MBIA to pay $75M in finite settlement: Report

ARMONK, N.Y.--MBIA Inc. has agreed to pay $75 million to end regulatory probes into its accounting for finite reinsurance deals, a media report said Friday.

Armonk, N.Y.-based MBIA's settlement--which may be announced as soon as Jan. 29--was reached jointly with the Securities and Exchange Commission, the office of New York Attorney General Andrew Cuomo, and the New York State Insurance Department, the report by Bloomberg News said.

Under the agreement, the financial guarantee insurer is required to hire an outside consultant to review its tax lien business, the news report said.

Spokesmen for MBIA and the state insurance department declined to comment. Representatives of the SEC and Mr. Cuomo's office could not be immediately reached.

State and federal regulators for nearly two years have been examining MBIA's nontraditional reinsurance transactions, particularly with regard to the company's use of retroactive reinsurance to cover a massive bond loss it incurred guaranteeing bonds issued by a bankrupt unit of Allegheny Health, Education & Research Foundation of Pittsburgh.

MBIA in 2005 twice restated its results to reverse a total of $170 million in reinsurance credits it took against the AHERF loss under contracts with AXA Re Finance S.A., Converium Reinsurance (North America) Inc. and Munich Reinsurance Co. In November 2005, it set aside $75 million in reserves for expected settlements of regulatory investigations (BI, Nov. 14, 2005).

Earlier this week, MBIA rescheduled the release of its fourth-quarter 2006 earnings, scheduled for this week, to Jan. 30.