Welcome to the MBIA, Inc.'s Second Quarter 2015 Financial Results Conference Call. I would now like to turn the call over to Greg Diamond, Managing Director of Investor Relations at MBIA. Please go ahead.

Thank you, Maria. And yes, welcome to the MBIA's conference call for our second quarter financial results. After the market closed yesterday, we issued and posted several items on our websites, including our financial results, press release, 10-Q, quarterly operating supplements, and statutory financial statements for MBIA Insurance Corporation and National Public Finance Guarantee Corporation. We also posted updates to the listings of our insured portfolios. Please note that anything said on today's call is qualified by the information provided in the company's 10-Q, 10-K and other SEC filings, as our company's definitive disclosures are incorporated in these filings. We urge investors to read our 2014 10-K and our second quarter 2015 10-Q as they contain our most current disclosures about the company and its financial and operating results. The 10-K and 10-Q also contain information that may not be addressed on today's call. Regarding the non-GAAP terms included in our remarks today, the definitions and reconciliations for those items may be found in our most recent 10-K and 10-Q, financial results press release for the quarterly operating supplement. The recorded replay of today's call will become available approximately one hour after the end of the call, and the information for accessing it is included in yesterday's financial results press release. And now here is our Safe Harbor disclosure statement. Our remarks on today's call may contain forward-looking statements. Important factors such as general market conditions and the competitive environment could cause our actual results to be materially different than the projected results referenced in our forward-looking statements. Risk factors are detailed in our 10-K, which is available on our website at mbia.com. The company cautions not to place undue reliance on any such forward-looking statements. The company also undertakes no obligation to publicly correct or update any forward-looking statement if it later becomes aware that such statement is no longer accurate. For our call today, Jay Brown, Bill Fallon and Chuck Chaplin, will provide some introductory comments. Then Anthony McKiernan will join Bill and Jay and Chuck for the question-and-answer session that will follow. Now, here's Jay.

Good morning and thank you for joining our call this morning. I am pleased today to report that MBIA, Inc. had a good quarter with 19 million of operating income and adjusted book value that increased to $27 per share. Premium earnings and investment income were higher and operating expenses lower than the comparable quarter of 2014. However, our attention and the market's attention was focused on development and news coverage about Puerto Rico. We have devoted considerable resources towards working with the government of the Commonwealth their advisers and other creditors towards the consensual restructuring of the Electric Power Authority and has a credits that we ensure. That work is ongoing and we don't yet have concrete results to share with you at this time. But I do want to spend few minutes on some of the significant issues. First off, our view of the Puerto Rico related credits hasn't changed materially since our last conference call. With respect to PREPA, we continue to believe that improvements to its operations and liquidity are achievable without cost of litigation or court intervention. Our commitment to negotiated outcome was an evidenced by our purchase last Friday of the previously disclosed market rate bond issued by PREPA. That corporate bonds provides with some interim liquidity puts it on a better near-term floating and allows it to focus on operational improvements that have already been identified. Several proposals have been made by PREPA and various creditor groups. Any successful proposal must include operational and government improvements and an increase in the base rate for electricity which is contractually and legally required. A base rate increase would result in the electric rates to the consumer that are still lower in the other Caribbean Irelands and lower that the rates that were in the factor…

Good morning. We continue building our sales and marketing organization. As I mentioned last quarter Tom Weyl joined in January the head of this effort since then we have bolstered our team by hiring Andy Nakahata to lead our Western regional marketing and Tom Metzold to lead our capital markets operation. We are also bringing on some additional - so we can respond to the increasing market opportunities that we are seeing. I believe we are building the best possible teams so that we are positioned to take advantage of both current opportunities as well as the higher volumes and penetrations that we think will accompany a higher interest environment. Our new business production ramp up has been slower than we anticipated when we return to the market last year due impart to the low interest rate environment. However I am pleased to report that we are closing business with more intermediaries while maintaining our underwriting discipline. In the second quarter we were up $272 million of par, our pipeline is robust as we are getting more FX than in earlier quarters. In the second quarter we reviewed over half of all negotiated transactions that’s sold with insurance. So we are starting to develop some momentum on the new business side. It will take many quarter though before our new business production replaces that which rolls off our books. In the second quarter as I said we were up $272 million of new par but we saw $10 billion of par refunded and another $5.4 billion that matured. Refundings in the first half of this year were 80% higher than last year this benefits us from an earnings perspective and helps to drive National’s outperformance of last year’s second quarter operating income. We have recently completed our rating agency annual…

Thanks Bill and good morning everyone. As Jay has mentioned this quarter was a favorable one from an earnings perspective. With combined operating income of $19 million or $0.11 per share compared to $2 million or $0.01 per share in last year’s Q2. Some of the drivers here were higher refunded premium and higher rate investment income and lower loss and loss adjustment expense and lower operating expenses. For the largest impact this quarter was on the tax line where last year we posted a reserve for an uncertain tax position in the second quarter. We've a normal provision of 35% of pretax operating income in this year second quarter. ABB increased to $27 per share compared to $24.87 per share at December 2014. The drivers that I mentioned contributed with the biggest impact is from our share buyback activity was contributed $1.85 to this increase. Given that I'll spend a few minutes now on share buyback activity and capacity. As Jay summarized the board authorized a $200 million program at the end of the 2014. We bought back 1.2 million shares under this authorization for $12 million before December 31 of last year and then from January 1 until last Thursday we bought back 15.5 million shares for $127 million in MBIA, Inc. In addition, in May the board gave us specific authorization for National to purchase 8 million shares in the secondary offering for approximately $70 million. We went to the board because we wanted to be clear from a governance perspective and we could purchase shares from other than the holding company and we wanted to make sure that we wouldn't exhaust the $200 million authorization while operating under 10b5-1 plan. Last week the board terminated the remainder of the authorization from December and gave us a…

Thank you. [Operator Instructions] Our first question comes from the line of Andrew Gadlin of Orient [ph] Capital Group.

Hi, good morning.

Good morning.

Wanted to ask a question on COFINA which you mentioned in the recovery marks and it’s - exposure for the company. It became very controversial in recent months and as I wonder if you could share the company's views on COFINA?

Yeah, it’s Bill speaking. As you know it is getting a lot of attention and there are different views. Our position I think is in the camp where COFINA is one of the more secured bonds that people talk about with regard to Puerto Rico and within that we have the senior lean COFINAS. So again hasn't come up with regard to discussion around any mispayments at this point and we feel at this point comfortable with the COFINA exposures.

And there was recently a group with manual forms to group of COFINA bondholders. Is the company involved with that group? And given the thoughts on when negotiations on COFINA could take center stage?

We are aware of the group through the newspaper reports that you referred to with - manual. We are not part of that group and at this point there has been no specific talk of any negotiations around COFINA, as we said all the payments are being paid and so therefore there is really nothing to talk about and as I said within that there may be some different classes of tiers of the COFINA. But again we feel very comfortable with our exposure on --.

Okay and then GDB there is a sizable payment later this year there is another group there involved, any thoughts on that?

Yeah, with regard to our GDB exposure in some ways ours is a little bit different than most and that our GDB exposure actually has a commonwealth guarantee on it which putted in the minority of the GDB debt that is outstanding. So as we show in our exposure reports we have 267 million of principle which is up only exposure to GDB that mature at the end of this year and again given everything that's been said with protecting the GO in the commonwealth credit. We would expect to that payment would be made. But again we are waiting to see what happens in December.

Got it. Okay. And then final question. I think Chuck mentioned the possibility of dividend in from National the shares the hold co shares up to the hold co. Any idea on what happened this quarter or interest in maintaining liquidity, could that be done in our 10 point later in the future?

Yeah, there are couple of different ways to do this. The two major payments if you look at National makes it holding company or dividends and payments into the tax escrow and I talked a little bit about the mechanics of that. So to the extent that National's making payment to the tax escrow and were to make those payments in part by transferring some of the common then you actually have an impact on holding company liquidity. But it's a future impact rather than a current impact. Right now I think that with respect to dividends we're expecting them to be paid in cash because that is current liquidity at the holding company level.

Got it. And if you were dividend then that obviously you bought the shares little higher with where they are today. Would that create negative investment income which would somewhat AAA at the dividend let's say next year?

No, the shares will be valued at market at the time. So it doesn't affect the amount of the dividend.

Got it. Okay. Thank you very much.

Our next question comes from the line of Nagendra Jayanty of Claren Road.

Actually my question on dividend on shares has been answered. Thanks.

Our next question comes from the line of Brian Charles of RW Pressprich.

Good morning. Chuck, a couple of questions about MBIA corp. First of all, do you have any color on the migration of your BBB CMBS exposure? I know you had a couple of pools you had exposure to your paying out one year-to-date, I know if you have any color on the - on what kind of payments and what kind of exposure you have remaining there?

Hi, this is Anthony. I think as we said before we got one transaction and we are paying claims on. We continue to take claims on that. It's more recent - those 7 BBB CMBS, remainder of our exposures actually performing in line with expectations. We don't really expect any issues with the remainder of the exposure.

Okay. Can you release how much of the remaining exposure for the - exposure that you are paying out on remains it was about 300 million I think at the end of the year. Where would that stand now?

That's 271 million right now.

271. Okay, thanks. And away from that just regarding the reserved the loss in LEE expenses you took during the quarter. I, is it safe to assume a lot of those reserves were associated with is a hard exposure?

In the second quarter we had reserve increases related to CDOs but also on our second lean in RMBS as we did see a spike in voluntary pre-payment activity early in the quarter that caused us to reduce the carrying value on the access spread assets- are those two components.

Okay. And do you have any guidance on what the breakdown of the two components is in the loss is LEE charge for the quarter?

We don't want to break that amount down any further.

Okay. That's fair enough. Just if I can -

To be clear, we have reserved on the assumption that the payment will be made Zohar in November.

Okay.

That's included in our scenario. So you won’t see another adjustment next quarter.

So, what you are reserving for around sort of the upcoming payment has been reserved for at this point?

It's included in our scenarios.

Okay. And I'm sorry, you're actually step ahead of me I was about to ask that question and I'm just wondering when taking a reserve for an upcoming payments say that might be about $150 million in November of this year, does you reserve that net reserve in vision recovery on the other side of that or for now you just reserving for that payment and then as you as a proposal comes forward may be in off course 2016, it might come up with a recovery estimate for your recovery there or you're already taking that into account when you make a reserve a loss in LEE adjustment now?

Anytime we evaluate reserve. We look at both the amount going out the door and the range of possible its dollars coming back in and then probably wait back. So the short answer is we have anticipated that there will be some recoveries, if not all the recoveries on that payment that will be made in November.

Okay. Alright, good thank you. And then just finally where you do the state that there has been no proposal for coming yet. I imagine you have been in regular contact with future partners regarding some certain regulation?

No comment.

Fair enough. Okay, thank you.

[Operator Instructions] Our next question comes from the line of Pete Taurasi of Barclays.

Good morning guys. I just have a follow up question on your Zohar exposure. During an interview on CNBC in early May representative from Patriarch Partners referenced to potential that loans in Zohar one would be put out to bid in May, can you confirm if that occurred?

We can't comment on that.

Okay. And then, I mean other than the legal final majority date in November or there are other milestone dates that we should be aware of either in the CLO documents or the actual financial guarantee policy?

We got the first Zohar deal maturing in November of this year, the second maturing in January 2017. So those are the two rational dates for the exposures in sales. And then obviously there is the ongoing SCC issues which have their own dates as well towards progress on that front.

Okay. Great, thank you.

Our next question comes from the line of Ed Grocan [ph] of High Analytics.

Are you there?

Sorry. Thank you. First let me say thank you for taking my questions. Just want to focus on capital during your prepared remarks you said you have about a $1 billion of access capital at national just to make sure and stand that that was relative to S&P and Moody's ratings is that correct?

That is relative to the S&P capital model.

Okay.

AAA requirements.

And how about on statutory basis. Do you provide any information about how much access capital you have on statutory basis?

The S&P capital model really focuses on statutory capital in its calculation.

Okay. So what would be the key elements that the state regulator would focus on when they are looking at your capital because lately the questions I may get in haven't focused on - you are talking about $150 million of dividends from national to the hold co and there seems to be some interest into - are there specific items that would lower or limit that dividend from National to the hold co?

Again the - as of right dividends that National can make to the holding company are limited by its net investment income to the extent that some things happen that cause net investment income to be higher or lower that will have an impact on the dividend able amount.

Okay. And then my last question is several times during your remarks you mention that for the outlook for Puerto Rico and for PREPA that nothing concrete is no material changes. Can I view those comments to me in that - and there hasn't been any material changes in the reserves that National has taken relative to its Puerto Rico exposure during the quarter?

We do update the reserves every quarter and just one effect we would be aware of is that for our GAAP reporting in our operating income. We do update the discount rates that are used every quarter. So as rates rise there has been impact on our loss reserves to extent that rates fall there is also small impact. So there is that volatility that exist in any reserves were looking at a long tail cash flow analysis.

Right, so aside from the rate volatility has there been any other changes?

I think just to be clear we took a very long look that's in the second quarter last year and rejected out over the next several years what we thought might occur in Puerto Rico in terms of payment interruptions and potential recoveries. What we said this quarter was everything we saw was consistent with what we had forecast in the past and we saw no material change in our views. So year ago to your point we didn't make any major change in scenarios or reserve levels at this point based on what we've seen.

Fantastic, I appreciate that. Thank you very much for taking my questions.

At this time, there are no further questions. I would now like to turn the floor back over to Greg Diamond for any additional or closing remarks.

Thank you, Maria and thanks to everyone to who joined us for today’s call. Please contact me if you have any additional questions. We also recommend that you visit our website at mbia.com for additional information on our company. Thank you for your interest in MBIA. Good day and goodbye.

Thank you. This concludes today’s call. You may now disconnect and have a wonderful day.