MBIA in red for third quarter

MBIA Inc., the world’s largest bond insurer, saw red for its third-quarter earnings with a net loss of $36.6 million or 29 cents per share. Last year’s net income was $217.9 million or $1.59 per share. Slumping market value of the Armonk, N.Y.-based firm’s insured credit derivatives portfolio punched a hole into the company’s profits. Spreads widened on commercial mortgage-backed securities and other asset-backed collateral, hurting the value of the CDO portfolio. MBIA Inc. took a pre-tax net loss of $352.4 million, or $1.80 per share, from foreign exchange and derivative writedowns. The firm’s insurance operations reported slowing performance, as pre-tax operating income from that department fell to $265.2 million, an 11% fall from the previous year. But the news isn’t all that bad, according to Gary Dunton, chairman and chief executive of MBIA. “We remain comfortable that our insured credit derivatives portfolio will not result in material credit losses,” said Mr. Dunton. “More important, wider spreads contributed to a substantially better pricing environment for our insurance and asset/liability management products.”