MBIA says it doesn't need more capital, is writing business

ARMONK, N.Y.—Bond insurer MBIA Inc. says it has the liquidity it needs in its insurance and asset management segments and won't spend the $1.1 billion it raised until it boosts capital in the insurance unit and decides how it will run the business long-term.

In a letter to investors late Tuesday, MBIA Chairman and Chief Executive Jay Brown said the company has enough assets to meet maturing liabilities and to post collateral in the event of downgrade from credit rating agencies. He continues to believe the company does not need to raise more capital.

In February the company raised $1.1 billion, selling a 40 percent equity stake in itself to stave off downgrades from credit ratings agencies concerned about its ability to pay claims on the bonds it insures. Bond insurers without top-caliber financial-strength ratings from all three agencies will have trouble winning new business. Moody's and Standard & Poor's affirmed its "AAA" rating, with a negative outlook.

The company also said that comments made by billionaire investor Warren Buffett, that the equity and debt markets aren't viewing bond insurers like MBIA as triple-A, are accurate. However, it has written new business in insurance and asset management in the first quarter. Buffett launched bond insurer Berkshire Hathaway Assurance after the credit crisis impaired the ability of other bond insurers to do business.

Brown said he expects there to be a wide range of opinions about the fair value of its credit derivative liabilities when it reports first-quarter results next week, and that it will provide information about how it derives its assessment.

"I continue to believe that investors in MBIA should understand that this number is nothing more than a barometer of credit market sentiment and market liquidity or illiquidity and does not accurately reflect the actual losses that would be expected at MBIA," Brown said in the letter.

MBIA is scheduled to report first-quarter earnings on May 12.