MBIA Inc. Reports 1 Percent Decrease in 2004 Earnings Per Share; Operating Earnings Per Share up 10 Percent in 2004.

ARMONK, N.Y. -- MBIA Inc. (NYSE: MBI), the holding company for MBIA Insurance Corporation, reported today that 2004 diluted earnings per share declined 1 percent to $5.55 per share compared to $5.61 in 2003. Net income for 2004 was $804.1 million compared to $813.6 million for 2003, a 1 percent decrease.

The decrease was the result of small mark-to-market net unrealized gains on MBIA's derivative exposure recorded for 2004, compared with large net unrealized gains for 2003. Excluding the effects of the net unrealized gains, net income for 2004 was $803.1 million, compared with $748.8 million for 2003, a 7 percent increase.

Fourth quarter diluted earnings per share increased 9 percent to $1.36 from $1.25 in 2003. Net income for the fourth quarter rose 6 percent to $193.4 million from $182.0 million in last year's fourth quarter.

 
Diluted earnings per share information 
-------------------------------------- 
                                          Three Months        Year 
                                             Ended           Ended 
                                           December 31    December 31 
                                        --------------- -------------- 
                                          2004   2003    2004    2003 
                                        ------  ------- -----  ------- 
Net income                               $1.36  $1.25   $5.55   $5.61 
  Income from discontinued operations     0.00   0.00    0.02    0.01 
                                        ------  ------- -----  ------- 
Net income from continuing operations     1.36   1.25    5.54    5.60 
 
  Net realized gains                      0.01   0.05    0.28    0.36 
  Net gains (losses) on derivative 
  instruments and foreign exchange        0.01   (0.02)  0.01    0.45 
                                        ------  ------- -----  ------- 
Operating income                         $1.34  $1.22   $5.25   $4.79 
 
(1) Presented on the same basis as analysts' estimates 

Operating income per share, which excludes the effects of net realized gains, net unrealized gains and losses on derivative instruments and foreign exchange, and income from discontinued operations, rose 10 percent to $5.25 per share in 2004 compared to $4.79 per share in 2003. Operating income, excluding refundings, also rose 10 percent to $4.68 per share in 2004 from $4.27 per share in 2003.

For the fourth quarter of 2004, operating income increased 10 percent to $1.34 per share from $1.22 per share in the fourth quarter of 2003. Excluding refundings, fourth quarter operating income rose 14 percent to $1.22 per share in 2004 from $1.07 per share in the same period of 2003.

Gary Dunton, MBIA Chief Executive Officer, said, "MBIA's financial and operating results for 2004 were solid, despite a very challenging market environment characterized by tight credit spreads and increased levels of competition. New business production in insurance operations, while down from last year's record results, was still among the highest in the company's history. Critical to the long-term success of our franchise, we continued to maintain our strict underwriting standards in this demanding environment."

Mr. Dunton added, "While we believe that current market conditions will likely continue this year, we have a solid pipeline across most of our product lines. For 2005, we expect operating earnings per share, excluding refundings, to increase by 10 to 12 percent, but then return to the 12 to 14 percent growth range in 2006-2007. We anticipate that operating ROE will be at the lower end of the 12 to 14 percent range in 2005 due to our strong capital position and the projected decline in refunding volume. Looking forward to 2006 and 2007, we expect that operating ROE will improve and be within the 12 to 14 percent range. We continue to manage MBIA to provide long-term growth in shareholder value, and we remain very optimistic about the prospects for our global franchise."

Insurance Operations

Adjusted direct premium (ADP), a non-GAAP measure, which includes both upfront premiums written and the present value of estimated installment premiums for new business writings and excludes premiums assumed or ceded, declined 29 percent to $1.15 billion in 2004 from a record $1.62 billion in 2003. The decline is primarily due to tighter credit spreads, particularly in the global structured finance market, increased competition from the uninsured market and other monolines, and uneven new business production in the company's international operations. In the fourth quarter of 2004, ADP was a healthy $383.9 million, although down 13 percent from the fourth quarter of last year. The decrease was the result of the factors cited above.

 
Adjusted Direct Premium 
(dollars in millions) 
----------------------- 
                              Three Months            Year 
                                 Ended               Ended 
                              December 31          December 31 
                             ------------          ----------- 
 
                       2004   2003  % Change  2004     2003  % Change 
                    -------------------------------------------------- 
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