Greg Diamond - Managing Director of IR and Media Relations Joseph Brown - CEO Anthony McKiernan - EVP and CFO William Fallon - President and COO.

Andrew Gadlin - Odeon Capital Group Michael Temple - Private Investor Peter Troisi - Barclays.

Welcome to the MBIA Inc. Second Quarter 2017 Financial Results Conference Call. I’d now like to turn the call over to Mr. 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 second quarter 2017 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 results for both 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 10-Q as they contain our most current disclosures about the Company and its financial and operating results. These documents also contain information that may not be addressed on today's c 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 press release, and our quarterly operating supplements.

The recorded replay of today's call will become available approximately two hours after the end of the call, and the information for accessing it is included in yesterday's financial results press release. Now I’ll read our Safe Harbor disclosure statement.

Our remarks on today's conference call may call -- I’m sorry, our remarks on today’s conference call may contain forward-looking statements. Important factors such as general market conditions 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 Web site 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 introductory remarks, then a question-and-answer session will follow. Now, here is Jay Brown..

Thanks, Greg. Good morning, everyone. Last month in the letter to owners from Bill and me, we informed you that we’ve decided to cease writing new business at National for now due to S&P's decision to downgrade National.

At the same time, we also noted that we have substantial financial resources and that our focus will be on continuing to enhance book value and adjusted book value on a per share basis.

Finally, we stated that we’d continue to work with our Board to develop and implement additional strategies to enhance shareholder value, while continuing to protect the interest of our policyholders.

While ongoing developments in Puerto Rico are likely to produce some volatility in our results, our companies today faces a relatively modest and stable level of risk and each of our significant legal entities is well-positioned to manage liquidity to satisfy its obligations, both at the operating company level, we remain focused on honoring our policy obligations and at MBIA Inc.

Bill will update you on National's ongoing efforts to address its Puerto Rico exposures, and Anthony will provide an update on our liquidity positions when he comments on our financial results. In the meantime, I'd like to share a few more thoughts and perspectives with you.

First of all, notwithstanding the recent S&P action, the Company faces no imminent threats. There are no urgent or drastic actions we need to take now or that we anticipate having to take going forward.

And particularly, given the current investment environment, we believe that it is proven -- prudent and appropriate to be deliberate and careful in any strategy we choose to employ going forward. Second, while National is not writing new business, there remains the principal source shareholder value for our company.

For the time being, it will continue to be the primary source of funds for MBIA Inc. as it pays regular as of right dividends and makes tax payments to the tax escrow facility, which may later be released to the holding company.

In addition, as we have expressed previously, we intend for National to seek permission from its regulator to issue a special dividend once the current uncertainty regarding its Puerto Rico exposures is reduced.

For now, however, we're focusing our attention on National's existing investment portfolio with an objective of increasing net investment income within existing New York Insurance law guidelines. Under New York Insurance Law, National's as of right dividend capacity is currently defined by its net investment income.

Thus as net investment income increases, it will have the ability to issue larger as of right dividends. Although we are not likely to materially alter National's investment portfolio over the remainder of this year, we expect that future changes to the portfolio will lead to an increase in National's as of right dividend capacity.

In terms of our projections for the current year, National's tax payments into the tax escrow facility are based on its annual tax returns. The amounts available to be released from that account to the holding company are subject to the two-year loss carryback provision of the current tax cut.

Given National's second quarter 2017 losses and loss adjustment expenses, we expect that the $22 million paid into the tax escrow account in 2017 will be returned to National in 2018. In addition, some of National's 2015 tax payment of a $130 million into the tax escrow account may also be returned to National in 2018.

We will have a better sense of these issues after the current tax year is completed.

However, while greater tax escrow releases enhance MBIA Inc.'s financial flexibility, we believe that the holding company will be able to satisfy its scheduled obligations even without receiving the full amount of the previously anticipated releases from National's tax escrow payments.

Separately, we expect that share repurchases will continue to be a significant component of enhancing shareholder value. During the first half the year, we spent $75 million to repurchase 9 million shares and reduced outstanding shares to 126 million shares at June 30, 2017.

As of August 2, we had $250 million remaining under our existing share repurchase authorization. We regularly evaluate share repurchase options in light of our liquidity position and alternative uses of funds among other considerations.

We are also reevaluating our internal assessment of the intrinsic value of the company in light of recent developments, and our potential alternative options for enhancing shareholder value to guide our thinking on the appropriate share price levels at which to repurchase stock.

Also in the wake of recent developments, we have reduced operating expenses and revised our target level for consolidated operating expenses, which is now expected to be about $75 million by the end of next year or about $30 million less than the previous run rate and almost 50% lower than the $137 million we spent in 2016.

Last but not least, as we noted in our recent form 8-K filing, despite our need to establish a full valuation allowance under our net deferred tax asset in accordance with accounting guidance, the company believes that it may be able to use most or perhaps all of its net deferred tax asset before the expirations associated with those assets due to expected earnings at National and potential future sources of taxable income to be identified by the company.

As of June 30 we had $2.8 billion in net operating losses to use in lieu of paying cash taxes. Next, Bill will provide an update on National, and then Anthony will comment on our financial results..

Thanks, Jay. Good morning, everyone. Today I will start with our Puerto Rico exposures, then I will comment on National's capital strength.

Since our last quarter's conference call, PREPA's restructuring support agreement or RSA was terminated after the oversight board refused to follow the clear congressional intent of PROMESA and approve the RSA's preexisting agreement. Immediately after this termination, PREPA entered Title III under PROMESA.

At this time, all four of our most significant Puerto Rico exposures have initiated Title III proceedings. As Puerto Rico GO and COFINA filed for Title III status about one week prior to our first quarter conference call, an HTA filed in the second half of May.

These developments drove the $253 million National statutory loss and loss adjustment expense this quarter, which was based on our current probability weighted scenarios for our Puerto Rico credits.

These developments in Puerto Rico have also spurred our participation in five additional legal proceedings related to the Puerto Rico debt that we have insured. There is more information about the legal proceedings involving National in our second quarter 10-Q and in the company's websites.

To summarize, our litigations are primarily focused on two themes. One, correcting violations of noncompliance with PROMESA law, which includes our seeking of declaratory judgment that the fiscal plan approved by the oversight board is unlawful under PROMESA and violates the U.S. Constitution.

And, two, enforcing PREPA debt related bondholder protections under the trust agreement Puerto Rico law and the U.S. Constitution now that PREPA's RSA has been terminated albeit unlawfully in our view. We continue to believe it would have been in the best interest of PREPA Puerto Rico and its citizens to execute the RSA.

It provided a workable framework for resolving PREPA's credit profile in a way that was well balanced and fair to all parties and was consistent with the Governor's energy reform agenda.

The termination of the RSA has brought about unnecessary additional cost and will likely lead to needless complications for PREPA and the island's electric power customers. In fact, on June 27 the same day that the RSA was effectively terminated, a major national gas import project was canceled by its sponsor Accelerate Energy.

This more than $400 million project was meant to be PREPA's pathway to regulatory compliance and would've also facilitated expansion of its installed renewables capacity. In addition, the gas port termination will result in the loss of countless employment and economic opportunity for Puerto Rico residents.

Its cancellation represents a tangible negative impact of PREPA's defaults and termination of the RSA. In the meanwhile, under the Title III matters, judge Swain has arranged for court supervised restructuring of Puerto Rico debt. The mediations are voluntary and judge Swain has designated five federal judges to act as mediators.

The mediation team will be led by Chief Judge Barbara Houser of the U.S. Bankruptcy Court for the Northern District of Texas. An initial organization mediation meeting was held by Judge Houser on July 12. The next mediation session is scheduled for later in August.

Outside of Puerto Rico, the other credits in National's insured portfolio continue to perform within our expectations. Despite heightened refunding over the last several years, National's insured portfolio remains the worst by sector and single risk.

Credit quality also remains high with 80% of insured par rated single A or better on an S&P priority basis. As we previously announced, S&P downgraded National to single A on June 26.

With no clear path to restoring National's rating to a level that would allow it to compete in the current environment, we have ceased for now our efforts to pursue actively writing new insurance policies in the new issue market. Furthermore, as we no longer have maintaining a AA rating as an objective, we are free from rating agency criteria.

Given that National generates cash for the holding company in three ways, as of right dividends, tax payments and operating profits, and special dividends with distributions. We will be focused on optimizing these levers for the benefit of all stakeholders.

And our policyholders should feel comforted that S&P indicated in their last rating report on National, that National is well above S&P's AAA capital level.

National ended the quarter with $3.3 billion of statutory capital and $4.6 billion of claims paying resources as National's insured portfolio amortize its capital position and its capital ratio continue to improve.

National's insured portfolio reduced by another $8 billion of gross par during the second quarter of 2017, and in the quarter at $94 billion of gross par outstanding. National's leverage ratio of gross par to statutory capital declined to 28 to 1, as of June 30, 2017, down from 32 to 1 at year end 2016. Now Anthony will cover the financial results..

Thanks, Bill, and good morning, everyone. As you know, we preannounced the primary drivers of our consolidated GAAP results. The full valuation allowance of our deferred tax asset as well as National statutory losses for the quarter.

I will summarize the impacts those items had on our financial results, provide some detail on the liquidity positions of the holding company and its operating subsidiaries, and finish with a summary of National and MBIA Corp's statutory financial results. We repurchased 4.2 million shares in the second quarter at an average price of $8.30 per share.

As of June 30, 2017, there were 126 million common shares outstanding. Through August 2, we did not repurchase any shares under the $250 million share repurchase authorization that was approved by the Board on June 27.

We continue to believe share repurchases provide material value to our shareholders and expect to do so opportunistically going forward.

The Company reported a consolidated GAAP net loss of $1.2 billion or $9.78 per share for the second quarter of 2017 compared to a consolidated GAAP net loss of $27 million or $0.20 per share for the second quarter of 2016.

The increase in year-over-year consolidated GAAP net loss was due primarily to a $1 billion charge to establish a full valuation allowance on the company's net deferred tax asset, which resulted from our analysis regarding the resources available to use the company's $2.8 billion net operating loss.

In addition, greater loss and loss adjustment expenses in National related to Puerto Rico exposures also contributed to a larger pre-tax loss for the quarter compared with last year's second quarter.

Including operating expenses for the quarter were approximately $8 million of severance and related costs associated with headcount reductions resulting from the company's decision to cease writing for now, new municipal bond insurance and the new issue market after the downgrade of National by S&P.

As Jay noted, the company will continue to identify ways to further reduce operating expenses, and we're targeting annual operating expenses to be at or below $75 million by year-end 2018.

Management's decision to take a full valuation allowance on the DTA resulted from its analysis under the appropriate accounting standards when considering greater uncertainty about new business revenue and the increase in NOLs resulting from increased loss reserves associated with National's Puerto Rico exposures.

We continue to believe we will use some, if not all of the $2.8 billion NOL in the future due to future profitability at National, as well as additional business opportunities to be identified over time.

Increased losses at National resulted in part from PREPA being placed into Title III and reflected the overall uncertainty driven by the questionable positions of the oversight board in Governor of Puerto Rico at this time.

With most of our Puerto Rico exposures in Title III we added new cash flow scenarios reflecting a wider range of outcomes, as well as anticipating National could be paying claims for the next several years. As we assigned probability weightings to our cash flow scenarios across our Puerto Rico exposures, it resulted in increased loss reserves.

Combined operating loss was $139 million or $1.09 per share -- per diluted share for the second quarter of 2017 compared with combined operating income of $15 million or $0.12 per diluted share for the second quarter of 2016.

The negative result for the second quarter of 2017 was primarily due to the greater loss and loss adjustment expenses at National. We view the charge to establish the valuation allowance as a non-operating item and therefore it did not impact our combined operating loss for the quarter.

Book value per share was $15.45 as of June 30, 2017 compared with $23.87 as of December 31, 2016. Adjusted book value per share was $26.26 as of June 30, 2017 compared with $31.88 as of December 31, 2016.

The decreases in both book value per share and adjusted book value per share since year end 2016 were primarily due to the valuation allowance on the company's DTA, partially offset by the reduction of shares outstanding resulting from the repurchase of 9 million MBIA common shares during the first half of 2017.

I would like to take a few minutes to walk through liquidity at the holding company. As of June 30, 2017, MBIA Inc. held cash and liquid assets of $287 million. There were assets totaling $259 million held in the tax escrow account as of June 30, 2017, and approximately $650 million in assets pledged for the GICs and interest rate swaps.

As Jay noted, MBIA Inc. relies primarily on as of right annual dividends from National as well as tax escrow releases to fund the majority of its operations. In October of this year, Inc. will receive the annual as of right dividend, which is expected to be in line with the prior year between $115 million and $120 million.

The as of right dividend size generally as the lesser of National's prior 12 months of net investment income or 10% of policyholder surplus. As a reminder, there are no regulatory or other restrictions that would interrupt the as of right dividend. Therefore this is a very reliable and predictable source of cash for the holding company.

Tax escrow releases are subject to the company's tax sharing agreement. As part of that agreement to the degree National generates taxable income, taxes are paid into the escrow account and are eligible for release to the holding company two years later, subject to the two-year tax loss carryback provision.

The holding company benefits from these releases as the consolidated enterprise is not a taxpayer given our NOLs. Should National generate a loss during the two-year loss carry back window, it is entitled to claw back some or all of its tax payments. Mechanically there are two components of the claw back.

The first tax payment subject to claw back are any estimated tax payments made for the current tax year. If National ends up with a net loss for its full-year tax return, then it can reclaim if necessary its tax payments starting with its deposits made two years prior up to the total amount in the escrow account.

As Jay noted, National paid $22 million into the tax escrow account related to the 2017 tax year. We expect that deposit to be returned to National. How much of National's 2015 tax payment of $130 million that will be returned to National in 2018 will depend on National's financial results for the full-year of 2017.

We expect National to be profitable going forward and resume making its tax payment obligations into the tax escrow facility, and for as long as MBIA Inc. has available NOLs, it will benefit from tax escrow releases.

We manage holding company liquidity taking into account potential disruptions to tax escrow releases and we set prudent liquidity cushions with the assumption that there could be a couple of years where the as of right dividend would be the primary inflow to the holding company.

We also have access to advances agreement between National and the holding company, sized to 3% of admitted assets of National or approximately $130 million as of June 30, 2017. Consequently, we are very comfortable with the holding company's ability to meet its obligations.

National had statutory capital of $3.3 billion and claims paying resources totaling $4.6 billion as of June 30, 2017. National maintains a $4.2 billion investment portfolio and liquidity is not a concern as its investments are highly rated and the market value of its fixed income investments approximated the book value of its investments at June 30.

You will note National's liquidity position increased materially to $689 million during the quarter, which was primarily due to asset sales that were made in preparation for paying insurance claims on our insured Puerto Rico debt payments that came due on July 1. National paid $217 million of insurance claims for those July 1 bond payments.

National had a statutory net loss of $124 million for the second quarter of 2017 compared with statutory net profit of $64 million for the quarter ended June 30, 2016. The loss in the second quarter of 2017 was primarily due to the preannounced losses at National, which totaled $253 million due to Puerto Rico credits.

Turning to MBIA Corp, its liquidity was in line with the first quarter at $115 million, as it generated fees from several transactions and settlements to offset loss payments. MBIA Corp. had statutory net income of $25 million for the second quarter of 2017 and a statutory net loss of $49 million for the second quarter of 2016.

The favorable variance is primarily due to lower loss in LAE and gains related to settlements and higher fee income, partially offset by interest expense on the Zohar related loan facility. MBIA Corp. had statutory net income of $203 million for the first six months of 2017. As of June 30, 2017, the statutory capital of MBIA insurance Corp.

was $548 million and claims paying resources totaled $1.6 billion. And now we will turn the call over to the operator to begin the question-and-answer session..

[Operator Instructions] Your first question comes line of Andrew Gadlin with Odeon Capital Group..

Good morning. I was wondering if you could clarify, when you talked about the amount of money that could be returned from the escrow account to National, there is a $86 million recovery reserve on National's balance sheet as of Q2.

Is that your estimate of what the actual number would be by year-end?.

That number represents the deposit that -- I’m sorry, this is Anthony. [Indiscernible] little interference. That number represents as of June 30, with the estimated return would be -- that number will change as National reports its results for the end of the year. So I would not expect the $86 million to be the number at year-end..

Got it. Thank you.

And then, you talked about -- I think, Jay, you’ve talked about increasing the aggressiveness inside National's investment portfolio, other than share buybacks that may be done with the National, are there any other thoughts the company is entertaining?.

Yes. What Jay was referring to, and its Bill speaking now, is we will continue to look to optimize the portfolio. So as you know to maintain a AA or AA minus rating under S&P, there were certain things, and so we really targeted a high quality portfolio. It's a AA average investment portfolio over time, and this won't happen overnight.

We would look to increase the income coming off that portfolio..

Got it. Order of magnitude, are you thinking about becoming a little more aggressive with quarter of the portfolio, half the portfolio? I mean, I think the last number that was $1.5 billion in excess of a AAA rating.

So is that a good number to tie yourself to, that number could go target next or call it 200, 300 basis points of return?.

There are different ways to look at it. We are going to look at all pieces of it. There are certain amounts we have to keep for regulatory purposes, but that’s a relatively small amount of the $4 billion.

And so, we will look across the Board to increase the yield, and to your point exactly the increase in basis points on particular investments to be decided, but there's a lot of things that we can look at..

Got it. And then, there is a lot of speculation in the market that the company is going to seek a sale as part of going into no longer writing new business.

And I was wondering if you could comment on that? Is that something that the company is looking at or are you going to look at other opportunities to increase value?.

Andrew, we obviously don't comment on speculation, but I will give you an idea of how our Board and management team looks at value and transactions. First and foremost, we run a wide variety of scenarios on intrinsic value. The big variables in that are investment income, expenses, the level of share buybacks, and interest rates.

Last but not least, of course is the outcomes associated with Puerto Rico. Looking at all those different scenarios, we run a variety of discounted cash flows to establish a range of intrinsic value.

And then against that we were on different levels of share buybacks at different prices to come up with an ultimate level of what we think this organization can develop -- can deliver to shareholders over a relatively short time period of 3 to 5 years.

That gives us the base number that our Board thinks about when they think about what is the company worth to shareholders. And any speculation or any actual transaction that we look at will be analyzed against that base alternative. I hope that’s helpful to you to understand how we think about it..

Yes, definitely. But, I guess, just to be very specific, is there a formal process underway? Right now you disclosed in the past, for example with MBIA U.K.

So is there a formal process underway or beginning now?.

No, comments..

Okay. And then, on this -- along these lines there are a couple other insurers that are in, various stage run off that have been rumored as potential targets over the years [indiscernible] is running a reinsurance process, [indiscernible] was discussing a transaction late last year with [indiscernible].

How do you think about that opportunity set now?.

Yes, with regard to these and other ones along the way, because as you know there's been several that happened over the last couple years, we look at these as good opportunities. There are clearly benefits to MBIA/National to perhaps buy some of these. So we will continue to look at all these opportunities and if they make sense we will pursue them..

Okay. Thank you very much..

[Operator Instructions] And your next question comes from the line of Michael Temple..

Good morning. I was hoping to get a little more of your thought process on the special dividend request that you would like to be able to make in terms of the Puerto Rico developments.

It would seem to me that 2017 might not be a year to expect favorable approval from your regulator, but as they are the regulators likely to take a negative view despite your capital buffers as long as the Title III process remains as a logical in this chaotic as assuming we have been [indiscernible], just more about comment on what a realistic timeframe might be that you think the regulators would be willing to give you the benefit of special dividends, given the whole miasma of Puerto Rico?.

Yes, as you recall over the last several quarters we had indicated that we were hopeful and expecting that as Puerto Rico became a little bit more stable, in particular there were some positive developments that we could approach the regulator before the end of 2017, primarily what we were looking at was the PREPA RSA, which is we've commented was not approved by the oversight board, we’re thinking correctly.

But to your point, that has now created further uncertainty especially with regard to what might happen this year vis-à-vis Puerto Rico on our exposures. So I think you're correct and that it would be unlikely now in 2017 that we’d seek and have a special dividend approved.

So I think the event is still correct as we get more clarity around Puerto Rico. I do think that Judge Swain and also the mediators that she has brought on board for the Title III, right now are doing what you would expect.

I think they're laying the groundwork in a very methodical way, so that these different mediations and negotiations can take place. On the one hand, there's not a lot to report and I wouldn’t expect there will be a lot more of substance until we get after Labor Day.

But I do think under judge Swain she and her colleagues are doing all the right things, and that we would hop back to the real issue of the special distribution, as we get into the first half of 2018 will have a lot more insight with regard to the timing of that..

And just a small follow-on, and again I noted I'm asking you to be a little bit speculative, but given how this Title III is proceeding at this time, I mean, one year from now, would you think that a rough outline of settlements -- I know there are various classes with this year, but should we -- do you feel comfortable that perhaps in one year's time you'll know within percentage points what restructuring settlements might look like or are we looking at something that could unfortunately drag on for many, many years before we have ultimate knowledge of ballpark haircuts that will be imposed?.

I think it's too hard to predict at this point exactly what the timing and at what point we will have sort of now enough range to provide you with the comfort that I think you're suggesting. So we'll wait and see and as we learn stuff, we will obviously pass it along and my guess is you'll be reading in the paper it about the same time..

All right. Thank you very much, gentlemen..

Your next question comes from the line of Peter Troisi with Barclays..

Great. Thank you. Bill, you talked about optimizing National's capital base. It sounds like there are things you can do there as it relates to the investment portfolio, but just in terms of operating leverage at National you're at 28 times now.

Is there a specific level that you'd like to -- get operating leverage to at National?.

Yes, as you know relative to historical levels, we are well below anything that would be considered normal. And that as you know is due to the fact that the refundings that have taken place really over the last eight years have been pretty extraordinary. The portfolios we report is now under $100 billion.

We would expect for the remainder of this year that you'll see additional run off, and while it's very hard to forecast refundings. And we said in the past as we get into next year, we think the refundings will start to slow only because most deals have a 10-year call and there wasn’t a lot of business written starting in 2008.

But there is not a set target. We think given the leverage we have now, the real issue we just talked about on the last question around getting the special dividend, we think the leverage is low enough that we can get special distributions out that really has to do with the Puerto Rico situation being clarified.

But in the absence of that, what you’re going to see is the leverage is going to continue to go down. So where 28, its going to be lower at the end of this year, and it's going to be lower as we head into 2018, which again is just going to increase the excess capital before we get to distributions..

Right.

And so it'll be lower even with the as of right dividend in October?.

Yes. Given the projections we have right now, the leverage will continue to come down..

Okay, great. And then, maybe just a question on -- just financial leverage in consolidated basis, I think previously you had targeted something in line with mid single A ratings and now you’re rated lower than that.

So, just wondering if you’ve rethought sort of consolidated leverage targets for the company?.

We are evaluating that now. Clearly, as we look at our priorities going forward, what we're focused on is insuring that the holding company has a very solid liquidity position. No issues whatsoever with its obligations. We will have to reassess -- we will reassess the leverage position as we move on considering new opportunities at this point.

And obviously a big part of the whole leverage issue is the impact of the DTA with the full valuation allowance that has an impact on it in the near-term..

Sure. That make sense. Thanks. And then, I just had another -- jus a quick follow-up on Corp. Looks like there has been an uptick in the quarter on first lien RMBS loss payments.

So just wondering if you could talk a little bit about what you're seeing in terms of loss emergence on the RMBS exposures that remain at MBIA Corp?.

Sure. I will give some color around that. On the first lien side, what we’ve seen with more work done and what partnership with our servicers on the first lien book is that loss severities have generally trended higher than our previous projections would have stated. So we’ve made some adjustments there to our reserving.

And as far as payments go, frankly we are seeing some of the liquidation timeline speed up a bit, that’s on the first lien.

And the second lien side actually offsetting that is on our second lien portfolio, we are also seeing an increase in subsequent recoveries on loans that have been previously charged-off, again due in part to partnership with servicers and programs we're working on to maximize recoveries.

So, when you kind of look at that altogether, I think the RMBS portfolio is certainly more stable than it was say six months to a year-ago. But that's really what you’re seeing right now is a bit of an increase in liquidation..

Okay, great. That’s great color. And so, I just -- actually I will leave at that. I appreciate it. Thanks, guys..

At this time, there are no further questions in queue. I will now turn the conference back to Mr. Greg Diamond..

Very, good. Thank you, Crystal. And thanks to all of those of you listening to our call today. Please contact me directly if you have any additional questions. We also recommend that you visit our Web site at MBIA.com for additional information on the company. Thank you for your interest in MBIA. Good day and goodbye..

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