MBIA, Inc. – Value Analysis (NYSE:MBI) : September 25, 2017

Capitalcube gives MBIA, Inc. a score of 8.

Our analysis is based on comparing MBIA, Inc. with the following peers – MGIC Investment Corporation, Radian Group Inc., Old Republic International Corporation, TEIJIN Limited Unsponsored ADR and Assured Guaranty Ltd. (MTG-US, RDN-US, ORI-US, TINLY-US and AGO-US).

Fundamental Overview

MBIA, Inc. has a fundamental score of 8 and has a relative valuation of UNDERVALUED.

Fundamental Score

Company Overview

  • It trades at a lower Price/Book multiple (0.65) than its peer median (1.14).
  • MBI-US‘s earnings and operating income are both negative which suggest that P/E or Price/Operating Income are not meaningful to make this analysis between operating advantage (ROE) and growth expectations (as suggested by P/E or P/Operating Income).
  • MBI-US‘s relatively low net margins and poor capital turns suggest a problematic operating strategy.
  • Compared with its chosen peers, the company’s annual revenues and earnings change at a slower rate, implying a lack of strategic focus and/or lack of execution success.
  • Over the last five years, MBI-US‘s return on equity has eroded from above median to below median among its peers suggesting declining relative operating performance.
  • The company’s relatively low level of equity capital investment and below peer median returns on capital suggest that the company is in maintenance mode.
  • MBI-US seems too levered to raise additional debt.

Drivers of Margin

  • Margins suggest relatively less discipline in both writing policies and controlling operating costs.
  • The company’s comparatively low underwriting margins (i.e. premiums earned minus insurance losses, expressed as a percentage of premiums earned) of -57.14% versus a peer median of 70.49% suggests that it follows a non-differentiated strategy and/or has not been conservative in writing policies. In addition, MBI-US‘s pre-tax margins are below the peer median (pre-tax margin of -185.20% compared to 18.35%) suggesting relatively high operating costs.
Drivers of Margins

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Differentiated; High Cost, Commodity; High Cost, Commodity; Low Cost

Company Profile

MBIA, Inc. is a holding company, which through its subsidiaries, provides financial guarantee insurance, as well as related reinsurance, advisory and portfolio services and asset management advisory services, for the public and structured finance markets. It operates through the following segments: U.S. Public Finance Insurance, Corporate, International and Structured Finance Insurance. The U.S. Public Finance Insurance segment is principally conducted through National. National issues financial guarantees for municipal bonds, including tax-exempt and taxable indebtedness of U.S. political subdivisions, as well as utilities, airports, health care institutions, higher educational facilities, student loan issuers, housing authorities and other similar agencies and obligations issued by private entities that finance projects that serve a substantial public purpose. The Corporate segment consists of general corporate activities, including providing general support services to MBIA’s other operating businesses and asset and capital management. The International and Structured Finance Insurance segment is conducted thru the MBIA Corp. The company was founded in 1973 and is headquartered in Purchase, NY.