the part of Puerto Rico is they're trying to lobby for a Congressional Bill to let their hands show to show what actual financial resources they have at any point in time.

And that's why it's always a mystery all way up until the actual minute something is due whether they're going to pay or not. And as you know, as you interpret the words, they often say they're not going to pay because they can't pay, it doesn't say they don't have the money. It doesn't say they don't have liquidity.

And if you'd taken and look at what's been going on, the last time we had an accurate even reasonably accurate idea of what was happening with the finances was last year in the summer before the Governor started down this path of believe - trying to convince the market that they couldn’t meet their debt obligations and that's the frustrating part.

So it's very difficult when you have some specific question, can PREPA pay or would we finance it. We don't know, we don't know if they have $300 million, $400 million, $500 million in liquid assets in any point in time, so it's a difficult situation to say the least..

Okay, thank you very much..

I will now turn the floor over to Mr. Greg Diamond for any additional or closing remarks..

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

This concludes today’s conference call. You may now disconnect..