MBIA posts surprise profit in 2Q

ARMONK, New York_Bond insurer MBIA Inc. surprised Wall Street Wednesday with a second-quarter profit, which it says was fueled partly by unrealized gains on credit derivatives.

The Armonk, New York-based company earned $894.7 million, or $4.30 per share, in the second quarter. That's down 47 percent from a profit of $1.7 billion, or $7.14 per share, a year earlier .

Analysts polled by Thomson Reuters on average expected a loss of 92 cents per share.

Shares of MBIA rose 52 cents, or 9.4 percent, TO $6.05 in afterhours trading, after closing down 22 cents at $5.53 during the regular session.

It was the second consecutive quarterly profit for MBIA.

MBIA said it recorded a $353.7 million rise in losses on mortgage-related securities in the second quarter. But that was offset by $1.1 billion in estimated recoveries in connection with ineligible mortgage loans in certain insured second-lien residential mortgage loan securitizations.

The company recorded $423.8 million in unrealized gains on insured credit derivatives and $116.3 million in gains on the extinguishment of debt.

That was offset by $113.7 million in pretax other-than-temporary impairments, primarily on structured investments.

MBIA also noted that its advisory services business continued to add new clients, with assets under management growing by 5 percent in the second quarter.

President and Chief Financial Officer Chuck Chaplin said the company expects a continued high level of claims payments for the remainder of the year.