ANNUAL STATEMENT INSURANCE DEPARTMENT

Transcription

1 ANNUAL STATEMENT OF THE MBIA INSURANCE CORPORATION OF ARMONK IN THE STATE OF NEW YORK TO THE INSURANCE DEPARTMENT OF THE STATE OF FOR THE YEAR ENDED DECEMBER 31, 2012 PROPERTY AND CASUALTY 2012

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3 ASSETS 1 Current Year 2 3 Prior Year 4 Assets Nonadmitted Assets Net Admitted Assets (Cols. 1-2) Net Admitted Assets 1. Bonds (Schedule D) 457,328, ,328, ,460, Stocks (Schedule D): 2.1 Preferred stocks Common stocks 442,750, ,750, ,816, Mortgage loans on real estate (Schedule B): 3.1 First liens Other than first liens Real estate (Schedule A): 4.1 Properties occupied by the company (less $ 0 encumbrances) Properties held for the production of income (less $ 0 encumbrances) Properties held for sale (less $ 0 encumbrances) Cash ($ 81,776,548, Schedule E-Part 1), cash equivalents ($ 0, Schedule E-Part 2) and short-term investments ($ 16,383,242, Schedule DA) 98,159, ,159, ,401, Contract loans (including $ 0 premium notes) Derivatives (Schedule DB) Other invested assets (Schedule BA) 724, ,508 1,079, Receivables for securities 64, , , Securities lending reinvested collateral assets (Schedule DL) Aggregate write-ins for invested assets ,000, Subtotals, cash and invested assets (Lines 1 to 11) 999,028, ,028,079 1,593,981, Title plants less $ 0 charged off (for Title insurers only) Investment income due and accrued 1,492, ,492,227 3,803, Premiums and considerations: 15.1 Uncollected premiums and agents balances in the course of collection 4,630, ,341 3,821,004 2,929, Deferred premiums, agents balances and installments booked but deferred and not yet due (including $ 0 earned but unbilled premiums) Accrued retrospective premiums Reinsurance: 16.1 Amounts recoverable from reinsurers 1,090, ,090,463 1,333, Funds held by or deposited with reinsured companies Other amounts receivable under reinsurance contracts Amounts receivable relating to uninsured plans Current federal and foreign income tax recoverable and interest thereon 1,372, ,372,759 4,628, Net deferred tax asset Guaranty funds receivable or on deposit Electronic data processing equipment and software 1,645,509 1,609,151 36,358 57, Furniture and equipment, including health care delivery assets ($ 0 ) 36,878 36, Net adjustment in assets and liabilities due to foreign exchange rates Receivables from parent, subsidiaries and affiliates 4,161,872 1,768 4,160,104 2,640, Health care ($ 0 ) and other amounts receivable Aggregate write-ins for other than invested assets 4,309,706 2,571,087 1,738,619 3,084, Total assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines 12 to 25) 1,017,767,838 5,028,225 1,012,739,613 1,612,460, From Separate Accounts, Segregated Accounts and Protected Cell Accounts Total (Lines 26 and 27) 1,017,767,838 5,028,225 1,012,739,613 1,612,460,177 DETAILS OF WRITE-INS Secured loan with parent ,000, Summary of remaining write-ins for Line 11 from overflow page Totals (Lines 1101 through 1103 plus 1198) (Line 11 above) ,000, Prepaid expenses and other non-admitted assets 2,565,308 2,565, Premium tax receivable 1,731, ,731,097 3,026, Contingent commission receivable 7, ,522 7, Summary of remaining write-ins for Line 25 from overflow page 5,779 5, , Totals (Lines 2501 through 2503 plus 2598) (Line 25 above) 4,309,706 2,571,087 1,738,619 3,084,662 2

4 LIABILITIES, SURPLUS AND OTHER FUNDS 1 Current Year 2 Prior Year 1. Losses (Part 2A, Line 35, Column 8) (2,659,352,450) (2,380,606,593) 2. Reinsurance payable on paid losses and loss adjustment expenses (Schedule F, Part 1, Column 6) Loss adjustment expenses (Part 2A, Line 35, Column 9) 53,122,646 46,116, Commissions payable, contingent commissions and other similar charges Other expenses (excluding taxes, licenses and fees) 28,252,065 25,649, Taxes, licenses and fees (excluding federal and foreign income taxes) Current federal and foreign income taxes (including $ 0 on realized capital gains (losses)) Net deferred tax liability Borrowed money $ 1,651,408,134 and interest thereon $ 29,137,174 1,680,545,308 1,134,174, Unearned premiums (Part 1A, Line 38, Column 5) (after deducting unearned premiums for ceded reinsurance of $ 1,577,586,003 and including warranty reserves of $ 0 and accrued accident and health experience rating refunds including $ 0 for medical loss ratio rebate per the Public Health Service Act) 427,244, ,353, Advance premium Dividends declared and unpaid: 11.1 Stockholders Policyholders Ceded reinsurance premiums payable (net of ceding commissions) 3,939,976 3,800, Funds held by company under reinsurance treaties (Schedule F, Part 3, Column 19) Amounts withheld or retained by company for account of others 9,066,351 8,610, Remittances and items not allocated Provision for reinsurance (including $ 0 certified) (Schedule F, Part 8) Net adjustments in assets and liabilities due to foreign exchange rates Drafts outstanding Payable to parent, subsidiaries and affiliates 11,787,475 36,351, Derivatives Payable for securities 0 34, Payable for securities lending Liability for amounts held under uninsured plans Capital notes $ 0 and interest thereon $ Aggregate write-ins for liabilities 493,047, ,420, Total liabilities excluding protected cell liabilities (Lines 1 through 25) 47,653,694 15,904, Protected cell liabilities Total liabilities (Lines 26 and 27) 47,653,694 15,904, Aggregate write-ins for special surplus funds Common capital stock 15,000,269 15,000, Preferred capital stock 275,908, ,908, Aggregate write-ins for other than special surplus funds Surplus notes 952,655, ,655, Gross paid in and contributed surplus 781,783, ,282, Unassigned funds (surplus) 36. Less treasury stock, at cost: (1,060,261,207) (427,289,649) shares common (value included in Line 30 $ 0 ) shares preferred (value included in Line 31 $ 0 ) Surplus as regards policyholders (Lines 29 to 35, less 36) (Page 4, Line 39) 965,085,919 1,596,556, Totals (Page 2, Line 28, Col. 3) 1,012,739,613 1,612,460,177 DETAILS OF WRITE-INS Contingency reserve 493,047, ,420, Summary of remaining write-ins for Line 25 from overflow page Totals (Lines 2501 through 2503 plus 2598) (Line 25 above) 493,047, ,420, Summary of remaining write-ins for Line 29 from overflow page Totals (Lines 2901 through 2903 plus 2998) (Line 29 above) Summary of remaining write-ins for Line 32 from overflow page Totals (Lines 3201 through 3203 plus 3298) (Line 32 above) 0 0 3

5 STATEMENT OF INCOME 1 Current Year 2 Prior Year UNDERWRITING INCOME 1. Premiums earned (Part 1, Line 35, Column 4) 240,986, ,851,375 DEDUCTIONS: 2. Losses incurred (Part 2, Line 35, Column 7) 682,749, ,494, Loss adjustment expenses incurred (Part 3, Line 25, Column 1) 133,792, ,177, Other underwriting expenses incurred (Part 3, Line 25, Column 2) 47,707,131 91,547, Aggregate write-ins for underwriting deductions Total underwriting deductions (Lines 2 through 5) 864,249, ,218, Net income of protected cells Net underwriting gain (loss) (Line 1 minus Line 6 plus Line 7) (623,263,066) (598,367,555) INVESTMENT INCOME 9. Net investment income earned (Exhibit of Net Investment Income, Line 17) (192,297,791) 34,452, Net realized capital gains (losses) less capital gains tax of $ 0 (Exhibit of Capital Gains (Losses)) (1,689,186) 68,389, Net investment gain (loss) (Lines ) (193,986,977) 102,842,324 OTHER INCOME 12. Net gain (loss) from agents' or premium balances charged off (amount recovered $ 0 amount charged off $ 0 ) Finance and service charges not included in premiums Aggregate write-ins for miscellaneous income (19,032,052) 24,421, Total other income (Lines 12 through 14) (19,032,052) 24,421, Net income before dividends to policyholders, after capital gains tax and before all other federal and foreign income taxes (Lines ) (836,282,095) (471,104,011) 17. Dividends to policyholders Net income, after dividends to policyholders, after capital gains tax and before all other federal and foreign income taxes (Line 16 minus Line 17) (836,282,095) (471,104,011) 19. Federal and foreign income taxes incurred 7,069,453 6,111, Net income (Line 18 minus Line 19) (to Line 22) (843,351,548) (477,215,454) CAPITAL AND SURPLUS ACCOUNT 21. Surplus as regards policyholders, December 31 prior year (Page 4, Line 39, Column 2) 1,596,556,017 1,074,702, Net income (from Line 20) (843,351,548) (477,215,454) 23. Net transfers (to) from Protected Cell accounts Change in net unrealized capital gains or (losses) less capital gains tax of $ 0 99,989,823 (7,534,145) 25. Change in net unrealized foreign exchange capital gain (loss) (28,757,479) 1,138, Change in net deferred income tax 0 (912,364,653) 27. Change in nonadmitted assets (Exhibit of Nonadmitted Assets, Line 28, Col. 3) 475, ,367, Change in provision for reinsurance (Page 3, Line 16, Column 2 minus Column 1) Change in surplus notes Surplus (contributed to) withdrawn from protected cells Cumulative effect of changes in accounting principles Capital changes: 32.1 Paid in Transferred from surplus (Stock Dividend) Transferred to surplus Surplus adjustments: 33.1 Paid in 1,501,460 1,882, Transferred to capital (Stock Dividend) Transferred from capital Net remittances from or (to) Home Office Dividends to stockholders Change in treasury stock (Page 3, Lines 36.1 and 36.2, Column 2 minus Column 1) Aggregate write-ins for gains and losses in surplus 138,671,942 1,032,579, Change in surplus as regards policyholders for the year (Lines 22 through 37) (631,470,098) 521,853, Surplus as regards policyholders, December 31 current year (Line 21 plus Line 38) (Page 3, Line 37) 965,085,919 1,596,556,017 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 5 from overflow page Totals (Lines 0501 through 0503 plus 0598) (Line 5 above) Foreign exchange on premium (19,379,756) 22,272, Miscellaneous income 347,704 2,149, Summary of remaining write-ins for Line 14 from overflow page Totals (Lines 1401 through 1403 plus 1498) (Line 14 above) (19,032,052) 24,421, Change in contingency reserve 213,372, ,315, Correction of error (74,700,797) 83,263, Summary of remaining write-ins for Line 37 from overflow page Totals (Lines 3701 through 3703 plus 3798) (Line 37 above) 138,671,942 1,032,579,464 4

6 CASH FLOW 1 Current Year 2 Prior Year Cash from Operations 1. Premiums collected net of reinsurance 202,657, ,903, Net investment income (118,045,330) (15,533,599) 3. Miscellaneous income 391,728 2,287, Total (Lines 1 through 3) 85,003, ,656, Benefit and loss related payments 961,239,475 3,122,251, Net transfers to Separate Accounts, Segregated Accounts and Protected Cell Accounts Commissions, expenses paid and aggregate write-ins for deductions 171,890, ,311, Dividends paid to policyholders Federal and foreign income taxes paid (recovered) net of $ 0 tax on capital gains (losses) 3,813,848 2,404, Total (Lines 5 through 9) 1,136,943,614 3,449,967, Net cash from operations (Line 4 minus Line 10) (1,051,939,981) (3,059,310,862) Cash from Investments 12. Proceeds from investments sold, matured or repaid: 12.1 Bonds 618,976,972 1,116,708, Stocks 7,598, ,095, Mortgage loans Real estate Other invested assets Net gains or (losses) on cash, cash equivalents and short-term investments 181,125 (1,103,670) 12.7 Miscellaneous proceeds 318,766, ,857, Total investment proceeds (Lines 12.1 to 12.7) 945,522,442 1,943,557, Cost of investments acquired (long-term only): 13.1 Bonds 336,498, ,716, Stocks 0 3,802, Mortgage loans Real estate Other invested assets 0 385, Miscellaneous applications 18,324, , Total investments acquired (Lines 13.1 to 13.6) 354,822, ,379, Net increase (decrease) in contract loans and premium notes Net cash from investments (Line 12.8 minus Line 13.7 minus Line 14) 590,699,863 1,469,177,400 Cash from Financing and Miscellaneous Sources 16. Cash provided (applied): 16.1 Surplus notes, capital notes Capital and paid in surplus, less treasury stock 1,501,460 1,882, Borrowed funds 443,000,000 1,130,000, Net deposits on deposit-type contracts and other insurance liabilities Dividends to stockholders Other cash provided (applied) (11,502,644) 60,174, Net cash from financing and miscellaneous sources (Lines 16.1 to 16.4 minus Line 16.5 plus Line 16.6) 432,998,816 1,192,056,997 RECONCILIATION OF CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS 18. Net change in cash, cash equivalents and short-term investments (Line 11, plus Lines 15 and 17) (28,241,302) (398,076,465) 19. Cash, cash equivalents and short-term investments: 19.1 Beginning of year 126,401, ,477, End of year (Line 18 plus Line 19.1) 98,159, ,401,091 5

7 UNDERWRITING AND INVESTMENT EXHIBIT Line of Business PART 1 - PREMIUMS EARNED 1 Net Premiums Written per Column 6, Part 1B 2 Unearned Premiums Dec. 31 Prior Year - per Col. 3, Last Year s Part 1 3 Unearned Premiums Dec. 31 Current Year - per Col. 5 Part 1A 4 Premiums Earned During Year (Cols ) 1. Fire Allied lines Farmowners multiple peril Homeowners multiple peril Commercial multiple peril Mortgage guaranty Ocean marine Inland marine Financial guaranty 204,218, ,737, ,969, ,986, Medical professional liability-occurrence Medical professional liability-claims-made Earthquake Group accident and health Credit accident and health (group and individual) Other accident and health Workers' compensation Other liability - occurrence Other liability - claims-made Excess workers compensation Products liability-occurrence Products liability-claims-made ,19.2 Private passenger auto liability ,19.4 Commercial auto liability Auto physical damage Aircraft (all perils) Fidelity Surety Burglary and theft Boiler and machinery Credit International Warranty Reinsurance-nonproportional assumed property Reinsurance-nonproportional assumed liability Reinsurance-nonproportional assumed financial lines Aggregate write-ins for other lines of business TOTALS 204,218, ,737, ,969, ,986,170 DETAILS OF WRITE-INS Sum. of remaining write-ins for Line 34 from overflow page Totals (Lines 3401 through 3403 plus 3498) (Line 34 above)

8 Line of Business UNDERWRITING AND INVESTMENT EXHIBIT PART 1A - RECAPITULATION OF ALL PREMIUMS 1 Amount Unearned (Running One Year or Less from Date of Policy) (a) 2 Amount Unearned (Running More Than One Year from Date of Policy) (a) 3 Earned but Unbilled Premium 4 Reserve for Rate Credits and Retrospective Adjustments Based on Experience 5 Total Reserve for Unearned Premiums Cols Fire Allied lines Farmowners multiple peril Homeowners multiple peril Commercial multiple peril Mortgage guaranty Ocean marine Inland marine Financial guaranty 12, ,956, ,969, Medical professional liability-occurrence Medical professional liability-claims-made Earthquake Group accident and health Credit accident and health (group and individual) Other accident and health Workers' compensation Other liability-occurrence Other liability-claims-made Excess workers compensation Products liability-occurrence Products liability-claims-made ,19.2Private passenger auto liability ,19.4Commercial auto liability Auto physical damage Aircraft (all perils) Fidelity Surety Burglary and theft Boiler and machinery Credit International Warranty Reinsurance-nonproportional assumed property Reinsurance-nonproportional assumed liability Reinsurance-nonproportional assumed financial lines Aggregate write-ins for other lines of business TOTALS 12, ,956, ,969, Accrued retrospective premiums based on experience Earned but unbilled premiums Balance (Sum of Lines 35 through 37) 286,969,602 DETAILS OF WRITE-INS Sum. of remaining write-ins for Line 34 from overflow page Totals (Lines 3401 through 3403 plus 3498) (Line 34 above) (a) State here basis of computation used in each case. Prorata based on expiration of risk. 7

9 UNDERWRITING AND INVESTMENT EXHIBIT PART 1B - PREMIUMS WRITTEN Line of Business 1 Reinsurance Assumed Reinsurance Ceded From From To To Affiliates Non-Affiliates Affiliates Non-Affiliates Direct Business (a) Net Premiums Written Cols Fire Allied lines Farmowners multiple peril Homeowners multiple peril Commercial multiple peril Mortgage guaranty Ocean marine Inland marine Financial guaranty 205,479,415 4,798, ,824 (1,258,225) 8,292, ,218, Medical professional liability-occurrence Medical professional liability-claims-made Earthquake Group accident and health Credit accident and health (group and individual) Other accident and health Workers' compensation Other liability-occurrence Other liability-claims-made Excess workers compensation Products liability-occurrence Products liability-claimsmade ,19.2 Private passenger auto liability ,19.4 Commercial auto liability Auto physical damage Aircraft (all perils) Fidelity Surety Burglary and theft Boiler and machinery Credit International Warranty Reinsurancenonproportional assumed property XXX Reinsurancenonproportional assumed liability XXX Reinsurancenonproportional assumed financial lines XXX Aggregate write-ins for other lines of business TOTALS 205,479,415 4,798, ,824 (1,258,225) 8,292, ,218,183 DETAILS OF WRITE-INS Sum. of remaining writeins for Line 34 from overflow page Totals (Lines 3401 through 3403 plus 3498) (Line 34 above) (a) Does the company s direct premiums written include premiums recorded on an installment basis? Yes [ X ] No [ ] If yes: 1. The amount of such installment premiums $ 205,479, Amount at which such installment premiums would have been reported had they been recorded on an annualized basis $ 205,479,415 8

10 9 1 UNDERWRITING AND INVESTMENT EXHIBIT PART 2 - LOSSES PAID AND INCURRED Losses Paid Less Salvage Net Losses Unpaid Net Losses Losses Incurred Reinsurance Net Payments Current Year Unpaid Current Year Recovered (Cols ) (Part 2A, Col. 8) Prior Year (Cols ) Percentage of Losses Incurred (Col. 7, Part 2) to Premiums Earned (Col. 4, Part 1) Reinsurance Line of Business Direct Business Assumed 1. Fire Allied lines Farmowners multiple peril Homeowners multiple peril Commercial multiple peril Mortgage guaranty Ocean marine Inland marine Financial guaranty 1,066,002,668 (1,578) 104,632, ,368,243 (2,659,352,451) (2,380,606,594) 682,622, Medical professional liability-occurrence Medical professional liability-claims-made Earthquake Group accident and health Credit accident and health (group and individual) Other accident and health Workers' compensation Other liability-occurrence Other liability-claims-made Excess workers compensation Products liability-occurrence Products liability-claims-made ,19.2 Private passenger auto liability ,19.4 Commercial auto liability Auto physical damage Aircraft (all perils) Fidelity Surety Burglary and theft Boiler and machinery Credit International Warranty Reinsurance-nonproportional assumed property XXX Reinsurance-nonproportional assumed liability XXX Reinsurance-nonproportional assumed financial lines XXX Aggregate write-ins for other lines of business TOTALS 1,066,002,668 (1,578) 104,632, ,368,243 (2,659,352,451) (2,380,606,594) 682,622, DETAILS OF WRITE-INS Sum. of remaining write-ins for Line 34 from overflow page Totals (Lines 3401 through ) (Line 34 above)

11 10 UNDERWRITING AND INVESTMENT EXHIBIT PART 2A - UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES 1 2 Reported Losses Incurred But Not Reported Deduct Reinsurance Recoverable from Net Losses Excl. Authorized and Incurred But Net Losses Unauthorized Not Reported Reinsurance Reinsurance Unpaid Companies (Cols ) Direct Assumed Ceded (Cols ) Net Unpaid Loss Adjustment Expenses Reinsurance Line of Business Direct Assumed 1. Fire Allied lines Farmowners multiple peril Homeowners multiple peril Commercial multiple peril Mortgage guaranty Ocean marine Inland marine Financial guaranty (2,775,285,738) 29,585,796 (86,347,491) (2,659,352,451) (2,659,352,451) 53,122, Medical professional liability-occurrence Medical professional liability-claims-made Earthquake Group accident and health (a) Credit accident and health (group and individual) Other accident and health (a) Workers' compensation Other liability-occurrence Other liability-claims-made Excess workers compensation Products liability-occurrence Products liability-claims-made ,19.2 Private passenger auto liability ,19.4 Commercial auto liability Auto physical damage Aircraft (all perils) Fidelity Surety Burglary and theft Boiler and machinery Credit International Warranty Reinsurance-nonproportional assumed property XXX XXX Reinsurance-nonproportional assumed liability XXX XXX Reinsurance-nonproportional assumed financial lines XXX XXX Aggregate write-ins for other lines of business TOTALS (2,775,285,738) 29,585,796 (86,347,491) (2,659,352,451) (2,659,352,451) 53,122,646 DETAILS OF WRITE-INS Sum. of remaining write-ins for Line 34 from overflow page Totals (Lines 3401 through ) (Line 34 above) (a) Including $ 0 for present value of life indemnity claims.

12 1. Claim adjustment services: ANNUAL STATEMENT FOR THE YEAR 2012 OF THE MBIA Insurance Corporation UNDERWRITING AND INVESTMENT EXHIBIT PART 3 - EXPENSES 1 Loss Adjustment Expenses 2 Other Underwriting Expenses 3 Investment Expenses 1.1 Direct 135,088, ,088, Reinsurance assumed Reinsurance ceded 9,528, ,528, Net claim adjustment services ( ) 125,560, ,560, Commission and brokerage: 2.1 Direct, excluding contingent Reinsurance assumed, excluding contingent 0 354, , Reinsurance ceded, excluding contingent 0 7,449, ,449, Contingent-direct Contingent-reinsurance assumed Contingent-reinsurance ceded Policy and membership fees Net commission and brokerage ( ) 0 (7,095,164) 0 (7,095,164) 3. Allowances to manager and agents Advertising 0 25,000 69,529 94, Boards, bureaus and associations 0 1,158,407 4,313 1,162, Surveys and underwriting reports 641, , ,408 1,279, Audit of assureds' records Salary and related items: 8.1 Salaries 4,091,986 31,293,172 1,977,223 37,362, Payroll taxes 92,460 1,378,224 95,858 1,566, Employee relations and welfare 1,421,662 7,126, ,461 8,998, Insurance 0 1,746,317 54,507 1,800, Directors' fees Travel and travel items 18, ,328 70, , Rent and rent items 0 812,015 88, , Equipment 604, , ,736 1,053, Cost or depreciation of EDP equipment and software 0 71, , , Printing and stationery 1,964 14,051 3,827 19, Postage, telephone and telegraph, exchange and express 41, ,971 19, , Legal and auditing 874,141 40,152,500 57,920 41,084, Totals (Lines 3 to 18) 7,788,058 85,537,183 3,392,996 96,718, Taxes, licenses and fees: 20.1 State and local insurance taxes deducting guaranty association credits of $ 0 0 2,243, ,243, Insurance department licenses and fees 0 67,190 5,645 72, Gross guaranty association assessments All other (excluding federal and foreign income and real estate) 0 2,368, ,368, Total taxes, licenses and fees ( ) 0 4,679,173 5,645 4,684, Real estate expenses 0 81, , Real estate taxes Reimbursements by uninsured plans Aggregate write-ins for miscellaneous expenses 444,331 (35,495,103) 0 (35,050,772) 25. Total expenses incurred 133,792,596 47,707,131 3,398,641 (a) 184,898, Less unpaid expenses-current year 53,122,646 28,252, ,374, Add unpaid expenses-prior year 46,116,076 25,649, ,765, Amounts receivable relating to uninsured plans, prior year Amounts receivable relating to uninsured plans, current year TOTAL EXPENSES PAID (Lines ) 126,786,026 45,104,267 3,398, ,288,934 DETAILS OF WRITE-INS Fee reimbursement net of consulting & temporary help 316,033 (36,282,300) 0 (35,966,267) Corporate Service Fees 128, , Contributions 0 343, , Summary of remaining write-ins for Line 24 from overflow page 0 443, , Totals (Lines 2401 through 2403 plus 2498) (Line 24 above) 444,331 (35,495,103) 0 (35,050,772) (a) Includes management fees of $ 29,483,401 to affiliates and $ 169,118 to non-affiliates. 4 Total 11

13 EXHIBIT OF NET INVESTMENT INCOME 1 Collected During Year 2 Earned During Year 1. U.S. Government bonds (a) 1,232, , Bonds exempt from U.S. tax (a) Other bonds (unaffiliated) (a) 44,849,493 44,045, Bonds of affiliates (a) Preferred stocks (unaffiliated) (b) Preferred stocks of affiliates (b) Common stocks (unaffiliated) Common stocks of affiliates Mortgage loans (c) Real estate (d) Contract loans Cash, cash equivalents and short-term investments (e) 2,828,857 2,772, Derivative instruments (f) Other invested assets 0 42, Aggregate write-ins for investment income Total gross investment income 48,911,824 47,843, Investment expenses (g) 3,392, Investment taxes, licenses and fees, excluding federal income taxes (g) 5, Interest expense (h) 236,742, Depreciation on real estate and other invested assets (i) Aggregate write-ins for deductions from investment income Total deductions (Lines 11 through 15) 240,140, Net investment income (Line 10 minus Line 16) (192,297,791) DETAILS OF WRITE-INS Summary of remaining write-ins for Line 9 from overflow page Totals (Lines 0901 through 0903) plus 0998 (Line 9 above) Summary of remaining write-ins for Line 15 from overflow page Totals (Lines 1501 through 1503) plus 1598 (Line 15 above) 0 (a) Includes $ 40,360,624 accrual of discount less $ 8,209,835 amortization of premium and less $ 291,231 paid for accrued interest on purchases. (b) Includes $ 0 accrual of discount less $ 0 amortization of premium and less $ 0 paid for accrued dividends on purchases. (c) Includes $ 0 accrual of discount less $ 0 amortization of premium and less $ 0 paid for accrued interest on purchases. (d) Includes $ 0 for company s occupancy of its own buildings; and excludes $ 0 interest on encumbrances. (e) Includes $ 53,954 accrual of discount less $ 635,562 amortization of premium and less $ 0 paid for accrued interest on purchases. (f) Includes $ 0 accrual of discount less $ 0 amortization of premium. (g) Includes $ 0 investment expenses and $ 0 investment taxes, licenses and fees, excluding federal income taxes, attributable to segregated and Separate Accounts. (h) Includes $ 133,371,700 interest on surplus notes and $ 0 interest on capital notes. (i) Includes $ 0 depreciation on real estate and $ 0 depreciation on other invested assets. EXHIBIT OF CAPITAL GAINS (LOSSES) 1 Realized Gain (Loss) On Sales or Maturity 2 Other Realized Adjustments 3 Total Realized Capital Gain (Loss) (Columns 1 + 2) 4 Change in Unrealized Capital Gain (Loss) 5 Change in Unrealized Foreign Exchange Capital Gain (Loss) 1. U.S. Government bonds (92,392) 0 (92,392) Bonds exempt from U.S. tax 27, , Other bonds (unaffiliated) 21,235,310 (42,297,092) (21,061,782) 37,149,954 (827,843) 1.3 Bonds of affiliates Preferred stocks (unaffiliated) Preferred stocks of affiliates Common stocks (unaffiliated) 1,293, ,293,317 (1,293,880) (107,617) 2.21 Common stocks of affiliates (11,377,205) 0 3. Mortgage loans Real estate Contract loans Cash, cash equivalents and short-term investments , Derivative instruments Other invested assets (215,570) 0 9. Aggregate write-ins for capital gains (losses) 0 18,143,929 18,143,929 75,726, Total capital gains (losses) 22,463,977 (24,153,163) (1,689,186) 99,989,826 (754,335) DETAILS OF WRITE-INS Foreign exchange gain on investments 0 18,708,819 18,708, Foreign exchange gain on cash 0 799, , Correction of error ,700, Summary of remaining write-ins for Line 9 from overflow page 0 (1,364,663) (1,364,663) 1,025, Totals (Lines 0901 through 0903) plus 0998 (Line 9 above) 0 18,143,929 18,143,929 75,726,

14 EXHIBIT OF NONADMITTED ASSETS 1 Current Year Total Nonadmitted Assets 2 Prior Year Total Nonadmitted Assets 3 Change in Total Nonadmitted Assets (Col. 2 - Col. 1) 1. Bonds (Schedule D) Stocks (Schedule D): 2.1 Preferred stocks Common stocks Mortgage loans on real estate (Schedule B): 3.1 First liens Other than first liens Real estate (Schedule A): 4.1 Properties occupied by the company Properties held for the production of income Properties held for sale Cash (Schedule E-Part 1), cash equivalents (Schedule E-Part 2) and short-term investments (Schedule DA) Contract loans Derivatives (Schedule DB) Other invested assets (Schedule BA) Receivables for securities 0 496, , Securities lending reinvested collateral assets (Schedule DL) Aggregate write-ins for invested assets Subtotals, cash and invested assets (Lines 1 to 11) 0 496, , Title plants (for Title insurers only) Investment income due and accrued Premiums and considerations: 15.1 Uncollected premiums and agents balances in the course of collection 809,341 0 (809,341) 15.2 Deferred premiums, agents balances and installments booked but deferred and not yet due Accrued retrospective premiums Reinsurance: 16.1 Amounts recoverable from reinsurers 0 12,521 12, Funds held by or deposited with reinsured companies Other amounts receivable under reinsurance contracts Amounts receivable relating to uninsured plans Current federal and foreign income tax recoverable and interest thereon Net deferred tax asset Guaranty funds receivable or on deposit Electronic data processing equipment and software 1,609,151 2,274, , Furniture and equipment, including health care delivery assets 36,878 42,345 5, Net adjustment in assets and liabilities due to foreign exchange rates Receivables from parent, subsidiaries and affiliates 1,768 86,105 84, Health care and other amounts receivable Aggregate write-ins for other than invested assets 2,571,087 2,591,289 20, Total assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines 12 to 25) 5,028,225 5,503, , From Separate Accounts, Segregated Accounts and Protected Cell Accounts Total (Lines 26 and 27) 5,028,225 5,503, ,704 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 11 from overflow page Totals (Lines 1101 through 1103 plus 1198) (Line 11 above) Prepaid expenses and other non-admitted assets 2,565,308 2,585,389 20, Deposits 5,779 5, Summary of remaining write-ins for Line 25 from overflow page Totals (Lines 2501 through 2503 plus 2598) (Line 25 above) 2,571,087 2,591,289 20,202 13

15 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION 1. Summary of Significant Accounting Policies A. Accounting Practices NOTES TO FINANCIAL STATEMENTS The statutory financial statements of MBIA Insurance Corporation ( MBIA Corp. or the Company ) are presented on the basis of accounting practices prescribed or permitted by the New York State Department of Financial Services ( NYSDFS, previously referred to as the New York State Insurance Department or NYSID ). The NYSDFS recognizes only statutory accounting practices prescribed or permitted by the State of New York for determining and reporting the financial condition and results of operations of an insurance company and determining its solvency under the New York Insurance Law ( NYIL ). The National Association of Insurance Commissioners ( NAIC ) Accounting Practices and Procedures Manual ( NAIC SAP ) has been adopted as a component of prescribed or permitted practices by the State of New York. The Superintendent of the NYSDFS has the right to permit other specific practices that deviate from prescribed practices. As of December 31, 2012, MBIA Corp. does not have any accounting practices which are permitted, rather than prescribed, by the NYSDFS. B. Use of Estimates in the Preparation of the Financial Statements The preparation of financial statements in conformity with Statutory Accounting Principles ( SAP ) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. It also requires disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. As additional information becomes available or actual amounts become determinable, the recorded estimates are revised and reflected in operating results. C. Accounting Policy MBIA Corp. s premiums written consist of upfront premiums and installment premiums received and accrued for policies issued in current and prior years. Upfront premiums are earned proportionately to the scheduled periodic maturity of principal and payment of interest (debt service) to the original total principal and interest insured. Installment premiums are earned on a straight-line basis over each installment period, generally one year or less. Unearned premiums represent the portion of premiums written in prior years that is applicable to the unexpired risk of insured obligations. When an insured obligation is retired early, is called by the issuer, or is in substance paid in advance through a refunding accomplished by placing United States ( U.S. ) Government securities in escrow, the remaining unearned premium is earned at that time, since there is no longer risk to MBIA Corp. As the outstanding principal of an installment-based policy is paid down by the issuer of an MBIA-insured obligation, less premium is collected and recognized by MBIA Corp. Additionally, MBIA Corp. may receive premiums upon the early termination of installment-based policies, which are earned when received. Premiums ceded to reinsurers reduce the amount of earned premium MBIA Corp. will recognize from its insurance policies. For both upfront and installment policies, ceded premium is recognized in earnings in proportion to and at the same time the related gross premium revenue is recognized. Ceding commission income and expense are recognized in earnings at the same time the related premium is recognized. However, ceding commission income that exceeds the anticipated acquisition costs of the business ceded will be established as a liability, equal to the difference between the anticipated acquisition cost and the reinsurance commission received. The excess ceding commission income is amortized pro-rata over the period which the ceded unearned premium is amortized. Expenses incurred in connection with the acquisition of new insurance business are charged to operations as incurred. Expenses incurred are reduced for ceding commissions received or receivable, to the extent admissible. MBIA Corp. collects insurance related fees for services performed in connection with certain transactions. In addition, MBIA Corp. may be entitled to reimbursement of third-party insurance expenses that it incurs in connection with certain transactions. These fees are included as a reduction to Other underwriting expenses incurred within the Statement of Income. Borrowed money is accounted for as a collateralized transaction and is recorded at contract value plus accrued and capitalized interest. In addition, MBIA Corp. uses the following accounting policies: (1) Short-term investments are stated at amortized cost, net of any unrealized foreign exchange gains and losses, which approximates fair value. Cash and cash equivalents include cash on hand and demand deposits with banks with an original maturity of less than 90 days. Cash equivalents also include bonds and commercial paper with a maturity of less than 90 days at time of purchase. (2) Bonds with an NAIC designation of 1 or 2 that are not backed by other loans are reported at amortized cost. Amortized cost is calculated using the effective yield method. For bonds purchased at a price below par value, discounts are accreted over the remaining term of the bond. For bonds purchased at a price above par value, which have call features, premiums are amortized to the call date that produces the lowest yield. For premium bonds that do not have call features, such premium is amortized over the remaining term of the bond. Investments in bonds with an NAIC designation of 3 through 6 that are not backed by other loans are reported at the lower of amortized cost (as described above) or fair value as determined by the NAIC s Securities Valuation Office ( SVO ). In the event the SVO has not determined the fair value of a security, fair value amounts are determined by using independent thirdparty sources, when available, and appropriate valuation methodologies when market quotes are not available. In cases where specific market quotes are unavailable, interpreting market data and estimating market values require considerable judgment 14

16 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS by management. Accordingly, the estimates presented are not necessarily indicative of the amount MBIA Corp. could realize in the market. Realized gains or losses on the sale of investments are determined by utilizing the first-in, first-out method to identify the investments sold and are included in the Statement of Income as a separate component of revenues. Unrealized gains and losses from the revaluation of bonds and common stocks not valued at amortized cost are credited or charged to unassigned surplus. MBIA Corp. s securities for which fair value is less than amortized cost are reviewed no less than quarterly in order to determine whether such a decline in value is other-than-temporary. This evaluation includes both qualitative and quantitative considerations. In assessing whether a decline in value is other-than-temporary, MBIA Corp. considers several factors, including but not limited to (a) the magnitude and duration of the decline, (b) credit indicators and the reasons for the decline, such as general interest rate or credit spread movements, credit rating downgrades, issuer-specific changes in credit spreads, and the financial condition of the issuer, and (c) any guarantees associated with a security such as those provided by investment-grade financial guarantee insurance companies. Based on this assessment, if MBIA Corp. believes that either (a) the investment s fair value will not recover to an amount equal to its amortized cost or (b) MBIA Corp. does not have the ability and intent to hold the investment to maturity or until the fair value recovers to an amount at least equal to amortized cost, it will consider the decline in value to be other-than-temporary. If MBIA Corp. determines that a decline in the value of an investment is other-than-temporary, the investment is written down to its fair value and a realized loss is recorded in the Statement of Income. For loan-backed and structured securities, MBIA Corp. estimates cash flows expected to be collected over the life of the security. If MBIA Corp. determines that if, based on current information and events, there is a decrease in cash flows expected to be collected (that is they will be unable to collect all cash flows expected at acquisition plus any additional cash flows expected to be collected arising from changes in estimates after acquisition) an other-than-temporary impairment ( OTTI ) shall be considered to have occurred. For loan-backed securities that management has no intent to sell and believes that it is more likely than not such securities will not be required to be sold prior to recovery, only the credit loss component of the OTTI is recognized as a realized loss, while the rest of the fair value loss is recognized as a reduction to unassigned surplus. If management intends to sell the security or if management believes that it is more likely than not such securities will be required to be sold prior to recovery, the entire amount of the unrealized loss is recognized as a realized loss. These assessments require management to exercise judgment as to whether an investment is impaired based on market conditions and trends and the availability of relevant data. (3) Common stocks are stated at fair value except for investments in stocks of uncombined subsidiaries and affiliates in which MBIA Corp. has an interest of 20% or more are carried on an equity basis. (4) MBIA Corp. did not hold any preferred stocks as of December 31, (5) MBIA Corp. did not hold investments in mortgage loans as of December 31, (6) Statements of Statutory Accounting Principles ( SSAP ) No. 43R Loan-Backed and Structured Securities-Revised establishes principles for investments in loan-backed and structured securities and increased disclosures regarding OTTI. The Company utilizes the retrospective adjustment method to value all loan-backed securities except for interest-only securities or securities where the yield has become negative. These securities are valued using the prospective method. Loan-backed bonds and structured securities with an NAIC designation of 1 or 2 are reported at amortized cost using the effective yield method, including anticipated prepayments at the date of purchase. Changes in the estimated cash flows from the original purchase assumptions are accounted for using the retrospective method. Loan-backed bonds and structured securities with a NAIC designation of 3 through 6 are reported at the lower of amortized cost or fair value as determined by the SVO. In the event the SVO has not determined the fair value of a security, fair value amounts are determined by using independent third-party sources, when available, and appropriate valuation methodologies when market quotes are not available. In cases where specific market quotes are unavailable, interpreting market data and estimating market values require considerable judgment by management. Accordingly, the estimates presented are not necessarily indicative of the amount MBIA Corp. could realize in the market. (7) MBIA UK Holdings ( UK Holdings ) and MBIA Mexico, S.A. de C.V. ( MBIA Mexico ) are wholly owned insurance subsidiaries of MBIA Corp. organized in the United Kingdom ( U.K. ) and Mexico, respectively, and are accounted for on the equity-method as an investment in subsidiaries as described in paragraph 9 of SSAP No. 97 Investments in Subsidiary, Controlled and Affiliated Entities and Section 1414 Valuation of Investments of the NYIL. Investments in these audited foreign insurance subsidiaries are admitted assets on MBIA Corp. s balance sheet and are reflected on Schedule D-Part 2- Section 2. MBIA Corp. does not have any investments in non-insurance subsidiaries. MBIA Corp. owns no investment in its parent, MBIA Inc. (8) At December 31, 2012, MBIA Corp. has no material ownership interests in joint ventures, partnerships and limited liability companies. (9) There are no outstanding derivative transactions as of December 31, (10) MBIA Corp. does not utilize anticipated investment income as a factor in its premium deficiency calculation. MBIA Corp. did not have a premium deficiency as of December 31, (11) MBIA Corp. s financial guarantee insurance provides an unconditional and irrevocable guarantee of the payment of the principal of, and interest or other amounts owing on, insured obligations when due or, in the event that MBIA Corp. has the right, at its discretion, to accelerate insured obligations upon default or otherwise, upon such acceleration by MBIA Corp. Loss and Loss Adjustment Expense ( LAE ) reserves are established by MBIA Corp. s Loss Reserve Committee, which 14.1

17 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS consists of members of senior management, and require the use of judgment and estimates with respect to the occurrence, timing and amount of a loss on an insured obligation. MBIA Corp. recognizes loss reserves on a contract-by-contract basis where an insured event has occurred (i.e., a payment default on the insured obligation) or an insured event is expected in the future based upon credit deterioration which has already occurred and has been identified. Case reserves are measured based on the probability-weighted present value of expected net cash inflows and outflows to be paid under the contract, discounted using a rate equal to the yield-to-maturity of MBIA Corp. s fixed-income investment portfolio, excluding cash and cash equivalents, and other investments not intended to defease long-term liabilities. The loss reserve is subsequently remeasured each reporting period for expected increases or decreases due to changes in the likelihood of default and potential recoveries. Subsequent changes to the measurement of the loss reserve are recognized as losses incurred in the period of change. Measurement and recognition of loss reserves is reported net of any reinsurance. MBIA Corp. estimates the likelihood of possible claims payments and possible recoveries using probability-weighted expected cash flows based on information available as of the measurement date, including market information. The methods for making such estimates are continually reviewed and any adjustments are reflected in the period determined. Once a case basis reserve is established for an insured obligation, MBIA Corp. continues to record premium revenue to the extent premiums have been or are expected to be collected on that obligation. The Company does not establish loss reserves for all payments that may be due under an insured obligation. Case basis reserves cover the estimated amount of principal and interest the Company expects to pay on its insured obligations and the costs of settlement and other loss mitigation expenses, net of expected recoveries. MBIA Corp. recognizes potential salvage and subrogation recoveries on paid losses based on a similar probability-weighted net cash flow projection discounted using the same rate discussed above, as of the measurement date. Such recovery amounts are reported within Loss and LAE reserves on MBIA Corp. s balance sheet as a contra liability. When MBIA Corp. becomes entitled to potential recoveries which are typically based on either, salvage rights, the rights conferred to MBIA Corp. through the transactional documents (inclusive of the insurance agreement), subrogation rights embedded within insurance policies, or the underlying collateral of an insured obligation, it reports this type of salvage and subrogation as a contra liability within Loss and LAE reserves on MBIA Corp. s balance sheet. References in the aforementioned and following disclosures to these items should be considered to be salvage and subrogation for purposes of financial reporting on a statutory basis. A number of variables are taken into account in establishing specific case basis reserves for individual policies. These variables include the creditworthiness of the underlying issuer of the insured obligation, whether the obligation is secured or unsecured and the expected recovery rates on the insured obligation, the projected cash flow or market value of any assets that support the insured obligation and the historical and projected loss rates on such assets. Factors that may affect the actual ultimate underwriting losses for any policy include the state of the economy, changes in interest rates, rates of inflation and the salvage values of specific collateral. Management believes that the Company s reserves are adequate to cover the net cost of claims. However, because the reserves are based on management s judgment and estimates, there can be no assurance that the ultimate liability will not exceed such estimates. Refer to Note 25: Changes in Incurred Losses and Loss Adjustment Expenses for additional information regarding the Company s reserving methodology. Contingency Reserves A contingency reserve is established for the protection of all policyholders by direct charges to unassigned surplus and is established by MBIA Corp. for past business and new business, as follows: For policies in force prior to July 1, 1989, MBIA Corp. establishes and maintains a contingency reserve equal to 50% of the cumulative earned premiums on such policies. For policies written on or after July 1, 1989, a contingency reserve, which represents the greater of 50% of premiums written or a stated percentage of the principal guaranteed dependent on the category of obligation insured, is established over a 15 to 20 year period. The stated percentage ranges from 0.55% on municipal general obligation bonds to 2.5% on certain industrial development bonds and non-investment grade obligations. Contingency reserves are established and maintained net of collateral and reinsurance. The reserves may be released in the same manner in which they were established and withdrawals, to the extent there may be excess, may be made with either the prior written approval of the Superintendent of the NYSDFS or upon thirty days prior written notice, depending upon the circumstances specified in Article 69, Financial Guaranty Insurance Corporations, Section 6903 of the NYIL. Contingency reserves established for policies which are terminated, matured or net of refundings to the extent that the refunded issue is paid off or secured by obligations which are directly payable or guaranteed by the U.S. Government may be released without prior approval or notice. Refer to Note 21: Other Items for more information about MBIA Corp. s release of excessive contingency reserves. (12) MBIA Corp. has not modified its capitalization policy from the prior year. (13) Not applicable as the Company does not write major medical insurance with prescription drug coverage. 14.2

18 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS 2. Accounting Changes and Correction of Errors Accounting Change Effective January 1, 2012, SSAP No. 10R Income Taxes - Revised was replaced by SSAP No. 101 Income Taxes - A Replacement of SSAP No. 10R and SSAP No. 10. SSAP No. 101 provides revised statutory accounting principles for federal and state income taxes. SSAP No. 101 retains the expanded net deferred tax asset ( DTA ) admissibility of SSAP No. 10R, including the possibility of a threeyear reversal period and a 15 percent surplus limitation. The expanded admissibility under SSAP No. 101 is subject to the new realization threshold limitation criteria which determines the future realization period under which reversals are considered (0, 1, or 3 years) and the applicable percentage of adjusted statutory surplus (0%, 10%, or 15%). However, due to the Company having established a full valuation allowance for the period ending December 31, 2012 and 2011, MBIA Corp. will not be able to realize its DTA and therefore cannot admit any DTA either upon transition at January 1, 2012 or as of December 31, In addition to SSAP No. 101, SSAP No. 5 Liabilities, Contingencies and Impairments of Assets was replaced with SSAP No. 5R Liabilities, Contingencies and Impairments of Assets Revised. SSAP No. 5R changes the recognition and measurement guidance on uncertain tax positions by reducing the recognition threshold from probable and reasonably estimated criterion to more likely than not and reasonably estimated. SSAP No. 5R and SSAP No. 101 did not have an impact on the balance sheets, statement of income, or cash flows for the period ended December 31, Refer to Note 9: Income Taxes for further discussion on the Company s income taxes. Correction of Errors During 2012, MBIA Corp. discovered it had understated a realized loss impairment of its investment in an unaffiliated common stock and overstated the amount of unrealized losses reflected in policyholders surplus for the year ended December 31, The result was an unrealized loss of $75 million which was not reversed and should have been recorded as a realized loss in MBIA Corp. s 2009 Statement of Income. MBIA Corp. has recorded the impairment in 2012 as an adjustment to unassigned surplus in accordance with SSAP No. 3 Accounting Changes and Corrections of Errors. This correction does not impact total policyholders surplus or earned surplus. During 2011, MBIA Corp. discovered two errors: The first was an error in the recognition of net premiums earned related to refunding activities prior to December 31, 2010 on reinsurance between National Public Finance Guarantee Corporation ( National ) and MBIA Corp. Certain financial guarantee policies ceded by MBIA Corp. and assumed by National were subsequently found to have been refunded by the issuers of the insured obligations prior to the date of the reinsurance agreement, which was January 1, 2009, and related premiums of $83 million, net of ceding commission, should have been returned to and earned by MBIA Corp. but were instead earned by National. The correction of this error resulted in an increase in unassigned surplus of $83 million. The correction of the second error resulted in the net loss reported in the audited statutory financial statements of $435 million being $42 million lower than the net loss of $477 million reported in the 2011 Annual Statement. The error related to the recognition of an OTTI loss on an investment in a structured security (an NAIC 6 designated security). During 2011, MBIA Corp. determined that the security was impaired by $57 million; $42 million of this impairment should have been recognized as a net realized loss in the Statement of Income in prior periods. As this amount of impairment was previously included in unrealized losses on the Statement of Changes in Capital and Surplus, this error and its correction did not have an impact on statutory capital. 3. Business Combinations and Goodwill A. Statutory Purchase - Not applicable. B. Statutory Merger - Not applicable. C. Impairment Loss - Not applicable. 4. Discontinued Operations MBIA Corp. did not have any discontinued operations during Investments A. MBIA Corp. did not hold mortgage loans as investments during B. MBIA Corp. is not party to any restructured debt transactions during C. MBIA Corp. did not hold investments in reverse mortgages during D. Loan-Backed Securities (1) Prepayment assumptions for loan-backed and structured securities were obtained from an independent third-party data service or internal estimates. (2) MBIA Corp. recognized an OTTI of $42 million on one loan-backed security during This security was subsequently sold in the fourth quarter of 2012 for $34 million which resulted in a gain of $12 million. 14.3

19 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS The following table summarizes by quarter OTTI for loan-backed securities recorded during the year because the Company had either the intent to sell the securities or the inability or lack of intent to retain as cited in the table: (1) (2) (3) Amortized Cost OTTI Recognized Fair Value In thousands Basis Before OTTI in Loss 1-2 OTTI recognized in 1st Quarter a. Intent to sell $ 64,079 $ 38,411 $ 25,668 b. Inability or lack of intent to retain the investment in the security for a period of time sufficient to recover the amortized cost basis c. Total 1st Quarter $ 64,079 $ 38,411 $ 25,668 Amortized Cost OTTI Recognized In thousands Basis Before OTTI in Loss Fair Value OTTI recognized in 2nd Quarter d. Intent to sell $ 25,668 $ 1,704 $ 23,964 e. Inability or lack of intent to retain the investment in the security for a period of time sufficient to recover the amortized cost basis f. Total 2nd Quarter $ 25,668 $ 1,704 $ 23,964 Amortized Cost OTTI Recognized In thousands Basis Before OTTI in Loss Fair Value OTTI recognized in 3rd Quarter g. Intent to sell $ 23,964 $ 2,182 $ 21,782 h. Inability or lack of intent to retain the investment in the security for a period of time sufficient to recover the amortized cost basis i. Total 3rd Quarter $ 23,964 $ 2,182 $ 21,782 Amortized Cost OTTI Recognized In thousands Basis Before OTTI in Loss Fair Value OTTI recognized in 4th Quarter j. Intent to sell $ - $ - $ - k. Inability or lack of intent to retain the investment in the security for a period of time sufficient to recover the amortized cost basis l. Total 4th Quarter $ - $ - $ - m. Annual Aggregate Total $ 42,297 (3) As of December 31, 2012, MBIA Corp. does not own any impaired securities. (4) The following table sets forth the gross unrealized losses of the Company s loan-backed and structured securities as of December 31, 2012 and 2011, that have been in a continuous unrealized loss position for less than twelve months from those that have been in a continuous unrealized loss position for twelve months or longer: In thousands a. The aggregate amount of unrealized losses: b. The aggregate related fair value of securities with unrealized losses: As of December 31, Less than 12 Months $ (3,488) Months or Longer $ (2) 1. Less than 12 Months $ 7, Months or Longer $ 43 The table above excludes NAIC rated 3 through 6 securities that were carried at fair value where the fair value of the securities was lower than amortized cost. The Company has recorded unrealized losses on these securities to bring the book 14.4

20 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS adjusted/carry value to fair value. As of December 31, 2012, the total fair value and unrealized loss for these securities was $4.2 million and $0.2 million, respectively. In thousands a. The aggregate amount of unrealized losses: As of December 31, Less than 12 Months $ (9) Months or Longer $ (451) b. The aggregate related fair value of securities with unrealized losses: 1. Less than 12 Months $ Months or Longer $ 1,363 The table above excludes unrealized losses on NAIC rated 3 through 6 securities that were carried at fair value where the fair value of the securities was lower than amortized cost. The Company has recorded unrealized losses on these securities to bring the book adjusted/carry value to fair value. As of December 31, 2011, the total fair value and unrealized loss for these securities was $33 million and $37 million, respectively. (5) Refer to Note 1: Summary of Significant Accounting Policies Section C (2) for a description of the general categories of information MBIA Corp. considers in determining whether a security is OTTI. E. There were no repurchase agreement transactions outstanding as of December 31, 2012 or F. MBIA Corp. does not have any investments in real estate as of December 31, 2012 or G. MBIA Corp. did not hold low income housing tax credits as investments during 2012 or Joint Ventures, Partnerships and Limited Liability Companies A. MBIA Corp. has no investments in joint ventures, partnerships or limited liability companies that exceed 10% of its admitted assets. B. MBIA Corp. did not recognize any impairment write-down for investments in joint ventures, partnerships and limited liability companies due to impairments during Investment Income A. Due and accrued income was excluded from surplus on the following basis: All investment income due and accrued with amounts that are over 90 days past due are non-admitted. B. There were no amounts excluded as of December 31, 2012 or Derivative Instruments There were no derivatives outstanding as of December 31, Income Taxes In August 2011, the NAIC adopted SSAP No. 101 Income Taxes which replaces guidance issued under SSAP No. 10 Income Taxes and SSAP No. 10R Income Taxes-Revised. SSAP No. 101 provides for an admission calculation of DTAs specific to financial guarantors which states that if the reporting entity meets the minimum capital and reserve requirements for the state of domicile, they shall use the Realization Threshold Limitation Table when calculating the admission of DTAs. The financial guaranty entity table s threshold limitations are contingent upon the ratio of statutory capital excluding the admitted DTA to the required surplus and contingency reserve (the Aggregate Risk Limit). The Aggregate Risk Limit is the amount of aggregate capital that the NYSDFS requires to be maintained based on the risk characteristic and amount of insurance in force under NYIL. SSAP No. 101 is effective January 1, 2012 and may impact the Company s ability to admit DTAs in 2012 and future years, subject to the ability of the Company to reduce its valuation allowance against its net DTA. Refer to Note 2: Accounting Changes and Correction of Errors for further discussion on SSAP No. 101 Income Taxes. 14.5

21 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS A. The components of DTAs and deferred tax liabilities ( DTLs ) (1) The components of the net deferred tax asset/(liability) at December 31 are as follows: 12/31/2012 (1) (2) (3) (Col 1+2) In thousands Ordinary Capital Total (a) Gross Deferred Tax Assets $ 1,016,718 $ 59,537 $ 1,076,255 (b) Statutory Valuation Allowance Adjustments 1,016,718 59,537 1,076,255 (c) Adjusted Gross Deferred Tax Assets (1a - 1b) (d) Deferred Tax Assets Nonadmitted (e) Subtotal Net Admitted Deferred Tax Asset (1c -1d ) (f) Deferred Tax Liabilities (g) Net Admitted Deferred Tax Asset/(Net Deferred Tax Liability) (1e - 1f) $ - $ - $ - 12/31/2011 (4) (5) (6) (Col 1+2) Ordinary Capital Total (a) Gross Deferred Tax Assets $ 726,303 $ 52,857 $ 779,160 (b) Statutory Valuation Allowance Adjustments 726,303 52, ,160 (c) Adjusted Gross Deferred Tax Assets (1a - 1b) (d) Deferred Tax Assets Nonadmitted (e) Subtotal Net Admitted Deferred Tax Asset (1c -1d ) (f) Deferred Tax Liabilities (g) Net Admitted Deferred Tax Asset/(Net Deferred Tax Liability) (1e - 1f) $ - $ - $ - Change (7) (8) (9) (Col 1+2) Ordinary Capital Total (a) Gross Deferred Tax Assets $ 290,415 $ 6,680 $ 297,095 (b) Statutory Valuation Allowance Adjustments 290,415 6, ,095 (c) Adjusted Gross Deferred Tax Assets (1a - 1b) (d) Deferred Tax Assets Nonadmitted (e) Subtotal Net Admitted Deferred Tax Asset (1c -1d ) (f) Deferred Tax Liabilities (g) Net Admitted Deferred Tax Asset/(Net Deferred Tax Liability) (1e - 1f) $ - $ - $

22 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION (2) Admission Calculation Components SSAP No. 101 NOTES TO FINANCIAL STATEMENTS 12/31/2012 (1) (2) (3) (Col 1+2) In thousands Ordinary Capital Total (a) Federal Income Taxes Paid In Prior Years Recoverable Through Loss Carrybacks. $ - $ - $ - (b) Adjusted Gross Deferred Tax Assets Expected To Be Realized (Excluding The Amount Of Deferred Tax Assets From 2(a) above) After Application of the Threshold Limitation. (The Lesser of 2(b)1 and 2(b)2 Below) Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold. XXX XXX $ - (c) Adjusted Gross Deferred Tax Assets (Excluding The Amount Of Deferred Tax Assets From 2(a) and 2(b) above) Offset by Gross Deferred Tax Liabilities (d) Deferred Tax Assets Admitted as the result of application of SSAP No Total (2(a) + 2(b) + 2(c)) $ - $ - $ - 12/31/2011 (4) (5) (6) (Col 1+2) Ordinary Capital Total (a) Federal Income Taxes Paid In Prior Years Recoverable Through Loss Carrybacks. $ $ $ - (b) Adjusted Gross Deferred Tax Assets Expected To Be Realized (Excluding The Amount Of Deferred Tax Assets From 2(a) above) After Application of the Threshold Limitation. (The Lesser of 2(b)1 and 2(b)2 Below) Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold. XXX XXX $ 121,467 (c) Adjusted Gross Deferred Tax Assets (Excluding The Amount Of Deferred Tax Assets From 2(a) and 2(b) above) Offset by Gross Deferred Tax Liabilities (d) Deferred Tax Assets Admitted as the result of application of SSAP No Total (2(a) + 2(b) + 2(c)) $ - $ - $ - Change (7) (8) (9) (Col 1+2) Ordinary Capital Total (a) Federal Income Taxes Paid In Prior Years Recoverable Through Loss Carrybacks. $ - $ - $ - (b) Adjusted Gross Deferred Tax Assets Expected To Be Realized (Excluding The Amount Of Deferred Tax Assets From 2(a) above) After Application of the Threshold Limitation. (The Lesser of 2(b)1 and 2(b)2 Below) Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold. XXX XXX $ (121,467) (c) Adjusted Gross Deferred Tax Assets (Excluding The Amount Of Deferred Tax Assets From 2(a) and 2(b) above) Offset by Gross Deferred Tax Liabilities (d) Deferred Tax Assets Admitted as the result of application of SSAP No Total (2(a) + 2(b) + 2(c)) $ - $ - $ - (3) Other Admissibility Criteria (a) Ratio Percentage Used To Determine Recovery Period And Threshold 96% N/A Limitation Amount. (b) Amount Of Adjusted Capital And Surplus Used To Determine Recovery Period And Threshold Limitation In 2(b)2 Above. $ 1,458,133 N/A 14.7

23 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION (4) Impact of Tax Planning Strategies NOTES TO FINANCIAL STATEMENTS 12/31/2012 (1) (2) (3) (Col 1+2) Ordinary Capital Total Percent Percent Percent (a) (b) Adjusted Gross DTAs (% of Total Adjusted Gross DTAs) Net Admitted Adjusted Gross DTAs (% of Total Net Admitted Adjusted Gross DTAs) 0% 0% 0% 0% 0% 0% (a) (b) (a) (b) (c) Adjusted Gross DTAs (% of Total Adjusted Gross DTAs) Net Admitted Adjusted Gross DTAs (% of Total Net Admitted Adjusted Gross DTAs) Adjusted Gross DTAs (% of Total Adjusted Gross DTAs) Net Admitted Adjusted Gross DTAs (% of Total Net Admitted Adjusted Gross DTAs) Does the Company's tax-planning strategies include the use of reinsurance? 12/31/2011 (4) (5) (6) (Col 4+5) Ordinary Capital Total Percent Percent Percent 0% 0% 0% Change (7) (8) (9) (Col 1-4) (Col 2-5) (Col 7+8) Ordinary Capital Total Percent Percent Percent 0% 0% 0% No 0% 0% 0% 0% B. The Company has no unrecognized DTL s for amounts described in SSAP No. 101, paragraph 7d., and paragraph 31 of accounting principles for income taxes. C. Income tax expense differs from the amount obtained by applying the federal statutory rate of 35%. Current income taxes incurred consist of the following major components: 1. Current income taxes incurred consist of the following major components: In thousands 0% (1) (2) (3) (Col 1-2) 12/31/ /31/2011 Change (a) Federal $ - $ 53 $ (53) (b) Foreign 1,363 3,991 (2,628) (c) Subtotal 1,363 4,044 (2,681) (d) Federal income tax on net capital gains (e) Utilization of capital loss carry-forwards (f) Other 5,707 2,067 3,640 (g) Federal and foreign income taxes incurred $ 7,070 $ 6,111 $ 959 0% 14.8

24 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS The Company does not expect a significant increase in its tax contingency within the twelve month period following the balance sheet. 2. Deferred Tax Assets: The tax effects of temporary differences that give rise to significant portions of DTAs and DTLs are as follows: (a) Ordinary (1) (2) (3) (Col 1-2) In thousands 12/31/ /31/2011 Change (1) Losses incurred $ 510,721 $ 284,970 $ 225,751 (2) Unearned premium reserve 18,101 15,237 2,864 (3) Contingency reserves 172, ,247 (74,680) (4) Investments (5) Deferred acquisition costs (6) Policyholder dividends accrual (7) Fixed assets (8) Compensation and benefits accrual (9) Pension accrual (10) Receivables - nonadmitted (11) Net operating loss & AMT credit carryover 239, ,706 79,146 (12) Tax credit carry-forward (13) Other (including items <5% of total ordinary tax 75,477 18,143 57,334 assets) (99) Subtotal 1,016, , ,415 (b) Statutory valuation allowance adjustment 1,016, , ,415 (c) Nonadmitted (d) Admitted ordinary deferred tax assets (2a99-2b - 2c) (e) Capital: (1) Investments (2) Capital loss carryovers and OTTI 59,537 52,857 6,680 (3) Real estate (4) Other (including items <5% of total capital tax assets) (99) Subtotal 59,537 52,857 6,680 (f) Statutory valuation allowance adjustment 59,537 52,857 6,680 (g) Nonadmitted (h) Admitted capital deferred tax assets (2e99-2f - 2g) (i) Admitted deferred tax assets (2d + 2h) $ - $ - $ - 3. Deferred Tax Liabilities: (a) Ordinary (1) Investments $ - $ - $ - (2) Fixed assets (3) Deferred and uncollected premium (4) Policyholder reserves (5) Other (including items<5% of total ordinary tax liabilities) (99) Subtotal (b) Capital: (1) Investments (2) Real Estate (3) Other (including items <5% of total capital tax liabilities) (99) Subtotal (c) Deferred tax liabilities (3a99 + 3b99) Net deferred tax assets/liabilities (2i - 3c) $ - $ - $

25 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS The change in net deferred income taxes is comprised of the following: In thousands 12/31/ /31/2011 Change Total DTAs $ 1,076,255 $ 779,160 $ 297,095 Valuation allowance (1,076,255) (779,160) (297,095) Total DTLs Net DTA (DTL) $ - $ - - Tax effect of unrealized gains/(losses) (net of valuation allowance) - Change in net deferred income tax[(expense)/benefit] $ - D. The provision for federal income taxes incurred is different from that which would be obtained by applying the statutory federal income tax rate to income before income taxes. The significant items causing this difference are as follows: In thousands Amount Tax Effect Effective Tax Rate (Loss) before taxes $ (836,282) $ (292,699) 35% Permanent adjustments 4,733 1,657 0% Other - - 0% $ (831,549) (291,042) 35% Prior year adjustment - RTP (467) 0% Prior year - True-up adjustment (88,422) 11% Foreign 1,363 0% Change in valuation allowance 312,349-37% Change in contingency reserve 74,680-9% Other items (1,391) 0% Total statutory income taxes $ 7,070-1% Federal and foreign income tax incurred 7,070-1% Change in net deferred income tax - 0% Total statutory income taxes $ 7,070-1% E. Operating Loss and Tax Credit Carryforward and Protective Tax Deposits (1) As of December 31, 2012, the Company had $685 million of net operating loss carry forwards expiring through the year Additionally, at December 31, 2012, the Company has a capital loss carry forward of $161 million expiring through the year (2) There were no income taxes paid in 2011 and 2012 that are available for recoupment in the event of future net losses. Year Ordinary Capital Total 2011 $ - $ - $ Total $ - $ - $ - (3) The Company does not have any deposits admitted under Section 6603 of the Internal Revenue Code. F. Consolidated Federal Income Tax Return (1) As of December 31, 2012, the Company s federal income tax return was consolidated with the following entities: MBIA, Inc. Capmac Holdings, Inc. Cutwater Asset Management Corporation Cutwater Investor Services Corporation Cutwater Colorado Investor Services Corporation MBIA Capital Corporation MBIA Insurance Corporation MBIA Investment Management Corporation MBIA Services Company Municipal Issuers Service Corporation National Public Finance Guarantee Corporation National Public Finance Guarantee Holdings, Inc. Optinuity Alliance Resource Corporation Latam Capital Advisors, Inc. Triple-A One Funding Corporation (2) MBIA Corp. is included in the consolidated tax return of MBIA Inc., its Parent Company. The method of allocation between the companies is subject to written agreement, and is approved by members of the consolidated group. Allocation is generally based upon separate return calculations. However, to the extent that the consolidated tax liability of the Parent Company and its subsidiaries is less than MBIA Corp. s tax liability on a separate company basis, the difference would be held in escrow for two years in the event MBIA Corp. were to incur a tax loss which could be carried back. Intercompany tax balances are settled annually following the Parent Company s filing of its federal income tax return. MBIA Inc. intends, as part of the agreement, that no member s net operating loss will expire without compensation

26 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS G. Federal or Foreign Federal Income Tax Loss Contingencies MBIA Corp. does not have any tax loss contingencies for which it is reasonably possible that the total liability will significantly increase within twelve months of the reporting date. 10. Information Concerning Parent, Subsidiaries, Affiliates and Other Related Parties A. MBIA Corp. is a wholly owned subsidiary of MBIA Inc. B. Transactions with Affiliates (Greater than ½% of Admitted Assets) (1) In 2011, National provided the $1.1 billion secured loan ( the National Secured Loan ) to MBIA Corp. in order to enable MBIA Corp. to fund settlements and commutations of its insurance policies. This loan was approved by the NYSDFS as well as by the boards of directors of MBIA Inc., MBIA Corp. and National. The National Secured Loan has a fixed annual interest rate of 7% and a maturity date of December MBIA Corp. has the option to defer payments of interest when due by capitalizing interest amounts to the loan balance, subject to the collateral value exceeding certain thresholds. MBIA Corp. has to date elected to defer the interest payments due under the loan. MBIA Corp. s obligation to repay the loan is secured by a pledge of collateral having an estimated value in excess of the notional amount of the loan as of December 31, 2012, which collateral comprised the following future receivables of MBIA Corp.: (i) its right to receive put-back recoveries related to ineligible mortgage loans included in its insured second-lien RMBS transactions; (ii) future recoveries on defaulted insured second-lien RMBS transactions resulting from expected excess spread generated by performing loans in such transactions; and (iii) future installment premiums. During the year ended December 31, 2012, MBIA Corp. borrowed an additional $443 million under the National Secured Loan with the approval of the NYSDFS at the same terms as the original loan to fund additional commutations of its insurance policies. As of December 31, 2012, the outstanding principal amount under this loan was $1.7 billion. MBIA Corp. may seek to borrow additional amounts under the loan in the future. Any such increase or other amendment to the terms of the loan would be subject to regulatory approval by the NYSDFS. (2) During 2012, MBIA Corp. received $16 million from National for premiums on policies refunded prior to January 1, 2009 the effective date of the reinsurance agreement between the two companies. Additionally, on November 7, 2011, MBIA Corp. received $113 million as a settlement of premium from National primarily related to the recognition of an error. Refer to Note 2: Accounting Changes and Correction of Errors for further information. (3) During 2011, MBIA Corp. sold investments in three series of shares (the Trust Shares ) and a portfolio of individual bonds (the Bonds ) to an affiliate, National for $180 million. The sale of both the Trust Shares and the Bonds were non-disapproved by the NYSDFS pursuant to Section 1505 of the NYIL. (4) In February 2009, after receiving the required regulatory approvals, MBIA Inc. established and capitalized National as a U.S. public finance-only financial guarantor, which was previously named MBIA Insurance Corp. of Illinois ( MBIA Illinois ) and previously owned by MBIA Corp. In connection with the establishment of National, the stock of MBIA Illinois was transferred to a newly established intermediate holding company, which is wholly owned by MBIA Inc. Additionally, National was further capitalized with approximately $2.1 billion from funds distributed by MBIA Corp. to MBIA Inc. as a dividend and return of capital, which MBIA Inc. contributed to National through the intermediate holding company. (5) During the fourth quarter of 2008, an intercompany secured loan was established between MBIA Inc. and MBIA Corp. for up to $2.0 billion to support the projected liquidity needs of the asset/liability products segment of MBIA Inc. Pursuant to the loan, MBIA Inc. may transfer securities in its portfolio to MBIA Corp. in exchange for $2.0 billion in cash. The loan was repaid in full during The amount outstanding under this agreement $300 million as of December 31, The loan was 19% of admitted assets at December 31, 2011 and had been approved by the NYSDFS in accordance with Section 1505 of the NYIL. As a condition to obtaining Section 1505 approval to enter into the secured loan, MBIA Inc. and MBIA Corp. agreed to provide notice to the NYSDFS prior to entering into certain transactions or taking other corporate actions (such as paying dividends when applicable statutory tests are satisfied) that would not otherwise require regulatory approval. Interest income on the loan for the years ended December 31, 2012 and 2011, was $4 million and $17 million, respectively. During the years ended December 31, 2012 and 2011, MBIA Inc. repaid $300 million and $675 million of the loan, respectively to MBIA Corp. In May 2012, MBIA Corp. received approval from the NYSDFS to extend the maturity of the intercompany secured loan to May 2013 for a maximum outstanding amount of $450 million. (6) During 2012, MBIA Corp. did not receive any capital contributions from its parent, MBIA Inc. (7) During 2012, MBIA Corp. did not declare or pay any dividends to MBIA Inc. C. There have been no changes in the method of establishing terms with respect to any related parties as of December 31, D. As of December 31, 2012, MBIA Corp. reported $2 million as an amount payable to MBIA Inc. and $10 million as an amount payable to its subsidiaries and affiliates. The terms of the settlement require that these amounts be settled within 90 days. Also, as of December 31, 2012, MBIA Corp. reported a receivable of $4 million (net of non-admitted) from its subsidiaries and affiliates. E. MBIA Corp. insures outstanding investment agreement and medium-term note ( MTN ) liabilities for affiliated companies. The total gross par outstanding as of December 31, 2012 was approximately 3% of MBIA Corp. s total gross outstanding par value. Refer to Note 21: Other Items for further information. MBIA Corp. maintains a reinsurance agreement with MBIA UK Insurance Limited ( MBIA UK ) providing for MBIA Corp.'s reimbursement of the losses incurred by MBIA UK in excess of a specified threshold and a net worth maintenance agreement in which MBIA Corp. agrees to maintain the net worth of MBIA UK, to remain its sole shareholder and not to pledge its shares. Under the reinsurance agreement, MBIA Corp. has agreed to reimburse MBIA UK on an excess-of-loss basis for losses incurred in 14.11

27 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS each calendar year for net retained insurance liability, subject to certain contract limitations. Under the net worth maintenance agreement, MBIA Corp. agrees to maintain a minimum capital and surplus position at MBIA UK in accordance with UK and New York State legal requirements. For the year ended December 31, 2012, MBIA Corp. recorded $30 million related to the excess-ofloss agreement with MBIA UK. F. In the first quarter of 2010, MBIA Corp. entered into a Master Services Agreement ( MSA ) with a newly formed affiliate service company, Optinuity Alliance Resources Corporation ( Optinuity ), dated January 1, 2010, which was approved by the NYSDFS. Employees of the service company were principally transferred from MBIA Corp. As a result of the MSA, Optinuity provides various support services including management, legal, accounting, treasury, information technology, among others, on a fee-forservice basis. The fee for the year ended December 31, 2012 was $26 million. MBIA Corp. s investment portfolio is managed by Cutwater Investor Services Corp. ( Cutwater-ISC ), a wholly owned subsidiary of Cutwater Holdings, LLC which provides fixed-income management services for MBIA Inc. and its affiliates, as well as thirdparty institutional clients. Prior to January 2011, Cutwater Asset Management Corp. ( Cutwater-AMC ) managed MBIA Corp. s investment portfolio, which was assigned to Cutwater-CISC in January For the years ended December 31, 2012 and 2011, Cutwater ISC charged fees of $3 million and $6 million, respectively, to MBIA Corp., based on the performance of its investment portfolio in each period. These fees are reported as investment expense within Net investment income on the Company s Statement of Income. G. MBIA Corp. an entity domiciled in New York, is a wholly owned subsidiary of MBIA Inc. who owns all the outstanding common shares of MBIA Corp. MBIA Inc. is a publicly traded insurance holding company whose common stock is listed on the New York Stock Exchange. MBIA Inc. is incorporated in the State of Connecticut and located in the State of New York. The organization chart is included in Schedule Y. H. MBIA Corp. owns no shares, directly or indirectly, of an upstream intermediate entity or ultimate parent. I. MBIA Corp. owns 100% of UK Holdings which is carried at its statutory equity basis of $430 million as of December 31, 2012 which exceeds 10% of MBIA Corp. s admitted assets. As of December 31, 2012, UK Holdings had total assets and liabilities of $759 million and $329 million, respectively. For the year ended December 31, 2012, UK Holdings had a net loss of $69 million. J. MBIA Corp. did not recognize any impairment write-down for its investment in subsidiary, controlled or affiliated companies during the year ended December 31, K. MBIA Corp. does not have foreign insurance subsidiaries valued using Commissioners' Annuity Reserve Valuation Method ( CARVM ). L. MBIA Corp. does not have any investments in a downstream noninsurance holding company. 11. Debt A. In December 2011, MBIA Corp. entered into the National Secured Loan under which National loaned MBIA Corp. $1.1 billion at a fixed annual interest rate of 7% with a maturity date of December During 2012, MBIA Corp. borrowed an additional $443 million under the National Secured Loan with the approval of the NYSDFS. As of December 31, 2012, the amount outstanding was $1.7 billion. For additional information, refer to Note 10: Information Concerning Parent, Subsidiaries and Affiliates. The secured loan agreement was approved by the NYSDFS. B. MBIA Corp. has no funding agreement with Federal Home Loan Banks ( FHLB ). 12. Retirement Plans, Deferred Compensation, Postemployment Benefits and Compensated Absences and Other Postretirement Benefit Plans A. MBIA Corp. does not sponsor a defined benefit plan. B. MBIA Corp. participates in its parent company s defined contribution plan. C. MBIA Corp. does not have any multiemployer plans. D. Consolidated/Holding Company Plans MBIA Corp. participates in its Parent Company s pension plan, which covers substantially all employees. The pension plan is a qualified non-contributory defined contribution plan to which MBIA Corp. contributes 10% of each eligible employee's annual compensation. Annual compensation for determining such contributions consists of base salary, bonus and commissions, as applicable. Pension benefits vest over a five-year period with 20% vested after two years, 60% vested after three years, 80% vested after four years and 100% vested after five years. The Company funds the annual pension contribution by the following February of each applicable year. Gross pension expense related to the qualified pension plan for the years ended December 31, 2012 and 2011 was $0.6 million and $0.9 million, respectively. MBIA Corp. s Parent Company has a qualified profit sharing/401(k) plan in which it participates. The plan is a voluntary contributory plan that allows eligible employees to defer compensation for federal income tax purposes under Section 401(k) of the Internal Revenue Code of 1986, as amended. Employees may contribute, through payroll deductions, up to 25% of eligible compensation. MBIA Corp. matches employee contributions up to the first 5% of such compensation and are made in the form of cash, whereby participants may direct the match to an investment of their choice. The benefit of MBIA Corp. s contributions vest over a five-year period with 20% vested after two years, 60% vested after three years, 80% vested after four years and 100% vested after five years. Generally, a participating employee is entitled to distributions from the plan upon termination of employment, retirement, death or disability. Participants who qualify for distribution may receive a single lump sum, transfer assets to another 14.12

28 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS qualified plan or individual retirement account, or receive a series of specified installment payments. Profit sharing/401(k) expense related to the qualified profit-sharing/401(k) plan for the years ended December 31, 2012 and 2011 was $0.1 million and $0.6 million, respectively. In addition to the above two plans, MBIA Corp. also participates in its Parent Company s non-qualified deferred compensation plan. Contributions to the above plans that exceed limitations established by federal regulations are then contributed to the nonqualified deferred compensation plan. The non-qualified pension expense for the years ended December 31, 2012 and 2011 was $0.5 million and $0.7 million, respectively. The non-qualified profit-sharing/401(k) expense for the years ended December 31, 2012 and 2011 was $0.3 million and $0.2 million, respectively. MBIA Corp. participates in its Parent Company s 2005 Omnibus Incentive Plan (the Omnibus Plan ), as amended May 7, 2009 and May 1, The Omnibus Plan may grant any type of award including stock options, performance shares, performance units, restricted stock, restricted stock units and dividend equivalents. Following the effective date of the Omnibus Plan, no new options or awards were granted under any of the prior plans authorized by the MBIA Inc. shareholders. The stock option component of the Omnibus Plan enables key employees to acquire shares of MBIA Inc. common stock. The stock option grants, which may be awarded every year, provide the right to purchase shares of MBIA Inc. common stock at the fair value of the stock on the date of grant. Options are exercisable as specified at the time of grant depending on the level of the recipient (generally four or five years) and expire either seven or ten years from the date of grant (or shorter if specified or following termination of employment). Under the restricted stock component of the Omnibus Plan, certain employees are granted restricted shares of MBIA Inc. s common stock. These awards have a restriction period lasting three, four or five years depending on the type of award, after which time the awards fully vest. During the vesting period these shares may not be sold. Restricted stock may be granted to all employees. MBIA Inc. maintains voluntary retirement benefits, which provide certain benefits to all of MBIA Corp. s eligible employees upon retirement. A description of these benefits is included in MBIA Inc. s proxy statement. One of the components of the retirement program, for those employees that are retirement eligible, is to continue to vest all performance-based stock options and restricted share awards beyond the retirement date in accordance with the original vesting terms and to immediately vest all outstanding time-based stock options and restricted share grants. MBIA Corp. s proportionate share of compensation cost for its participation in its Parent Company s stock option program for each of the years ended December 31, 2012 and 2011 was $2 million and $1 million, respectively. MBIA Corp. s proportionate share of compensation cost related to the restricted stock program for each of the years ended December 31, 2012 and 2011 was $5 million for each applicable year. During 2011 and 2010, MBIA Corp. granted deferred cash-based long-term incentive awards. No new grants were awarded during These grants have a vesting period of either three or five years, after which time the award fully vests. Payment is generally contingent upon the employee s continuous employment with MBIA Corp. through the payment date. The deferred cash awards are granted to employees from the vice-president level up. Compensation expense related to the deferred cash awards was $2 million for each applicable year in the years ended December 31, 2012 and E. Postemployment Benefits and Compensated Absences MBIA Corp. does not have a postemployment benefit plan. MBIA Corp. does have an obligation for compensation related to earned vacation. F. Impact of Medicare Modernization Act on Postretirement Benefits MBIA Corp. does not have a postretirement benefit plan. 13. Capital and Surplus, Dividend Restrictions and Quasi-Reorganizations (1) MBIA Corp. has 67,936 common shares authorized, issued and outstanding as of December 31, 2012, with a par value of $ per share. All shares are Class A shares. (2) MBIA Corp. has 2,759 shares of Series A preferred stock issued and outstanding as of December 31, 2012, with a par value of $1,000 and a liquidation preference of $100,000 per share. The carrying value of the preferred stock was $276 million as of December 31, 2012 and In accordance with MBIA s fixed-rate election, the dividend rate on the preferred stock was determined using a fixed-rate equivalent of London Interbank Offered Rate ( LIBOR ) plus 200 basis points. Each share of preferred stock has a par value of $1,000 with a liquidation preference of $100,000. Subject to certain requirements, the preferred stock may be redeemed, in whole or in part, at the option of MBIA Corp. at any time or from time to time for cash at a redemption price equal to the liquidation preference per share plus any accrued and unpaid dividends thereon at the date of redemption for the then current dividend period and any previously accumulated dividends payable without interest on such unpaid dividends. As of December 31, 2012 and 2011, there were no dividends declared on preferred stock due to MBIA Corp. s unassigned surplus deficit. Payment of dividends on MBIA Corp. s preferred stock is subject to the same restrictions that apply to dividends on common stock under NYIL. The terms of the preferred stock provide that if MBIA Corp. fails to pay dividends in full on the preferred stock for 18 consecutive months, the authorized number of members of the MBIA Corp. board of directors will automatically be increased by two and the holders of the preferred stock will be entitled to fill the vacancies so created at a special meeting of the preferred stockholders of MBIA Corp. Due to its nonpayment of dividends on the preferred stock for 18 consecutive months, MBIA Corp. held a meeting of preferred stockholders on August 12, 2011 to elect the two new directors, and the meeting was adjourned because a quorum was not present

29 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS During 2012, no shares were repurchased. During 2011, MBIA Inc. repurchased 111 shares of the outstanding preferred stock of MBIA Corp. at a weighted average purchase price of approximately $20,200 per share or 20.20% of the face value. As of December 31, 2012, 1,315 preferred shares of MBIA Corp. were held by unaffiliated investors with a carrying value of $132 million. (3) and (4) NYIL regulates the payment of dividends by financial guarantee insurance companies and provides that such companies may not declare or distribute dividends except out of statutory earned surplus. Under the NYIL, the sum of (i) the amount of dividends declared or distributed during the preceding 12-month period and (ii) the dividend to be declared may not exceed the lesser of (a) 10% of policyholders surplus, as reported in the latest statutory financial statements and (b) 100% of adjusted net investment income for such 12-month period (the net investment income for such 12-month period plus the excess, if any, of net investment income over dividends declared or distributed during the two-year period preceding such 12-month period), unless the Superintendent of the NYSDFS approves a greater dividend distribution based upon a finding that the insurer will retain sufficient surplus to support its obligations. In 2012 and 2011, MBIA Corp. did not declare or pay any dividends to MBIA Inc. or the holders of its preferred stock. MBIA Corp. is currently unable to pay dividends, including those related to its preferred stock, as a result of its earned surplus deficit as of December 31, 2012 and 2011 MBIA Corp. is not expected to have any statutory capacity to pay any dividends in the near term. In connection with MBIA Corp. obtaining approval from the NYSDFS to release excessive contingency reserves as of September 30, 2011 December 31, 2011 and March 31, 2012, MBIA Corp. agreed that it would not pay any dividends without prior approval from NYSDFS. (5) In accordance with items (3) and (4) above, MBIA Corp. did not have any dividend capacity as of December 31, (6) Other than the items mentioned in (3) and (4) above, MBIA Corp. has no restrictions on unassigned surplus as of December 31, (7) MBIA Corp. is not a mutual company; as such, there were no mutual surplus advances for the year ended December 31, (8) MBIA Corp. owns no common stock in affiliates for special purposes as of December 31, (9) MBIA Corp. did not have any changes in the balances of special surplus funds during 2012 or (10)The portion of unassigned funds (surplus) represented by cumulative net unrealized capital gains is $274 million. The portion of unassigned funds (surplus) represented by non-admitted assets is $5 million. (11)On January 16, 2008, MBIA Corp. issued $1.0 billion of 14% fixed-to-floating rate surplus notes due January 15, 2033 as presented in the following table: In thousands Par Value (Face Amount) of Note Carrying Value of Note Principal And/Or Interest Paid Current Year (2012) Total Principal And/Or Interest Paid Unapproved Principal And/Or Interest Date Issued Interest Rate Date of Maturity 1/16/ % $1,000,000 $952,655 $133,372 $650,443 $66,686 1/15/2033 (see below) As of December 31, 2012 and 2011, MBIA Corp. had $953 million in surplus debentures outstanding. In January and July 2012, MBIA Corp. received approval from the NYSDFS to pay the January 15 and July15, 2012 interest on its surplus notes. As of December 31, 2012 and 2011, MBIA Corp. made total interest payments of $133 million and $67 million, respectively, related to its surplus notes. Surplus note interest expense is included within Net investment (expense) income on the Statement of Income. The surplus notes have an initial interest rate of 14% until January 15, 2013 and thereafter at an interest rate of three-month LIBOR plus 11.26% from and including January 15, 2013 to but excluding the date on which the notes are paid in full, payable quarterly in arrears on January 15, April 15, July 15, and October 15 of each year, beginning on April 15, A request for approval of the January 15, 2013, note interest payment was denied by the NYSDFS. MBIA Corp. provided notice to the Fiscal Agent that it has not made a scheduled interest payment. The deferred interest payment will become due on the first business day on or after which MBIA Corp. obtains approval to make such payment. No interest will accrue on the deferred interest. The surplus notes were callable at par at the option of MBIA Corp. on the fifth anniversary of the date of issuance, and are callable at par on January 15, 2018 and every fifth anniversary thereafter and are callable on any other date at par plus a make-whole amount, subject to prior approval by the Superintendent of the NYSDFS and other restrictions. The cash received from the issuance of surplus notes was used for general business purposes. During 2012, no surplus notes were repurchased. During 2011, an affiliated entity purchased $5 million par value of surplus notes issued by MBIA Corp. at approximately 55% of par value. As of December 31, 2012, MBIA Inc., through its corporate segment, owned $13 million of MBIA Corp. s surplus notes. The notes are unsecured debt obligations and were issued in accordance with Section 1307 of the NYIL. The notes rank equally with any future surplus notes or similar obligations of MBIA Corp., and will be subordinate in right of payment to all other existing and future indebtedness, policy claims and other creditor claims of MBIA Corp. Each payment of interest on or principal of the notes (including upon redemption) may be made only with the prior approval of the NYSDFS and only out of surplus funds available for such payments under the NYIL. (12) and (13) MBIA Corp. has not undergone a reorganization or quasi-reorganization

30 14. Contingencies ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS A. In the normal course of operating its business, MBIA Corp. may be involved in various legal proceedings. Additionally, MBIA Inc. may be involved in various legal proceedings that directly or indirectly impact MBIA Corp. MBIA Inc. has received subpoenas or informal inquiries from a variety of regulators, regarding a variety of subjects. MBIA Inc. has cooperated fully with each of these regulators and has or is in the process of satisfying all such requests. MBIA Inc. may receive additional inquiries from these or other regulators and expects to provide additional information to such regulators regarding their inquiries in the future. Recovery Litigation On September 30, 2008, MBIA Corp. commenced an action in New York State Supreme Court, New York County, against Countrywide Home Loans, Inc., Countrywide Securities Corp. and Countrywide Financial Corp. (collectively, Countrywide ). An amended complaint, adding Bank of America as successor to Countrywide s liabilities, and Countrywide Home Loans Servicing LP as defendants was filed on August 24, The amended complaint alleges that Countrywide fraudulently induced MBIA Corp. to provide financial guarantee insurance on securitizations of home equity lines of credit ( HELOC ) and closed-end secondliens by misrepresenting the true risk profile of the underlying collateral and Countrywide s adherence to its strict underwriting standards and guidelines. The complaint also alleges that Countrywide breached its representations and warranties and its contractual obligations, including its obligation to cure or repurchase ineligible loans as well as its obligation to service the loans in accordance with industry standards. Expert discovery was completed as of September 20, On September 19, 2012, MBIA Corp. and Countrywide filed respective motions for summary judgment regarding Countrywide s primary liability and argument was heard on December 12 and 13, On September 28, 2012, MBIA Corp. and Bank of America filed motions for summary judgment regarding Bank of America s successor liability and argument was heard on January 9 and 10, Oral argument with respect to the trial court s partial summary judgment decision regarding proof of causation is scheduled for March 12, 2013 before the Appellate Division, First Department. On July 10, 2009, MBIA Corp. commenced an action in Los Angeles Superior Court against Bank of America Corporation, Countrywide Financial Corporation, Countrywide Home Loans, Inc., Countrywide Securities Corporation, Angelo Mozilo, David Sambol, Eric Sieracki, Ranjit Kripalani, Jennifer Sandefur, Stanford Kurland, Greenwich Capital Markets, Inc., HSBC Securities (USA) Inc., UBS Securities, LLC, and various Countrywide-affiliated Trusts. The complaint alleges that Countrywide made numerous misrepresentations and omissions of material fact in connection with its sale of certain RMBS, including that the underlying collateral consisting of mortgage loans had been originated in strict compliance with its underwriting standards and guidelines. MBIA Corp. commenced this action as subrogee of the purchasers of the RMBS, who incurred severe losses that have been passed on to MBIA Corp. as the insurer of the income streams on these securities. On June 21, 2010, MBIA Corp. filed its second amended complaint. The court has allowed limited discovery to proceed while otherwise staying the case pending further developments in the New York Countrywide action described in the prior paragraph. On October 15, 2008, MBIA Corp. commenced an action in the United States District Court for the Southern District of New York against Residential Funding Company, LLC ( RFC ). On December 5, 2008, a notice of voluntary dismissal without prejudice was filed in the Southern District of New York and the complaint was re-filed in the Supreme Court of the State of New York, New York County. The complaint alleges that RFC fraudulently induced MBIA Corp. to provide financial guarantee policies with respect to five RFC closed-end second-lien and HELOC securitizations, and that RFC breached its contractual representations and warranties, as well as its obligation to repurchase ineligible loans, among other claims. The case is currently stayed as a result of the Chapter 11 filing of ResCap on May 14, 2012 in the United States Bankruptcy Court for the Southern District of New York. On April 1, 2010, MBIA Corp. commenced an action in New York State Supreme Court, New York County, against GMAC Mortgage, LLC ( GMAC ). The complaint alleges fraud and negligent misrepresentation on the part of GMAC in connection with the procurement of financial guarantee insurance on three RMBS transactions, breach of GMAC s representations and warranties and its contractual obligation to cure or repurchase ineligible loans and breach of the implied duty of good faith and fair dealing. The case is currently stayed as a result of the Chapter 11 filing of ResCap on May 14, 2012 in the United States Bankruptcy Court for the Southern District of New York. On December 14, 2009, MBIA Corp. commenced an action in New York State Supreme Court, New York County, against Credit Suisse Securities (USA) LLC, DLJ Mortgage Capital, Inc., and Select Portfolio Servicing Inc. (collectively, Credit Suisse ). The complaint seeks damages for fraud and breach of contractual obligations in connection with the procurement of financial guarantee insurance on the Home Equity Mortgage Trust Series securitization. On January 30, 2013, MBIA Corp. filed its amended complaint. The amended complaint alleges, among other claims, that Credit Suisse falsely represented (i) the attributes of the securitized loans; (ii) that the loans complied with the governing underwriting guidelines; and (iii) that Credit Suisse had conducted extensive due diligence on and quality control reviews of the securitized loans to ensure compliance with the underwriting guidelines. The complaint further alleges that the defendants breached their contractual obligations to cure or repurchase loans found to be in breach of the representations and warranties applicable thereto and denied MBIA Corp. the requisite access to all records and documents regarding the securitized loans. Defendants response to the amended complaint is due March 8, On September 14, 2012, MBIA Corp. filed a complaint alleging fraud against J.P. Morgan Securities LLC (f/k/a Bear, Stearns & Co. Inc) relating to Bear, Stearns & Co. Inc. s role as lead securities underwriter on the GMAC Mortgage Corporation Home Equity Loan Trust 2006-HE4. On November 26, 2012, the defendant filed its answer. On September 17, 2012, MBIA Corp. filed a complaint in Minnesota state court for aiding and abetting fraud and breach of contract against certain Ally Bank companies relating to seven MBIA-insured mortgage-backed securitizations sponsored by RFC and GMAC during The defendants removed to the United States District Court for the District of Minnesota on October 5, 2012, and filed a notice of motion to dismiss on October 12, A hearing on the defendants motion to dismiss is scheduled for April 25,

31 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS On January 11, 2013, MBIA Corp. commenced a lawsuit in the United States District Court for the Southern District of New York against Flagstar ABS, LLC, Flagstar Bank, FSB, and Flagstar Capital Markets Corporation (collectively, "Flagstar") alleging breach of contract in connection with the Flagstar and second-lien RMBS transactions (the Flagstar Transactions ). Specifically, the complaint alleges that Flagstar breached the repurchase protocol and breached various representations and warranties relating to the nature of the loans included in the securitizations and contained within the insurance agreements entered into in connection with the Flagstar Transactions. Defendants response to the complaint is due February 28, On October 14, 2008, June 17, 2009 and August 25, 2009, MBIA Corp. submitted proofs of claim to the Federal Deposit Insurance Corporation ( FDIC ) with respect to the resolution of IndyMac Bank, F.S.B. for both pre- and post-receivership amounts owed to MBIA Corp. as a result of IndyMac s contractual breaches and fraud in connection with financial guarantee insurance issued by MBIA Corp. on securitizations of HELOCs. The proofs of claim were subsequently denied by the FDIC. MBIA Corp. has appealed the FDIC s denial of its proofs of claim via a complaint, filed on May 29, 2009, against IndyMac Bank, F.S.B. and the FDIC, as receiver, in the United States District Court for the District of Columbia and alleges that IndyMac fraudulently induced MBIA Corp. to provide financial guarantee insurance on securitizations of HELOCs by breaching contractual representations and warranties as well as negligently and fraudulently misrepresenting the nature of the loans in the securitization pools and IndyMac s adherence to its strict underwriting standards and guidelines. On October 6, 2011, the court issued a ruling granting the FDIC s motion to dismiss, which MBIA Corp. appealed. Oral argument was heard on November 14, 2012 and a decision is pending. On September 22, 2009, MBIA Corp. commenced an action in Los Angeles Superior Court against IndyMac ABS, Inc., Home Equity Mortgage Loan Asset-Backed Trust, Series 2006-H4, Home Equity Mortgage Loans Asset-Backed Trust, Series INDS 2007-I, Home Equity Mortgage Loan Asset-Backed Trust, Series INDS , Credit Suisse Securities (USA), L.L.C., UBS Securities, LLC, JPMorgan Chase & Co., Michael Perry, Scott Keys, Jill Jacobson, and Kevin Callan. The Complaint alleges that IndyMac Bank made numerous misrepresentations and omissions of material fact in connection with its sale of certain RMBS, including that the underlying collateral consisting of mortgage loans had been originated in strict compliance with its underwriting standards and guidelines. MBIA Corp. commenced this action as subrogee of the purchasers of the RMBS, who incurred severe losses that have been passed on to MBIA Corp. as the insurer of the income streams on these securities. On October 19, 2009, MBIA Corp. dismissed IndyMac ABS, Inc. from the action without prejudice. On October 23, 2009, defendants removed the case to the United States District Court for the Central District of California. On November 30, 2009, the IndyMac trusts were consensually dismissed from the litigation. On August 3, 2010, the court denied defendants Motion for Judgment on the Pleadings in its entirety. Effective January 30, 2012, the case has been reassigned to Judge Kenneth Freeman. Transformation Litigation On May 13, 2009, a complaint was filed in the New York State Supreme Court against MBIA Inc., MBIA Corp. and National, entitled ABN AMRO Bank N.V. et al. v. MBIA Inc. et al. The plaintiffs, a group of domestic and international financial institutions, purport to be acting as holders of insurance policies issued by MBIA Corp. directly or indirectly guaranteeing the repayment of structured finance products. The complaint alleges that certain of the terms of the transactions entered into by MBIA Inc., which were approved by the New York State Department of Insurance, constituted fraudulent conveyances and a breach of the implied covenant of good faith and fair dealing under New York law. The complaint seeks a judgment (a) ordering the defendants to unwind the transactions, (b) declaring that the transactions constituted a fraudulent conveyance, (c) declaring that MBIA Inc. and National are jointly and severally liable for the insurance policies issued by MBIA Corp., and (d) ordering damages in an unspecified amount. On February 17, 2010, the court denied the defendants motion to dismiss. Sixteen of the original eighteen plaintiffs have dismissed their claims, several of which dismissals were related to the commutation of certain of their MBIA-insured exposures. On June 15, 2009, the same group of eighteen domestic and international financial institutions who filed the above described plenary action in New York State Supreme Court filed a proceeding pursuant to Article 78 of New York s Civil Practice Law & Rules in New York State Supreme Court, entitled ABN AMRO Bank N.V. et al. v. Eric Dinallo, in his capacity as Superintendent of the New York State Insurance Department, the New York State Insurance Department, MBIA Inc. et al. The petition seeks a judgment (a) declaring void and to annul the approval letter of the Superintendent of the Department of Insurance, (b) to recover dividends paid in connection with the Transactions, and (c) declaring that the approval letter does not extinguish plaintiffs direct claims against MBIA Inc. in the plenary action described above. MBIA Inc. and the New York State Insurance Department filed their answering papers to the Article 78 Petition on November 24, 2009 and argued that based on the record and facts, approval of Transformation and its constituent transactions was neither arbitrary nor capricious nor in violation of NYIL. The Article 78 hearing concluded on June 7, A decision is pending. Sixteen of the original eighteen plaintiffs have dismissed their claims, several of which dismissals were related to the commutation of certain of their MBIA-insured exposures. On September 10, 2012, CQS ABS Master Fund Ltd., CQS Select ABS Master Fund Ltd., and CQS ABS Alpha Master Fund Ltd. as holders of MBIA-insured residential mortgage-backed bonds filed suit against MBIA Inc., MBIA Corp. and National. The complaint alleges that certain of the terms of the transactions entered into by MBIA Corp., which were approved by the New York State Department of Insurance, constituted fraudulent conveyances under 273, 274, 276 and 279(c) of New York Debtor and Creditor Law and a breach of the implied covenant of good faith and fair dealing under New York common law. On October 19, 2012, MBIA Corp. filed its answer. On November 9, 2012, certain holders of MBIA Corp. s perpetual preferred shares filed a complaint in New York State Supreme Court, New York County titled Broadbill Partners LP et al. v. MBIA Inc. et al. alleging harm in connection with (i) MBIA Corp. s exercise of put options in or around November 2008 pursuant to put option agreements with certain custodial trusts (i.e., North Castle Custodial Trusts I through North Castle Custodial Trust VIII), (ii) MBIA Inc. s February 2009 Transformation and (iii) the August 2011 meeting of preferred stockholders to elect directors. Plaintiffs allege twenty-one causes of action including breach of contract, unjust enrichment, constructive and resulting trust, recession, breach of the covenant of good faith and fair dealing, declaratory relief, fraud, intentional interference with contract, violations of NYIL and New York Debtor and Creditor Law, and joint and several liability. On January 15, 2013 MBIA Inc. filed its motion to dismiss

32 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS On October 22, 2010, a similar group of domestic and international financial institutions who filed the above described Article 78 proceeding and related plenary action in New York State Supreme Court filed an additional proceeding pursuant to Article 78 of New York s Civil Practice Law & Rules in New York State Supreme Court, entitled Barclays Bank PLC et. al. v. James Wrynn, in his capacity as Superintendent of the New York State Insurance Department, the New York State Insurance Department, MBIA Inc. et al. This petition challenges the New York State Insurance Department s June 22, 2010 approval of National s restatement of earned surplus. The proceeding is currently stayed through April 19, Corporate Litigation On December 13, 2012, Bank of America filed a complaint against MBIA Inc. and The Bank of New York Mellon, as Indenture Trustee in New York State Supreme Court, County of Westchester, alleging MBIA Corp.'s consent solicitation completed on November 26, 2012, resulting in amendments to the indentures governing five series of MBIA Inc.'s notes, tortiously interfered with Bank of America's November 13, 2012 tender offer to buy all of MBIA Inc.'s 5.7% senior notes due On January 8, 2013, MBIA Inc. filed a motion to transfer venue to New York State Supreme Court, New York County and the briefing was completed on January 31, On February 19, 2013, Bank of America filed an amended complaint. On February 7, 2013, MBIA Inc. filed a complaint for declaratory and injunctive relief against Bank of America Corp. and Blue Ridge Investments, L.L.C. in New York State Supreme Court, County of Westchester. The complaint seeks, among other things, a declaration that amendments to indentures and/or the issuance of supplemental indentures governing five series of MBIA Inc. s notes that resulted from MBIA Corp. s consent solicitation completed on November 26, 2012, were valid and properly effectuated and did not give rise to an event of default under the Senior Indenture dated as of November 24, 2004 between MBIA Inc. and the Bank of New York, as Trustee. On July 23, 2008, the City of Los Angeles filed a complaint in the Superior Court of the State of California, County of Los Angeles, against a number of financial guarantee insurers, including MBIA Inc. At the same time and subsequently, additional complaints against MBIA Inc. and nearly all of the same co-defendants were filed by various municipal entities and quasimunicipal entities, mostly in California. These cases are part of a coordination proceeding in Superior Court, San Francisco County, before Judge Richard A. Kramer, referred to as the Ambac Bond Insurance Cases, which name as defendants MBIA Inc., Ambac Assurance Corp., Syncora Guarantee, Inc. f/k/a XL Capital Assurance Inc., Financial Security Assurance, Inc., Assured Guaranty Corp., Financial Guaranty Insurance Company, and CIFG Assurance North America, Inc., Fitch Inc., Fitch Ratings, Ltd., Fitch Group, Inc., Moody s Corporation, Moody s Investors Service, Inc., The McGraw-Hill Companies, Inc., and Standard & Poor s Corporation. In August 2011, the plaintiffs filed amended versions of their respective complaints. The claims allege participation by all the defendants in a conspiracy in violation of California s antitrust laws to maintain a dual credit rating scale that misstated the credit default risk of municipal bond issuers and not-for-profit issuers and thus created market demand for bond insurance. The plaintiffs also allege that the individual bond insurers participated in risky financial transactions in other lines of business that damaged each bond insurer s financial condition (thereby undermining the value of each of their guaranties), and each failed adequately to disclose the impact of those transactions on their financial condition. In addition to the statutory antitrust claim, plaintiffs assert common law claims of breach of contract and fraud against MBIA Corp. and the other monoline defendants. The non-municipal plaintiffs also allege a California unfair competition cause of action. On May 1, 2012, the court ruled in favor of the monoline defendants on their special motion to strike pursuant to California s Anti-SLAPP statute. A hearing on the motion is scheduled for March 12, On July 23, 2008, the City of Los Angeles filed a separate complaint in the Superior Court, County of Los Angeles, naming as defendants MBIA Inc. and other financial institutions, and alleging fraud and violations of California s antitrust laws through bidrigging in the sale of guaranteed investment contracts and what plaintiffs call municipal derivatives to municipal bond issuers. The case was removed to federal court and transferred by order dated November 26, 2008, to the Southern District of New York for inclusion in the multidistrict litigation In re Municipal Derivatives Antitrust Litigation, M.D.L. No Complaints making the same allegations against MBIA Inc. and nearly all of the same co-defendants were then, or subsequently, filed by municipal entities and quasi-municipal entities, mostly in California, and three not-for-profit retirement community operators. These cases have all been added to the multidistrict litigation. The plaintiffs in all of the cases assert federal and either California or New York state antitrust claims. As of May 31, 2011, MBIA Inc. has answered all of the existing complaints. On March 12, 2010, the City of Phoenix, Arizona filed a complaint in the United States District Court for the District of Arizona against MBIA Corp., Ambac Assurance Corp. and Financial Guaranty Insurance Company relating to insurance premiums charged on municipal bonds issued by the City of Phoenix between 2004 and The plaintiff s complaint alleges pricing discrimination under Arizona insurance law and unjust enrichment. On April 5, 2010, Tri-City Healthcare District, a California public healthcare legislative district, filed a complaint in the Superior Court of California, County of San Francisco, against MBIA Inc., MBIA Corp., National, certain MBIA employees (collectively for this paragraph, MBIA ) and various financial institutions and law firms. Tri-City subsequently filed five amended complaints. The Fifth Amended Complaint, filed on March 7, 2012, purports to state seven causes of action against MBIA for, among other things, fraud, negligent misrepresentation, breach of contract and violation of the Business and Professions Code arising from Tri- City Healthcare District s investment in auction rate securities. MBIA. filed its answer to the remaining causes of action on November 26, MBIA Inc. and MBIA Corp. are defending against the aforementioned actions in which they are a defendant and expect ultimately to prevail on the merits. There is no assurance, however, that they will prevail in these actions. Adverse rulings in these actions could have a material adverse effect on MBIA Corp. s ability to implement its strategy and on its business, results of operations, cash flows and financial condition. At this stage of the litigation, there has not been a determination as to the amount, if any, of damages. Accordingly, MBIA Corp. is not able to estimate any amount of loss or range of loss. There are no other material lawsuits pending or, to the knowledge of MBIA Corp., threatened, to which MBIA Corp. or any of its subsidiaries is a party

33 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS B. MBIA Corp. does not issue life insurance policies and therefore is not subject to guaranty fund assessments. C. MBIA Corp. has not recognized any gain contingencies subsequent to the balance sheet date. D. MBIA Corp. has no extra contractual obligation and bad faith losses. E. MBIA Corp. has no product warranties. F. MBIA Corp. has no other contingencies that would have a material effect on the financial statements. 15. Leases A. Lessee Operating Lease (1) a. On March 1, 2010, MBIA Corp. entered into a lease agreement with National Real Estate Holdings of Armonk, LLC to rent space at 113 King Street in Armonk, New York. As per the lease agreement, MBIA Corp. pays rent expense of approximately $41 thousand per month. Rental expense for the years ended December 31, 2012 and December 31, 2011 was $495 thousand, for each applicable period. b. e. Not Applicable. (2) At January 1, 2013, the aggregate minimum rental commitments are follows (in thousands): Year Ending December 31, Operating Leases $ Total $ 2,475 (3) The Company is not involved in any sales-leaseback transactions. B. MBIA Corp. has no lessor leasing arrangements. 16. Information About Financial Instruments With Off-Balance Sheet Risk And Financial Instruments With Concentration of Credit Risk The financial guarantees issued by MBIA Corp. provide unconditional and irrevocable guarantees of the payment of the principal of, and interest or other amounts owing on, insured obligations when due or, in the event MBIA Corp. has the right at its discretion to accelerate insured obligations upon default or otherwise, upon MBIA Corp. s acceleration. Certain investment agreement contracts and MTNs issued by MBIA Inc. are insured by MBIA Corp. and if MBIA Inc. were to have insufficient assets to pay amounts due upon maturity or termination, MBIA Corp. would make such payments under its insurance policies. MBIA Corp. has also insured debt obligations of its affiliates, MBIA Global Funding, LLC ( GFL ) and Meridian Funding Company, LLC ( Meridian ) and provides reinsurance to its insurance subsidiaries. Additionally, insurance policies include payments due under credit and other derivatives, including termination payments that may become due upon certain events including the insolvency or payment default of MBIA Corp. As of December 31, 2012 and 2011, MBIA Corp. s gross par amount outstanding was $112.4 billion and $141.4 billion, respectively. Refer to Note: 21 Other Items for further information. 17. Sale, Transfer and Servicing of Financial Assets and Extinguishments of Liabilities A. MBIA Corp. has not sold or transferred any receivables during B. MBIA Corp. did not have any transfers and servicing of financial assets during C. MBIA Corp. did not engage in any wash sale transactions in Gain or Loss to the Reporting Entity from Uninsured A&H Plans and the Uninsured Portion of Partially Insured Plans A. MBIA Corp. does not serve as an Administrative Services Only (ASO) provider. B. MBIA Corp. does not serve as an Administrative Services Contract (ASC) provider. C. MBIA Corp. has no Medicare or similarly structured cost based reimbursement contracts. 19. Direct Premium Written/Produced by Managing General Agents/Third-party Administrators MBIA Corp. did not write direct premiums through managing general agents or third-party administrators during

34 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION 20. Fair Value Measurements A. Inputs for Assets and Liabilities Measured at Fair Value (1) Fair Value Measurements by Levels 1, 2 and 3 NOTES TO FINANCIAL STATEMENTS For financial instruments recorded at their carrying amount, the estimated fair value amounts of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies. In certain instances, considerable judgment may be required to interpret market data in order to develop estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amount the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amount. For assets and liabilities recorded on the balance sheet at fair value, SSAP No. 100 Fair Value Measurements establishes a disclosure hierarchy for inputs used in measuring fair value. Observable inputs are those the Company believes that market participants would use in pricing the asset or liability developed based on market data. Unobservable inputs are those that reflect the Company s beliefs about the assumptions market participants would use in pricing the asset or liability developed based on the best information available. The fair value hierarchy is broken down into three levels based on the observability and reliability of inputs as follows: Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that the Company can access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail any degree of judgment. Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observerable, either directly or indirectly. Level 2 assets include debt securities with quoted prices that are traded less frequently than exchange-traded instruments, securities which are priced using observable inputs and derivative contracts whose values are determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. Level 3 - Valuations based on inputs that are unobservable and supported by little or no market activity and that are significant to the overall fair value measurement. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques where significant inputs are unobservable, as well as instruments for which the determination of fair value requires significant management judgment or estimation. The following fair value hierarchy table presents information about the Company s assets reported on the balance sheet at fair value as of December 31, Fair Value Measurements at Reporting Date In thousands (Level 1) (Level 2) (Level 3) Total a. Assets at fair value Bonds Industrial and miscellaneous $ - $ 4,211 $ 4,203 $ 8,414 Total bonds - 4,211 4,203 8,414 Total assets as fair value $ - $ 4,211 $ 4,203 $ 8,414 b. There were no liabilities measured at fair value as of December 31, There were no transfer into or out of Levels 1 and 2 during (2) Roll forward of Level 3 Items Level 3 assets were $4 million as of December 31, 2012 and represented approximately 50% of total assets measured at fair value. As of December 31, 2012, these bonds consist of other loan-backed and structured securities. The following table presents information about changes in Level 3 assets reported on the balance sheet at fair value for the year ended December 31, Gains and losses reported in this table may include changes in fair value that are attributable to both observable and unobservable inputs. Fair Value Measurements in Level 3 of the Fair Value Hierarchy for the year ended December 31, 2012 In thousands Balance at 12/31/2011 Transfers into Level 3 Transfers out of Level 3 Total gains and (losses) included in Net Income Total gains and (losses) included in Surplus Purchases Issuances Sales Settlements Balance at 12/31/2012 Assets: Loan-backed and structured securities (NAIC 3-6) Other $ 33,826 $ - $ - $ (30,079) $ 37,094 $ - $ - $ (34,000) $ (2,638) $ 4,203 Total assets $ 33,826 $ - $ - $ (30,079) $ 37,094 $ - $ - $ (34,000) $ (2,638) $ 4,203 (3) Policy on Transfers Into and Out of Level 3 For the year ended December 31, 2012, there no securities transferred into or out of Level

35 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS Realized gains and losses included in earnings pertaining to Level 3 assets for the years ended December 31, 2012 was a loss of $30 million. Unrealized gains and losses included in surplus pertaining to Level 3 assets as of December 31, 2012 was a gain of $37 million. (4) Inputs and Techniques Used for Level 2 and Level 3 Fair Value Valuation Techniques Valuation techniques for financial instruments measured at fair value are described below. These determinations were based on available market information and valuation methodologies. Considerable judgment is required to interpret market data to develop estimates and therefore, estimates may not necessarily be indicative of the amount the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair-value amounts. The Company s assets recorded at fair value have been categorized according to the fair value hierarchy based on the lowest level input that is significant to the fair value measurement in its entirety. Fixed-maturity securities and Short-term investments Fixed-maturity securities and short-term investments with an NAIC designation of 1 and 2 are carried at amortized cost while fixed-maturity securities and short-term investments with an NAIC designation of 3 through 6 are carried at the lower of amortized cost or fair value. Fair value of fixed-maturity securities and short-term investments with an NAIC designation of 1 and 2 are generally provided by NAIC SVO published market prices. If NAIC SVO published market prices are not available, the fair value is determined using an independent third-party pricing service which maximizes observable inputs, including price quotations of recent trades of same or similar securities. When observable price quotations are not available, fair value is determined based on cash flow models with yield curves, bond or single name credit default swap spreads and diversity scores as key inputs. These bonds are generally categorized in Level 2 of the fair value hierarchy; in instances where significant inputs are unobservable, they are categorized in Level 3 of the hierarchy. Cash and cash equivalents, Accrued investment income, Receivable for investments sold and Payable for investments purchased The carrying amounts of these items approximate fair value due to the short-term nature and creditworthiness of these instruments. Common stock The fair value of common stock is based upon quoted market prices, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. Common stocks of uncombined subsidiaries and affiliates in which MBIA Corp. has an interest of 20% or more are carried on a statutory equity basis. Premium receivable, Reinsurance recoverable, Reinsurance balance payable, Receivable from and Payable to affiliates and Premium tax receivable The carrying amounts of these items approximates fair value due to the short-term nature and creditworthiness of these instruments. Other investments Other investments are recorded at book value and include the Company s interest in equity securities and premium tax credit investments. The carrying value of these investments approximates fair value. Secured loan with parent The fair value of the secured loan with MBIA Inc. as of December 31, 2011 was determined based on the underlying securities pledged as collateral. The underlying securities were generally corporate bonds. The fair value of these corporate bonds was obtained using recently executed transactions or market price quotations where observable. When observable price quotations were not available, fair value was determined based on cash flow models with yield curves, bond or single name credit default swap ( CDS ) spreads and diversity scores as key inputs. The secured loan was paid off in Deferred premium revenue The fair value of the Company s deferred premium revenue is the unearned premium reserve on upfront policies net of reinsurance premiums plus the present value of premium receivables. The carrying amount of deferred premium revenue represents the unamortized balance of premiums collected. Loss and LAE reserves The carrying amount is composed of the present value of the expected net cash flows for specifically identified claims. Therefore, the carrying amount is a reasonable estimate of the fair value of the reserve. Borrowed money - The fair value of the borrowed money is determined as the net present value of expected cash flows from the loan. The discount rate is the yield to maturity of a comparable corporate bond index. Description of Level 3 Securities As of December 31, 2012, Level 3 securities consisted primarily of other loan-backed and structured securities. (5) Derivative Fair Value The fair value of a derivative asset is the exit price the Company would receive to sell a derivative in an orderly transaction between market participants at the measurement date. MBIA Corp. did not have any derivative assets recorded on its balance sheet as of December 31, B. Other Fair Values Disclosure Not Applicable

36 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS C. Fair Value for All Financial Instruments by Levels 1, 2 and 3 The table below reflects the fair value and admitted values of all admitted assets that are financial instruments excluding those accounted for under the equity method as of December 31, The fair values are also categorized into Levels 1, 2 and 3 of the fair value hierarchy as described above in Note 20A. In thousands Type of Financial Instrument Fair Value Admitted Value Level 1 Level 2 Level 3 Assets: Not Practicable (Carrying Value) Bonds $ 475,724 $ 457,328 $ 346,024 $ 125,297 $ 4,403 $ - Cash, cash equivalents and short-term investments 98,160 98,160 83,027 15, Other invested assets Receivable for investments sold Investment income due and accrued 1,492 1,492 1, Premium receivable 4,630 3,821 4, Reinsurance recoverable 1,090 1,090 1, Receivable from affiliates 4,162 4,160 4, Premium tax receivable 1,731 1,731 1, Total assets $ 587,778 $ 568,571 $ 442,221 $ 140,430 $ 5,127 $ - Liabilities: Borrowed money $ 1,684,538 $ 1,680,545 $ - $ 1,684,538 $ - $ - Loss and LAE reserves (2,606,230) (2,606,230) - - (2,606,230) - Unearned premium revenue 1,462, , ,462,735 - Reinsurance payable 3,940 3,940 3, Payable to affiliates 11,787 11,787 11, Total liabilities $ 556,770 $ (482,713) $ 15,727 $ 1,684,538 $ (1,143,495) $ - D. Financial Instrument for Which it is Not Practical to Estimate Fair Values Not Applicable. 21. Other Items A. MBIA Corp. had no extraordinary items during B. MBIA Corp. has no troubled debt restructuring during C. Other Disclosures (1) Business Developments As a result of insured losses during the period from 2007 through December 31, 2012, MBIA Corp. has seen ratings downgrades, a near cessation of new insurance business and increasing liquidity pressure. MBIA Corp. has been unable to write meaningful amounts of new insurance business since 2008 and does not expect to write significant new insurance business prior to an upgrade of its credit ratings. As of December 31, 2012, MBIA Corp. was rated B with a negative outlook by Standard & Poor s Financial Services LLC ( S&P ) and Caa2 with a developing outlook by Moody s Investors Service, Inc. ( Moody s ). During the year ended December 31, 2012, MBIA Corp. continued to seek to reduce both the absolute amount and the volatility of its obligations and potential future claim payments through the execution of commutations of insurance policies. The combination of the failure of certain mortgage originators to honor contractual obligations to repurchase ineligible mortgage loans from securitizations MBIA Corp. insured, commutation payments to reduce liabilities and claim payments has increased liquidity pressure on MBIA Corp. The failure of certain mortgage originators, primarily Bank of America, to repurchase ineligible mortgages from securitizations MBIA Corp. insured represents significant breaches of their contractual obligations. As of December 31, 2012 and 2011, cash and liquid assets were $345 million and $534 million, respectively. Management believes MBIA Corp. s current liquidity position is adequate to make expected future claim payments assuming its insured commercial mortgage-backed securities ( CMBS ) exposures held by Bank of America/Merrill Lynch are commuted as part of a settlement of MBIA Corp. s put-back claims against Bank of America/Countrywide. No assurance can be given as to whether such a settlement can be timely reached. In the absence of collecting a substantial amount of its putback recoverables and in light of the potential for substantial claims in the near-term on its insured CMBS exposure, the related liquidity stress to MBIA Corp. could result in it being placed in a rehabilitation or liquidation proceeding by the NYSDFS (an MBIA Corp. Proceeding ). Refer to the following Risks and Uncertainties section for a discussion of factors that could have an adverse effect on MBIA Corp. During the year ended December 31, 2012, MBIA Corp., including non-consolidated entities, made $1.2 billion in gross claim payments, and commuted $13.4 billion of gross insured exposure, primarily comprising structured CMBS pools, commercial real estate ( CRE ) collateralized debt obligations ( CDOs ), investment grade corporate CDOs, asset-backed securities ( ABS ) CDOs, and subprime residential mortgage-backed securities ( RMBS ) transactions. The reference herein to ineligible mortgage loans refers to those mortgage loans that MBIA Corp. believes failed to comply with the representations and warranties made by the sellers/servicers of the securitizations to which those mortgage loans were 14.21

37 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS sold (including mortgage loans that failed to comply with the related underwriting criteria), based on MBIA Corp. s assessment of such mortgage loans compliance with such representations and warranties, which included information provided by third-party review firms. The sellers/servicers have contractual obligations to cure, repurchase or replace such ineligible mortgage loans. These expected recoveries are generally referred to as put-backs, and are calculated based on MBIA Corp. s assessment of a range of possible collection outcomes. MBIA Corp. s assessment of the ineligibility of individual mortgage loans is being challenged by the sellers/servicers of the securitizations in litigation and there is no assurance that MBIA Corp. s determinations will prevail. Risks and Uncertainties MBIA Corp. s financial statements include estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. The outcome of certain significant risks and uncertainties could cause MBIA Corp. to revise its estimates and assumptions or could cause actual results to differ from MBIA Corp. s estimates. While MBIA Corp. believes, subject to the qualifications described above, that it continues to have sufficient capital and liquidity to meet all of its expected obligations, if one or more possible adverse events were to occur, its statutory capital, financial position, results of operations and cash flows could be materially and adversely affected. Significant risks and uncertainties that could affect amounts reported in MBIA Corp. s financial statements in future periods include, but are not limited to, the following: x Management s expected liquidity and capital forecast for MBIA Corp. for 2013 reflects adequate resources to pay expected claims. However, there is a significant risk to this forecast as MBIA Corp. s forecast assumes a settlement with Bank of America including a commutation of insured CMBS exposure, as well as collection of a substantial portion of MBIA Corp. s put-back recoverable recorded against Bank of America/Countrywide. Management believes that a timely settlement will occur because it believes a comprehensive settlement is in the best interests of MBIA Corp. and Bank of America. If, however, MBIA Corp. is not able to reach a comprehensive settlement with Bank of America and Bank of America presents substantial claims on its policies covering CMBS pools, MBIA Corp. would have insufficient resources to cover Bank of America s expected claims. While no claims have been made on these CMBS exposures to date, given the significant erosion of the deductible in some of the underlying insured CDS, MBIA Corp. expects that Bank of America /Merrill Lynch will have the ability to make a claim in the near term. In addition, Bank of America/Merrill Lynch is also one of two remaining plaintiffs in the litigation challenging the establishment of National Public Finance Guarantee Corporation ( National ) ( Transformation Litigation ), and developments in this litigation may impact the amount MBIA Corp. ultimately collects in a comprehensive settlement. While management believes it is more likely than not that a settlement will be reached, which would alleviate its liquidity risk, there can be no assurance such a settlement will be reached on mutually acceptable terms or in a timely manner. As a result of the risk that MBIA Corp. may not reach a settlement with Bank of America within a reasonable period of time, management has concluded that there is a significant risk of an MBIA Corp. Proceeding that raises substantial doubt about MBIA Corp. s ability to continue as a going concern. MBIA Corp. s financial statements do not include any adjustments that might result from the outcome of this uncertainty. In the event of an MBIA Corp. Proceeding, MBIA Corp. may be subject to, among other things, the following: x x x x x x x CDS counterparties may seek to terminate CDS contracts insured by MBIA Corp. and MBIA UK, which is not consolidated under U.S. Statutory Accounting, and make market-based damage claims (irrespective of whether actual losses are expected under the underlying exposure), which claims could aggregate $7.0 billion or more; MTNs issued by MBIA Inc. s subsidiaries, GFL and Meridian, which are insured by MBIA Corp., would accelerate. To the extent GFL failed to pay the accelerated amounts under the GFL MTNs or the collateral securing the Meridian MTNs was deemed insufficient to pay the accelerated amounts under the Meridian MTNs, the MTN holders would have policy claims against MBIA Corp. for scheduled payments of interest and principal; An MBIA Corp. Proceeding may result in a default under certain collateralized investment agreements of MBIA Inc. that are insured by MBIA Corp., and to the extent MBIA Inc. fails to pay the accelerated amounts under these investment agreements or the collateral securing these investment agreements is deemed insufficient to pay the accelerated amounts due, the holders of the investment agreements would have policy claims against MBIA Corp.; Payments under MBIA Corp. insurance policies could be suspended, delayed or reduced, in whole or in part; An acceleration of the surplus notes issued by MBIA Corp. and a possible reduction or further delay or suspension of the amounts due; MBIA Corp. s ability to carry out tax planning strategies. Refer to Note 9: Income Taxes for information about MBIA Corp. s deferred tax assets. In addition, MBIA Corp. is currently included in the consolidated tax return of MBIA Inc. An MBIA Corp. Proceeding could result in challenges to the tax sharing arrangement among the MBIA affiliates that might adversely affect management s ability to manage taxes efficiently; Approval of the rehabilitator and the rehabilitation court (or liquidator and liquidation court, as the case may be) may be required for a variety of actions of importance to MBIA Corp. and its policyholders, including, without limitation, settlement of MBIA Corp. s put-back litigation (including against Bank of America) and commutation of MBIA Corp.-insured exposures (including insured CMBS exposures held by Bank of America); 14.22

38 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS x x x The rehabilitator or liquidator would replace the Board of Directors of MBIA Corp. and take control of the operations and assets of MBIA Corp., which may result in changes to its strategies and management; MBIA Corp. would be subject to significant additional expenses arising from the appointment of the rehabilitator or liquidator, as receiver, and payment of the fees and expenses of the advisors to such rehabilitator or liquidator; and A default under and an acceleration of MBIA Corp. s secured loan from National (the National Secured Loan ). x x x Incurred losses from insured RMBS have declined from their peaks. However, due to the large percentage of ineligible mortgage loans included within the MBIA Corp.-insured second-lien portfolio, performance remains difficult to predict and losses could ultimately be in excess of MBIA Corp. s current estimated loss reserves. In addition, MBIA Corp. s efforts to recover losses from second-lien RMBS originators, including but not limited to Bank of America, could be delayed, settled at amounts below its contractual claims or potentially settled at amounts below those recorded on its balance sheet. As of December 31, 2012 and 2011, MBIA Corp. s estimated recoveries after income taxes calculated at the federal statutory rate of 35%, were $2.4 billion and $2.0 billion, respectively, which was 162% and 89%, respectively, of the statutory capital of MBIA Corp. Statutory capital includes policyholders surplus and contingency reserves. Refer to Note 25: Change in Incurred Loss and Loss Adjustment Expense for information about MBIA Corp. s RMBS reserves and recoveries. Further economic stress might cause increases in MBIA Corp. s loss estimates on its remaining exposure, particularly within its higher risk CMBS pool and ABS CDO exposures. As of December 31, 2012, MBIA Corp. s CMBS pool gross par outstanding, including exposure held by Bank of America, and ABS CDO gross par outstanding was approximately $15.6 billion and $4.3 billion, respectively. MBIA Corp. s primary strategy for managing its CMBS pool and ABS CDO exposures has been commutations. Consistent with this strategy, in the fourth quarter of 2012, MBIA Corp. agreed with a CDS counterparty on a commutation of certain potentially volatile policies insuring ABS CDO, structured CMBS pools and CRE CDO transactions. The agreement was subject to the approval by the NYSDFS of a request to draw on the National Secured Loan in order to finance the commutation, as well as the receipt by MBIA Corp. of confirmation from the NYSDFS of its non-disapproval of the commutation. MBIA Corp. requested the NYSDFS to confirm its non-disapproval of the commutation and for approval of a loan under the National Secured Loan or for approval of an alternative financing structure to finance the commutation. Subsequent to December 31, 2012, those requests were denied. MBIA Corp. s ability to commute insured transactions is limited by available liquidity, including the availability of intercompany loans under the National Secured Loan and the use of other available financing structures and liquidity, all of which could be subject to regulatory approval by the NYSDFS. There can be no assurance that MBIA Corp. will be able to fund further commutations by borrowing from National or otherwise. Refer to Note 25: Change in Incurred Loss and Loss Adjustment Expense for information about MBIA Corp. s estimate of losses on its exposures. As of December 31, 2012, MBIA Corp. was not in compliance with a requirement under NYIL to hold qualifying assets in an amount at least equal to its insurance liabilities. In order to be in compliance, MBIA Corp. has requested approval from the NYSDFS to release a portion of its contingency reserves. To date, such request remains outstanding. In addition, as of September 30, 2012 and December 31, 2012, MBIA Corp. exceeded its aggregate risk limits under NYIL. MBIA Corp. has filed a formal notification with the NYSDFS regarding the overage and submitted a plan to achieve compliance with its limits. While the NYSDFS has not taken action against MBIA Corp., the NYSDFS may restrict MBIA Corp. from making commutation or other payments or may take other remedial actions for failing to meet these requirements. Key Lending Agreements MBIA Corp. has entered into agreements with affiliates as follows: National Secured Loan In 2011, National provided the $1.1 billion secured loan to MBIA Corp. in order to enable MBIA Corp. to fund settlements and commutations of its insurance policies. This loan was approved by the NYSDFS as well as by the boards of directors of MBIA Inc., MBIA Corp. and National. The National Secured Loan has a fixed annual interest rate of 7% and a maturity date of December MBIA Corp. has the option to defer payments of interest when due by capitalizing interest amounts to the loan balance, subject to the collateral value exceeding certain thresholds. MBIA Corp. has elected to defer the interest payments due under the loan. MBIA Corp. s obligation to repay the loan is secured by a pledge of collateral having an estimated value in excess of the notional amount of the loan as of December 31, 2012, which collateral comprised the following future receivables of MBIA Corp.: (i) its right to receive put-back recoveries related to ineligible mortgage loans included in its insured second-lien RMBS transactions; (ii) future recoveries on defaulted insured second-lien RMBS transactions resulting from expected excess spread generated by performing loans in such transactions; and (iii) future installment premiums. During the year ended December 31, 2012, MBIA Corp. borrowed an additional $443 million under the National Secured Loan with the approval of the NYSDFS at the same terms as the original loan to fund additional commutations of its insurance policies. As of December 31, 2012, the outstanding principal amount under this loan was $1.7 billion. MBIA Corp. may seek to borrow additional amounts under the loan in the future. Any such increase or other amendment to the terms of the loan would be subject to regulatory approval by the NYSDFS. MBIA Corp. Secured Loan MBIA Corp., as lender, maintained a master repurchase agreement with MBIA Inc. ( MBIA Corp. Secured Loan ) for the benefit of MBIA Inc. s asset/liability products business, which totaled $2.0 billion at inception and was scheduled to mature in May 2012, as amended. This loan was repaid in May 2012 and there have been no further draws. During 2012, the average 14.23

39 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS interest rate on the MBIA Corp. Secured Loan was 2.51% through the repayment in May Also in May 2012, the NYSDFS approved the maturity extension of the MBIA Corp. Secured Loan to May 2013 with a maximum outstanding amount of $450 million, subject to MBIA Corp. obtaining prior regulatory approval from the NYSDFS for any draws under the facility. Structured Finance and International Insurance Business The insurance policies issued by MBIA Corp. generally provide unconditional and irrevocable guarantees of the payments of the principal of, and interest or other amounts owing on, insured obligations when due or, in the event MBIA Corp. has the right at its discretion to accelerate insured obligations upon default or otherwise, upon MBIA Corp. s acceleration. MBIA Corp. also insures debt obligations of the following affiliates: x x x x MBIA Inc. ($911 million); GFL ($1.6 billion); Meridian ($550 million); LaCrosse, a wholly-owned affiliate, in which MBIA Corp. has written insurance policies guaranteeing the obligations under CDS, including termination payments that may become due in certain circumstances including the occurrence of certain insolvency or payment defaults under the CDS contracts ($46.9 billion). MBIA Corp. s guarantees insure structured finance and asset-backed obligations, privately issued bonds used for the financing of public purpose projects, which are primarily located outside of the U.S. and that include toll roads, bridges, airports, public transportation facilities, utilities and other types of infrastructure projects serving a substantial public purpose, and obligations of sovereign-related and sub-sovereign issuers. Structured finance and ABS typically are securities repayable from expected cash flows generated by a specified pool of assets, such as residential and commercial mortgages, insurance policies, consumer loans, corporate loans and bonds, trade and export receivables, leases for equipment, aircraft and real property. Since the beginning of the economic downturn in 2008, the collateral underlying many of MBIA Corp. s insured structured finance transactions has experienced diminished value and financial stress. Although MBIA Corp. s current reserves represent its estimate of expected losses based on all available information, there is a possibility such losses could increase significantly. A material increase in losses in MBIA Corp. s structured finance insured portfolio could have a material adverse effect on its statutory capital, financial condition, cash flows, and results of operations. MBIA Corp. owns MBIA UK, a financial guarantee insurance company licensed in the United Kingdom ( U.K. ) that issued financial guarantee insurance in the member countries of the European Economic Area and other regions outside the U.S. MBIA Corp. issued financial guarantee insurance in Mexico through MBIA Mexico. Transformation In February 2009, after receiving the required regulatory approvals, MBIA Inc. established and capitalized National as a U.S. public finance-only financial guarantor, which was previously named MBIA Insurance Corp. of Illinois ( MBIA Illinois ) and previously owned by MBIA Corp. In connection with the establishment of National, the stock of MBIA Illinois was transferred to a newly established intermediate holding company, which is wholly owned by MBIA Inc. Additionally, National was further capitalized with approximately $2.1 billion from funds distributed by MBIA Corp. to MBIA Inc. as a dividend and return of capital, which MBIA Inc. contributed to National through the intermediate holding company. In February 2009, MBIA Corp. entered into a quota share reinsurance agreement effective January 1, 2009 pursuant to which MBIA Corp. ceded all of its U.S. public finance exposure to National and into an assignment agreement under which MBIA Corp. assigned its rights and obligations with respect to the U.S. public finance business that MBIA Corp. assumed from Financial Guaranty Insurance Corporation ( FGIC ). The exposure transferred to National under the reinsurance and assignment agreements totaled $553.7 billion of net par outstanding. The reinsurance and assignment enables covered policyholders and certain ceding reinsurers to make claims for payment directly against National in accordance with the terms of those agreements. To provide additional protection to its policyholders, National also issued second-to-pay policies for the benefit of the policyholders covered by the above reinsurance and assignment agreements. These second-to-pay policies, which are direct obligations of National, are held by a trustee and provide that if MBIA Corp. or FGIC, as applicable, do not pay valid claims of their policyholders; the policyholders will then be able to make claims directly against National. MBIA Corp. is no longer insuring new credit derivative contracts except in transactions related to the reduction of existing derivative exposure. The structured finance market continues to recover from the global credit crisis with new issuance volume, though increasing, still well below historical averages. It is unclear how or when MBIA Corp. may be able to reengage this market. D. At December 31, 2012 and 2011, MBIA Corp. had uncollected premium balances of $4 million and $3 million, respectively. Uncollected premiums more than 90 days past due were $1 million and zero, respectively. All amounts more than 90 days past due were non-admitted as of December 31, MBIA Corp. routinely assesses the collectability of these receivables. Based upon MBIA Corp. s experience, the premium balances to be potentially charged off are not material to its financial condition. E. MBIA Corp. had no business interruption insurance recoveries during F. MBIA Corp. had no state transferable credits as of December 31, G. Subprime Exposure Related Risk Exposure 14.24

40 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS (1) MBIA Corp. has invested in an immaterial amount of RMBS securities that could potentially be adversely affected by subprime mortgage exposure. (2) MBIA Corp. does not have direct exposure through investments in subprime mortgage loans. (3) At December 31, 2012, MBIA Corp. had indirect exposure to subprime mortgage risk through investments in RMBS. The cost, book adjusted carrying value and the fair value of subprime RMBS were $10 million. MBIA Corp. did not recognize an OTTI related to an investment in a subprime mortgage related security. Book/Adjusted Carrying Value (excluding interest) Other Than Temporary Impairment Losses Recognized In thousands Actual Cost Fair Value a. Residential mortgage-backed securities $ 9,893 $ 10,043 $ 10,484 $ - b. Commercial mortgage-backed securities c. Collateralized debt obligations d. Structured securities e. Equity investment in SCAs f. Other assets g. Total $ 9,893 $ 10,043 $ 10,484 $ - (4) At December 31, 2012, MBIA Corp. had underwriting exposure to subprime mortgage risk through financial guaranty insurance coverage. MBIA Corp. did not recognize any Incurred But Not Reported ( IBNR ) reserves related to subprime exposure. Refer to Note 25: Change in Incurred Losses and Loss Adjustment Expenses for information about subprime exposure. Losses Paid in the Current Year Losses Incurred in Current Year In thousands Case Reserves at End of Year IBNR reserves at End of Year a. Mortgage guaranty coverage $ - $ - $ - $ - b. Financial guaranty coverage 18,150 33,817 43,040 - c. Other d. Total $ 18,150 $ 33,817 $ 43,040 $ Events Subsequent Subsequent events have been considered through February 27, 2013, the date upon which the statutory financial statements were available to be issued. Refer to Note 13: Capital and Surplus, Dividend Restrictions and Quasi-Reorganizations for information on the January 15, 2013, surplus notes interest expense payment request that was denied by the NYSDFS. Refer to Note 14: Contingencies for information about legal proceedings that commenced after December 31, Reinsurance A. Unsecured Reinsurance Recoverables MBIA Corp. does not have an unsecured aggregate reinsurance recoverable for paid and unpaid losses, loss adjustment expenses and unearned premiums from any individual reinsurer, authorized or unauthorized, that exceeds 3% of policyholders' surplus. B. Reinsurance Recoverable in Dispute MBIA Corp. does not have reinsurance recoverables in dispute for paid losses and loss adjustment expenses that exceed 5% of policyholders' surplus from any individual reinsurer or exceed 10% of policyholders' surplus in aggregate. C. Reinsurance Assumed and Ceded (1) Listed below is the maximum amount of return commission which would have been due reinsurers if they or MBIA Corp. had canceled all of MBIA Corp. s reinsurance, or if MBIA Corp. or a receiver had canceled all of MBIA Corp.'s insurance assumed as of December 31, In thousands Assumed Reinsurance Ceded Reinsurance Net Reinsurance Premium Commission Premium Commission Premium Commission Reserve Equity Reserve Equity Reserve Equity (1) (2) (3) (4) (5) (6) Affiliates $ 102 $ 26 $ 1,508,377 $ 331,843 $ (1,508,275) $ (331,817) All other ,209 20,675 (68,605) (20,455) Total $ 706 $ 246 $ 1,577,586 $ 352,518 $ (1,576,880) $ (352,272) Direct unearned premium reserve $ 2,004,

41 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS (2) Listed below are the amounts of reinsurance additional or return commission, which is predicated on loss experience or on any other form of profit sharing arrangements in this annual statement as a result of existing contractual arrangements. In thousands Direct Assumed Ceded Net Contingent commission $ - $ - $ 8 $ (8) Total $ - $ - $ 8 $ (8) (3) All contracts of reinsurance covering losses that have occurred prior to the inception of the contract have been accounted for in conformity with the instructions contained in the NAIC Accounting Practices and Procedures Manual and NYIL. D. Uncollectible Reinsurance MBIA Corp. has not written off any uncollectible reinsurance in E. Commutation of Ceded Reinsurance MBIA Corp. has not had any third-party commutations of ceded reinsurance for the year ended December 31, F. Retroactive Reinsurance MBIA Corp. has no retrospectively rated contracts or contracts subject to redetermination. G. Reinsurance Accounted for as a Deposit MBIA Corp. has no reinsurance accounted for as a deposit as of December 31, H. Disclosures for the Transfer of Property and Casualty Run-off Agreements MBIA Corp. has not entered into any Transfer of Property and Casualty Run-off Agreements. 24. Retrospectively Rated Contracts & Contracts Subject to Redetermination MBIA Corp. had no retrospectively rated contracts or contracts subject to redetermination in Change in Incurred Losses and Loss Adjustment Expenses Total net loss and LAE incurred was $817 million during 2012 compared with $868 million during Net case basis activity during 2012 primarily consisted of $873 million of loss and LAE incurred related to structured CMBS and $106 million of loss and LAE incurred related to first-lien RMBS transactions, offset by a $179 million benefit related to insured ABS CDOs and a $26 million benefit related to insured obligations within second-lien RMBS exposures. Net case basis activity during 2011 primarily consisted of $1.6 billion of loss and LAE incurred related to structured CMBS and $78 million related to first-lien RMBS transactions, offset by a $521 million benefit related to insured ABS CDOs and a $340 million benefit related to insured obligations within second-lien RMBS exposures. Refer to the RMBS Case Basis Reserves and Recoveries, ABS CDOs, and CMBS Pools, CRE CDOs and CRE Loan Pools sections included herein for additional information regarding MBIA Corp. s loss and LAE reserves related to its exposures to first-lien and second-lien RMBS case reserves and recoveries, CMBS and ABS CDOs. As of December 31, 2012, MBIA Corp. has established loss and LAE reserves in a contra-liability position of $2.6 billion, net of salvage reserves of $4.6 billion, for which MBIA Corp. expects to incur actual claims or receive a benefit in the future. Commutations In 2012, MBIA Corp. commuted $13.4 billion of gross insured exposure, primarily comprising structured CMBS pools, CRE CDOs, investment grade corporate CDOs, ABS CDOs, and subprime RMBS transactions. In consideration for the commutation of insured transactions, MBIA Corp. has made and may in the future make payments to the counterparties, the amounts of which, if any, may be less than or greater than any loss reserves established for the respective transactions. MBIA Corp. enters into commutations in the ordinary course of its business and generally does not intend to make contemporaneous disclosures regarding any such transactions regardless of the amounts paid to effect such commutations in relation to the loss reserves established for the respective transactions. MBIA Corp. s ability to commute insured transactions may be limited by available liquidity as determined based on management s assessment. RMBS Case Basis Reserves and Recoveries MBIA Corp. s RMBS reserves and recoveries relate to financial guarantee insurance policies. MBIA Corp. calculated RMBS case basis reserves as of December 31, 2012 for both second-lien and first-lien RMBS transactions using a process called the Roll Rate Methodology. The Roll Rate Methodology is a multi-step process using a database of loan level information, a proprietary internal cash flow model, and a commercially available model to estimate expected ultimate cumulative losses on insured bonds. Roll Rate is defined as the probability that current loans become delinquent and that loans in the delinquent pipeline are charged-off or liquidated. Generally, Roll Rates are calculated for the previous three months and averaged. The loss reserve estimates are based on a probabilityweighted average of three scenarios of loan losses (base case, stress case, and an additional stress case). In calculating ultimate cumulative losses for RMBS, MBIA Corp. estimates the amount of loans that are expected to be charged-off (deemed uncollectible by servicers of the transactions) or liquidated in the future. MBIA Corp. assumes that charged-off loans have zero recovery values

42 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS Second-lien RMBS Reserves MBIA Corp. s second-lien RMBS case basis reserves as of December 31, 2012 relate to RMBS backed by home equity lines of credit ( HELOC ) and closed-end second mortgages ( CES ). The Roll Rates for day delinquent loans and day delinquent loans are calculated on a transaction-specific basis. MBIA Corp. assumes that the Roll Rate for 90+ day delinquent loans, excluding foreclosures and Real Estate Owned ( REO ) is 95%. The Roll Rates are applied to the amounts in the respective delinquency buckets based on delinquencies as of November 30, 2012 to estimate future losses from loans that are delinquent as of the current reporting period. Roll Rates for loans that are current as of November 30, 2012 ( Current Roll to Loss ) are also calculated on a transaction-specific basis. A proportion of loans reported current as of November 30, 2012 is assumed to become delinquent every month, at a Current Roll to Loss rate that persists at a high level for a time and subsequently starts to decline. A key assumption in the model is the period of time in which MBIA Corp. projects high levels of Current Roll to Loss to persist. In MBIA Corp. s base case, MBIA Corp. assumes that the Current Roll to Loss begins to decline immediately and continues to decline over the next six months to 25% of their levels as of November 30, In the stress case, the period of elevated delinquency and loss is extended by six months. In the additional stress case, MBIA Corp. assumes that the current trends in losses will remain through late 2013, after which time they will revert to the base case. For example, in the base case, as of November 30, 2012, if the amount of current loans which become days delinquent is 10%, and recent performance suggests that 30% of those loans will be charged-off, the Current Roll to Loss for the transaction is 3%. In the base case, it is then assumed that the Current Roll to Loss will reduce linearly to 25% of its original value over the next six months (i.e., 3% will linearly reduce to 0.75% over the six months from December 2012 to May 2013). After that six-month period, MBIA Corp. further reduces the Current Roll to Loss to 0% by early 2014 with the expectation that the performing seasoned loans will eventually result in loan performance reverting to historically low levels of default. In addition, in MBIA Corp. s loss reserve models for transactions secured by HELOCs, MBIA Corp. considers borrower draw and prepayment rates and factors that could affect the excess spread generated by current loans, which offsets losses and reduces payments. For HELOCs, the current three-month average draw rate is generally used to project future draws on the line. For HELOCs and transactions secured by fixed-rate CES, the three-month average conditional prepayment rate is generally used to start the projection for trends in voluntary principal prepayments. Projected cash flows are also based on an assumed constant basis spread between floating rate assets and floating rate insured debt obligations (the difference between Prime and LIBOR interest rates, minus any applicable fees). For all transactions, cash flow models consider allocations and other structural aspects of the transactions, including managed amortization periods, rapid amortization periods and claims against MBIA Corp. s insurance policy consistent with such policy s terms and conditions. In developing multiple loss scenarios, stress is applied by elongating the Current Roll to Loss rate for various periods, simulating a slower improvement in the transaction performance. The estimated net claims from the procedure above are then discounted using a 5.72% discount rate to a net present value reflecting MBIA Corp. s general obligation to pay claims over time and not on an accelerated basis. The above assumptions represent MBIA Corp. s best estimates of how transactions will perform over time. MBIA Corp. monitors portfolio performance on a monthly basis against projected performance, reviewing delinquencies, Roll Rates, and prepayment rates (including voluntary and involuntary). However, given the large percentage of mortgage loans that were not underwritten by the sellers/servicers in accordance with applicable underwriting guidelines, performance remains difficult to predict and losses may exceed expectations. In the event of a material deviation in actual performance from projected performance, MBIA Corp. would increase or decrease the case basis reserves accordingly. Second-lien RMBS Recoveries Since 2009, MBIA Corp. has recognized the following amounts of estimated recoveries related to its second-lien RMBS put-back claims by respective year: In billions 2009 $ Total $ 3.6 MBIA Corp. has recognized $154 million of actual cash recoveries related to its RMBS put-back claims through 2012, in aggregate. As of December 31, 2012, MBIA Corp. recorded estimated recoveries of $3.6 billion related to second-lien RMBS put-back claims on ineligible mortgage loans, which have been disputed by the loan sellers/servicers and are currently subject to litigation initiated by MBIA Corp. to pursue recoveries. While MBIA Corp. believes that it will prevail in enforcing its contractual rights, there is uncertainty with respect to the ultimate outcome. Furthermore, there is a risk that sellers/servicers or other responsible parties might not be able to satisfy their put-back obligations. Such risks are contemplated in scenarios that MBIA Corp. utilizes to calculate recoveries. MBIA Corp. assesses the financial abilities of the sellers/servicers using external credit ratings and other factors. The impact of such factors on cash flows related to expected recoveries is incorporated into MBIA Corp. s probability-weighted scenarios. Accordingly, MBIA Corp. has not recognized any recoveries related to its IndyMac Bank, F.S.B. insured exposures and has subsequent to the ResCap bankruptcy filing reviewed the indicative scenarios and related probabilities assigned to each scenario to develop a distribution of possible outcomes. MBIA Corp. s expected recoveries may be discounted in the future based on additional reviews of the creditworthiness of other sellers/servicers. As of December 31, 2011, MBIA Corp. utilized five probability-weighted scenarios primarily based on the percentage of incurred losses for all sellers/servicers where estimated recoveries of ineligible mortgage loans were recorded

43 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS On May 14, 2012, ResCap, and its wholly owned subsidiary companies, Residential Funding Company, LLC ( RFC ) and GMAC Mortgage LLC ( GMAC ), each filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code. MBIA Corp. believes that the claims against RFC and GMAC are stronger and better defined than most other unsecured creditor claims due to the following reasons: x x x the direct contractual relationship between MBIA Corp., GMAC and RFC related to MBIA Corp. s second-lien RMBS putback claims on ineligible mortgage loans that were improperly included in the MBIA Corp.-insured transactions; MBIA Corp. s legal claims against RFC and GMAC based on breach of contract and fraud have withstood motions to dismiss; and expert reports submitted in the RFC litigation which established a substantial breach rate in MBIA-insured securitizations, and MBIA s damages as a result thereof. MBIA Corp. has now modeled scenario-based recoveries which are founded upon the strength of these claims as well as a range of estimated assets available to unsecured creditors of the ResCap companies. As of December 31, 2012 the auction of the servicing platform and specific loans of the ResCap bankruptcy estate have concluded. However, an actual distribution of proceeds will not occur until a plan detailing the distribution of assets has been approved by the bankruptcy court. Consequently, the outcomes utilized by MBIA Corp. continue to be based upon information that was available to MBIA Corp. as of the filing date. As of December 31, 2012, MBIA Corp. continues to maintain the same probability-weighted scenarios for its non-gmac and non- RFC exposures (non-rescap exposures), which are primarily based on the percentage of incurred losses MBIA Corp. would collect. The non-rescap recovery estimates incorporate five scenarios that include full recovery of its incurred losses and limited/reduced recoveries due to litigation delays and risks and/or potential financial distress of the sellers/servicers. Probabilities were assigned across these scenarios, with most of the probability weight on partial recovery scenarios. The sum of the probabilities assigned to all scenarios is 100%. Expected cash inflows from recoveries are discounted at 5.72%. However, based on MBIA Corp. s assessment of the strength of its contract claims, MBIA Corp. believes it is entitled to collect and/or assert a claim for the full amount of its incurred losses on these transactions, which totaled $5.3 billion through December 31, MBIA Corp. is entitled to collect interest on amounts paid. MBIA Corp. s potential recoveries are typically based on either salvage rights, the rights conferred to MBIA Corp. through the transactional documents (inclusive of the insurance agreement), or subrogation rights embedded within financial guarantee insurance policies. The second-lien RMBS transactions with respect to which MBIA Corp. has estimated put-back recoveries provide MBIA Corp. with such rights. Expected salvage and subrogation recoveries, as well as recoveries from other remediation efforts, reduce MBIA Corp. s claim liability. The amount of recoveries recorded by MBIA Corp. is limited to paid claims plus the present value of projected future claim payments. As claim payments are made, the recorded amount of potential recoveries may exceed the remaining amount of the claim liability for a given policy. To date, sellers/servicers have not substituted loans which MBIA Corp. has put-back, and the amount of loans repurchased has been insignificant. The unsatisfactory resolution of these put-backs led MBIA Corp. to initiate litigation against six of the sellers/servicers to enforce their obligations. MBIA Corp. has alleged several causes of action in its complaints, including breach of contract, fraudulent inducement and indemnification. MBIA Corp. s aggregate $3.6 billion of estimated potential recoveries do not include damages from causes of action other than breach of contract. Irrespective of amounts recorded in its financial statements, MBIA Corp. is seeking to recover and/or assert claims for the full amount of its incurred losses and other damages on these transactions. MBIA Corp. has not collected any material amounts of cash related to these recoveries. Additional information on the status of these litigations can be found in the Recovery Litigation discussion within Note 14: Contingencies. MBIA Corp. has initiated litigation against six sellers/servicers (most recent filing was January 11, 2013) related to loan put-backs. MBIA Corp. has received five decisions with regard to the respective defendants motions to dismiss MBIA Corp. s claims. In each instance, the respective court denied the motion, allowing MBIA Corp. to proceed on, at minimum, its fraud and breach of contract claims. In December 2011, MBIA Corp. reached an agreement with one of the six sellers/servicers with whom it had initiated litigation and that litigation has been dismissed. MBIA Corp. s assessment of the recovery outlook for insured second-lien RMBS issues is principally based on the following factors: 1. the strength of MBIA Corp. s existing contract claims related to ineligible mortgage loan substitution/repurchase obligations; 2. the settlement of Assured Guaranty s and Syncora s put-back related claims with Bank of America; 3. the improvement in the financial strength of certain sellers/servicers due to mergers and acquisitions and/or government assistance, which should facilitate the ability of these sellers/servicers and their successors to comply with required loan repurchase/substitution obligations. MBIA Corp. is not aware of any provisions that explicitly preclude or limit successors obligations to honor the obligations of original sellers/servicers. MBIA Corp. s assessment of any credit risk associated with sellers/servicers (or their successors) is reflected in MBIA Corp. s probability-weighted potential recovery scenarios; 4. evidence of ineligible mortgage loan repurchase/substitution by sellers/servicers for put-back requests made by other harmed parties; this factor is further enhanced by (i) Bank of America s disclosure that it has resolved $8.0 billion of repurchase requests in the fourth quarter of 2010; (ii) the Fannie Mae settlements with Ally Bank announced on December 23, 2010 and with Bank of America (which also involved Freddie Mac) announced on December 31, 2010; (iii) the Bank of America $10.3 billion settlement with Fannie Mae announced on January 7, The settlement substantially resolves Countrywide repurchase related claims between Bank of America and Fannie Mae, and (iv) MBIA Corp. s settlement agreements entered into on July 16, 2010 and December 13, 2011 respectively, between MBIA Corp. and sponsors of certain MBIA Corp.-insured mortgage loan securitizations in which MBIA Corp. received consideration in exchange for a release relating to its representation and warranty claims against the sponsors. These settlements resolved all of MBIA Corp. s representation and warranty claims against the sponsors on mutually beneficial terms and in aggregate were slightly more than the recoveries previously recorded by MBIA Corp. related to these exposures; 5. Assured Guaranty s favorable court ruling of $90 million (plus interest, fees and expenses) regarding Flagstar Bank s pervasive breach of mortgage representations and warranties; 14.28

44 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS 6. the defendants failure to win dismissals of MBIA Corp. s put-back litigations discussed above, allowing MBIA Corp. to continue to pursue its contract and fraud claims; 7. Countrywide s unsuccessful appeal of its failure to win dismissal of MBIA Corp. s fraud claims in the Countrywide litigation, allowing MBIA Corp. to pursue its fraud claims; 8. MBIA Corp. s successful motion in the Countrywide litigation allowing MBIA Corp. to present evidence of liability and damages through the introduction of statistically valid random samples of loans rather than on a loan-by-loan basis and subsequent decisions consistent with that ruling; 9. Bank of America s failure to win dismissal of MBIA Corp. s claims for successor liability in the Countrywide litigation, as well as the completion of discovery relating to MBIA Corp. s successor liability claims against Bank of America; 10. MBIA Corp. s successful motion regarding causation and the right to rescissory damages in the Countrywide litigation, which provides that MBIA Corp. is not required to establish a direct causal link between Countrywide s misrepresentations and MBIA Corp. s claims payments made pursuant to the insurance policies at issue, and that MBIA Corp. may seek damages equal to the amount that it has been and will be required to pay under the relevant policies, less premiums received; 11. Syncora s and Assured Guaranty s successful motions regarding causation in their Federal court put-back litigations with JP Morgan Chase and Flagstar Bank, respectively, which support the ruling on causation in MBIA Corp. s litigation against Countrywide; and 12. other loan repurchase reserves and/or settlements which have been publicly disclosed by certain sellers/servicers. MBIA Corp. continues to consider all relevant facts and circumstances, including the factors described above, in developing its assumptions on expected cash inflows, probability of potential recoveries (including the outcome of litigation) and recovery period. The estimated amount and likelihood of potential recoveries are expected to be revised and supplemented to the extent there are developments in the pending litigation, new litigation is initiated and/or changes to the financial condition of sellers/servicers occur. While MBIA Corp. believes it will be successful in realizing recoveries from contractual and other claims, the ultimate amounts recovered may be materially different from those recorded by MBIA Corp. given the inherent uncertainty of the manner of resolving the claims (e.g., litigation) and the assumptions used in the required estimation process for accounting purposes which are based, in part, on judgments and other information that are not easily corroborated by historical data or other relevant benchmarks. All of MBIA Corp. s policies insuring second-lien RMBS for which litigation has been initiated against sellers/servicers are in the form of financial guarantee insurance contracts. MBIA Corp. has not recorded a gain contingency with respect to pending litigation. First-lien RMBS Reserves MBIA Corp. s first-lien RMBS case basis reserves as of December 31, 2012, which primarily relate to RMBS backed by alternative A- paper ( Alt-A ) and subprime mortgage loans were determined using the Roll Rate Methodology. MBIA Corp. assumes that the Roll Rate for loans in foreclosure, REO and bankruptcy are 90%, 90% and 75%, respectively. Roll Rates for current, day delinquent loans, day delinquent loans and 90+ day delinquent loans are calculated on a transaction-specific basis. The Current Roll to Loss rates stay at the November 30, 2012 level for two months before declining to 25% of this level over a 24-month period. Additionally, MBIA Corp. runs scenarios where the 90+ day roll rate to loss is set at 90%. The Roll Rates are applied to the amounts in the respective delinquency buckets based on delinquencies as of November 30, 2012 to estimate future losses from loans that are delinquent as of the current reporting period. In calculating ultimate cumulative losses for first-lien RMBS, MBIA Corp. estimates the amount of loans that are expected to be liquidated through foreclosure or short sale. The time to liquidation for a defaulted loan is specific to the loan s delinquency bucket with the latest three-month average loss severities generally used to start the projection for trends in loss severities at loan liquidation. The loss severities are reduced over time to account for reduction in the amount of foreclosure inventory, anticipated future increases in home prices, principal amortization of the loan and government foreclosure moratoriums. The following table presents the gross par outstanding of MBIA Corp. s total direct RMBS insured exposure as of December 31, 2012 by S&P credit rating category. Gross Par Outstanding Prime Alt-A-paper Subprime HELOC CES In millions First-lien First-lien First-lien Second-lien Second-lien Total AAA $ 172 $ 1,245 $ 1,242 $ - $ 9 $ 2,668 AA A BBB ,575 1,718 3,730 Below investment grade - 1, ,660 1,561 4,748 Total gross par $ 206 $ 3,095 (1) - Includes international exposure of $744 million. (2) - Includes international exposure of $11 million. (1) $ 2,215 (2) $ 3,244 $ 3,306 $ 12,

45 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS The following table presents the gross par outstanding by vintage year of MBIA Corp. s total second-lien residential mortgage loan securitizations insured exposure as of December 31, Gross Par Outstanding In millions HELOC % of Total HELOC CES % of Total CES 2007 $ % $ 2,180 66% ,168 36% 1,061 32% % - 0% % 38 1% 2003 and prior 76 2% 27 1% Total gross par $ 3, % $ 3, % As of December 31, 2012, total gross par outstanding for HELOC and CES was $3.2 billion and $3.3 billion, respectively, compared with HELOC and CES gross par outstanding of $4.0 billion and $4.1 billion, respectively, as of December 31, During the year ended December 31, 2012, net loss and LAE incurred on insured second-lien RMBS transactions was a benefit of $26 million, comprising $437 million of additional case basis incurred due to a combination of the overall weakening in the economic environment, servicer performance related issues and relatively few successful loan modifications by the loan servicers, offset by an increase in salvage and subrogation recoveries of $463 million primarily related to loan losses principally associated with ineligible mortgage loans in certain insured second-lien residential mortgage loan securitizations that are subject to a contractual obligation by the sellers/servicers to repurchase or replace the mortgage loans and amounts expected to be received from excess spread. During the year ended December 31, 2012, MBIA Corp. paid approximately $595 million, net of reinsurance and collections, on insured second-lien RMBS transactions. Through December 31, 2012, MBIA Corp. paid a cumulative total of $6.6 billion, net of reinsurance and collections, on insured second-lien RMBS transactions and had case basis reserves of $252 million. The case basis reserves represent the present value of the difference between cash payments MBIA Corp. expects to make on the insured transactions and the cash receipts MBIA Corp. expects from the performing mortgages in the securitizations. The payments that MBIA Corp. makes virtually all go to reduce the principal balances of the securitizations. The following table provides information about second-lien RMBS transactions included in MBIA Corp. s insured portfolio for which it has made claim and LAE payments, net of collections as of December 31, $ in millions Number of Issues Original Par Insured Gross Par Outstanding Claim Payments and LAE Net of Collections Since Inception HELOC 19 $ 17,910 $ 2,932 $ 2,938 CES 16 13,266 3,279 3,800 Total 35 $ 31,176 $ 6,211 $ 6,738 Total net of reinsurance $ 6,556 As of December 31, 2012, the gross par outstanding on insured second-lien RMBS transactions included in the preceding table was $6.2 billion and MBIA Corp. expects to pay an additional $365 million (on a present value basis) on these transactions. MBIA Corp. expects to receive a total of $961 million (on a present value basis) in reimbursement of past and future expected claims through excess spread in these transactions. In addition, MBIA Corp. expects to receive $3.6 billion (on a present value basis) in respect of the sellers /servicers obligation to repurchase ineligible mortgage loans. ABS CDOs MBIA Corp. s insured ABS CDOs are transactions that include a variety of collateral ranging from corporate bonds to structured finance assets (which includes but are not limited to RMBS related collateral, ABS CDOs, corporate CDOs and collateralized loan obligations). These transactions were insured as either financial guarantee insurance policies or credit derivatives with the majority insured in the form of credit derivatives. Since the fourth quarter of 2007, MBIA Corp. s insured par exposure within the ABS CDO portfolio has been substantially reduced through a combination of terminations and commutations. Accordingly, as of December 31, 2012, the insured par exposure of the ABS CDO financial guarantee insurance policies and credit derivatives portfolio has declined by approximately 88% of the insured amount as of December 31, MBIA Corp. s ABS CDOs originally benefited from two sources of credit enhancement. First, the subordination in the underlying securities collateralizing the transaction must be fully eroded and second, the subordination below the insured tranche in the CDO transaction must be fully eroded before the insured tranche is subject to a claim. MBIA Corp. s payment obligations after a default vary by transaction and by insurance type. The primary factor in estimating reserves on insured ABS CDO policies written as financial guarantee insurance policies or insured credit derivatives is the losses associated with the underlying collateral in the transactions. MBIA Corp. s approach to establishing reserves in this portfolio employs a methodology which is similar to other structured finance asset classes insured by MBIA Corp. MBIA Corp. uses up to a total of four probability-weighted scenarios in order to estimate its reserves for ABS CDOs. As of December 31, 2012, MBIA Corp. established loss and LAE reserves of $329 million related to ABS CDOs. For the year ended December 31, 2012, MBIA Corp. recognized a loss and LAE benefit of $179 million which related to improved performance and commutations of credit derivative exposures at less than estimated reserves. In the event of further deteriorating performance of the collateral referenced or held in ABS CDO transactions, the amount of losses estimated by MBIA Corp. could increase materially

46 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS CMBS Pools, CRE CDOs and CRE Loan Pools For the year ended December 31, 2012, MBIA Corp. incurred loss and LAE on the structured CMBS pool, CRE CDO and CRE Loan portfolios of $873 million as a result of additional delinquencies and loan level liquidations, as well as continued refinements of MBIA Corp. s assessment of various commutation possibilities. The majority of the increase relates to a subset of transactions with a single counterparty. The loss and LAE incurred is determined as the present value of probability-weighted potential future losses, net of estimated recoveries, across multiple scenarios, plus actual payments and collections. Although the pace of increases in the delinquency rate has slowed and many loans are being modified, liquidations have taken place. Some loans were liquidated with minimal losses of 1% to 2%, others experienced near complete losses, and in some cases severities exceeded 100%. These liquidations have led to losses in the CMBS market, and in many cases, have resulted in reductions of enhancement to the individual CMBS bonds referenced by the insured structured CMBS pools. In certain insured transactions, these losses have resulted in deductible erosion. Bond level enhancement and pool level deductibles are structural features intended to mitigate losses to MBIA Corp. However, some of the transactions reference similar rated subordinate tranches of CMBS bonds. When there are broad-based declines in property performance, this leverage can result in rapid deterioration in pool performance. In the CRE CDO portfolio, transaction specific structures require managers to report reduced enhancement according to certain guidelines which often include downgrades even when the bond is still performing. As a result, in addition to collateral defaults, reported enhancement has been reduced significantly in some CRE CDOs. Moreover, many of the CRE CDO positions are amortizing more quickly than originally expected as most or all interest proceeds that would have been allocated to more junior classes within the CDO have been diverted and redirected to pay down the senior most classes insured by MBIA Corp. MBIA Corp. has developed multiple scenarios to consider the range of potential outcomes in the CRE market and their impact on MBIA Corp. The approaches require substantial judgments about the future performance of the underlying loans, and include the following: x The first approach considers the range of commutation agreements achieved and agreed to since 2010, which included 66 structured CMBS pools, CRE CDOs and CRE loan pool policies totaling $33.1 billion of gross insured exposure. MBIA Corp. considers the range of commutations achieved over the past several years with multiple counterparties. This approach results in an estimated price to commute the remaining policies with price estimates, based on this experience. It is customized by counterparty and is dependent on the level of dialogue with the counterparty and the credit quality and payment profile of the underlying exposure. x x x The second approach considers current delinquency rates and uses current and projected net operating income ( NOI ) and capitalization rates ( Cap Rates ) to project losses under two scenarios. Loans are stratified by size with larger loans being valued utilizing lower Cap Rates than for smaller loans. These scenarios also assume that Cap Rates and NOIs remain flat for the near term and then begin to improve gradually. Additionally, in these scenarios, any loan with a balance greater than $75 million with a debt service coverage ratio ( DSCR ) less than 1.0x or that was reported as being in any stage of delinquency, was reviewed individually so that performance and loss severity could be more accurately determined. Specific loan level assumptions for this large loan subset were then incorporated into these scenarios, as well as specific assumptions regarding certain smaller loans when there appeared to be a material change in the asset s financial or delinquency performance over the preceding six months. As MBIA Corp. continues to increase the level of granularity in its individual loan assessments, it analyzes and adjusts assumptions for loans with certain mitigating attributes, such as no lifetime delinquency, recent appraisals indicating sufficient value and large capital reserve levels. These scenarios project different levels of additional defaults with respect to loans that are current. This approach makes use of the most recent financial statements available at the property level. The third approach stratifies loans into buckets based on delinquency status (including a current bucket) and utilizes recent Roll Rates actually experienced within each of the commercial mortgage-backed index ( CMBX ) series in order to formulate an assumption to predict future delinquencies. Ultimately, this generates losses over a projected time horizon based on the assumption that loss severities will begin to decline from the high levels seen over the past two years. MBIA Corp. further examines those loans referenced in the CMBX indices which were categorized as 90+ days delinquent or in the process of foreclosure and determines the average monthly balance of such loans which were cured. MBIA Corp. then applies the most recent rolling sixmonth average balance of all such cured loans to all underperforming loans in the 90+ day delinquent bucket or in the foreclosure process (and those projected to roll into late stage delinquency from the current and lesser stage levels of delinquency) and assumes all other loans are liquidated. MBIA Corp. reserves the right to exclude any aberrant data from this analysis and also assumes all loans in the REO category liquidate over the next twelve months. The fourth approach is based on a proprietary model developed by reviewing performance data on over 80,000 securitized CRE loans originated between 1992 and The time period covered during the performance review includes the years 2006 through MBIA Corp. believes that these five years represent an appropriate time period in which to conduct a performance review because they encompass a period of extreme stress in the economy and the CRE market. Based on a review of the data, MBIA Corp. found property type and the DSCR to be the most significant determinants of a loan s default probability, with other credit characteristics less influential. As a result, MBIA Corp. developed a model in which the loans were divided into 168 representative cohorts based on their DSCR and property type. For each of these cohorts, MBIA Corp. calculated the average annual probability of default, and then ran Monte Carlo simulations to estimate the timing of defaults. In addition, the model incorporated the following logic: x NOI and Cap Rates were assumed to remain at current levels for loans in MBIA Corp. s classified portfolio, resulting in no modifications or extensions under the model, other than as described in the next bullet point, to reflect the possibility that the U.S. economy and CRE market could experience no growth for the foreseeable future

47 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS x Any valuation estimates obtained by special servicers since a loan s origination as well as MBIA Corp. s individual large loan level analysis for loans with balances greater than $75 million were incorporated as described in the second approach. However, in the fourth approach no adjustments were made for loans lower than $75 million regardless of any mitigating factors. The loss severities projected by these scenarios vary widely, from moderate to substantial losses, with the majority of projected losses relating to a subset of transactions with a single counterparty. Actual losses will be a function of the proportion of loans in the pools that are foreclosed and liquidated and the loss severities associated with those liquidations. If the deductibles in MBIA Corp. s insured transactions and underlying referenced CMBS transactions are fully eroded, additional property level losses upon foreclosures and liquidations could result in substantial losses for MBIA Corp. Since foreclosures and liquidations have only begun to take place during this economic cycle, particularly for larger properties, ultimate loss rates remain uncertain. Whether CMBS collateral is included in a structured pool or in a CRE CDO, MBIA Corp. believes the modeling related to the underlying bond should be the same. However, adjustments may be needed for structural or legal reasons. MBIA Corp. assigns a wide range of probabilities to these scenarios, with lower severity scenarios being weighted more heavily than higher severity scenarios. This reflects the view that liquidations will continue to be mitigated by loan extensions and modifications, and that property values and NOIs have bottomed for many sectors and markets in the U.S. The weightings are customized to each counterparty. If macroeconomic stress were to increase or the U.S. goes into a recession, higher delinquencies, liquidations and/or higher severities of loss upon liquidation may result and MBIA Corp. may incur substantial additional losses. The foreclosure and REO pipelines are still relatively robust, with several restructurings and liquidations yet to occur, so the range of possible outcomes is wider than those for MBIA Corp. s exposures to ABS CDOs and second-lien RMBS. 26. Intercompany Pooling Arrangements MBIA Corp. has no intercompany pooling arrangements. 27. Structured Settlements MBIA Corp. did not purchase any annuities during Health Care Receivables MBIA Corp. does not have any health care receivables as of December 31, Participating Policies MBIA Corp. had no participating accident or health contracts during Premium Deficiency Reserves MBIA Corp. had no premium deficiency reserves during MBIA Corp. does not anticipate investment income as a factor in its premium deficiency calculation. 31. High Deductibles MBIA Corp. has not recorded any reserve credits for high deductibles on unpaid claims during Discounting of Liabilities for Unpaid Losses or Unpaid Loss Adjustment Expenses Loss reserves are discounted on a non-tabular basis by applying a discount rate equal to the yield-to-maturity of MBIA Corp. s fixedincome investment portfolio, excluding cash and cash equivalents and other investments not intended to defease long-term liabilities. MBIA Corp. does not discount LAE reserves. The discount rates used at December 31, 2012 and 2011 were 5.72% and 5.59%, respectively. The amount of non-tabular discount as of December 31, 2012 and 2011 was $463 million and $1.7 billion, respectively. 33. Asbestos/Environmental Reserves MBIA Corp. has not written any policies which have been identified as having the potential for the existence of a liability due to asbestos or environmental losses. 34. Subscriber Savings Accounts MBIA Corp. is not a reciprocal insurance entity and, therefore, does not have subscriber savings accounts. 35. Multiple Peril Crop Insurance MBIA Corp. does not write multiple peril crop insurance. 36. Financial Guarantee Insurance A. Refer to Note 1: Summary of Significant Accounting Policies for a description of MBIA Corp. s accounting policy for insurance premiums. MBIA Corp. has not recorded unearned premium related to future installment payments nor has it recorded premiums receivable on installment contracts as of December 31,

48 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS (1) Financial guarantee insurance contracts where premiums are received as installment payments over the period of the contract, rather than at inception: b. The following table presents the undiscounted future amount of premiums expected to be collected under all installment contracts and the period in which those collections are expected to occur: In thousands Expected Collection of Premiums (a) 1st Quarter 2013 $ 38,350 (b) 2nd Quarter ,485 (c) 3rd Quarter ,504 (d) 4th Quarter ,986 (e) Year ,547 (f) Year ,007 (g) Year ,502 (h) Year ,218 (a) 2018 through ,798 (b) 2023 through ,105 (c) 2028 through ,102 (d) 2033 through ,903 (e) 2038 through ,234 (f) 2043 through ,212 (g) 2048 through ,126 (h) December 31, 2053 and thereafter 68 Total $ 1,354,147 c. The following table presents a roll forward of MBIA Corp. s undiscounted premiums receivable for the year ended December 31, 2012 as if all installment premium contracts were received on an upfront basis: In thousands 1. Expected future premiums - Beginning of Year $ 1,638, Less - Premium payments received for existing installment contracts (206,624) 3. Add - Expected premium payments for new installment contracts 5, Adjustments to the expected future premium payments (82,803) 5. Expected future premiums - End of Year $ 1,354,147 (2) Financial guarantee contracts where premiums were received upfront: b. The following table presents future expected earned premium revenue on upfront contracts as of and for the periods presented: In thousands Gross Expected Future Premium Earnings On Upfront Contracts (a) 1st Quarter 2013 $ 28,962 (b) 2nd Quarter ,841 (c) 3rd Quarter ,262 (d) 4th Quarter ,977 (e) Year ,051 (f) Year ,559 (g) Year ,457 (h) Year ,105 (a) 2018 through ,403 (b) 2023 through ,095 (c) 2028 through ,321 (d) December 31, 2033 and thereafter 193,314 Total $ 1,742,347 (3) Claim Liability a. Changes in the loss and LAE reserve attributable to the accretion of the claim liability discount, changes in discount rates, changes in the timing and amounts of estimated payments and recoveries, changes in assumptions and changes in LAE reserves are recorded in Losses incurred in MBIA Corp. s Statement of Income. LAE reserves are reported net of 14.33

49 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS reinsurance and are expected to be settled within a one year period and are not discounted. As of December 31, 2012 and December 31, 2011, the rates used to discount the claim liability were 5.72% and 5.59%, respectively. b. The following table presents changes in MBIA Corp. s loss and LAE reserve as of December 31, Components (In thousands) Amount (1) Accrection of the discount $ (110,961) (2) Changes in timing 191,767 (3) New reserves for defaults of insured contracts (352,545) (4) Changes in deficiency reserves - (5) Change in incurred but not reported claims - (6) Total $ (271,739) (4) MBIA Corp. s insured portfolio management groups within its structured finance and international insurance businesses (collectively, IPM ) monitor MBIA Corp. s outstanding insured obligations with the objective of minimizing losses. IPM meets this objective by identifying issuers that, because of deterioration in credit quality or changes in the economic, regulatory or political environment, are at a heightened risk of defaulting on debt service of obligations insured by MBIA Corp. In such cases, IPM works with the issuer, trustee, bond counsel, servicer, underwriter and other interested parties in an attempt to alleviate or remedy the problem and avoid defaults on debt service payments. Once an obligation is insured, MBIA Corp. typically requires the issuer, servicer (if applicable) and the trustee to furnish periodic financial and asset-related information, including audited financial statements, to IPM for review. IPM also monitors publicly available information related to insured obligations. Potential problems uncovered through this review, such as poor financial results, low fund balances, covenant or trigger violations and trustee or servicer problems, or other events that could have an adverse impact on the insured obligation, could result in an immediate surveillance review and an evaluation of possible remedial actions. IPM also monitors and evaluates the impact on issuers of general economic conditions, current and proposed legislation and regulations, as well as state and municipal finances and budget developments. Insured obligations are monitored periodically. The frequency and extent of such monitoring is based on the criteria and categories described below. Insured obligations that are judged to merit more frequent and extensive monitoring or remediation activities due to a deterioration in the underlying credit quality of the insured obligation or the occurrence of adverse events related to the underlying credit of the issuer are assigned to a surveillance category ( Caution List Low, Caution List Medium, Caution List High or Classified List ) depending on the extent of credit deterioration or the nature of the adverse events. IPM monitors insured obligations assigned to a surveillance category more frequently and, if needed, develops a remediation plan to address any credit deterioration. MBIA Corp. does not establish any case basis reserves for insured obligations that are assigned to Caution List Low, Caution List Medium or Caution List High. In the event MBIA Corp. expects to pay a claim as determined by probability-weighted cash flow analysis with respect to an insured transaction, it places the insured transaction on its Classified List and establishes a case basis reserve. The following provides a description of each surveillance category: Caution List Low Includes issuers where debt service protection is adequate under current and anticipated circumstances. However, debt service protection and other measures of credit support and stability may have declined since the transaction was underwritten and the issuer is less able to withstand further adverse events. Transactions in this category generally require more frequent monitoring than transactions that do not appear within a surveillance category. IPM subjects issuers in this category to heightened scrutiny. Caution List Medium Includes issuers where debt service protection is adequate under current and anticipated circumstances, although adverse trends have developed and are more pronounced than for Caution List Low. Issuers in this category may have breached one or more covenants or triggers. These issuers are more closely monitored by IPM but generally take remedial action on their own. Caution List High Includes issuers where more proactive remedial action is needed but where no defaults on debt service payments are expected. Issuers in this category exhibit more significant weaknesses, such as low debt service coverage, reduced or insufficient collateral protection or inadequate liquidity, which could lead to debt service defaults in the future. Issuers in this category may have breached one or more covenants or triggers and have not taken conclusive remedial action. Therefore, IPM adopts a remediation plan and takes more proactive remedial actions. Classified List Includes all insured obligations where MBIA Corp. has paid a claim or where a claim payment is expected. It also includes insured obligations where a significant LAE payment has been made, or is expected to be made, to mitigate a claim payment. This may include property improvements, bond purchases and commutation payments. Generally, IPM is actively remediating these credits where possible, including restructurings through legal proceedings, usually with the assistance of specialist counsel and advisors

50 ANNUAL STATEMENT FOR YEAR 2012 OF THE MBIA INSURANCE CORPORATION NOTES TO FINANCIAL STATEMENTS The following table provides information about the financial guarantees and related loss reserves ( net claim liability ) included in MBIA Corp. s surveillance categories as of December 31, 2012: Surveillance Categories A B C D Caution List Low Caution List Medium Caution List High Classified List Total $ in millions 1. Number of policies Remaining weighted average contract period (in years) Gross insured contractual payments outstanding (1) : 3a. Principal $ 3,915 $ 4,316 $ 477 $ 20,206 $ 28,914 3b. Interest 3, ,040 12,800 3c. Total $ 7,201 $ 4,676 $ 591 $ 29,246 $ 41, Gross claim liability $ - $ - $ - $ 3,613 $ 3,613 Less: 5a. Gross potential recoveries ,756 5,756 5b. Discount, net Net claim liability (recoverable) $ - $ - $ - $ (2,606) $ (2,606) 7. Net unearned premium revenue $ 51 $ - $ - $ 11 $ Reinsurance recoverable $ - $ - $ - $ 1 $ 1 (1) - Represents contractual principal and interest payments due by the issuer of the obligations insured by MBIA Corp

51 GENERAL INTERROGATORIES PART 1 - COMMON INTERROGATORIES GENERAL 1.1 Is the reporting entity a member of an Insurance Holding Company System consisting of two or more affiliated persons, one or more of which is an insurer? Yes [ X ] No [ ] 1.2 If yes, did the reporting entity register and file with its domiciliary State Insurance Commissioner, Director or Superintendent or with such regulatory official of the state of domicile of the principal insurer in the Holding Company System, a registration statement providing disclosure substantially similar to the standards adopted by the National Association of Insurance Commissioners (NAIC) in its Model Insurance Holding Company System Regulatory Act and model regulations pertaining thereto, or is the reporting entity subject to standards and disclosure requirements substantially similar to those required by such Act and regulations? Yes [ X ] No [ ] N/A [ ] 1.3 State Regulating? New York 2.1 Has any change been made during the year of this statement in the charter, by-laws, articles of incorporation, or deed of settlement of the reporting entity? Yes [ ] No [ X ] 2.2 If yes, date of change: 3.1 State as of what date the latest financial examination of the reporting entity was made or is being made. 12/31/ State the as of date that the latest financial examination report became available from either the state of domicile or the reporting entity. This date should be the date of the examined balance sheet and not the date the report was completed or released. 12/31/ State as of what date the latest financial examination report became available to other states or the public from either the state of domicile or the reporting entity. This is the release date or completion date of the examination report and not the date of the examination (balance sheet date). 06/30/ By what department or departments? New York State Department of Financial Services 3.5 Have all financial statement adjustments within the latest financial examination report been accounted for in a subsequent financial statement filed with Departments? Yes [ X ] No [ ] N/A [ ] 3.6 Have all of the recommendations within the latest financial examination report been complied with? Yes [ X ] No [ ] N/A [ ] 4.1 During the period covered by this statement, did any agent, broker, sales representative, non-affiliated sales/service organization or any combination thereof under common control (other than salaried employees of the reporting entity) receive credit or commissions for or control a substantial part (more than 20 percent of any major line of business measured on direct premiums) of: 4.11 sales of new business? Yes [ ] No [ X ] 4.12 renewals? Yes [ ] No [ X ] 4.2 During the period covered by this statement, did any sales/service organization owned in whole or in part by the reporting entity or an affiliate, receive credit or commissions for or control a substantial part (more than 20 percent of any major line of business measured on direct premiums) of: 4.21 sales of new business? Yes [ ] No [ X ] 4.22 renewals? Yes [ ] No [ X ] 5.1 Has the reporting entity been a party to a merger or consolidation during the period covered by this statement? Yes [ ] No [ X ] 5.2 If yes, provide the name of the entity, NAIC company code, and state of domicile (use two letter state abbreviation) for any entity that has ceased to exist as a result of the merger or consolidation. 1 Name of Entity 2 NAIC Company Code 3 State of Domicile 6.1 Has the reporting entity had any Certificates of Authority, licenses or registrations (including corporate registration, if applicable) suspended or revoked by any governmental entity during the reporting period? Yes [ ] No [ X ] 6.2 If yes, give full information 7.1 Does any foreign (non-united States) person or entity directly or indirectly control 10% or more of the reporting entity? Yes [ ] No [ X ] 7.2 If yes, 7.21 State the percentage of foreign control State the nationality(s) of the foreign person(s) or entity(s); or if the entity is a mutual or reciprocal, the nationality of its manager or attorney-in-fact and identify the type of entity(s) (e.g., individual, corporation, government, manager or attorneyin-fact). 1 Nationality 2 Type of Entity 15

52 GENERAL INTERROGATORIES 8.1 Is the company a subsidiary of a bank holding company regulated by the Federal Reserve Board? Yes [ ] No [ X ] 8.2 If response to 8.1 is yes, please identify the name of the bank holding company. 8.3 Is the company affiliated with one or more banks, thrifts or securities firms? Yes [ ] No [ X ] 8.4 If response to 8.3 is yes, please provide the names and locations (city and state of the main office) of any affiliates regulated by a federal financial regulatory services agency [i.e. the Federal Reserve Board (FRB), the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC) and the Securities Exchange Commission (SEC)] and identify the affiliate s primary federal regulator. 1 Affiliate Name 2 Location (City, State) 3 FRB 4 OCC 5 FDIC 6 SEC 9. What is the name and address of the independent certified public accountant or accounting firm retained to conduct the annual audit? PricewaterhouseCoopers LLP, 300 Madison Avenue, New York, NY Has the insurer been granted any exemptions to the prohibited non-audit services provided by the certified independent public accountant requirements as allowed in Section 7H of the Annual Financial Reporting Model Regulation (Model Audit Rule), or substantially similar state law or regulation? Yes [ ] No [ X ] 10.2 If the response to 10.1 is yes, provide information related to this exemption: 10.3 Has the insurer been granted any exemptions related to the other requirements of the Annual Financial Reporting Model Regulation as allowed for in Section 17A of the Model Regulation, or substantially similar state law or regulation? Yes [ ] No [ X ] 10.4 If the response to 10.3 is yes, provide information related to this exemption: 10.5 Has the reporting entity established an Audit Committee in compliance with the domiciliary state insurance laws? Yes [ X ] No [ ] N/A [ ] 10.6 If the response to 10.5 is no or n/a, please explain 11. What is the name, address and affiliation (officer/employee of the reporting entity or actuary/consultant associated with an actuarial consulting firm) of the individual providing the statement of actuarial opinion/certification? Mark Littmann, Principal, PricewaterhouseCoopers LLP, 185 Asylum Street, Suite 2400, Hartford, CT Does the reporting entity own any securities of a real estate holding company or otherwise hold real estate indirectly? Yes [ ] No [ X ] 12.2 If yes, provide explanation Name of real estate holding company Number of parcels involved Total book/adjusted carrying value $ FOR UNITED STATES BRANCHES OF ALIEN REPORTING ENTITIES ONLY: 13.1 What changes have been made during the year in the United States manager or the United States trustees of the reporting entity? 13.2 Does this statement contain all business transacted for the reporting entity through its United States Branch on risks wherever located? Yes [ ] No [ ] 13.3 Have there been any changes made to any of the trust indentures during the year? Yes [ ] No [ ] 13.4 If answer to (13.3) is yes, has the domiciliary or entry state approved the changes? Yes [ ] No [ ] N/A [ ] 14.1 Are the senior officers (principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions) of the reporting entity subject to a code of ethics, which includes the following standards? Yes [ X ] No [ ] a. Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; b. Full, fair, accurate, timely and understandable disclosure in the periodic reports required to be filed by the reporting entity; c. Compliance with applicable governmental laws, rules and regulations; d. The prompt internal reporting of violations to an appropriate person or persons identified in the code; and e. Accountability for adherence to the code If the response to 14.1 is no, please explain: 14.2 Has the code of ethics for senior managers been amended? Yes [ ] No [ X ] If the response to 14.2 is yes, provide information related to amendment(s) 14.3 Have any provisions of the code of ethics been waived for any of the specified officers? Yes [ ] No [ X ] If the response to 14.3 is yes, provide the nature of any waiver(s). 15.1

53 GENERAL INTERROGATORIES 15.1 Is the reporting entity the beneficiary of a Letter of Credit that is unrelated to reinsurance where the issuing or confirming bank is not on the SVO Bank List? Yes [ ] No [ X ] 15.2 If the response to 15.1 is yes, indicate the American Bankers Association (ABA) Routing Number and the name of the issuing or confirming bank of the Letter of Credit and describe the circumstances in which the Letter of Credit is triggered American Bankers Association (ABA) Routing Number Issuing or Confirming Bank Name Circumstances That Can Trigger the Letter of Credit Amount BOARD OF DIRECTORS 16. Is the purchase or sale of all investments of the reporting entity passed upon either by the board of directors or a subordinate committee thereof? Yes [ X ] No [ ] 17. Does the reporting entity keep a complete permanent record of the proceedings of its board of directors and all subordinate committees thereof? Yes [ X ] No [ ] 18. Has the reporting entity an established procedure for disclosure to its board of directors or trustees of any material interest or affiliation on the part of any of its officers, directors, trustees or responsible employees that is in conflict or is likely to conflict with the official duties of such person? Yes [ X ] No [ ] FINANCIAL 19. Has this statement been prepared using a basis of accounting other than Statutory Accounting Principles (e.g., Generally Accepted Accounting Principles)? Yes [ ] No [ X ] 20.1 Total amount loaned during the year (inclusive of Separate Accounts, exclusive of policy loans): To directors or other officers $ To stockholders not officers $ Trustees, supreme or grand (Fraternal only) $ Total amount of loans outstanding at the end of year (inclusive of Separate Accounts, exclusive of policy loans): To directors or other officers $ To stockholders not officers $ Trustees, supreme or grand (Fraternal only) $ Were any assets reported in this statement subject to a contractual obligation to transfer to another party without the liability for such obligation being reported in the statement? Yes [ ] No [ X ] 21.2 If yes, state the amount thereof at December 31 of the current year: Rented from others $ Borrowed from others $ Leased from others $ Other $ Does this statement include payments for assessments as described in the Annual Statement Instructions other than guaranty fund or guaranty association assessments? Yes [ ] No [ X ] 22.2 If answer is yes: Amount paid as losses or risk adjustment $ Amount paid as expenses $ Other amounts paid $ Does the reporting entity report any amounts due from parent, subsidiaries or affiliates on Page 2 of this statement? Yes [ X ] No [ ] 23.2 If yes, indicate any amounts receivable from parent included in the Page 2 amount: $ (1,893,836) INVESTMENT Were all the stocks, bonds and other securities owned December 31 of current year, over which the reporting entity has exclusive control, in the actual possession of the reporting entity on said date? (other than securities lending programs addressed in 24.03) Yes [ ] No [ X ] If no, give full and complete information, relating thereto Securities are held pursuant to either a custodial or safekeeping agreement with the custodians listed in Interrogatory For security lending programs, provide a description of the program including value for collateral and amount of loaned securities, and whether collateral is carried on or off-balance sheet. (an alternative is to reference Note 17 where this information is also provided) Not Applicable Does the company s security lending program meet the requirements for a conforming program as outlined in the Risk-Based Capital Instructions? Yes [ ] No [ ] NA [ X ] If answer to is yes, report amount of collateral for conforming programs. $ If answer to is no, report amount of collateral for other programs. $ Does your securities lending program require 102% (domestic securities) and 105% (foreign securities) from the counterparty at the outset of the contract? Yes [ ] No [ ] NA [ X ] Does the reporting entity non-admit when the collateral received from the counterparty falls below 100%? Yes [ ] No [ ] NA [ X ] Does the reporting entity or the reporting entity s securities lending agent utilize the Master Securities Lending Agreement (MSLA) to conduct securities lending? Yes [ ] No [ ] NA [ X ] For the reporting entity s security lending program, state the amount of the following as of December 31 of the current year: Total fair value of reinvested collateral assets reported on Schedule DL, Parts 1 and 2 $ Total book adjusted/carrying value of reinvested collateral assets reported on Schedule DL, Parts 1 and 2 $ Total payable for securities lending reported on the liability page $

54 GENERAL INTERROGATORIES 25.1 Were any of the stocks, bonds or other assets of the reporting entity owned at December 31 of the current year not exclusively under the control of the reporting entity or has the reporting entity sold or transferred any assets subject to a put option contract that is currently in force? (Exclude securities subject to Interrogatory 21.1 and 24.03). Yes [ X ] No [ ] 25.2 If yes, state the amount thereof at December 31 of the current year: 25.3 For category (25.27) provide the following: Subject to repurchase agreements $ Subject to reverse repurchase agreements $ Subject to dollar repurchase agreements $ Subject to reverse dollar repurchase agreements $ Pledged as collateral $ Placed under option agreements $ Letter stock or securities restricted as to sale $ On deposit with state or other regulatory body $ 4,482, Other $ 0 1 Nature of Restriction 2 Description 3 Amount 26.1 Does the reporting entity have any hedging transactions reported on Schedule DB? Yes [ ] No [ X ] 26.2 If yes, has a comprehensive description of the hedging program been made available to the domiciliary state? Yes [ ] No [ ] N/A [ ] If no, attach a description with this statement Were any preferred stocks or bonds owned as of December 31 of the current year mandatorily convertible into equity, or, at the option of the issuer, convertible into equity? Yes [ ] No [ X ] 27.2 If yes, state the amount thereof at December 31 of the current year. $ Excluding items in Schedule E Part 3 Special Deposits, real estate, mortgage loans and investments held physically in the reporting entity s offices, vaults or safety deposit boxes, were all stocks, bonds and other securities, owned throughout the current year held pursuant to a custodial agreement with a qualified bank or trust company in accordance with Section 1, III General Examination Considerations, F. Outsourcing of Critical Functions, Custodial or Safekeeping agreements of the NAIC Financial Condition Examiners Handbook? Yes [ X ] No [ ] For agreements that comply with the requirements of the NAIC Financial Condition Examiners Handbook, complete the following: 1 Name of Custodian(s) 2 Custodian s Address J.P. Morgan Chase Bank 1 Chase Manhattan Plaza, New York, NY Bank of New York Mellon Avenue des Artis 35, B-1040, Brussels, Belgium Banco Santander Central Hispano, SA Plaza de Canalegas, 1 Madrid, Spain Citibank, N.A. BBVA Bancomer, SA Av. Andres Bello 2681 Las Condes, Santiago, Chile 7609 Senior Banker Bancos, Mexico, D.F. Bank of New York Mellon 101 Barclay Street - 8W, New York, NY For all agreements that do not comply with the requirements of the NAIC Financial Condition Examiners Handbook, provide the name, location and a complete explanation: 1 Name(s) 2 Location(s) 3 Complete Explanation(s) Have there been any changes, including name changes, in the custodian(s) identified in during the current year? Yes [ ] No [ X ] If yes, give full and complete information relating thereto: 1 Old Custodian 2 New Custodian 3 Date of Change 4 Reason Identify all investment advisors, brokers/dealers or individuals acting on behalf of broker/dealers that have access to the investment accounts, handle securities and have authority to make investments on behalf of the reporting entity: 1 Central Registration Depository Number(s) 2 Name 3 Address Cutwater Investor Services Corp. 113 King Street, Armonk, NY

55 GENERAL INTERROGATORIES 29.1 Does the reporting entity have any diversified mutual funds reported in Schedule D - Part 2 (diversified according to the Securities and Exchange Commission (SEC) in the Investment Company Act of 1940 [Section 5 (b) (1)])? Yes [ ] No [ X ] 29.2 If yes, complete the following schedule: 1 CUSIP # 2 Name of Mutual Fund 3 Book/Adjusted Carrying Value TOTAL For each mutual fund listed in the table above, complete the following schedule: 1 Name of Mutual Fund (from above table) 2 Name of Significant Holding of the Mutual Fund 3 Amount of Mutual Fund s Book/Adjusted Carrying Value Attributable to the Holding 4 Date of Valuation 30. Provide the following information for all short-term and long-term bonds and all preferred stocks. Do not substitute amortized value or statement value for fair value. 1 Statement (Admitted) Value 2 Fair Value 3 Excess of Statement over Fair Value (-), or Fair Value over Statement (+) 30.1 Bonds 473,711, ,107,397 18,396, Preferred Stocks Totals 473,711, ,107,397 18,396, Describe the sources or methods utilized in determining the fair values: The fair value of bonds is based upon the market prices published by the NAIC Securities Valuation Office ("SVO"), if applicable. If the NAIC SVO published market price is unavailable fair value is determined by using independent third-party source or appropriate valuation methodologies Was the rate used to calculate fair value determined by a broker or custodian for any of the securities in Schedule D? Yes [ X ] No [ ] 31.2 If the answer to 31.1 is yes, does the reporting entity have a copy of the broker s or custodian s pricing policy (hard copy or electronic copy) for all brokers or custodians used as a pricing source? Yes [ ] No [ X ] 31.3 If the answer to 31.2 is no, describe the reporting entity s process for determining a reliable pricing source for purposes of disclosure of fair value for Schedule D: Prices are evaluated for reasonableness by comparing current prices to prior month's prices. The portfolio management group reviews the portfolio valuations received from third-party valuators and compares the valuations to similar trades in the market or spread levels published in dealer research Have all the filing requirements of the Purposes and Procedures Manual of the NAIC Securities Valuation Office been followed? Yes [ X ] No [ ] 32.2 If no, list exceptions: 15.4

56 GENERAL INTERROGATORIES OTHER 33.1 Amount of payments to Trade associations, service organizations and statistical or rating bureaus, if any? $ 1,199, List the name of the organization and the amount paid if any such payment represented 25% or more of the total payments to trade associations, service organizations and statistical or rating bureaus during the period covered by this statement. 1 Name 2 Amount Paid Standard & Poor's Financial Services $ 575,000 Moody's Investors Service, Inc. $ 560, Amount of payments for legal expenses, if any? $ 16,335, List the name of the firm and the amount paid if any such payment represented 25% or more of the total payments for legal expenses during the period covered by this statement. 1 Name 2 Amount Paid Kasowitz, Benson, Torres & Friedman $ 9,636, Amount of payments for expenditures in connection with matters before legislative bodies, officers or departments of government, if any? $ List the name of the firm and the amount paid if any such payment represented 25% or more of the total payment expenditures in connection with matters before legislative bodies, officers or departments of government during the period covered by this statement. 1 Name $ $ $ 2 Amount Paid 15.5

57 GENERAL INTERROGATORIES PART 2 - PROPERTY & CASUALTY INTERROGATORIES 1.1 Does the reporting entity have any direct Medicare Supplement Insurance in force? Yes [ ] No [ X ] 1.2 If yes, indicate premium earned on U. S. business only $ What portion of Item (1.2) is not reported on the Medicare Supplement Insurance Experience Exhibit? $ Reason for excluding 1.4 Indicate amount of earned premium attributable to Canadian and/or Other Alien not included in Item (1.2) above. $ Indicate total incurred claims on all Medicare Supplement insurance. $ Individual policies: Most current three years: 1.61 Total premium earned $ Total incurred claims $ Number of covered lives 0 All years prior to most current three years: 1.64 Total premium earned $ Total incurred claims $ Number of covered lives Group policies: Most current three years: 1.71 Total premium earned $ Total incurred claims $ Number of covered lives 0 All years prior to most current three years: 1.74 Total premium earned $ Total incurred claims $ Number of covered lives 0 2. Health Test: 1 Current Year 2 Prior Year 2.1 Premium Numerator $ 0 $ Premium Denominator $ 0 $ Premium Ratio (2.1/2.2) Reserve Numerator $ 0 $ Reserve Denominator $ 0 $ Reserve Ratio (2.4/2.5) Does the reporting entity issue both participating and non-participating policies? Yes [ ] No [ X ] 3.2 If yes, state the amount of calendar year premiums written on: 3.21 Participating policies $ Non-participating policies $ 0 4. For Mutual reporting entities and Reciprocal Exchanges only: 4.1 Does the reporting entity issue assessable policies? Yes [ ] No [ ] 4.2 Does the reporting entity issue non-assessable policies? Yes [ ] No [ ] 4.3 If assessable policies are issued, what is the extent of the contingent liability of the policyholders? 0.0 % 4.4 Total amount of assessments paid or ordered to be paid during the year on deposit notes or contingent premiums. $ 0 5. For Reciprocal Exchanges Only: 5.1 Does the exchange appoint local agents? Yes [ ] No [ ] 5.2 If yes, is the commission paid: 5.21 Out of Attorney's-in-fact compensation Yes [ ] No [ ] N/A [ ] 5.22 As a direct expense of the exchange Yes [ ] No [ ] N/A [ ] 5.3 What expenses of the Exchange are not paid out of the compensation of the Attorney-in-fact? 5.4 Has any Attorney-in-fact compensation, contingent on fulfillment of certain conditions, been deferred? Yes [ ] No [ ] 5.5 If yes, give full information 16

58 GENERAL INTERROGATORIES PART 2 - PROPERTY & CASUALTY INTERROGATORIES 6.1 What provision has this reporting entity made to protect itself from an excessive loss in the event of a catastrophe under a workers compensation contract issued without limit of loss: Not applicable. 6.2 Describe the method used to estimate this reporting entity s probable maximum insurance loss, and identify the type of insured exposures comprising that probable maximum loss, the locations of concentrations of those exposures and the external resources (such as consulting firms or computer software models), if any, used in the estimation process: Refer to Note 1, Section C of the Notes to Financial Statements for a detailed description of the method used to estimate losses. 6.3 What provision has this reporting entity made (such as a catastrophic reinsurance program) to protect itself from an excessive loss arising from the types and concentrations of insured exposures comprising its probable maximum property insurance loss? The company has established a contingency reserve which protects all policyholders against excessive loss. 6.4 Does the reporting entity carry catastrophe reinsurance protection for at least one reinstatement, in an amount sufficient to cover its estimated probable maximum loss attributable to a single loss event or occurrence? Yes [ ] No [ X ] 6.5 If no, describe any arrangements or mechanisms employed by the reporting entity to supplement its catastrophe reinsurance program or to hedge its exposure to unreinsured catastrophic loss Refer to Interrogatory 6.3 related to contingency reserve. 7.1 Has the reporting entity reinsured any risk with any other entity under a quota share reinsurance contract that includes a provision that would limit the reinsurer's losses below the stated quota share percentage (e.g., a deductible, a loss ratio corridor, a loss cap, an aggregate limit or any similar provisions)? Yes [ ] No [ X ] 7.2 If yes, indicate the number of reinsurance contracts containing such provisions If yes, does the amount of reinsurance credit taken reflect the reduction in quota share coverage caused by any applicable limiting provision(s)? Yes [ ] No [ ] 8.1 Has this reporting entity reinsured any risk with any other entity and agreed to release such entity from liability, in whole or in part, from any loss that may occur on this risk, or portion thereof, reinsured? Yes [ ] No [ X ] 8.2 If yes, give full information 9.1 Has the reporting entity ceded any risk under any reinsurance contract (or under multiple contracts with the same reinsurer or its affiliates) for which during the period covered by the statement: (i) it recorded a positive or negative underwriting result greater than 5% of prior yearend surplus as regards policyholders or it reported calendar year written premium ceded or year-end loss and loss expense reserves ceded greater than 5% of prior year-end surplus as regards policyholders; (ii) it accounted for that contract as reinsurance and not as a deposit; and (iii) the contract(s) contain one or more of the following features or other features that would have similar results: (a) A contract term longer than two years and the contract is noncancellable by the reporting entity during the contract term; (b) A limited or conditional cancellation provision under which cancellation triggers an obligation by the reporting entity, or an affiliate of the reporting entity, to enter into a new reinsurance contract with the reinsurer, or an affiliate of the reinsurer; (c) Aggregate stop loss reinsurance coverage; (d) A unilateral right by either party (or both parties) to commute the reinsurance contract, whether conditional or not, except for such provisions which are only triggered by a decline in the credit status of the other party; (e) A provision permitting reporting of losses, or payment of losses, less frequently than on a quarterly basis (unless there is no activity during the period); or (f) Payment schedule, accumulating retentions from multiple years or any features inherently designed to delay timing of the reimbursement to the ceding entity. Yes [ X ] No [ ] 9.2 Has the reporting entity during the period covered by the statement ceded any risk under any reinsurance contract (or under multiple contracts with the same reinsurer or its affiliates), for which, during the period covered by the statement, it recorded a positive or negative underwriting result greater than 5% of prior year-end surplus as regards policyholders or it reported calendar year written premium ceded or year-end loss and loss expense reserves ceded greater than 5% of prior year-end surplus as regards policyholders; excluding cessions to approved pooling arrangements or to captive insurance companies that are directly or indirectly controlling, controlled by, or under common control with (i) one or more unaffiliated policyholders of the reporting entity, or (ii) an association of which one or more unaffiliated policyholders of the reporting entity is a member where: (a) The written premium ceded to the reinsurer by the reporting entity or its affiliates represents fifty percent (50%) or more of the entire direct and assumed premium written by the reinsurer based on its most recently available financial statement; or (b) Twenty five percent (25%) or more of the written premium ceded to the reinsurer has been retroceded back to the reporting entity or its affiliates in a separate reinsurance contract. Yes [ X ] No [ ] 9.3 If yes to 9.1 or 9.2, please provide the following information in the Reinsurance Summary Supplemental Filing for General Interrogatory 9: (a) The aggregate financial statement impact gross of all such ceded reinsurance contracts on the balance sheet and statement of income; (b) A summary of the reinsurance contract terms and indicate whether it applies to the contracts meeting the criteria in 9.1 or 9.2; and (c) A brief discussion of management's principle objectives in entering into the reinsurance contract including the economic purpose to be achieved. 9.4 Except for transactions meeting the requirements of paragraph 31 of SSAP No. 62R, Property and Casualty Reinsurance, has the reporting entity ceded any risk under any reinsurance contract (or multiple contracts with the same reinsurer or its affiliates) during the period covered by the financial statement, and either: (a) Accounted for that contract as reinsurance (either prospective or retroactive) under statutory accounting principles ( SAP ) and as a deposit under generally accepted accounting principles ( GAAP ); or (b) Accounted for that contract as reinsurance under GAAP and as a deposit under SAP? Yes [ ] No [ X ] 9.5 If yes to 9.4, explain in the Reinsurance Summary Supplemental Filing for General Interrogatory 9 (Section D) why the contract(s) is treated differently for GAAP and SAP. 9.6 The reporting entity is exempt from the Reinsurance Attestation Supplement under one or more of the following criteria: (a) The entity does not utilize reinsurance; or, Yes [ ] No [ X ] (b) The entity only engages in a 100% quota share contract with an affiliate and the affiliated or lead company has filed an attestation supplement; or Yes [ ] No [ X ] (c) The entity has no external cessions and only participates in an intercompany pool and the affiliated or lead company has filed an attestation supplement. Yes [ ] No [ X ] 10. If the reporting entity has assumed risks from another entity, there should be charged on account of such reinsurances a reserve equal to that which the original entity would have been required to charge had it retained the risks. Has this been done? Yes [X] No [ ] N/A [ ] 16.1

59 GENERAL INTERROGATORIES PART 2 - PROPERTY & CASUALTY INTERROGATORIES 11.1 Has the reporting entity guaranteed policies issued by any other entity and now in force: Yes [ ] No [ X ] 11.2 If yes, give full information 12.1 If the reporting entity recorded accrued retrospective premiums on insurance contracts on Line 15.3 of the asset schedule, Page 2, state the amount of corresponding liabilities recorded for: Unpaid losses $ Unpaid underwriting expenses (including loss adjustment expenses) $ Of the amount on Line 15.3, Page 2, state the amount that is secured by letters of credit, collateral and other funds? $ If the reporting entity underwrites commercial insurance risks, such as workers compensation, are premium notes or promissory notes accepted from its insureds covering unpaid premiums and/or unpaid losses? Yes [ ] No [ ] N/A [X] 12.4 If yes, provide the range of interest rates charged under such notes during the period covered by this statement: From 0.0 % To 0.0 % 12.5 Are letters of credit or collateral and other funds received from insureds being utilized by the reporting entity to secure premium notes or promissory notes taken by a reporting entity, or to secure any of the reporting entity s reported direct unpaid loss reserves, including unpaid losses under loss deductible features of commercial policies? Yes [ ] No [ X ] 12.6 If yes, state the amount thereof at December 31 of current year: Letters of Credit $ Collateral and other funds $ Largest net aggregate amount insured in any one risk (excluding workers compensation): $ 387,895, Does any reinsurance contract considered in the calculation of this amount include an aggregate limit of recovery without also including a reinstatement provision? Yes [ ] No [ X ] 13.3 State the number of reinsurance contracts (excluding individual facultative risk certificates, but including facultative programs, automatic facilities or facultative obligatory contracts) considered in the calculation of the amount Is the company a cedant in a multiple cedant reinsurance contract? Yes [ ] No [ X ] 14.2 If yes, please describe the method of allocating and recording reinsurance among the cedants: 14.3 If the answer to 14.1 is yes, are the methods described in item 14.2 entirely contained in the respective multiple cedant reinsurance contracts? Yes [ ] No [ ] 14.4 If the answer to 14.3 is no, are all the methods described in 14.2 entirely contained in written agreements? Yes [ ] No [ ] 14.5 If the answer to 14.4 is no, please explain: 15.1 Has the reporting entity guaranteed any financed premium accounts? Yes [ ] No [ X ] 15.2 If yes, give full information 16.1 Does the reporting entity write any warranty business? Yes [ ] No [ X ] If yes, disclose the following information for each of the following types of warranty coverage: 1 Direct Losses Incurred 2 Direct Losses Unpaid 3 Direct Written Premium 4 Direct Premium Unearned 5 Direct Premium Earned Home $ 0 $ 0 $ 0 $ 0 $ Products $ 0 $ 0 $ 0 $ 0 $ Automobile $ 0 $ 0 $ 0 $ 0 $ Other* $ 0 $ 0 $ 0 $ 0 $ 0 * Disclose type of coverage: 16.2

60 GENERAL INTERROGATORIES PART 2 - PROPERTY & CASUALTY INTERROGATORIES 17.1 Does the reporting entity include amounts recoverable on unauthorized reinsurance in Schedule F Part 3 that it excludes from Schedule F Part 5. Yes [ ] No [ X ] Incurred but not reported losses on contracts in force prior to July 1, 1984, and not subsequently renewed are exempt from inclusion in Schedule F Part 5. Provide the following information for this exemption: Gross amount of unauthorized reinsurance in Schedule F Part 3 excluded from Schedule F Part 5 $ Unfunded portion of Interrogatory $ Paid losses and loss adjustment expenses portion of Interrogatory $ Case reserves portion of Interrogatory $ Incurred but not reported portion of Interrogatory $ Unearned premium portion of Interrogatory $ Contingent commission portion of Interrogatory $ 0 Provide the following information for all other amounts included in Schedule F Part 3 and excluded from Schedule F Part 5, not included above Gross amount of unauthorized reinsurance in Schedule F Part 3 excluded from Schedule F Part 5 $ Unfunded portion of Interrogatory $ Paid losses and loss adjustment expenses portion of Interrogatory $ Case reserves portion of Interrogatory $ Incurred but not reported portion of Interrogatory $ Unearned premium portion of Interrogatory $ Contingent commission portion of Interrogatory $ Do you act as a custodian for health savings accounts? Yes [ ] No [ X ] 18.2 If yes, please provide the amount of custodial funds held as of the reporting date. $ Do you act as an administrator for health savings accounts? Yes [ ] No [ X ] 18.4 If yes, please provide the balance of the funds administered as of the reporting date. $

61 FIVE-YEAR HISTORICAL DATA Show amounts in whole dollars only, no cents; show percentages to one decimal place, i.e., Gross Premiums Written (Page 8, Part 1B, Cols. 1, 2 & 3) 1. Liability lines (Lines 11.1, 11.2, 16, 17.1, 17.2, 17.3, 18.1, 18.2, 19.1, 19.2 & 19.3, 19.4) Property lines (Lines 1, 2, 9, 12, 21 & 26) Property and liability combined lines (Lines 3, 4, 5, 8, 22 & 27) All other lines (Lines 6, 10, 13, 14, 15, 23, 24, 28, 29, 30 & 34) 211,252, ,434, ,062,965 (509,339,388) 1,455,348, Nonproportional reinsurance lines (Lines 31, 32 & 33) Total (Line 35) 211,252, ,434, ,062,965 (509,339,388) 1,455,348,333 Net Premiums Written (Page 8, Part 1B, Col. 6) 7. Liability lines (Lines 11.1, 11.2, 16, 17.1, 17.2, 17.3, 18.1, 18.2, 19.1, 19.2 & 19.3, 19.4) Property lines (Lines 1, 2, 9, 12, 21 & 26) Property and liability combined lines (Lines 3, 4, 5, 8, 22 & 27) All other lines (Lines 6, 10, 13, 14, 15, 23, 24, 28, 29, 30 & 34) 204,218, ,058, ,685,045 (3,136,692,001) 1,429,392, Nonproportional reinsurance lines (Lines 31, 32 & 33) Total (Line 35) 204,218, ,058, ,685,045 (3,136,692,001) 1,429,392,189 Statement of Income (Page 4) 13. Net underwriting gain (loss) (Line 8) (623,263,066) (598,367,555) (632,307,322) (816,056,792) (2,478,998,135) 14. Net investment gain (loss) (Line 11) (193,986,977) 102,842,324 15,652,632 (91,993,702) 381,411, Total other income (Line 15) (19,032,052) 24,421, ,357,781 (37,206,739) 58,895, Dividends to policyholders (Line 17) Federal and foreign income taxes incurred (Line 19) 7,069,453 6,111,443 23,674,249 (261,083,404) (625,935,405) 18. Net income (Line 20) (843,351,548) (477,215,454) (433,971,158) (684,173,829) (1,412,755,555) Balance Sheet Lines (Pages 2 and 3) 19. Total admitted assets excluding protected cell business (Page 2, Line 26, Col. 3) 1,012,739,613 1,612,460,177 3,458,449,732 5,031,793,666 13,532,648, Premiums and considerations (Page 2, Col. 3) 20.1 In course of collection (Line 15.1) 3,821,004 2,929,629 4,752,336 12,341,852 4,673, Deferred and not yet due (Line 15.2) Accrued retrospective premiums (Line 15.3) Total liabilities excluding protected cell business (Page 3, Line 26) 47,653,694 15,904,160 2,383,747,572 2,978,750,565 10,030,226, Losses (Page 3, Line 1) (2,659,352,450) (2,380,606,593) (17,617,539) 948,093,012 2,056,386, Loss adjustment expenses (Page 3, Line 3) 53,122,646 46,116,076 85,455,153 (387,138,080) (185,690,296) 24. Unearned premiums (Page 3, Line 9) 427,244, ,353, ,302, ,517,765 4,005,836, Capital paid up (Page 3, Lines 30 & 31) 290,908, ,908, ,908, ,908, ,908, Surplus as regards policyholders (Page 3, Line 37) 965,085,919 1,596,556,017 1,074,702,160 2,053,043,101 3,502,422,224 Cash Flow (Page 5) 27. Net cash from operations (Line 11) (1,051,939,981) (3,059,310,862) (1,539,251,380) (4,888,257,411) (210,957,608) Risk-Based Capital Analysis 28. Total adjusted capital Authorized control level risk-based capital Percentage Distribution of Cash, Cash Equivalents and Invested Assets (Page 2, Col. 3)(Item divided by Page 2, Line 12, Col. 3) x Bonds (Line 1) Stocks (Lines 2.1 & 2.2) Mortgage loans on real estate (Lines 3.1 and 3.2) Real estate (Lines 4.1, 4.2 & 4.3) Cash, cash equivalents and short-term investments (Line 5) Contract loans (Line 6) Derivatives (Line 7) XXX XXX 37. Other invested assets (Line 8) Receivables for securities (Line 9) Securities lending reinvested collateral assets (Line 10) XXX XXX 40. Aggregate write-ins for invested assets (Line 11) Cash, cash equivalents and invested assets (Line 12) Investments in Parent, Subsidiaries and Affiliates 42. Affiliated bonds, (Sch. D, Summary, Line 12, Col. 1) Affiliated preferred stocks (Sch. D, Summary, Line 18, Col. 1) Affiliated common stocks (Sch. D, Summary, Line 24, Col. 1) 442,750, ,109, ,110, ,399, ,537, Affiliated short-term investments (subtotals included in Schedule DA Verification, Col. 5, Line 10) Affiliated mortgage loans on real estate All other affiliated 227, ,106 1,162, , , Total of above Lines 42 to ,978, ,552, ,272, ,167, ,668, Total Investment in parent included in Lines 42 to 47 above Percentage of investments in parent, subsidiaries and affiliates to surplus as regards policyholders (Line 48 above divided by Page 3, Col. 1, Line 37 x 100.0)

62 Capital and Surplus Accounts (Page 4) FIVE-YEAR HISTORICAL DATA (Continued) Net unrealized capital gains (losses) (Line 24) 99,989,823 (7,534,145) (48,689,725) 73,374,317 (79,030,675) 52. Dividends to stockholders (Line 35) (1,160,711,098) Change in surplus as regards policyholders for the year (Line 38) (631,470,098) 521,853,857 (978,340,941) (1,449,379,123) (160,629,456) Gross Losses Paid (Page 9, Part 2, Cols. 1 & 2) 54. Liability lines (Lines 11.1, 11.2, 16, 17.1, 17.2, 17.3, 18.1, 18.2, 19.1, 19.2 & 19.3, 19.4) Property lines (Lines 1, 2, 9, 12, 21 & 26) Property and liability combined lines (Lines 3, 4, 5, 8, 22 & 27) All other lines (Lines 6, 10, 13, 14, 15, 23, 24, 28, 29, 30 & 34) 1,066,001,090 3,241,332,906 2,375,079,693 2,808,793,084 2,177,546, Nonproportional reinsurance lines (Lines 31, 32 & 33) Total (Line 35) 1,066,001,090 3,241,332,906 2,375,079,693 2,808,793,084 2,177,546,287 Net Losses Paid (Page 9, Part 2, Col. 4) 60. Liability lines (Lines 11.1, 11.2, 16, 17.1, 17.2, 17.3, 18.1, 18.2, 19.1, 19.2 & 19.3, 19.4) Property lines (Lines 1, 2, 9, 12, 21 & 26) Property and liability combined lines (Lines 3, 4, 5, 8, 22 & 27) All other lines (Lines 6, 10, 13, 14, 15, 23, 24, 28, 29, 30 & 34) 961,368,243 3,121,500,261 1,840,478,141 2,662,648,256 1,928,436, Nonproportional reinsurance lines (Lines 31, 32 & 33) Total (Line 35) 961,368,243 3,121,500,261 1,840,478,141 2,662,648,256 1,928,436,423 Operating Percentages (Page 4) (Item divided by Page 4, Line 1) x Premiums earned (Line 1) Losses incurred (Line 2) Loss expenses incurred (Line 3) Other underwriting expenses incurred (Line 4) (168.6) Net underwriting gain (loss) (Line 8) (258.6) (165.8) (155.0) (206.1) (273.3) Other Percentages 71. Other underwriting expenses to net premiums written (Page 4, Lines divided by Page 8, Part 1B, Col. 6, Line 35 x 100.0) (58.9) Losses and loss expenses incurred to premiums earned (Page 4, Lines divided by Page 4, Line 1 x 100.0) Net premiums written to policyholders' surplus (Page 8, Part 1B, Col. 6, Line 35 divided by Page 3, Line 37, Col. 1 x 100.0) (152.8) 40.8 One Year Loss Development (000 omitted) 74. Development in estimated losses and loss expenses incurred prior to current year (Schedule P, Part 2-Summary, Line 12, Col. 11) (557,234) (2,764,880) (364,421) 785, , Percent of development of losses and loss expenses incurred to policyholders' surplus of prior year end (Line 74 above divided by Page 4, Line 21, Col. 1 x 100.0) (34.9) (257.3) (17.8) Two Year Loss Development (000 omitted) 76. Development in estimated losses and loss expenses incurred 2 years before the current year and prior year (Schedule P, Part 2 - Summary, Line 12, Col. 12) (3,623,331) (4,000,243) 492, ,240 42, Percent of development of losses and loss expenses incurred to reported policyholders' surplus of second prior year end (Line 76 above divided by Page 4, Line 21, Col. 2 x 100.0) (337.1) (194.8) NOTE: If a party to a merger, have the two most recent years of this exhibit been restated due to a merger in compliance with the disclosure requirements of SSAP No. 3, Accounting Changes and Correction of Errors? Yes [ ] No [ ] If no, please explain 18

63 19.GT * * ANNUAL STATEMENT FOR THE YEAR 2012 OF THE MBIA Insurance Corporation EXHIBIT OF PREMIUMS AND LOSSES (Statutory Page 14) NAIC Group Code BUSINESS IN THE STATE OF Consolidated DURING THE YEAR 2012 NAIC Company Code Gross Premiums, Including Policy and Membership Fees, Less Return Premiums and Premiums on Policies not Taken Dividends Paid Direct Direct Losses Direct Defense and Cost Direct Defense and Cost Direct Defense and Cost Line of Business 1 Direct Premiums Written 2 Direct Premiums Earned or Credited to Policyholders on Direct Business Unearned Premium Reserves Paid (deducting salvage) Direct Losses Incurred Direct Losses Unpaid Containment Expense Paid Containment Expense Incurred Containment Expense Unpaid Commissions and Brokerage Expenses Taxes, Licenses and Fees 1. Fire Allied lines Multiple peril crop Federal flood Farmowners multiple peril Homeowners multiple peril Commercial multiple peril (non-liability portion) Commercial multiple peril (liability portion) Mortgage guaranty Ocean marine Inland marine Financial guaranty 205,479, ,574, ,004,125,360 1,066,002, ,455,982 (2,775,285,737) 150,386, ,615,526 15,188, ,679, Medical professional liability Earthquake Group accident and health (b) Credit A & H (group and individual) Collectively renewable A & H (b) Non-cancelable A & H (b) Guaranteed renewable A & H (b) Non-renewable for stated reasons only (b) Other accident only Medicare Title XVIII exempt from state taxes or fees All other A & H (b) Federal employees health benefits program premium (b) Workers' compensation Other liability-occurrence Other Liability-Claims-Made Excess workers compensation Products liability Private passenger auto no-fault (personal injury protection) Other private passenger auto liability Commercial auto no-fault (personal injury protection) Other commercial auto liability Private passenger auto physical damage Commercial auto physical damage Aircraft (all perils) Fidelity Surety Burglary and theft Boiler and machinery Credit Warranty Aggregate write-ins for other lines of business TOTALS (a) 205,479, ,574, ,004,125,360 1,066,002, ,455,982 (2,775,285,737) 150,386, ,615,526 15,188, ,679,175 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 34 from overflow page Totals (Lines 3401 through 3403 Plus 3498) (Line 34 above) (a) Finance and service charges not included in Lines 1 to 35 $ 0 (b) For health business on indicated lines report: Number of persons insured under PPO managed care products 0 and number of persons insured under indemnity only products 0

64 Federal ID Number ANNUAL STATEMENT FOR THE YEAR 2012 OF THE MBIA Insurance Corporation SCHEDULE F - PART 1 Assumed Reinsurance as of December 31, Current Year (000 Omitted) Reinsurance On Amount of Assets Pledged or Funds Held By or Compensating NAIC Paid Losses and Contingent Assumed Deposited With Balances to Company Domiciliary Assumed Loss Adjustment Known Case Commissions Premiums Unearned Reinsured Letters of Credit Secure Letters Code Name of Reinsured Jurisdiction Premium Expenses Losses and LAE Cols Payable Receivable Premium Companies Posted of Credit Amount of Assets Pledged or Collateral Held in Trust AA MBIA UK INSURANCE LTD GBR 3,452 0 (29,858) (29,858) AA MBIA MEXICO S.A. DE C.V. MEX 1, Total Affiliates - U.S. Non-Pool 4,799 0 (29,858) (29,858) Total Affiliates - Total Affiliates 4,799 0 (29,858) (29,858) AA OVERSEAS PRIVATE INVESTMENT CORP DC 1, ASSURED GUAR CORP MD FIREMANS FUND INS CO CA TRAVELERS CAS & SURETY CO CT 2 0 (151) (151) TRAVELERS IND CO CT ACE PROP & CAS INS CO PA 1 0 (66) (66) CONTINENTAL INS CO PA 0 0 (55) (55) SWISS REINS AMER CORP NY MOSAIC INS CO DE MUNICH REINS AMER INC DE SECURITY INS CO OF HARTFORD DE FINANCIAL GUAR INS CO NY (72) RADIAN GUAR INC PA (29) Total Other U.S. Unaffiliated Insurers (272) (272) Totals 5,773 0 (30,130) (30,130)

65 1 Federal ID Number 2 NAIC Company Code ANNUAL STATEMENT FOR THE YEAR 2012 OF THE MBIA Insurance Corporation SCHEDULE F - PART 2 Premium Portfolio Reinsurance Effected or (Canceled) during Current Year Reinsurance Premium Name of Company Date of Contract Original Premium Total Reinsurance Ceded by Portfolio Total Reinsurance Assumed by Portfolio

66 Federal ID Number ANNUAL STATEMENT FOR THE YEAR 2012 OF THE MBIA Insurance Corporation SCHEDULE F - PART 3 Ceded Reinsurance as of December 31, Current Year (000 Omitted) Reinsurance Recoverable On Reinsurance Payable Reinsurance Contracts Net Amount Ceding 75% Recoverable or More of Other From NAIC Direct Reinsurance Known Case Known Case Contingent Cols. Ceded Amounts Reinsurers Company Domiciliary Premiums Premiums Paid Paid Loss LAE IBNR Loss IBNR LAE Unearned Commissions 7 through 14 Balances Due to Cols Code Name of Reinsurer Jurisdiction Written Ceded Losses LAE Reserves Reserves Reserves Reserves Premiums Totals Payable Reinsurers [ ] NATIONAL PUBLIC FINANCE GUAR CORP NY (1,258) 0 0 (83,317) (37,303) 0 0 1,508, ,387, ,387, Total Authorized - Affiliates - U.S. Non-Pool (1,258) 0 0 (83,317) (37,303) 0 0 1,508, ,387, ,387, Total Authorized - Affiliates - Total Authorized - Affiliates (1,258) 0 0 (83,317) (37,303) 0 0 1,508, ,387, ,387, ASSURED GUAR CORP MD 3,449 1,070 2 (1,888) (622) , ,188 2, ,012 0 AA OVERSEAS PRIVATE INVESTMENT CORP DC 3, , ,566 1, , OLD REPUBLIC INS CO PA (352) (17) WESTPORT INS CORP MO (790) (765) 0 0 (765) EVERSPAN FIN GUAR CORP WI Total Authorized - Other U.S. Unaffiliated Insurers 6,572 1, (3,030) (631) , ,045 3, , Total Authorized - Total Authorized 5,314 1, (86,347) (37,934) 0 0 1,575, ,452,802 3, ,449,464 0 AA ASSURED GUAR RE LTD BMU 1, , , AA EXPORT DEVELOPMENT CANADA CAN AA PARTNER REINS INS EUROPE LTD PLC IRL AA ALLIANZ GLOBAL CORPRATE & SPECIALTY SA FRA (1) Total Unauthorized - Other Non-U.S. Insurers 1, , , Total Unauthorized - Total Unauthorized 1, , , Total Authorized, Unauthorized and Certified 7,034 1, (86,347) (37,934) 0 0 1,577, ,454,403 3, ,450,463 0 Funds Held By Company Under Reinsurance Treaties Totals 7,034 1, (86,347) (37,934) 0 0 1,577, ,454,403 3, ,450,463 0 NOTE: A. Report the five largest provisional commission rates included in the cedant s reinsurance treaties. The commission rate to be reported is by contract with ceded premium in excess of $50,000: 1 Name of Reinsurer 2 Commission Rate 3 Ceded Premium B. Report the five largest reinsurance recoverables reported in Column 15, due from any one reinsurer (based on-the total recoverables, Line , Column 15, the amount of ceded premium, and indicate whether the recoverables are due from an affiliated insurer. 1 Name of Reinsurer 2 Total Recoverables 3 Ceded Premiums 4 Affiliated 1. NATIONAL PUBLIC FINANCE GUAR CORP 1,387,757 (1,258) Yes [ X ] No [ ] 2. ASSURED GUAR CORP 33,188 3,449 Yes [ ] No [ X ] 3. OVERSEAS PRIVATE INVESTMENT CORP 32,566 3,119 Yes [ ] No [ X ] 4. ASSURED GUAR RE LTD 1,460 1,152 Yes [ ] No [ X ] 5. EXPORT DEVELOPMENT CANADA Yes [ ] No [ X ]

67 SCHEDULE F - PART 4 Aging of Ceded Reinsurance as of December 31, Current Year (000 OMITTED) Reinsurance Recoverable on Paid Losses and Paid Loss Adjustment Expenses Overdue 11 Federal ID Number NAIC Company Code Percentage Overdue Col. 10/Col. 11 Percentage More Than 120 Days Overdue Col. 9 / Col. 11 Name of Reinsurer Domiciliary Jurisdiction Current 1 to 29 Days Days Days Over 120 Days Total Overdue Cols Total Due Cols ASSURED GUAR CORP MD 1, , WESTPORT INS CORP MO Total Authorized - Other U.S. Unaffiliated Insurers 1, , Total Authorized - Total Authorized 1, , AA ASSURED GUAR RE LTD BMU AA PARTNER REINS INS EUROPE LTD PLC IRL Total Unauthorized - Other Non-U.S. Insurers Total Unauthorized - Total Unauthorized Total Authorized, Unauthorized and Certified 1, , Totals 1, ,

68 ANNUAL STATEMENT FOR THE YEAR 2012 OF THE MBIA Insurance Corporation 6 7 SCHEDULE F - PART 5 Provision for Unauthorized Reinsurance as of December 31, Current Year (000 OMITTED) Letter of Credit Issuing or Confirming Bank (a) Recoverable Reinsurance American Paid Losses Smaller of Col. Recoverable Funds Held Bankers & LAE 14 or 20% of All Items By Company Association Letter Cols Expenses Over Amount in Federal ID Number NAIC Company Code Name of Reinsurer Domiciliary Jurisdiction Schedule F Part 3, Col. 15 Under Reinsurance Treaties Letters of Credit (ABA) Routing Number of Credit Code Bank Name Ceded Balances Payable Miscellaneous Balances Other Allowed Offset Items but not in excess of Col. 5 Subtotal Col. 5 minus Col Days past Due not in Dispute 20% of Amount in Col. 16 Smaller of Col. 14 or Col. 17 Dispute Included in Col AA ASSURED GUAR RE LTD BMU 1, ,735 1, AA EXPORT DEVELOPMENT CANADA CAN , Royal Bank of Canada Total Provision for Unauthorized Reinsurance Smaller of Col.5 or Cols. PARTNER REINS INS EUROPE LTD PLC IRL , Credit Suisse AG AA Total Other Non-U.S. Insurers 1, ,911 XXX XXX XXX ,735 1, Total Affiliates and Others 1, ,911 XXX XXX XXX ,735 1, Totals 1, ,911 XXX XXX XXX ,735 1, Amounts in dispute totaling $ 0 are included in Column Amounts in dispute totaling $ 0 are excluded from Column 16. (a) Code American Bankers Association (ABA) Routing Number Bank Name

69 Schedule F - Part 6 - Section 1 Schedule F - Part 6 - Section 2 Schedule F - Part 7 Schedule F - Part 8 25, 26, 27, 28, 29

70 SCHEDULE F - PART 9 Restatement of Balance Sheet to Identify Net Credit for Reinsurance 1 As Reported (Net of Ceded) 2 Restatement Adjustments 3 Restated (Gross of Ceded) ASSETS (Page 2, Col. 3) 1. Cash and invested assets (Line 12) 999,028, ,028, Premiums and considerations (Line 15) 3,821, ,821, Reinsurance recoverable on loss and loss adjustment expense payments (Line 16.1) 1,090,463 (1,090,463) 0 4 Funds held by or deposited with reinsured companies (Line 16.2) Other assets 8,800, ,800, Net amount recoverable from reinsurers 0 2,386,855,347 2,386,855, Protected cell assets (Line 27) Totals (Line 28) 1,012,739,613 2,385,764,884 3,398,504,497 LIABILITIES (Page 3) 9. Losses and loss adjustment expenses (Lines 1 through 3) (2,606,229,804) (124,281,426) (2,730,511,230) 10. Taxes, expenses, and other obligations (Lines 4 through 8) 1,708,797, ,708,797, Unearned premiums (Line 9) 427,244,546 1,577,586,003 2,004,830, Advance premiums (Line 10) Dividends declared and unpaid (Line 11.1 and 11.2) Ceded reinsurance premiums payable (net of ceding commissions) (Line 12) 3,939,976 (3,939,976) Funds held by company under reinsurance treaties (Line 13) Amounts withheld or retained by company for account of others (Line 14) 9,066, ,066, Provision for reinsurance (Line 16) Other liabilities 504,835, ,400,283 1,441,235, Total liabilities excluding protected cell business (Line 26) 47,653,694 2,385,764,884 2,433,418, Protected cell liabilities (Line 27) Surplus as regards policyholders (Line 37) 965,085,919 X X X 965,085, Totals (Line 38) 1,012,739,613 2,385,764,884 3,398,504,497 NOTE: Is the restatement of this exhibit the result of grossing up balances ceded to affiliates under 100 percent reinsurance or pooling arrangements? Yes [ ] No [ X ] If yes, give full explanation: 30

71 Schedule H - Part 1 Schedule H - Part 2 Schedule H - Part 3 Schedule H - Part 4 Schedule H - Part 5 - Health Claims 31, 32, 33

72 Years in Which Premiums Were Earned and Losses Were Incurred ANNUAL STATEMENT FOR THE YEAR 2012 OF THE MBIA Insurance Corporation SCHEDULE P - ANALYSIS OF LOSSES AND LOSS EXPENSES SCHEDULE P - PART 1 - SUMMARY ($000 Omitted) Premiums Earned Loss and Loss Expense Payments Defense and Cost Adjusting and Other Loss Payments Containment Payments Payments Number of Salvage Total Net Claims and Paid (Cols. Reported Direct and Net Direct and Direct and Direct and Subrogation Direct and Assumed Ceded (Cols. 1-2) Assumed Ceded Assumed Ceded Assumed Ceded Received ) Assumed 1. Prior XXX XXX XXX 19,600 20,961 1, , ,944 1,471 XXX , , , ,349 23,708 (16,268) 899 3, ,356 64,284 XXX , , , ,253 17,437 15, , , ,082 XXX , , ,314 39,277 5,086 4, , ,063 40,806 XXX , , ,996 37,488 7,453 3, , ,658 34,395 XXX , , ,132 4,090, , ,893 3,430 4, ,462 3,948,800 XXX ,045, , ,920 4,028, , ,682 36,256 9, ,615,247 3,774,079 XXX , , , , , , ,643 4, , ,973 XXX , , ,950 1,962, ,661 62,282 48,523 4, ,036 1,723,592 XXX , , , , ,390 3,465 3, , ,151 XXX , , ,986 12,321 7,469 5,505 3, ,245 XXX 12. Totals XXX XXX XXX 11,913,535 1,108, , ,270 38, ,221,148 11,224,879 XXX Adjusting and Other Losses Unpaid Defense and Cost Containment Unpaid Unpaid Case Basis Bulk + IBNR Case Basis Bulk + IBNR Total Number of Salvage and Subrogation Net Losses and Claims Outstanding Direct Direct and Assumed Ceded Direct and Assumed Ceded Direct and Assumed Ceded Direct and Assumed Ceded Direct and Assumed Ceded Anticipated Expenses Unpaid and Assumed 1. 42,015 84, , ,367 (41,064) XXX 2. (3,499) (47) ,254 (2,982) XXX 3. (28,331) 1, ,765 (28,573) XXX 4. (251) (259) , XXX 5. (9,173) (130) ,000 (8,917) XXX (2,165,156 ) , ,022,237 (2,149,174) XXX (1,943,443 ) 9, , , ,295,642 (1,923,959) XXX 8. (36,213) (4,081) (3,194) ,271 (27,302) XXX 9. 1,397,557 (179,217) 0 0 (39,219) (39,701) 0 0 1, ,106 1,578,636 XXX ,437 4, (3,711) , , ,066 XXX ,731 (2,837) 0 0 5,035 4, ,154 XXX 12. (2,282,326 ) (86,347) 0 0 6,539 (37,934) 0 0 8, ,627,808 (2,142,856) XXX Total Losses and Loss Expenses Incurred Direct and Assumed Ceded Net Loss and Loss Expense Percentage (Incurred/Premiums Earned) Direct and Assumed Ceded Net Nontabular Discount Loss Loss Expense 34 Inter- Company Pooling Participation Percentage Net Balance Sheet Reserves After Discount Loss Losses Expenses Unpaid Unpaid 1. XXX XXX XXX XXX XXX XXX 5,455 0 XXX (48,367) 1, ,863 24,560 61, (3,497) ,440 18, , (162) (29,181) ,963 4,898 41, (846) ,848 7,371 25, (43) (9,000) ,081, ,897 1,799, (210,756) (1,954,432) 16, ,270, ,006 1,850, (42,493) (1,910,263) 28, , , , , (93,913) 4, ,389,494 87,266 3,302, , ,183,918 1, ,310,304 9,086 1,301, , ,710 (2,430) ,142 12,742 98, , , XXX XXX XXX XXX XXX XXX 463,374 0 XXX (2,659,352) 53,123 Note: Parts 2 and 4 are gross of all discounting, including tabular discounting. Part 1 is gross of only nontabular discounting, which is reported in Columns 32 and 33 of Part 1. The tabular discount, if any, is reported in the Notes to Financial Statements, which will reconcile Part 1 with Parts 2 and 4. 34

73 Years in Which Losses Were Incurred SCHEDULE P - PART 2 - SUMMARY INCURRED NET LOSSES AND DEFENSE AND COST CONTAINMENT EXPENSES REPORTED AT YEAR END ($000 OMITTED) DEVELOPMENT One Year Two Year 1. Prior 285, , , , , , , , , ,514 (163) (1,191) ,573 22,853 44,760 74,861 77,097 78,125 80,778 57,369 60,457 57,022 (3,435) (347) XXX 93,675 99, , , , , , , ,213 32,533 40, XXX XXX 100,889 50,892 42,034 37,667 43,838 41,290 39,971 38,230 (1,741) (3,060) XXX XXX XXX 12,461 28,902 37,593 38,776 29,733 27,279 24,263 (3,016) (5,470) XXX XXX XXX XXX 892,010 1,738,662 1,970,261 1,918,935 1,803,400 1,794,233 (9,167) (124,702) XXX XXX XXX XXX XXX 5,340,462 6,054,214 5,844,801 3,343,757 1,839,666 (1,504,091) (4,005,136) XXX XXX XXX XXX XXX XXX 1,551,136 1,479, , ,380 32,420 (993,083) XXX XXX XXX XXX XXX XXX XXX 1,827,055 2,697,997 3,296, ,210 1,469, XXX XXX XXX XXX XXX XXX XXX XXX 995,194 1,296, ,217 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX 97,849 XXX XXX 12. Totals (557,234) (3,623,331) Years in Which Losses Were Incurred SCHEDULE P - PART 3 - SUMMARY CUMULATIVE PAID NET LOSSES AND DEFENSE AND COST CONTAINMENT EXPENSES REPORTED AT YEAR END ($ OMITTED) Number of Number of Claims Claims Closed Closed With Without Loss Loss Payment Payment 1. Prior , , , , , , , , ,957 XXX XXX ,754 28,108 43, , , , , ,385 62,679 60,474 XXX XXX XXX 2,835 62,960 67,118 75, , , , , ,099 XXX XXX XXX XXX 4,450 22,238 20,153 26,478 29,886 32,375 35,568 38,221 XXX XXX XXX XXX XXX 3,089 56,679 51,022 47,496 43,377 39,818 33,306 XXX XXX XXX XXX XXX XXX 45,669 1,184,253 2,371,432 3,360,103 3,688,996 3,944,097 XXX XXX XXX XXX XXX XXX XXX 922,169 2,337,552 2,740,124 3,364,725 3,765,035 XXX XXX XXX XXX XXX XXX XXX XXX 258, , , ,528 XXX XXX XXX XXX XXX XXX XXX XXX XXX 36,194 1,704,805 1,718,951 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX 571, ,849 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX 6,977 XXX XXX Years in Which Losses Were Incurred SCHEDULE P - PART 4 - SUMMARY BULK AND IBNR RESERVES ON NET LOSSES AND DEFENSE AND COST CONTAINMENT EXPENSES REPORTED AT YEAR END ($000 OMITTED) Prior XXX 25, XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX 0 35

74 Schedule P - Part 1A - Home/Farm Schedule P - Part 1B - Private Passenger Schedule P - Part 1C - Comm Auto/Truck Schedule P - Part 1D - Workers' Comp Schedule P - Part 1E - Comm Multi Peril Schedule P - Part 1F - Med Pro Liab Occ Schedule P - Part 1F - Med Pro Liab Clm Schedule P - Part 1G - Special Liability Schedule P - Part 1H - Other Liab Occur Schedule P - Part 1H - Other Liab Claims Schedule P - Part 1I - Special Property 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46

75 Schedule P - Part 1J - Auto Physical Schedule P - Part 1K - Fidelity/Surety Schedule P - Part 1L - Other Schedule P - Part 1M - International Schedule P - Part 1N - Reinsurance Schedule P - Part 1O - Reinsurance Schedule P - Part 1P - Reinsurance Schedule P - Part 1R - Prod Liab Occur Schedule P - Part 1R - Prod Liab Claims 47, 48, 49, 50, 51, 52, 53, 54, 55

76 SCHEDULE P-PART 1S - FINANCIAL GUARANTY/MORTGAGE GUARANTY ($000 OMITTED) Years in Premiums Earned Loss and Loss Expense Payments 12 Which Defense and Cost Adjusting and Other Premiums Loss Payments Containment Payments Payments Were Total Number of Earned and Losses Were Incurred Direct and Assumed Ceded Net (Cols. 1-2) Direct and Assumed Ceded Direct and Assumed Ceded Direct and Assumed Ceded Salvage and Subrogation Received Net Paid (Cols ) Claims Reported Direct and Assumed 1. Prior XXX XXX XXX 705,251 98, ,603 19,186 6, , ,895 XXX , , , , ,390 3,465 3, , ,151 XXX , , ,986 12,321 7,469 5,505 3, ,245 XXX 4. Totals XXX XXX XXX 1,632, , ,498 26,031 10, ,738 1,662,291 XXX Losses Unpaid Defense and Cost Containment Unpaid Adjusting and Other Unpaid Case Basis Bulk + IBNR Case Basis Bulk + IBNR Direct and Assumed Ceded Direct and Assumed Ceded Direct and Assumed Ceded Direct and Assumed Ceded Direct and Assumed Ceded Salvage and Subrogation Anticipated Total Net Losses and Expenses Unpaid Number of Claims Outstanding Direct and Assumed 1. (2,746,494) (88,452) 0 0 5,215 (42,887) 0 0 6, ,619,911 (2,603,076) ,437 4, (3,711) , , , ,731 (2,837) 0 0 5,035 4, , (2,282,326) (86,347) 0 0 6,539 (37,934) 0 0 8, ,627,808 (2,142,856) 0 Total Losses and Loss Expenses Incurred Direct and Assumed Ceded Net Loss and Loss Expense Percentage (Incurred/Premiums Earned) Direct and Assumed Ceded Net Nontabular Discount Loss Loss Expense 34 Inter- Company Pooling Participation Percentage Net Balance Sheet Reserves After Discount Loss Losses Expenses Unpaid Unpaid 1. XXX XXX XXX XXX XXX XXX 205,839 0 XXX (2,863,880) 54, ,310,304 9,086 1,301, , ,710 (2,430) ,142 12,742 98, , , XXX XXX XXX XXX XXX XXX 463,374 0 XXX (2,659,352) 53,123 56

77 Schedule P - Part 1T - Warranty Schedule P - Part 2A Schedule P - Part 2B Schedule P - Part 2C Schedule P - Part 2D Schedule P - Part 2E Schedule P - Part 2F - Section 1 Schedule P - Part 2F - Med Pro Liab Clm Schedule P - Part 2G Schedule P - Part 2H - Other Liab Occur Schedule P - Part 2H - Other Liab Claim 57, 58, 59

78 Schedule P - Part 2I Schedule P - Part 2J Schedule P - Part 2K Schedule P - Part 2L Schedule P - Part 2M Schedule P - Part 2N Schedule P - Part 2O Schedule P - Part 2P 60, 61

79 SCHEDULE P - PART 2R - SECTION 1 - PRODUCTS LIABILITY - OCCURRENCE Years in Which Losses Were Incurred INCURRED NET LOSSES AND DEFENSE AND COST CONTAINMENT EXPENSES REPORTED AT YEAR END ($000 OMITTED) DEVELOPMENT One Year Two Year 1. Prior XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX 0 XXX XXX 12. Totals 0 0 SCHEDULE P - PART 2R - SECTION 2 - PRODUCTS LIABILITY - CLAIMS-MADE 1. Prior XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX 0 XXX XXX 12. Totals 0 0 SCHEDULE P - PART 2S - FINANCIAL GUARANTY/MORTGAGE GUARANTY 1. Prior XXX XXX XXX XXX XXX XXX XXX 4,417,388 1,652, ,057 (858,451) (3,623,331) XXX XXX XXX XXX XXX XXX XXX XXX 995,194 1,296, ,217 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX 97,849 XXX XXX 4. Totals (557,234) (3,623,331) SCHEDULE P - PART 2T WARRANTY 1. Prior XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX 0 XXX XXX 4. Totals

80 Schedule P - Part 3A Schedule P - Part 3B Schedule P - Part 3C Schedule P - Part 3D Schedule P - Part 3E Schedule P - Part 3F - Med Pro Liab Occ Schedule P - Part 3F - Med Pro Liab Clm Schedule P - Part 3G Schedule P - Part 3H - Other Liab Occur Schedule P - Part 3H - Other Liab Claims Schedule P - Part 3I 63, 64, 65

81 Schedule P - Part 3J Schedule P - Part 3K Schedule P - Part 3L Schedule P - Part 3M Schedule P - Part 3N Schedule P - Part 3O Schedule P - Part 3P 65, 66

82 SCHEDULE P - PART 3R - SECTION 1 - PRODUCTS LIABILITY - OCCURRENCE Years in Which Losses Were Incurred CUMULATIVE PAID NET LOSSES AND DEFENSE AND COST CONTAINMENT EXPENSES REPORTED AT YEAR END ($000 OMITTED) Number of Number of Claims Claims Closed Closed With Without Loss Loss Payment Payment 1. Prior XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX SCHEDULE P - PART 3R - SECTION 2 - PRODUCTS LIABILITY - CLAIMS-MADE 1. Prior XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX SCHEDULE P - PART 3S - FINANCIAL GUARANTY/MORTGAGE GUARANTY 1. Prior XXX XXX XXX XXX XXX XXX XXX 000 2,687,634 3,403,997 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX 571, ,849 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX 6,977 XXX XXX SCHEDULE P - PART 3T - WARRANTY 1. Prior XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

83 Schedule P - Part 4A Schedule P - Part 4B Schedule P - Part 4C Schedule P - Part 4D Schedule P - Part 4E Schedule P - Part 4F - Med Pro Liab Occ Schedule P - Part 4F - Med Pro Liab Clm Schedule P - Part 4G Schedule P - Part 4H - Other Liab Occur Schedule P - Part 4H - Other Liab Claims Schedule P - Part 4I 68, 69, 70

84 Schedule P - Part 4J Schedule P - Part 4K Schedule P - Part 4L Schedule P - Part 4M Schedule P - Part 4N Schedule P - Part 4O Schedule P - Part 4P 70, 71

85 SCHEDULE P - PART 4R - SECTION 1 - PRODUCTS LIABILITY - OCCURRENCE Years in Which Losses Were Incurred BULK AND IBNR RESERVES ON NET LOSSES AND DEFENSE AND COST CONTAINMENT EXPENSES REPORTED AT YEAR END ($000 OMITTED) Prior XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX SCHEDULE P - PART 4R - SECTION 2 - PRODUCTS LIABILITY - CLAIMS-MADE 1. Prior XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX 0 SCHEDULE P - PART 4S - FINANCIAL GUARANTY/MORTGAGE GUARANTY 1. Prior XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX 0 SCHEDULE P - PART 4T - WARRANTY 1. Prior XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX 0 72

86 Schedule P - Part 5A- SN1 Schedule P - Part 5A- SN2 Schedule P - Part 5A- SN3 Schedule P - Part 5B- SN1 Schedule P - Part 5B- SN2 Schedule P - Part 5B- SN3 Schedule P - Part 5C- SN1 Schedule P - Part 5C- SN2 Schedule P - Part 5C- SN3 Schedule P - Part 5D- SN1 Schedule P - Part 5D- SN2 73, 74, 75, 76

87 Schedule P - Part 5D- SN3 Schedule P - Part 5E- SN1 Schedule P - Part 5E- SN2 Schedule P - Part 5E- SN3 Schedule P - Part 5F- SN1A Schedule P - Part 5F- SN2A Schedule P - Part 5F- SN3A Schedule P - Part 5F- SN1B Schedule P - Part 5F- SN2B Schedule P - Part 5F- SN3B Schedule P - Part 5H- SN1A 76, 77, 78, 79, 80

88 Schedule P - Part 5H- SN2A Schedule P - Part 5H- SN3A Schedule P - Part 5H- SN1B Schedule P - Part 5H- SN2B Schedule P - Part 5H- SN3B Schedule P - Part 5R- SN1A Schedule P - Part 5R- SN2A Schedule P - Part 5R- SN3A Schedule P - Part 5R- SN1B Schedule P - Part 5R- SN2B Schedule P - Part 5R- SN3B 80, 81, 82, 83

89 Schedule P - Part 5T- SN1 Schedule P - Part 5T- SN2 Schedule P - Part 5T- SN3 Schedule P - Part 6C - SN1 Schedule P - Part 6C - SN2 Schedule P - Part 6D - SN1 Schedule P - Part 6D - SN2 Schedule P - Part 6E - SN1 Schedule P - Part 6E - SN2 Schedule P - Part 6H - SN1A Schedule P - Part 6H - SN2A 84, 85, 86

90 Schedule P - Part 6H - SN1B Schedule P - Part 6H - SN2B Schedule P - Part 6M - SN1 Schedule P - Part 6M - SN2 Schedule P - Part 6N - SN1 Schedule P - Part 6N - SN2 Schedule P - Part 6O - SN1 Schedule P - Part 6O - SN2 Schedule P - Part 6R - SN1A Schedule P - Part 6R - SN2A Schedule P - Part 6R - SN1B 87, 88, 89

91 Schedule P - Part 6R - SN2B Schedule P - Part 7A - Section 1 Schedule P - Part 7A - Section 2 Schedule P - Part 7A - Section 3 Schedule P - Part 7A - Section 4 Schedule P - Part 7A - Section 5 Schedule P - Part 7B - Section 1 Schedule P - Part 7B - Section 2 Schedule P - Part 7B - Section 3 Schedule P - Part 7B - Section 4 Schedule P - Part 7B - Section 5 89, 90, 91, 92, 93

92 Schedule P - Part 7B - Section 6 Schedule P - Part 7B - Section 7 93

93 SCHEDULE P INTERROGATORIES 1. The following questions relate to yet-to-be-issued Extended Reporting Endorsements (EREs) arising from Death, Disability, or Retirement (DDR) provisions in Medical Professional Liability Claims Made insurance policies. EREs provided for reasons other than DDR are not to be included. 1.1 Does the company issue Medical Professional Liability Claims Made insurance policies that provide tail (also known as an extended reporting endorsement, or ERE ) benefits in the event of Death, Disability, or Retirement (DDR) at a reduced charge or at no additional cost? Yes [ ] No [ X ] If the answer to question 1.1 is no, leave the following questions blank. If the answer to question 1.1 is yes, please answer the following questions: 1.2 What is the total amount of the reserve for that provision (DDR Reserve), as reported, explicitly or not, elsewhere in this statement (in dollars)? $ Does the company report any DDR reserve as Unearned Premium Reserve per SSAP #65? Yes [ ] No [ X ] 1.4 Does the company report any DDR reserve as loss or loss adjustment expense reserve? Yes [ ] No [ X ] 1.5 If the company reports DDR reserve as Unearned Premium Reserve, does that amount match the figure on the Underwriting and Investment Exhibit, Part 1A Recapitulation of all Premiums (Page 7) Column 2, Lines 11.1 plus 11.2? Yes [ ] No [ ] N/A [ X ] 1.6 If the company reports DDR reserve as loss or loss adjustment expense reserve, please complete the following table corresponding to where these reserves are reported in Schedule P: Years in Which Premiums Were Earned and Losses Were Incurred DDR Reserve Included in Schedule P, Part 1F, Medical Professional Liability Column 24: Total Net Losses and Expenses Unpaid 1 Section 1: Occurrence 2 Section 2: Claims-Made Prior Totals The definition of allocated loss adjustment expenses (ALAE) and, therefore, unallocated loss adjustment expenses (ULAE) was changed effective January 1, This change in definition applies to both paid and unpaid expenses. Are these expenses (now reported as Defense and Cost Containment and Adjusting and Other ) reported in compliance with these definitions in this statement? Yes [ X ] No [ ] 3. The Adjusting and Other expense payments and reserves should be allocated to the years in which the losses were incurred based on the number of claims reported, closed and outstanding in those years. When allocating Adjusting and Other expense between companies in a group or a pool, the Adjusting and Other expense should be allocated in the same percentage used for the loss amounts and the claim counts. For reinsurers, Adjusting and Other expense assumed should be reported according to the reinsurance contract. For Adjusting and Other expense incurred by reinsurers, or in those situations where suitable claim count information is not available, Adjusting and Other expense should be allocated by a reasonable method determined by the company and described in Interrogatory 7, below. Are they so reported in this Statement?: Yes [ X ] No [ ] 4. Do any lines in Schedule P include reserves that are reported gross of any discount to present value of future payments, and that are reported net of such discounts on Page 10? Yes [ X ] No [ ] If yes, proper disclosure must be made in the Notes to Financial Statements, as specified in the Instructions. Also, the discounts must be reported in Schedule P - Part 1, Columns 32 and 33. Schedule P must be completed gross of non-tabular discounting. Work papers relating to discount calculations must be available for examination upon request. Discounting is allowed only if expressly permitted by the state insurance department to which this Annual Statement is being filed. 5. What were the net premiums in force at the end of the year for: (in thousands of dollars) 5.1 Fidelity $ Surety $ 0 6. Claim count information is reported per claim or per claimant. (indicate which) CLAIM If not the same in all years, explain in Interrogatory The information provided in Schedule P will be used by many persons to estimate the adequacy of the current loss and expense reserves, among other things. Are there any especially significant events, coverage, retention or accounting changes that have occurred that must be considered when making such analyses? Yes [ X ] No [ ] 7.2 An extended statement may be attached. See Attached 94

94 SCHEDULE T - EXHIBIT OF PREMIUMS WRITTEN Allocated By States And Territories 1 Gross Premiums, Including Policy and Membership Fees Less Return Premiums and Premiums on Policies Not Taken 4 Dividends Paid Finance and 2 3 or Credited to Direct Losses Service Direct Direct Policyholders Paid Charges Not Premiums Premiums on Direct (Deducting Direct Losses Direct Losses Included in Written Earned Business Salvage) Incurred Unpaid Premiums 9 Direct Premium Written for Federal Purchasing Groups (Included in Col. 2) Active States, etc. Status 1. Alabama AL L 0 3,108, ,471,055 2,361,683 (5,109,372) Alaska AK L 218,612 1,995, Arizona AZ L (42,861) 2,531, ,816 (1,149,149) Arkansas AR L (12,000) 610, California CA L 2,225,653 66,446, ,846 2,979,962 5,080, Colorado CO L 33,499 7,834, Connecticut CT L 860 5,751, ,486,290 (271,638) (171,096,468) Delaware DE L 240, , Dist. Columbia DC L 0 1,607, Florida FL L 484,956 22,984, ,992,863 (407,167) (12,969,622) Georgia GA L 0 5,991, Hawaii HI L 3,019,386 5,046, Idaho ID L 0 301, Illinois IL L 77,240 16,322, (2,667) Indiana IN L 0 4,404, Iowa IA L 0 490, Kansas KS L 139,000 2,688, Kentucky KY L 392 2,256, (1,637) 24, Louisiana LA L 2,298,465 4,273, Maine ME L 0 213, Maryland MD L 0 2,476, Massachusetts MA L 163,590 13,466, Michigan MI L 77,912 8,374, , , Minnesota MN L 38,791 2,813, (117,084) (2,598,768) Mississippi MS L 17, , Missouri MO L 412,000 6,654, Montana MT L 0 218, Nebraska NE L 0 624, Nevada NV L 85,978 1,834,819 0 (1,303,980) (1,876,077) New Hampshire NH L 224, , New Jersey NJ L 539,490 11,730, New Mexico NM L 0 640, New York NY L 131,293, ,546, ,761, ,219, (2,666,581,45 2) 34. No.Carolina NC L 0 2,960, No.Dakota ND L 0 634, Ohio OH L 143,781 3,817, Oklahoma OK L 28, , Oregon OR L 0 2,240, Pennsylvania PA L 0 5,070, ,994,877 (3,213,584) 85,974, Rhode Island RI L 121,754 1,185, So. Carolina SC L 237,251 3,344, So. Dakota SD L 0 50, Tennessee TN L 0 12,392, Texas TX L 671,552 11,568, ,175, ,848 9,470, Utah UT L 0 544, Vermont VT L , Virginia VA L 9,408 5,818, Washington WA L 0 11,642, West Virginia WV L 0 1,089, Wisconsin WI L 17,000 3,525, Wyoming WY L 0 103, American Samoa AS N Guam GU L 826,560 4,625, Puerto Rico PR L 0 24,183, U.S. Virgin Islands VI L 0 22, Northern Mariana Islands MP L Canada CAN N Aggregate other alien OT XXX 61,887,983 93,975,943 0 (5,815,962) (6,260,729) (17,861,857) Totals (a) ,479, ,574, ,066,002, ,455,982 (2,775,285,737) 0 0 DETAILS OF WRITE-INS CHL Chile XXX 33,137,514 37,700, ZZZ Other Alien XXX 11,980,629 28,269,819 0 (9,335,847) (4,687,551) (17,861,857) MEX Mexico XXX 6,348,342 6,901, Sum. of remaining write-ins for Line 58 from overflow page XXX 10,421,498 21,104, ,519,885 (1,573,178) Totals (Lines through ) (Line 58 above) XXX 61,887,983 93,975,943 0 (5,815,962) (6,260,729) (17,861,857) 0 0 (L) Licensed or Chartered - Licensed Insurance Carrier or Domiciled RRG; (R) Registered - Non-domiciled RRGs; (Q) Qualified - Qualified or Accredited Reinsurer; (E) Eligible - Reporting Entities eligible or approved to write Surplus Lines in the state; (N) None of the above - Not allowed to write business in the state. All premiums allocated to location of risk or policyholders. Explanation of basis of allocation of premiums by states, etc. (a) Insert the number of L responses except for Canada and Other Alien 95

95 SCHEDULE T PART 2 INTERSTATE COMPACT EXHIBIT OF PREMIUMS WRITTEN Allocated By States and Territories 1 Life (Group and Individual) 2 3 Disability Income (Group and Individual) Direct Business Only 4 Long-Term Care (Group and Individual) Annuities (Group Deposit-Type States, Etc. and Individual) Contracts Totals 1. Alabama AL Alaska AK Arizona AZ Arkansas AR California CA Colorado CO Connecticut CT Delaware DE District of Columbia DC Florida FL Georgia GA Hawaii HI Idaho ID Illinois IL Indiana IN Iowa IA Kansas KS Kentucky KY Louisiana LA Maine ME Maryland MD Massachusetts MA Michigan MI Minnesota MN Mississippi MS Missouri MO Montana MT Nebraska NE Nevada NV New Hampshire NH New Jersey NJ New Mexico NM New York NY North Carolina NC North Dakota ND Ohio OH Oklahoma OK Oregon OR Pennsylvania PA Rhode Island RI South Carolina SC South Dakota SD Tennessee TN Texas TX Utah UT Vermont VT Virginia VA Washington WA West Virginia WV Wisconsin WI Wyoming WY American Samoa AS Guam GU Puerto Rico PR US Virgin Islands VI Northern Mariana Islands MP Canada CAN Aggregate Other Alien OT Totals

96 SCHEDULE Y - INFORMATION CONCERNING ACTIVITIES OF INSURER MEMBERS OF A HOLDING COMPANY GROUP PART 1 - ORGANIZATIONAL CHART MBIA INC. (Connecticut) Optinuity Alliance Resources Corporation (Delaware) % Owned by MBIA Inc. Cutwater Holdings, LLC (Delaware) % Owned by MBIA Inc. National Public Finance Guarantee Holdings, Inc. (Delaware) % Owned by MBIA Inc. MBIA Insurance Corporation (New York) NAIC: % Owned by MBIA Inc. Trifinium Holdings Limited (England and Wales) % Owned by MBIA Inc. 97 Cutwater Investor Services Corp. (Delaware) % Owned by Cutwater Holdings, LLC Cutwater Asset Management Corp. (Delaware) % Owned by Cutwater Holdings, LLC National Public Finance Guarantee Corporation (New York) NAIC: % Owned by NPFGH MBIA Mexico, S.A. de C.V. (Mexico) MME070223L66 AA % Owned by MBIA Insurance Corporation,.1% by MBIA Inc. MBIA UK (Holdings) Limited (England and Wales) % Owned by MBIA Insurance Corporation Trifinium Advisors (UK) Limited (England and Wales) % Owned by Trifinium Holdings Limited VNBR Advisors Limited (England and Wales) % Owned by Trifinium Holdings Limited Trifinium Services Limited (England and Wales) % Owned by Trifinium Holdings Limited Cutwater Colorado Investor Services Corp. (Colorado) % Owned by Cutwater Investor Services Corp. National Real Estate Holdings of Armonk, LLC (Delaware) % Owned by NPFGC MBIA UK Insurance Limited (England and Wales) AA % Owned by MBIA UK (Holdings) Limited Trifinium Infrastructure GP Limited (England and Wales) % Owned by Trifinium Advisors (UK) Limited MBIA Infrastructure LP Limited (England and Wales) % Owned by MBIA UK Insurance Limited TIF Infrastructure LP (England and Wales) % Owned by Trifinium Infrastructure GP Limited as GP, 99% by MBIA Infrastructure LP Limited as LP *Please see page 97.2 for additional entities under TIF Holdco Limited See page 97.1 for additional MBIA Inc. Subsidiaries *TIF Holdco Limited (Guernsey) % Owned by TIF Infrastructure LP where Trifinium Infrastructure GP Limited is shareholder on behalf of TIF Infrastructure LP

97 SCHEDULE Y - INFORMATION CONCERNING ACTIVITIES OF INSURER MEMBERS OF A HOLDING COMPANY GROUP PART 1 - ORGANIZATIONAL CHART MBIA INC. (Connecticut) Municipal Issuers Service Corporation (New York) % Owned by MBIA Inc. MBIA Global Funding, LLC (Delaware) % Owned by MBIA Inc. CapMAC Holdings Inc. (Delaware) % Owned by MBIA Inc. MBIA Asset Finance, LLC (Delaware) % Owned by MBIA Inc. MBIA Investment Management Corp. (Delaware) % Owned by MBIA Inc. LaCrosse Financial Products Member, LLC (Delaware) % Owned by MBIA Inc., 39% by MBIA Capital Corp. MBIA Capital Corp. (Delaware) % Owned by MBIA Inc. Euro Asset Acquisition Limited (England and Wales) % Owned by MBIA Inc. LatAm Capital Advisors, Inc. (Delaware) % Owned by CapMAC Holdings Inc. Promotora de Infraestructura Registral, S.A. de C.V. SOFOM ENR (Mexico) PIR090827MJ7 99.9% Owned by MBIA Asset Finance, LLC, 0.1% by LatAm Capital Advisors, Inc. Meridian Funding Company, LLC (Delaware) % Owned by MBIA Asset Finance, LLC, 1% by MBIA Insurance Corporation LaCrosse Financial Products, LLC (Delaware) % Owned by LaCrosse Financial Products Member, LLC

98 SCHEDULE Y - INFORMATION CONCERNING ACTIVITIES OF INSURER MEMBERS OF A HOLDING COMPANY GROUP PART 1 - ORGANIZATIONAL CHART TIF Holdco Limited (Guernsey) % Owned by TIF Infrastructure LP where Trifinium Infrastructure GP Limited is shareholder on behalf of TIF Infrastructure LP 97.2 AvantAge (Cheshire) Holdings Limited (England & Wales) Tax ID # % Owned by TIF Holdco Limited Grove Village Holdings Limited (England and Wales) Tax ID # % Owned by TIF Holdco Limited Chrysalis (Stanhope) Holdings Limited (England and Wales) Tax ID # % Owned by TIF Holdco Limited AvantAge (Cheshire) Limited (England and Wales) Tax ID # % Owned by AdvantAge (Cheshire) Holdings Limited Grove Village Limited (England and Wales) Tax ID # % Owned by Grove Village Holdings Limited Chrysalis (Stanhope) Limited (England and Wales) Tax ID # % Owned by Chrysalis (Stanhope) Holdings Limited

99 SCHEDULE Y PART 1A DETAIL OF INSURANCE HOLDING COMPANY SYSTEM Name of Securities Exchange if Publicly Traded (U.S. or NAIC Federal Name of Relationship to Group Code Group Name Company Code ID Number Federal RSSD CIK International) Parent Subsidiaries or Affiliates Domiciliary Location Reporting Entity Directly Controlled by (Name of Entity/Person) Influence, Other) Percentage Person(s) * MBIA NYSE MBIA INC. CT UDP Type of Control (Ownership, Board, Management, Attorney-in-Fact, MBIA Optinuity Alliance Resources Corporation DE NIA MBIA INC. Ownership MBIA INC MBIA Cutwater Holdings, LLC DE NIA MBIA INC. Ownership MBIA INC MBIA Cutwater Investor Services Corp. DE NIA Cutwater Holdings, LLC Ownership MBIA INC MBIA Cutwater Colorado Investor Services Corp CO NIA Cutwater Investor Services Corp. Ownership MBIA INC MBIA Cutwater Asset Management Corp. DE NIA Cutwater Holdings, LLC Ownership MBIA INC MBIA National Public Finance Guarantee Holdings, Inc. DE NIA MBIA INC. Ownership MBIA INC. 0 National Public Finance National Public Finance MBIA Guarantee Corporation NY IA Guarantee Holdings, Inc. Ownership MBIA INC MBIA National Real Estate Holdings of Armonk, LLC DE NIA National Public Finance Guarantee Corporation Ownership MBIA INC MBIA MBIA Insurance Corporation NY MBIA INC. Ownership MBIA INC MBIA AA MBIA Mexico S.A. de C.V. MEX DS MBIA Insurance Corporation Ownership 99.9 MBIA INC MBIA AA MBIA Mexico S.A. de C.V. MEX DS MBIA INC. Ownership 0.1 MBIA INC MBIA MBIA UK (Holdings) Limited GBR DS MBIA Insurance Corporation Ownership MBIA INC MBIA AA MBIA UK Insurance Limited GBR DS MBIA UK (Holdings) Limited Ownership MBIA INC MBIA MBIA Infrastructure LP Limited GBR DS MBIA UK Insurance Limited Ownership MBIA INC MBIA Trifinium Holdings Limited GBR NIA MBIA INC. Ownership MBIA INC MBIA Trifinium Advisors (UK) Limited GBR NIA Trifinium Holdings Limited Ownership MBIA INC MBIA Trifinium Infrastructure GP Limited GBR NIA Trifinium Advisors (UK) Limited Ownership MBIA INC MBIA TIF Infrastructure LP GBR NIA MBIA Infrastructure LP Limited Ownership 99.0 MBIA INC MBIA TIF Infrastructure LP GBR NIA Trifinium Infrastructure GP Limited Ownership 1.0 MBIA INC MBIA TIF Holdco Limited GGY NIA TIF Infrastructure LP Ownership MBIA INC MBIA AvantAge (Cheshire) Holdings Limited GBR NIA TIF Holdco Limited Ownership 66.0 MBIA INC. 0 AvantAge (Cheshire) Holdings MBIA AvantAge (Cheshire) Limited GBR NIA Limited Ownership MBIA INC MBIA Grove Village Holdings Limited GBR NIA TIF Holdco Limited Ownership 74.5 MBIA INC MBIA Grove Village Limited GBR NIA Grove Village Holdings Limited Ownership MBIA INC MBIA Chrysalis (Stanhope) Holdings Limited GBR NIA TIF Holdco Limited Ownership 66.0 MBIA INC MBIA Chrysalis (Stanhope) Limited GBR NIA Chrysalis (Stanhope) Holdings Limited Ownership MBIA INC MBIA VNBR Advisors Limited GBR NIA Trifinium Holdings Limited Ownership MBIA INC MBIA Trifinium Services Limited GBR NIA Trifinium Holdings Limited Ownership MBIA INC If Control is Ownership Provide 14 Ultimate Controlling Entity(ies)/ Municipal Issuers Service Corporation NY NIA MBIA INC. Ownership MBIA INC MBIA MBIA MBIA Global Funding, LLC DE NIA MBIA INC. Ownership MBIA INC MBIA CapMAC Holdings Inc. DE NIA MBIA INC. Ownership MBIA INC MBIA LatAm Capital Advisors, Inc. DE NIA CapMAC Holdings Inc. Ownership MBIA INC. 0 15

100 SCHEDULE Y PART 1A DETAIL OF INSURANCE HOLDING COMPANY SYSTEM Name of Securities Exchange if Publicly Traded (U.S. or NAIC Federal Name of Relationship to Group Code Group Name Company Code ID Number Federal RSSD CIK International) Parent Subsidiaries or Affiliates Domiciliary Location Reporting Entity Directly Controlled by (Name of Entity/Person) Influence, Other) Percentage Person(s) * MBIA MBIA Asset Finance, LLC DE NIA MBIA INC. Ownership MBIA INC MBIA Type of Control (Ownership, Board, Management, Attorney-in-Fact, 13 If Control is Ownership Provide 14 Ultimate Controlling Entity(ies)/ Promotora de Infraestructura Registral, S.A. de C.V. SOFOM ENR MEX NIA MBIA Asset Finance, LLC Ownership 99.9 MBIA INC MBIA Promotora de Infraestructura Registral, S.A. de C.V. SOFOM ENR MEX NIA LatAm Capital Advisors, Inc. Ownership 0.1 MBIA INC MBIA Meridian Funding Company, LLC DE NIA MBIA Asset Finance, LLC Ownership 99.0 MBIA INC MBIA Meridian Funding Company, LLC DE NIA MBIA Insurance Corporation Ownership 1.0 MBIA INC MBIA MBIA Investment Management Corp. DE NIA MBIA INC. Ownership MBIA INC MBIA LaCrosse Financial Products Member, LLC DE NIA MBIA INC. Ownership 61.0 MBIA INC MBIA LaCrosse Financial Products Member, LLC DE NIA MBIA Capital Corp. Ownership 39.0 MBIA INC MBIA LaCrosse Financial Products, LLC DE NIA LaCrosse Financial Products Member, LLC Ownership MBIA INC MBIA MBIA Capital Corp. DE NIA MBIA INC. Ownership MBIA INC MBIA Euro Asset Acquisition Limited GBR NIA MBIA INC. Ownership MBIA INC Asterisk Explanation

101 SCHEDULE Y PART 2 - SUMMARY OF INSURER S TRANSACTIONS WITH ANY AFFILIATES 1 NAIC Company Code Purchases, Sales or Exchanges of Loans, Securities, Real Estate, Mortgage Loans or Other Investments 7 Income/ (Disbursements) Incurred in Connection with Guarantees or Undertakings for the Benefit of any Affiliate(s) 8 Management Agreements and Service Contracts 9 Income/ (Disbursements) Incurred Under Reinsurance Agreements Any Other Material Activity Not in the Ordinary Course of the Insurer s Business Reinsurance Recoverable/ (Payable) on Losses and/or Reserve Credit Taken/(Liability) Federal ID Number Names of Insurers and Parent, Subsidiaries or Affiliates Shareholder Dividends Capital Contributions * Totals MBIA Insurance Corporation 0 1,501,429 (1,377,973,774) 0 (26,253,878) 131,176,097 0 (1,271,550,126) 1,417,716, National Public Finance Guarantee Corpor 0 0 1,680,545, (126,377,110) 0 1,554,168,198 (1,387,756,359) MBIA INC. 0 (1,501,429) (302,571,534) (304,072,963) 0 AA MBIA Mexico S.A. de C.V (1,346,917) 0 (1,346,917) (101,968) AA MBIA UK Insurance Limited (3,452,070) 0 (3,452,070) (29,857,682) Optinuity Alliance Resources Corporation ,253, ,253, Control Totals XXX 0 0 0

102 SUPPLEMENTAL EXHIBITS AND SCHEDULES INTERROGATORIES The following supplemental reports are required to be filed as part of your statement filing unless specifically waived by the domiciliary state. However, in the event that your domiciliary state waives the filing requirement, your response of WAIVED to the specific interrogatory will be accepted in lieu of filing a "" report and a bar code will be printed below. If the supplement is required of your company but is not being filed for whatever reason enter SEE EXPLANATION and provide an explanation following the interrogatory questions. MARCH FILING RESPONSES 1. Will an actuarial opinion be filed by March 1? YES 2. Will the Supplemental Compensation Exhibit be filed with the state of domicile by March 1? YES 3. Will the confidential Risk-based Capital Report be filed with the NAIC by March 1? WAIVED 4. Will the confidential Risk-based Capital Report be filed with the state of domicile, if required, by March 1? WAIVED APRIL FILING 5. Will the Insurance Expense Exhibit be filed with the state of domicile and the NAIC by April 1? YES 6. Will Management s Discussion and Analysis be filed by April 1? YES 7. Will the Supplemental Investment Risks Interrogatories be filed by April 1? YES MAY FILING 8. Will this company be included in a combined annual statement that is filed with the NAIC by May 1? SEE EXPLANATION JUNE FILING 9. Will an audited financial report be filed by June 1? YES 10. Will Accountants Letter of Qualifications be filed with the state of domicile and electronically with the NAIC by June 1? YES AUGUST FILING 11. Will Communication of Internal Control Related Matters Noted in Audit be filed with the state of domicile by August 1? YES The following supplemental reports are required to be filed as part of your statement filing. However, in the event that your company does not transact the type of business for which the special report must be filed, your response of NO to the specific interrogatory will be accepted in lieu of filing a "" report and a bar code will be printed below. If the supplement is required of your company but is not being filed for whatever reason enter SEE EXPLANATION and provide an explanation following the interrogatory questions. MARCH FILING 12. Will Schedule SIS (Stockholder Information Supplement) be filed with the state of domicile by March 1? NO 13. Will the Financial Guaranty Insurance Exhibit be filed by March 1? YES 14. Will the Medicare Supplement Insurance Experience Exhibit be filed with the state of domicile and the NAIC by March 1? NO 15. Will Supplement A to Schedule T (Medical Professional Liability Supplement) be filed by March 1? NO 16. Will the Trusteed Surplus Statement be filed with the state of domicile and the NAIC by March 1? SEE EXPLANATION 17. Will the Premiums Attributed to Protected Cells Exhibit be filed by March 1? NO 18. Will the Reinsurance Summary Supplemental Filing for General Interrogatory 9 be filed with the state of domicile and the NAIC by March 1? YES 19. Will the Medicare Part D Coverage Supplement be filed with the state of domicile and the NAIC by March 1? NO 20. Will the confidential Actuarial Opinion Summary be filed with the state of domicile, if required, by March 15 (or the date otherwise specified)? YES 21. Will the Reinsurance Attestation Supplement be filed with the state of domicile and the NAIC by March 1? YES 22. Will the Exceptions to the Reinsurance Attestation Supplement be filed with the state of domicile by March 1? SEE EXPLANATION 23. Will the Bail Bond Supplement be filed with the state of domicile and the NAIC by March 1? NO 24. Will the Director and Officer Insurance Coverage Supplement be filed with the state of domicile and the NAIC by March 1? NO 25. Will an approval from the reporting entity s state of domicile for relief related to the five-year rotation requirement for lead audit partner be filed electronically with the NAIC by March 1? NO 26. Will an approval from the reporting entity s state of domicile for relief related to the one-year cooling off period for independent CPA be filed electronically with the NAIC by March 1? NO 27. Will an approval from the reporting entity s state of domicile for relief related to the Requirements for Audit Committees be filed electronically with the NAIC by March 1? NO 100

103 SUPPLEMENTAL EXHIBITS AND SCHEDULES INTERROGATORIES APRIL FILING 28. Will the Credit Insurance Experience Exhibit be filed with the state of domicile and the NAIC by April 1? NO 29. Will the Long-term Care Experience Reporting Forms be filed with the state of domicile and the NAIC by April 1? NO 30. Will the Accident and Health Policy Experience Exhibit be filed by April 1? NO 31. Will the Supplemental Health Care Exhibit (Parts 1, 2 and 3) be filed with the state of domicile and the NAIC by April 1? NO 32. Will the regulator only (non-public) Supplemental Health Care Exhibit s Allocation Report be filed with the state of domicile and the NAIC by April 1? NO AUGUST FILING 33. Will Management s Report of Internal Control Over Financial Reporting be filed with the state of domicile by August 1? SEE EXPLANATION Explanation: 8. MBIA Insurance Corporation ("MBIA Corp.") does not own a consolidated subsidiary insurer MBIA Corp. is not a U.S. branch of an Alien insurer MBIA Corp. has no exceptions to the Reinsurance Attestation Supplement MBIA Corp. does not exceed $500,000,000 or more in direct written and assumed premiums for the year ended December 31, 2012, per New York State audit rule Section 8914 "Management's report of internal control over financial reporting." Bar Code: * * 3. * * 4. * * 12. * *

104 SUPPLEMENTAL EXHIBITS AND SCHEDULES INTERROGATORIES * * 15. * * 17. * * 19. * * 23. * * 24. * * 25. * * 26. * * 27. * * 28. * * 29. * * 30. * * 31. * *

105 OVERFLOW PAGE FOR WRITE-INS P002 Additional Aggregate Lines for Page 2 Line 25. *ASSETS - Assets Net Admitted Nonadmitted Assets Net Admitted Assets Assets (Cols. 1 2) Assets Deposits 5,779 5, Other assets , Summary of remaining write-ins for Line 25 from page 2 5,779 5, ,014 P011 Additional Aggregate Lines for Page 11 Line 24. *EXEXP - Underwriting and Investment - Part 3 - Expenses 1 Loss Adjustment Expenses 2 Other Underwriting Expenses Investment Expenses Total Bank fees 0 443, , Summary of remaining write-ins for Line 24 from page , , P012 Additional Aggregate Lines for Page 12 Line 9. * EXCAPGLOSS - Exhibit of Capital Gains (Losses) 1 Realized Gain (Loss) On Sales or Maturity 2 Other Realized Adjustments 3 Total Realized Capital Gain (Loss) (Columns 1 + 2) 4 Change in Unrealized Capital Gain (Loss) 5 Change in Unrealized Foreign Exchange Capital Gain (Loss) Other (1,364,663) (1,364,663) 1,025, Summary of remaining write-ins for Line 9 from page 12 0 (1,364,663) (1,364,663) 1,025,730 0 P95 Additional Aggregate Lines for Page 95 Line 58. *SCT - Schedule T - Exhibit of Premiums Written Active Status Direct Premiums Written Direct Premiums Earned Dividends Paid or Credited to Policyholders on Direct Business Direct Losses Paid (Deducting Salvage) Direct Losses Incurred Direct Losses Unpaid Finance and Service Charges Not Included in Premiums Direct Premium Written for Federal Purchasing Groups (Included in Col. 2) AUS Australia XXX 4,007,957 10,188, ,519,885 (1,573,178) TUR Turkey XXX 2,242,501 3,622, ESP Spain XXX 1,080,466 2,091, HUN Hungary XXX 1,066,642 1,537, DEU Germany XXX 746,084 1,140, GBR United Kingdom XXX 544, , ITA Italy XXX 413, , KOR Korea, Republic of XXX 123, , TTO Trinidad and Tobago XXX 119, , BRA Brazil XXX 75, , ABW Aruba XXX 0 64, FRA France XXX NZL New Zealand XXX 0 (106,135) QAT Qatar XXX 0 427, THA Thailand XXX Summary of remaining write-ins for Line 58 from page 95 XXX 10,421,498 21,104, ,519,885 (1,573,178)

106 SUMMARY INVESTMENT SCHEDULE Gross Investment Holdings Admitted Assets as Reported in the Annual Statement Bonds: Investment Categories Amount Percentage Amount Securities Lending Reinvested Collateral Amount Total (Col. 3+4) Amount Percentage 1.1 U.S. treasury securities 345,265, ,265, ,265, U.S. government agency obligations (excluding mortgagebacked securities): 1.21 Issued by U.S. government agencies Issued by U.S. government sponsored agencies Non-U.S. government (including Canada, excluding mortgagebacked securities) 31,106, ,106, ,106, Securities issued by states, territories, and possessions and political subdivisions in the U.S.: 1.41 States, territories and possessions general obligations Political subdivisions of states, territories and possessions and political subdivisions general obligations Revenue and assessment obligations 752, , , Industrial development and similar obligations Mortgage-backed securities (includes residential and commercial MBS): 1.51 Pass-through securities: Issued or guaranteed by GNMA Issued or guaranteed by FNMA and FHLMC All other CMOs and REMICs: Issued or guaranteed by GNMA, FNMA, FHLMC or VA Issued by non-u.s. Government issuers and collateralized by mortgage-backed securities issued or guaranteed by agencies shown in Line All other 65,105, ,105, ,105, Other debt and other fixed income securities (excluding short term): 2.1 Unaffiliated domestic securities (includes credit tenant loans and hybrid securities) 15,011, ,011, ,011, Unaffiliated non-u.s. securities (including Canada) 86, , , Affiliated securities Equity interests: 3.1 Investments in mutual funds Preferred stocks: 3.21 Affiliated Unaffiliated Publicly traded equity securities (excluding preferred stocks): 3.31 Affiliated Unaffiliated Other equity securities: 3.41 Affiliated 442,750, ,750, ,750, Unaffiliated Other equity interests including tangible personal property under lease: 3.51 Affiliated Unaffiliated Mortgage loans: 4.1 Construction and land development Agricultural Single family residential properties Multifamily residential properties Commercial loans Mezzanine real estate loans Real estate investments: 5.1 Property occupied by company Property held for production of income (including $ 0 of property acquired in satisfaction of debt) Property held for sale (including $ 0 property acquired in satisfaction of debt) Contract loans Derivatives Receivables for securities 64, , , Securities Lending (Line 10, Asset Page reinvested collateral) XXX XXX XXX 10. Cash, cash equivalents and short-term investments 98,159, ,159, ,159, Other invested assets 724, , , Total invested assets 999,028, ,028, ,028, SI01

107 SCHEDULE A VERIFICATION BETWEEN YEARS Real Estate 1. Book/adjusted carrying value, December 31 of prior year 0 2. Cost of acquired: 2.1 Actual cost at time of acquisition (Part 2, Column 6) Additional investment made after acquisition (Part 2, Column 9) Current year change in encumbrances: 3.1 Totals, Part 1, Column Totals, Part 3, Column Total gain (loss) on disposals, Part 3, Column Deduct amounts received on disposals, Part 3, Column Total foreign exchange change in book/adjusted carrying value: 6.1 Totals, Part 1, Column Totals, Part 3, Column Deduct current year s other than temporary impairment recognized: 7.1 Totals, Part 1, Column Totals, Part 3, Column Deduct current year s depreciation: 8.1 Totals, Part 1, Column Totals, Part 3, Column Book/adjusted carrying value at the end of current period (Lines ) Deduct total nonadmitted amounts Statement value at end of current period (Line 9 minus Line 10) 0 SCHEDULE B VERIFICATION BETWEEN YEARS Mortgage Loans 1. Book value/recorded investment excluding accrued interest, December 31 of prior year 0 2. Cost of acquired: 2.1 Actual cost at time of acquisition (Part 2, Column 7) Additional investment made after acquisition (Part 2, Column 8) Capitalized deferred interest and other: 3.1 Totals, Part 1, Column Totals, Part 3, Column Accrual of discount 0 5. Unrealized valuation increase (decrease): 5.1 Totals, Part 1, Column Totals, Part 3, Column Total gain (loss) on disposals, Part 3, Column Deduct amounts received on disposals, Part 3, Column Deduct amortization of premium and mortgage interest points and commitment fees 0 9. Total foreign exchange change in book value/recorded investment excluding accrued interest: 9.1 Totals, Part 1, Column Totals, Part 3, Column Deduct current year s other than temporary impairment recognized: 10.1 Totals, Part 1, Column Totals, Part 3, Column Book value/recorded investment excluding accrued interest at end of current period (Lines ) Total valuation allowance Subtotal (Line 11 plus Line 12) Deduct total nonadmitted amounts Statement value of mortgages owned at end of current period (Line 13 minus Line 14) 0 SI02

108 SCHEDULE BA VERIFICATION BETWEEN YEARS Other Long-Term Invested Assets 1. Book/adjusted carrying value, December 31 of prior year 1,079, Cost of acquired: 2.1 Actual cost at time of acquisition (Part 2, Column 8) Additional investment made after acquisition (Part 2, Column 9) Capitalized deferred interest and other: 3.1 Totals, Part 1, Column Totals, Part 3, Column Accrual of discount 0 5. Unrealized valuation increase (decrease): 5.1 Totals, Part 1, Column 13 (215,570) 5.2 Totals, Part 3, Column 9 0 (215,570) 6. Total gain (loss) on disposals, Part 3, Column Deduct amounts received on disposals, Part 3, Column Deduct amortization of premium and depreciation 139, Total foreign exchange change in book/adjusted carrying value: 9.1 Totals, Part 1, Column Totals, Part 3, Column Deduct current year s other than temporary impairment recognized: 10.1 Totals, Part 1, Column Totals, Part 3, Column Book/adjusted carrying value at end of current period (Lines ) 724, Deduct total nonadmitted amounts Statement value at end of current period (Line 11 minus Line 12) 724,508 SCHEDULE D VERIFICATION BETWEEN YEARS Bonds and Stocks 1. Book/adjusted carrying value, December 31 of prior year 1,166,276, Cost of bonds and stocks acquired, Part 3, Column 7 336,498, Accrual of discount 40,360, Unrealized valuation increase (decrease): 4.1 Part 1, Column 12 14, Part 2, Section 1, Column Part 2, Section 2, Column 13 (23,358,905) 4.4 Part 4, Column 11 35,841,618 12,497, Total gain (loss) on disposals, Part 4, Column 19 22,463, Deduction consideration for bonds and stocks disposed of, Part 4, Column 7 626,575, Deduct amortization of premium 8,209, Total foreign exchange change in book/adjusted carrying value: 8.1 Part 1, Column 15 (706,288) 8.2 Part 2, Section 1, Column Part 2, Section 2, Column Part 4, Column 15 (229,172) (935,460) 9. Deduct current year s other than temporary impairment recognized: 9.1 Part 1, Column Part 2, Section 1, Column Part 2, Section 2, Column Part 4, Column 13 42,297,092 42,297, Book/adjusted carrying value at end of current period (Lines ) 900,079, Deduct total nonadmitted amounts Statement value at end of current period (Line 10 minus Line 11) 900,079,109 SI03

109 SCHEDULE D - SUMMARY BY COUNTRY Long-Term Bonds and Stocks OWNED December 31 of Current Year Description 1 Book/Adjusted Carrying Value 2 Fair Value 3 Actual Cost 4 Par Value of Bonds BONDS 1. United States 345,265, ,023, ,210, ,160,000 Governments 2. Canada (Including all obligations guaranteed 3. Other Countries 31,106,744 34,617,833 31,322,316 30,547,132 by governments) 4. Totals 376,372, ,641, ,532, ,707,132 U.S. States, Territories and Possessions (Direct and guaranteed) 5. Totals U.S. Political Subdivisions of States, Territories and Possessions (Direct and guaranteed) 6. Totals U.S. Special revenue and special assessment obligations and all non-guaranteed obligations of agencies and authorities of governments and their political subdivisions 7. Totals 752, , , , United States 80,116,830 94,199,933 62,105, ,633,265 Industrial and Miscellaneous and 9. Canada Hybrid Securities (unaffiliated) 10. Other Countries 86, ,906 91,893 20,930, Totals 80,203,200 94,339,839 62,197, ,564,028 Parent, Subsidiaries and Affiliates 12. Totals Total Bonds 457,328, ,724, ,486, ,021,160 PREFERRED STOCKS 14. United States Industrial and Miscellaneous (unaffiliated) 15. Canada Other Countries Totals Parent, Subsidiaries and Affiliates 18. Totals Total Preferred Stocks COMMON STOCKS 20. United States Industrial and Miscellaneous (unaffiliated) 21. Canada Other Countries Totals Parent, Subsidiaries and Affiliates 24. Totals 442,750, ,750, ,611, Total Common Stocks 442,750, ,750, ,611, Total Stocks 442,750, ,750, ,611, Total Bonds and Stocks 900,079, ,475, ,097,938 SI04

110 SI05 1 SCHEDULE D - PART 1A - SECTION 1 Quality and Maturity Distribution of All Bonds Owned December 31, at Book/Adjusted Carrying Values by Major Types of Issues and NAIC Designations Over 1 Year Through 5 Over 5 Years Through Over 10 Years Col. 6 as a Total from Col. 6 Years 10 Years Through 20 Years Over 20 Years Total Current Year % of Line 9.7 Prior Year 9 % From Col. 7 Prior Year 10 Total Publicly Traded 11 Total Privately Placed (a) Quality Rating per the NAIC Designation 1 Year or Less 1. U.S. Governments 1.1 Class ,265, ,265, ,536, ,265, Class Class Class Class Class Totals 0 345,265, ,265, ,536, ,265, All Other Governments 2.1 Class ,760,441 20,346, ,106, ,330, ,106, Class Class Class Class Class Totals 0 10,760,441 20,346, ,106, ,330, ,106, U.S. States, Territories and Possessions, etc., Guaranteed 3.1 Class Class Class Class Class Class Totals U.S. Political Subdivisions of States, Territories and Possessions, Guaranteed 4.1 Class Class Class Class Class Class Totals U.S. Special Revenue & Special Assessment Obligations, etc., Non-Guaranteed 5.1 Class ,441, Class , , , , Class Class Class Class Totals 0 752, , ,196, ,836 0

111 SI06 Quality Rating per the NAIC Designation 1 1 Year or Less SCHEDULE D - PART 1A - SECTION 1 (Continued) Quality and Maturity Distribution of All Bonds Owned December 31, at Book/Adjusted Carrying Values by Major Types of Issues and NAIC Designations Over 1 Year Through 5 Over 5 Years Through Over 10 Years Col. 6 as a Total from Col. 6 Years 10 Years Through 20 Years Over 20 Years Total Current Year % of Line 9.7 Prior Year 9 % From Col. 7 Prior Year 10 Total Publicly Traded 11 Total Privately Placed (a) 6. Industrial and Miscellaneous (unaffiliated) 6.1 Class 1 37,662,434 11,779,938 37,531, , ,895, ,027, ,762,648 15,132, Class 2 1,590 4,438 29,882 82, , , , Class , , ,433, , Class 4 724,302 1,352, ,625 1,662, ,356, ,356, Class Class 6 445,553 2,236,784 1,520, ,203, ,825, ,203, Totals 38,833,879 15,373,334 39,700,036 2,679, ,586, ,390, ,453,867 15,132, Hybrid Securities 7.1 Class Class Class Class Class Class Totals Parent, Subsidiaries and Affiliates 8.1 Class Class Class Class Class Class Totals

112 SI07 SCHEDULE D - PART 1A - SECTION 1 (Continued) Quality and Maturity Distribution of All Bonds Owned December 31, at Book/Adjusted Carrying Values by Major Types of Issues and NAIC Designations 5 6 Quality Rating per the NAIC Designation 1 1 Year or Less 2 Over 1 Year Through 5 Years 3 Over 5 Years Through 10 Years 4 Over 10 Years Through 20 Years Over 20 Years Total Current Year 7 Col. 6 as a % of Line Total from Col. 6 Prior Year 9 % From Col. 7 Prior Year 10 Total Publicly Traded 11 Total Privately Placed (a) 9. Total Bonds Current Year 9.1 Class 1 (d) 37,662, ,805,728 57,877, , ,267, XXX XXX 449,134,741 15,132, Class 2 (d) 1, ,274 29,882 82, , XXX XXX 871, Class 3 (d) , , XXX XXX 12, Class 4 (d) 724,302 1,352, ,625 1,662, ,356, XXX XXX 4,356, Class 5 (d) (c) XXX XXX Class 6 (d) 445,553 2,236,784 1,520, (c) 4,203, XXX XXX 4,203, Totals 38,833, ,151,960 60,046,339 2,679,193 0 (b) 473,711, XXX XXX 458,578,796 15,132, Line 9.7 as a % of Col XXX XXX XXX Total Bonds Prior Year 10.1 Class 1 60,315, ,938,592 67,244,296 15,836, XXX XXX 652,336, ,336, Class ,882 58,187 45,601 0 XXX XXX 858, , Class 3 630, , ,003,703 0 XXX XXX 6,433, ,433, Class XXX XXX Class XXX XXX (c) Class 6 603,475 3,029,592 13,385,530 13,916,529 2,890,821 XXX XXX (c) 33,825, ,825, Totals 61,550, ,521,568 80,688,013 34,802,642 2,891,739 XXX XXX (b) 693,454, ,454, Line 10.7 as a % of Col XXX XXX XXX Total Publicly Traded Bonds 11.1 Class 1 22,529, ,805,728 57,877, , ,134, ,336, ,134,741 XXX 11.2 Class 2 1, ,274 29,882 82, , , ,648 XXX 11.3 Class , , ,433, ,952 XXX 11.4 Class 4 724,302 1,352, ,625 1,662, ,356, ,356,247 XXX 11.5 Class XXX 11.6 Class 6 445,553 2,236,784 1,520, ,203, ,825, ,203,208 XXX 11.7 Totals 23,701, ,151,960 60,046,339 2,679, ,578, ,454, ,578,796 XXX 11.8 Line 11.7 as a % of Col XXX XXX XXX XXX 11.9 Line 11.7 as a % of Line 9.7, Col. 6, Section XXX XXX XXX 96.8 XXX 12. Total Privately Placed Bonds 12.1 Class 1 15,132, ,132, XXX 15,132, Class XXX Class XXX Class XXX Class XXX Class XXX Totals 15,132, ,132, XXX 15,132, Line 12.7 as a % of Col XXX XXX XXX XXX Line 12.7 as a % of Line 9.7, Col. 6, Section XXX XXX XXX XXX 3.2 (a) Includes $ 0 freely tradable under SEC Rule 144 or qualified for resale under SEC Rule 144A. (b) Includes $ 0 current year, $ 0 prior year of bonds with Z designations and $ 0 current year, $ 0 prior year of bonds with Z* designations. The letter Z means the NAIC designation was not assigned by the Securities Valuation Office (SVO) at the date of the statement. Z* means the SVO could not evaluate the obligation because valuation procedures for the security class is under regulatory review. (c) Includes $ 0 current year, $ 0 prior year of bonds with 5* designations and $ 4,203,209 current year, $ 0 prior year of bonds with 6* designations. 5* means the NAIC designation was assigned by the SVO in reliance on the insurer s certification that the issuer is current in all principal and interest payments. 6* means the NAIC designation was assigned by the SVO due to inadequate certification of principal and interest payments. (d) Includes the following amount of non-rated short-term and cash equivalent bonds by NAIC designation: NAIC 1 $ 16,383,243 ; NAIC 2 $ 0 ; NAIC 3 $ 0 ; NAIC 4 $ 0 ; NAIC 5 $ 0 NAIC 6 $ 0

113 SI08 ANNUAL STATEMENT FOR THE YEAR 2012 OF THE MBIA Insurance Corporation SCHEDULE D - PART 1A - SECTION 2 Maturity Distribution of All Bonds Owned December 31, At Book/Adjusted Carrying Values by Major Type and Subtype of Issues Over 1 Year Over 5 Years Over 10 Years Total Current Col. 6 as a % 1 Year or Less Through 5 Years Through 10 Years Through 20 Years Over 20 Years Year of Line Total from Col 6 Prior Year 9 % From Col. 7 Prior Year 10 Total Publicly Traded 11 Total Privately Placed Distribution by Type 1. U.S. Governments 1.1 Issuer Obligations 0 345,265, ,265, ,199, ,265, Residential Mortgage-Backed Securities , Commercial Mortgage-Backed Securities Other Loan-Backed and Structured Securities Totals 0 345,265, ,265, ,536, ,265, All Other Governments 2.1 Issuer Obligations 0 10,760,441 20,346, ,106, ,330, ,106, Residential Mortgage-Backed Securities Commercial Mortgage-Backed Securities Other Loan-Backed and Structured Securities Totals 0 10,760,441 20,346, ,106, ,330, ,106, U.S. States, Territories and Possessions, Guaranteed 3.1 Issuer Obligations Residential Mortgage-Backed Securities Commercial Mortgage-Backed Securities Other Loan-Backed and Structured Securities Totals U.S. Political Subdivisions of States, Territories and Possessions, Guaranteed 4.1 Issuer Obligations Residential Mortgage-Backed Securities Commercial Mortgage-Backed Securities Other Loan-Backed and Structured Securities Totals U.S. Special Revenue & Special Assessment Obligations, etc., Non-Guaranteed 5.1 Issuer Obligations 0 752, , , , Residential Mortgage-Backed Securities ,441, Commercial Mortgage-Backed Securities Other Loan-Backed and Structured Securities Totals 0 752, , ,196, , Industrial and Miscellaneous 6.1 Issuer Obligations 16,383,243 60,000 27,933 58, ,529, ,590, ,397,038 15,132, Residential Mortgage-Backed Securities 20,138,790 7,637,690 34,708,185 2,620, ,105, ,797, ,105, Commercial Mortgage-Backed Securities Other Loan-Backed and Structured Securities 2,311,846 7,675,645 4,963, ,951, ,001, ,951, Totals 38,833,879 15,373,335 39,700,036 2,679, ,586, ,390, ,453,867 15,132, Hybrid Securities 7.1 Issuer Obligations Residential Mortgage-Backed Securities Commercial Mortgage-Backed Securities Other Loan-Backed and Structured Securities Totals Parent, Subsidiaries and Affiliates 8.1 Issuer Obligations Residential Mortgage-Backed Securities Commercial Mortgage-Backed Securities Other Loan-Backed and Structured Securities Totals

114 SI09 SCHEDULE D - PART 1A - SECTION 2 (Continued) Maturity Distribution of All Bonds Owned December 31, at Book/Adjusted Carrying Values by Major Type and Subtype of Issues 1 2 Over 1 Year Through 5 Years 3 Over 5 Years Through 10 Years 4 Over 10 Years Through 20 Years 5 6 Total Current Year 7 Col. 6 as a % of Line Total From Col. 6 Prior Year 9 % From Col. 7 Prior Year 10 Total Publicly Traded 11 Total Privately Placed Distribution by Type 1 Year or Less Over 20 Years 9. Total Bonds Current Year 9.1 Issuer Obligations 16,383, ,838,626 20,374,236 58, ,654, XXX XXX 378,521,967 15,132, Residential Mortgage-Backed Securities 20,138,790 7,637,690 34,708,185 2,620, ,105, XXX XXX 65,105, Commercial Mortgage-Backed Securities XXX XXX Other Loan-Backed and Structured Securities 2,311,846 7,675,645 4,963, ,951, XXX XXX 14,951, Totals 38,833, ,151,961 60,046,339 2,679, ,711, XXX XXX 458,578,796 15,132, Lines 9.5 as a % Col XXX XXX XXX Total Bonds Prior Year 10.1 Issuer Obligations 21,975, ,949,836 20,892,532 58,783 0 XXX XXX 524,876, ,876, Residential Mortgage-Backed Securities 34,595,505 19,663,961 40,488,167 20,827, XXX XXX 115,575, ,575, Commercial Mortgage-Backed Securities XXX XXX Other Loan-Backed and Structured Securities 4,979,297 11,907,771 19,307,314 13,916,529 2,890,821 XXX XXX 53,001, ,001, Totals 61,550, ,521,568 80,688,013 34,802,641 2,891,739 XXX XXX 693,454, ,454, Line 10.5 as a % of Col XXX XXX XXX Total Publicly Traded Bonds 11.1 Issuer Obligations 1,250, ,838,626 20,374,236 58, ,521, ,876, ,521,967 XXX 11.2 Residential Mortgage-Backed Securities 20,138,790 7,637,690 34,708,185 2,620, ,105, ,575, ,105,420 XXX 11.3 Commercial Mortgage-Backed Securities XXX 11.4 Other Loan-Backed and Structured Securities 2,311,846 7,675,645 4,963, ,951, ,001, ,951,409 XXX 11.5 Totals 23,701, ,151,961 60,046,339 2,679, ,578, ,454, ,578,796 XXX 11.6 Line 11.5 as a % of Col XXX XXX XXX XXX 11.7 Line 11.5 as a % of Line 9.5, Col. 6, Section XXX XXX XXX 96.8 XXX 12. Total Privately Placed Bonds 12.1 Issuer Obligations 15,132, ,132, XXX 15,132, Residential Mortgage-Backed Securities XXX Commercial Mortgage-Backed Securities XXX Other Loan-Backed and Structured Securities XXX Totals 15,132, ,132, XXX 15,132, Line 12.5 as a % of Col XXX XXX XXX XXX Line 12.5 as a % of Line 9.5, Col. 6, Section XXX XXX XXX XXX 3.2

115 SCHEDULE DA - VERIFICATION BETWEEN YEARS Short-Term Investments Total Bonds Mortgage Loans Other Short-term Investment Assets(a) Investments in Parent, Subsidiaries and Affiliates 1. Book/adjusted carrying value, December 31 of prior year 994, , Cost of short-term investments acquired 869,640, ,640, Accrual of discount 21,694 21, Unrealized valuation increase (decrease) Total gain (loss) on disposals (3,906) (3,906) Deduct consideration received on disposals 853,814, ,814, Deduct amortization of premium 635, , Total foreign exchange change in book/adjusted carrying value 181, , SI10 9. Deduct current year s other than temporary impairment recognized Book adjusted carrying value at end of current period (Lines ) 16,383,242 16,383, Deduct total nonadmitted amounts Statement value at end of current period (Line 10 minus Line 11) 16,383,242 16,383, (a) Indicate the category of such assets, for example, joint ventures, transportation equipment:

116 Schedule DB - Part A - Verification Schedule DB - Part B - Verification Schedule DB - Part C - Section 1 Schedule DB - Part C - Section 2 Schedule DB - Verification SI11, SI12, SI13, SI14

117 SCHEDULE E - VERIFICATION BETWEEN YEARS (Cash Equivalents) Total Bonds Other (a) 1. Book/adjusted carrying value, December 31 of prior year Cost of cash equivalents acquired 5,883,567,740 5,883,567, Accrual of discount 32,260 32, Unrealized valuation increase (decrease) Total gain (loss) on disposals Deduct consideration received on disposals 5,883,600,000 5,883,600, Deduct amortization of premium Total foreign exchange change in book/adjusted carrying value Deduct current year s other than temporary impairment recognized Book/adjusted carrying value at end of current period (Lines ) Deduct total nonadmitted amounts Statement value at end of current period (Line 10 minus Line 11) (a) Indicate the category of such investments, for example, joint ventures, transportation equipment SI15

118 Schedule A - Part 1 Schedule A - Part 2 Schedule A - Part 3 Schedule B - Part 1 Schedule B - Part 2 Schedule B - Part 3 E01, E02, E03, E04, E05, E06

119 SCHEDULE BA - PART 1 Showing Other Long-Term Invested Assets OWNED December 31 of Current Year Location Change in Book/Adjusted Carrying Value CUSIP Identification Name or Description Code Name of Vendor or General Partner NAIC Designation Date Originally Acquired Type and Strategy Actual Cost Fair Value City State Stonehenge Capital Fund New York, LLC Series 2000-B4 New York NY Direct 12/12/2004 1,807, , ,973 0 (139,783) Fixed or Variable Interest Rate Investments That Have the Underlying Characteristics of: Other Fixed Income Instruments - Unaffiliated 1,807, , ,973 0 (139,783) XXX BCM LP Wilmington DE BCM LP 04/01/ ,000 15,000 15, Any Other Class of Assets - Unaffiliated 15,000 15,000 15, XXX Meridian Funding Company, LLC Company Held NY Direct 07/31/ , , ,536 (215,570) Any Other Class of Assets - Affiliated 75, , ,536 (215,570) XXX Book / Adjusted Carrying Value Less Encumbrances Unrealized Valuation Increase (Decrease) Current Year s (Depreciation) or (Amortization)/ Accretion Current Year s Other than Temporary Impairment Recognized Capitalized Deferred Interest and Other Total Foreign Exchange Change in B./A.C.V. Investment Income Commitment for Additional Investment Percentage of Ownership E Subtotal Unaffiliated 1,822, , ,973 0 (139,783) XXX Subtotal Affiliated 75, , ,536 (215,570) XXX Totals 1,897, , ,509 (215,570) (139,783) XXX

120 Schedule BA - Part 2 Schedule BA - Part 3 E08, E09

121 E10 SCHEDULE D - PART 1 Showing All Long-Term BONDS Owned December 31 of Current Year 1 2 Codes 6 7 Fair Value Change in Book / Adjusted Carrying Value Interest Dates F o r Current Year s Other Total Foreign CUSIP Identification Description Code e i g n Bond CHAR NAIC Designation Actual Cost Rate Used to Obtain Fair Value Fair Value Par Value Book/ Adjusted Carrying Value Unrealized Valuation Increase/ (Decrease) Current Year s (Amortization)/ Accretion Than Temporary Impairment Recognized Exchange Change In B./A.C.V. Rate of Effective Rate of When Paid Admitted Amount Due & Accrued Amount Rec. During Year Acquired Stated Contractual Maturity Date United States Treasury T CA-6 02/15/14 1 6,594, ,255,000 6,000,000 6,189,224 0 (166,594) FA 90, ,000 07/19/ /15/2014 United States Treasury T EE-6 1/4 08/15/15 SD 1 1,738, ,708,038 1,550,000 1,650,098 0 (37,012) FA 24,882 65,875 06/14/ /15/2015 United States Treasury T EE-6 1/4 08/15/15 1 3,364, ,305,880 3,000,000 3,192,551 0 (71,174) FA 48, ,500 07/19/ /15/2015 United States Treasury T FY-1 5/8 11/15/16 1 5,722, ,785,200 5,000,000 5,453,945 0 (111,218) MN 30, ,250 07/19/ /15/2016 United States Treasury T NL-0 7/8 06/30/15 SD 1 2,023, ,093,404 2,015,000 2,019,582 0 (1,780) JD ,781 09/30/ /30/2015 United States Treasury T NL-0 7/8 06/30/15 1 1,602, ,657,061 1,595,000 1,598,627 0 (1,409) JD 83 29,906 09/30/ /30/2015 United States Treasury T RV-4 1/4 12/15/ ,976, ,012,000 75,000,000 74,976, JD 8, /27/ /15/2014 United States Treasury T RZ-5 1/4 01/15/ ,988, ,992,500 50,000,000 49,988, JJ 57, /12/ /15/2015 United States Treasury T SK-7 3/8 03/15/ ,199, ,211, ,000, ,196,303 0 (2,916) MS 111, /26/ /15/2015 United States Treasury T TZ-3 11/30/ ,000, ,003, ,000,000 99,999,771 0 (229) MN 21, /26/ /30/ Bonds - U.S. Governments - Issuer Obligations 346,210,119 XXX 346,023, ,160, ,265,349 0 (391,929) 0 0 XXX XXX XXX 394, ,312 XXX XXX Bonds - U.S. Governments - Subtotals - U.S. Governments 346,210,119 XXX 346,023, ,160, ,265,349 0 (391,929) 0 0 XXX XXX XXX 394, ,312 XXX XXX FMS Wertmanagement AoR FMSWER /8 08/2 D 1FE 10,821, ,998,233 10,547,132 10,760,441 0 (60,186) 0 (244,319) AUG 69, ,427 05/09/ /24/2015 Bundesrepublik Deutschland DBR 3 1/2 07/ D 1FE 20,500, ,619,600 20,000,000 20,346,303 0 (58,445) 0 (461,969) JUL 352, ,259 02/11/ /04/ Bonds - All Other Governments - Issuer Obligations 31,322,316 XXX 34,617,833 30,547,132 31,106,744 0 (118,631) 0 (706,288) XXX XXX XXX 422, ,686 XXX XXX Bonds - All Other Governments - Subtotals - All Other Governments 31,322,316 XXX 34,617,833 30,547,132 31,106,744 0 (118,631) 0 (706,288) XXX XXX XXX 422, ,686 XXX XXX Govt Dev Bank for Puerto Rico General SD 2FE 756, , , ,836 0 (2,047) MN 4,588 27,525 06/03/ /01/ EW Bonds - U.S. Special Revenue and Special Assessment Obligations and all Non-Guaranteed Obligations of Agencies and Authorities of Governments and Their Political Subdivisions - Issuer Obligations 756,015 XXX 742, , ,836 0 (2,047) 0 0 XXX XXX XXX 4,588 27,525 XXX XXX Bonds - U.S. Special Revenue and Special Assessment Obligations and all Non-Guaranteed Obligations of Agencies and Authorities of Governments and Their Political Subdivisions - Subtotals - U.S. Special Revenue and Special Assessment Obligations and all Non-Guaranteed Obligations of Agencies of Governments and Their Political Subdivisions 756,015 XXX 742, , ,836 0 (2,047) 0 0 XXX XXX XXX 4,588 27,525 XXX XXX Citibank CD- Guam 01/9/17 $O 1 60, ,000 60,000 60, MAT 1, /31/ /09/ Autopista Central S.A. D 2FE 14, ,552 13,805 13, JD 0 1,204 09/30/ /15/2026 Sociedad Concessionaria Vespucio Norte D 3FE 13, ,432 12,951 12, JD /30/ /15/ Talca Chilian Bond - Series C D 2FE 17, ,890 17,570 17, JD /27/ /15/2021 Talca-Chilian Sociedad Concessionaria D 2FE 15, ,171 10,363 10, JD /30/ /15/ Autopista del Maipo D 2FE 17, ,856 17,411 17, JD 0 1,202 06/15/ /15/ Autopista del Maipo Sociedad D 2FE 14, ,905 14,270 14, JD 0 1,115 09/30/ /15/ Bonds - Industrial and Miscellaneous (Unaffiliated) - Issuer Obligations 151,893 XXX 199, , , XXX XXX XXX 1,065 5,719 XXX XXX 04544G-AQ-2 Asset Backed Sec Corp Home Eqt ABSHE FE ,123, MON /26/ /25/2036

122 E10.1 SCHEDULE D - PART 1 Showing All Long-Term BONDS Owned December 31 of Current Year 1 2 Codes 6 7 Fair Value Change in Book / Adjusted Carrying Value Interest Dates F o r Current Year s Other Total Foreign CUSIP Identification Description Code e i g n Bond CHAR NAIC Designation Actual Cost Rate Used to Obtain Fair Value Fair Value Par Value Book/ Adjusted Carrying Value Unrealized Valuation Increase/ (Decrease) Current Year s (Amortization)/ Accretion Than Temporary Impairment Recognized Exchange Change In B./A.C.V. Rate of Effective Rate of When Paid Admitted Amount Due & Accrued Amount Rec. During Year Acquired Stated Contractual Maturity Date Contimortgage Home Equity 21075W-AS-4 Trst CONHE FM 1,249, ,249,879 1,237,186 1,248,058 17,683 6, MON 9, ,735 04/12/ /15/2025 Contimortgage Home Equity 21075W-CV-5 Trst CONHE FM 1,231, ,102,915 1,222,324 1,102,915 19,858 16, MON 8,047 93,516 12/16/ /15/2027 Contimortgage Home Equity 21075W-DD-4 Trst CONHE FM 3,185, ,108,190 3,118,887 3,108,190 (23,085) 71, MON 20, ,548 08/15/ /15/2027 Contimortgage Home Equity 21075W-DR-3 Trst CONHE FM 45, ,260 45,338 45, MON 260 3,119 05/28/ /15/2028 Residential Fund Mtg Sec II 43710R-AE-1 RFMS H 2 1FM 20,819, ,855,335 72,689,328 35,034,155 0 (1,742,385) MON 351,938 4,223,250 11/19/ /25/2037 Residential Fund Mtg Sec II 43710W-AD-2 RFMS H 2 1FM 14,068, ,336,733 46,125,491 20,028,714 0 (1,615,067) MON 234,856 2,818,268 10/03/ /25/2037 Provident Bnk Home Eqt Ln CW-0 Trst PBHET FM 2,463, ,829,789 5,159,705 2,518,466 0 (48,460) MON ,425 12/29/ /25/2031 Provident Bnk Home Eqt Ln CY-6 Trst PBHET FM 1,717, ,149,725 3,385,020 2,019, , MON ,114 12/29/ /25/ Bonds - Industrial and Miscellaneous (Unaffiliated) - Residential Mortgage-Backed Securities 44,781,184 XXX 82,675, ,106,991 65,105,420 14,456 (3,196,451) 0 0 XXX XXX XXX 626,612 7,567,975 XXX XXX JG Wentworth Rec IV LLC WENT AA A A 2 1FE 150, , , , MON 418 9,412 12/17/ /15/2017 Keycorp Student Loan Trust AY-2 KSLT 2000-B A 2 1AM 10,294, ,110,424 12,365,310 10,598, , JAJO 14,604 98,507 12/15/ /25/2029 REDI Trust Series Class A 2 6* 6,820, ,203,209 32,950,837 4,203,209 0 (2,617,030) MON 1,089 38,677 12/29/ /31/ B-AG-6 Camber CAMBR 7A D F 1 6FE ,844, MJSD /26/ /12/2042 Gemstone CDO Ltd GEMST A C F 1 6FE ,000, MJSD /26/ /12/ V-AD Bonds - Industrial and Miscellaneous (Unaffiliated) - Other Loan-Backed and Structured Securities 17,264,486 XXX 11,464,207 66,310,667 14,951,410 0 (2,471,728) 0 0 XXX XXX XXX 16, ,596 XXX XXX Bonds - Industrial and Miscellaneous (Unaffiliated) - Subtotals - Industrial and Miscellaneous (Unaffiliated) 62,197,563 XXX 94,339, ,564,028 80,203,200 14,456 (5,668,179) 0 0 XXX XXX XXX 643,788 7,720,290 XXX XXX Bonds - Total Bonds - Subtotals - Issuer Obligations 378,440,343 XXX 381,584, ,603, ,271,299 0 (512,607) 0 (706,288) XXX XXX XXX 822,494 1,623,242 XXX XXX Bonds - Total Bonds - Subtotals - Residential Mortgage-Backed Securities 44,781,184 XXX 82,675, ,106,991 65,105,420 14,456 (3,196,451) 0 0 XXX XXX XXX 626,612 7,567,975 XXX XXX Bonds - Total Bonds - Subtotals - Other Loan-Backed and Structured Securities 17,264,486 XXX 11,464,207 66,310,667 14,951,410 0 (2,471,728) 0 0 XXX XXX XXX 16, ,596 XXX XXX Subtotals - Total Bonds 440,486,013 XXX 475,724, ,021, ,328,129 14,456 (6,180,786) 0 (706,288) XXX XXX XXX 1,465,217 9,337,813 XXX XXX

123 CUSIP Identification ANNUAL STATEMENT FOR THE YEAR 2012 OF THE MBIA Insurance Corporation SCHEDULE D - PART 2 - SECTION 1 Showing All PREFERRED STOCKS Owned December 31 of Current Year 1 2 Codes Fair Value 11 Dividends Change in Book/Adjusted Carrying Value Rate Per Total Share Current Year s Total Foreign Par Book/ Used to Amount Nonadmitted Unrealized Current Other Than Change Exchange Number Value Rate Adjusted Obtain Declared Received Declared Valuation Year s Temporary In Change NAIC Of Per Per Carrying Fair Fair Actual but During But Increase/ (Amortization) Impairment B./A.C.V. In Designation Description Code Foreign Shares Share Share Value Value Value Cost Unpaid Year Unpaid (Decrease) Accretion Recognized ( ) B./A.C.V. Date Acquired E Total Preferred Stocks 0 XXX XXX XXX

124 SCHEDULE D - PART 2 - SECTION 2 Showing all COMMON STOCKS Owned December 31 of Current Year 1 2 Codes 5 6 Fair Value 9 Dividends Change in Book/Adjusted Carrying Value Rate per Current Year s CUSIP Identification Description Code Foreign Number of Shares Book / Adjusted Carrying Value Share Used To Obtain Fair Value Fair Value Actual Cost Declared but Unpaid Amount Received During Year Nonadmitted Declared But Unpaid Unrealized Valuation Increase/ (Decrease) Other Than Temporary Impairment Recognized Total Change in B./A.C.V. (13-14) Total Foreign Exchange Change in B./A.C.V. NAIC Market Indicator (a) Date Acquired MBIA UK (Holdings) Ltd. F 24,666, ,161, ,161, ,153, (23,950,901) 0 (23,950,901) 0 K 05/01/ MBIA Mexico S.A. de C.V. F 9, ,589,652 1, ,589,652 14,458, , ,996 0 K 12/21/ Parent, Subsidiaries and Affiliates 442,750,980 XXX 442,750, ,611, (23,358,905) 0 (23,358,905) 0 XXX XXX E Total Common Stocks 442,750,980 XXX 442,750, ,611, (23,358,905) 0 (23,358,905) 0 XXX XXX Total Preferred and Common Stocks 442,750,980 XXX 442,750, ,611, (23,358,905) 0 (23,358,905) 0 XXX XXX (a) For all common stocks bearing the NAIC market indicator U provide: the number of such issues 0, the total $ value (included in Column 8) of all such issues $ 0

125 SCHEDULE D - PART 3 Showing All Long-Term Bonds and Stocks ACQUIRED During Current Year CUSIP Identification Description Foreign Date Acquired Name of Vendor Number of Shares of Stock Actual Cost Par Value Paid for Accrued Interest and Dividends RV-4 United States Treasury T 0 1/4 12/15/14 12/27/2012 Various XXX 74,976,593 75,000,000 6, RZ-5 United States Treasury T 0 1/4 01/15/15 12/12/2012 Banc of America Securities LLC XXX 49,988,281 50,000,000 51, SK-7 United States Treasury T 0 3/8 03/15/15 12/26/2012 Various XXX 100,199, ,000,000 99, TZ-3 United States Treasury T.25 11/30/14 12/26/2012 Various XXX 100,000, ,000,000 13, Bonds - U.S. Governments 325,164, ,000, , FMS Wertmanagement AoR FMSWER 1 7/8 08/2 D 05/09/2012 Morgan Stanley & Co., Inc. XXX 10,731,725 10,547, , Bonds - All Other Governments 10,731,725 10,547, , Citibank CD- Guam 01/9/17 08/31/2012 Conversion XXX 60,000 60, Bonds - Industrial and Miscellaneous (Unaffiliated) 60,000 60, Bonds - Subtotals - Bonds - Part 3 335,955, ,607, , Bonds - Summary item from Part 5 for Bonds 542, ,623 4, Bonds - Subtotals - Bonds 336,498, ,149, ,231 E Totals 336,498,441 XXX 291,231

126 SCHEDULE D - PART 4 Showing all Long-Term Bonds and Stocks SOLD, REDEEMED or Otherwise DISPOSED OF During Current Year Change in Book/Adjusted Carrying Value E14 CUSIP Identification F o r e i g n Disposal Date Number of Shares of Stock Consideration Par Value Actual Cost Prior Year Book/Adjusted Carrying Value 11 Unrealized Valuation Increase/ (Decrease) Description Name of Purchaser Salomon SmBarney 36203C-QS-4 Ginnie Mae I Pool GNSF /15/2012 (Citigroup) 17,781 16,313 18,359 18,261 0 (85) 0 (85) 0 18,176 0 (394) (394) 1,186 04/15/ C-QS-4 Ginnie Mae I Pool GNSF /01/2012 Paydown 7,933 7,933 8,928 8,881 0 (947) 0 (947) 0 7, /15/ Current Year (Amortization)/ Accretion 13 Current Year s Other Than Temporary Impairment Recognized 14 Total Change in B/A. C.V. ( ) 15 Total Foreign Exchange Change in B/A. C.V. Book/ Adjusted Carrying Value at Disposal Date Foreign Exchange Gain (Loss) on Disposal Realized Gain (Loss) on Disposal Total Gain (Loss) on Disposal Bond Interest/Stock Dividends Received During Year Salomon SmBarney (Citigroup) 20,835 19,114 21,809 21,720 0 (76) 0 (76) 0 21,644 0 (809) (809) 1,390 01/15/ M-AP-2 Ginnie Mae I Pool GNSF /15/ M-AP-2 Ginnie Mae I Pool GNSF /01/2012 Paydown (104) 0 (104) /15/ R-YR-9 Ginnie Mae I Pool GNSF /22/2012 Oppenheimer 75,418 66,557 66,474 66, , ,950 8,950 2,031 09/15/ R-YR-9 Ginnie Mae I Pool GNSF /01/2012 Paydown 1,769 1,769 1,767 1, , /15/ GB-2 Ginnie Mae I Pool GNSF /15/2012 Salomon SmBarney (Citigroup) 4,862 4,460 4,460 4, , /15/ GB-2 Ginnie Mae I Pool GNSF /01/2012 Paydown /15/ S-UW-9 Ginnie Mae I Pool GNSF /15/2012 Salomon SmBarney (Citigroup) 2,791 2,560 2,560 2, , /15/ S-UW-9 Ginnie Mae I Pool GNSF /01/2012 Paydown /15/ T-CV-9 Ginnie Mae I Pool GNSF /15/2012 Salomon SmBarney (Citigroup) 32,659 29,962 34,022 33, ,925 0 (1,266) (1,266) 2,469 11/15/ T-CV-9 Ginnie Mae I Pool GNSF /01/2012 Paydown 2,735 2,735 3,105 3,075 0 (340) 0 (340) 0 2, /15/ RF-8 Ginnie Mae I Pool GNSF /15/2012 Salomon SmBarney (Citigroup) 10,529 9,660 10,966 10, , , ,884 0 (1,355) (1,355) /15/ RF-8 Ginnie Mae I Pool GNSF /01/2012 Paydown ,041 1,030 0 (113) 0 (113) /15/ M-AT-6 Ginnie Mae I Pool GNSF /15/2012 Salomon SmBarney (Citigroup) 3,819 3,504 3,504 3, , /15/ M-AT-6 Ginnie Mae I Pool GNSF /01/2012 Paydown /15/ P-JQ-6 Ginnie Mae I Pool GNSF /15/2012 Salomon SmBarney (Citigroup) 17,477 16,034 18,203 18,036 0 (92) 0 (92) 0 17,944 0 (467) (467) 1,321 04/15/ P-JQ-6 Ginnie Mae I Pool GNSF /01/2012 Paydown 1,874 1,874 2,127 2,107 0 (234) 0 (234) 0 1, /15/ K-6X-3 Ginnie Mae I Pool GNSF /15/2012 Salomon SmBarney (Citigroup) 6,965 6,390 7,555 7, ,309 0 (1,344) (1,344) /15/ K-6X-3 Ginnie Mae I Pool GNSF /01/2012 Paydown (74) 0 (74) /15/ S-LY-7 Ginnie Mae I Pool GNSF /15/2012 Salomon SmBarney (Citigroup) 3,628 3,328 3,935 3, ,328 0 (700) (700) /15/ S-LY-7 Ginnie Mae I Pool GNSF /01/2012 Paydown (37) 0 (37) /15/ A-3U-3 Ginnie Mae I Pool GNSF /15/2012 Salomon SmBarney (Citigroup) 11,315 10,381 11,664 11,594 0 (62) 0 (62) 0 11,532 0 (217) (217) /15/ A-3U-3 Ginnie Mae I Pool GNSF /01/2012 Paydown 1,215 1,215 1,365 1,357 0 (142) 0 (142) 0 1, /15/ K-DP-1 Ginnie Mae I Pool GNJO /15/2012 Salomon SmBarney (Citigroup) 11,688 10,723 12,054 11, ,064 0 (376) (376) /15/ K-DP-1 Ginnie Mae I Pool GNJO /01/2012 Paydown (80) 0 (80) /15/ Q-ZP-4 Ginnie Mae I Pool GNSF /15/2012 Salomon SmBarney (Citigroup) 25,834 23,701 26,665 26,521 0 (125) 0 (125) 0 26,396 0 (562) (562) 1,723 03/15/ Q-ZP-4 Ginnie Mae I Pool GNSF /01/2012 Paydown 1,359 1,359 1,529 1,520 0 (162) 0 (162) 0 1, /15/ W-PM-9 Ginnie Mae I Pool GNSF /15/2012 Salomon SmBarney (Citigroup) 66,393 60,911 69,027 68, ,779 0 (2,385) (2,385) 4,724 04/15/ W-PM-9 Ginnie Mae I Pool GNSF /01/2012 Paydown 3,274 3,274 3,711 3,690 0 (415) 0 (415) 0 3, /15/2023 United States Treasury T 0 3/ NY-2 09/15/13 12/12/2012 Various 100,603, ,000, ,841, ,839,066 0 (263,763) 0 (263,763) 0 100,575, ,213 28, ,850 09/15/ QL-7 United States Treasury T 0 3/4 03/31/13 12/12/2012 Various 100,363, ,000, ,695, ,692,228 0 (151,046) 0 (151,046) 0 100,541,183 0 (177,901) (177,901) 636,687 03/31/ RA-0 United States Treasury T 0 3/8 06/30/13 12/12/2012 Various 100,136, ,000, ,224, ,223,387 0 (88,586) 0 (88,586) 0 100,134, ,918 1, ,174 06/30/ RS-1 United States Treasury T 0 1/4 11/30/13 02/14/2012 Various 155,008, ,000, ,951, ,951, , , ,953, ,357 55,357 58,982 11/30/ Bonds - U.S. Governments 456,448, ,308, ,052, ,043,607 0 (502,299) 0 (502,299) 0 456,541,311 0 (92,392) (92,392) 1,565,849 XXX Societe Financement de l'econo SFEFR 2 3 D 03/10/2012 Maturity 1,118,207 1,482,175 1,504,319 1,496,591 0 (4,954) 0 (4,954) 0 1,482, ,814 03/10/ Bonds - All Other Governments 1,118,207 1,482,175 1,504,319 1,496,591 0 (4,954) 0 (4,954) 0 1,482, ,814 XXX 31280M-3A-3 Freddie Mac Gold Pool FGCI E /01/2012 Paydown (4) 0 (4) /01/ M-Y5-0 Freddie Mac Gold Pool FGCI E /01/2012 Paydown /01/2012 Salomon SmBarney 31283G-HP-5 Freddie Mac Gold Pool FGLMC G /15/2012 (Citigroup) 21,109 19,366 20,031 19,903 0 (34) 0 (34) 0 19, ,240 1,240 1,596 06/01/ G-HP-5 Freddie Mac Gold Pool FGLMC G /01/2012 Paydown 8,753 8,753 9,054 8,996 0 (243) 0 (243) 0 8, /01/ F5-VX-3 Freddie Mac Gold Pool FGLMC D /15/2012 Salomon SmBarney (Citigroup) 7,139 6,549 7,305 7,277 0 (18) 0 (18) 0 7,259 0 (120) (120) /01/ F5-VX-3 Freddie Mac Gold Pool FGLMC D /01/2012 Paydown (30) 0 (30) /01/ F8-YL-0 Freddie Mac Gold Pool FGLMC D /15/2012 Salomon SmBarney (Citigroup) 21,322 19,561 21,819 21,734 0 (51) 0 (51) 0 21,683 0 (362) (362) 1,327 02/01/ F8-YL-0 Freddie Mac Gold Pool FGLMC D /01/2012 Paydown (86) 0 (86) /01/ FH-UU-4 Freddie Mac Gold Pool FGLMC D /15/2012 Salomon SmBarney (Citigroup) 3,925 3,601 4,031 4, ,044 0 (119) (119) /01/2026 Stated Contractual Maturity Date

127 SCHEDULE D - PART 4 Showing all Long-Term Bonds and Stocks SOLD, REDEEMED or Otherwise DISPOSED OF During Current Year Change in Book/Adjusted Carrying Value E14.1 F o CUSIP Identification Description r e i g n Disposal Date Name of Purchaser Number of Shares of Stock Consideration Par Value Actual Cost Prior Year Book/Adjusted Carrying Value Unrealized Valuation Increase/ (Decrease) Current Year (Amortization)/ Accretion Current Year s Other Than Temporary Impairment Recognized Total Change in B/A. C.V. ( ) Total Foreign Exchange Change in B/A. C.V. Book/ Adjusted Carrying Value at Disposal Date Foreign Exchange Gain (Loss) on Disposal Realized Gain (Loss) on Disposal Total Gain (Loss) on Disposal Bond Interest/Stock Dividends Received During Year Stated Contractual Maturity Date 3128FH-UU-4 Freddie Mac Gold Pool FGLMC D /01/2012 Paydown (14) 0 (14) /01/2026 Salomon SmBarney (Citigroup) 12,925 11,858 13,274 13, ,386 0 (461) (461) /01/ FH-YK-2 Freddie Mac Gold Pool FGLMC D /15/ FH-YK-2 Freddie Mac Gold Pool FGLMC D /01/2012 Paydown (47) 0 (47) /01/ FU-Z7-1 Freddie Mac Gold Pool FGLMC D /01/2012 Paydown 6,942 6,942 6,865 6, , /01/ T9-0 Freddie Mac Gold Pool FGCI B /13/2012 G.X. Clarke & Company 200, , , ,910 0 (823) 0 (823) 0 201,086 0 (1,058) (1,058) 9,962 02/01/ T9-0 Freddie Mac Gold Pool FGCI B /01/2012 Paydown 284, , , ,996 0 (22,091) 0 (22,091) 0 284, ,028 02/01/ G-P5-8 Freddie Mac Gold Pool FGLMC C /15/2012 Salomon SmBarney (Citigroup) 5,634 5,169 5,185 5,180 0 (1) 0 (1) 0 5, /01/ G-P5-8 Freddie Mac Gold Pool FGLMC C /01/2012 Paydown (2) 0 (2) /01/2026 Freddie Mac Non Gold Pool FHLMC Salomon SmBarney XQ /15/2012 (Citigroup) 2,971 2,726 2,557 2, , /01/2017 Freddie Mac Non Gold Pool FHLMC XQ /01/2012 Paydown 1,318 1,318 1,236 1, , /01/ QP-1 Freddie Mac Non Gold Pool FHLMC /01/2012 Paydown 8,835 8,835 7,848 8, , /01/2017 Freddie Mac Non Gold Pool FHLMC Salomon SmBarney NE /15/2012 (Citigroup) 5,006 4,593 4,080 4, , /01/2017 Freddie Mac Non Gold Pool FHLMC NE /01/2012 Paydown /01/2017 Freddie Mac Non Gold Pool FHLMC Salomon SmBarney 31345J-LA /15/2012 (Citigroup) 2,163 1,985 1,866 1,906 0 (36) 0 (36) 0 1, /15/2018 Freddie Mac Non Gold Pool FHLMC 31345J-LA /01/2012 Paydown 1,800 1,800 1,692 1, , /15/ BK-1 Fannie Mae Pool FNCL /15/2012 Salomon SmBarney (Citigroup) /01/ BK-1 Fannie Mae Pool FNCL /01/2012 Paydown /01/ W-VL-5 Fannie Mae Pool FNCL /15/2012 Salomon SmBarney (Citigroup) 2,285 2,097 2,016 2,029 0 (4) 0 (4) 0 2, /01/ W-VL-5 Fannie Mae Pool FNCL /01/2012 Paydown /01/ X-D9-0 Fannie Mae Pool FNCL /15/2012 Salomon SmBarney (Citigroup) /01/ X-D9-0 Fannie Mae Pool FNCL /01/2012 Paydown /01/ X-UH-3 Fannie Mae Pool FNCL /15/2012 Salomon SmBarney (Citigroup) 22,568 20,704 19,908 20,087 0 (132) 0 (132) 0 19, ,613 2,613 1,706 05/01/ X-UH-3 Fannie Mae Pool FNCL /01/2012 Paydown 1,509 1,509 1,451 1, , /01/ Y-E4-8 Fannie Mae Pool FNCL /15/2012 Salomon SmBarney (Citigroup) 17,073 15,663 15,061 15,195 0 (104) 0 (104) 0 15, ,982 1,982 1,291 06/01/ Y-E4-8 Fannie Mae Pool FNCL /01/2012 Paydown 1,105 1,105 1,062 1, , /01/ Y-LK-4 Fannie Mae Pool FNCL /15/2012 Salomon SmBarney (Citigroup) (2) 0 (2) /01/ Y-LK-4 Fannie Mae Pool FNCL /01/2012 Paydown /01/ T-CF-8 Fannie Mae Pool FNCL /15/2012 Salomon SmBarney (Citigroup) 7,948 7,292 7,191 7, , /01/ T-CF-8 Fannie Mae Pool FNCL /01/2012 Paydown 2,961 2,961 2,920 2, , /01/ T-CP-6 Fannie Mae Pool FNCL /15/2012 Salomon SmBarney (Citigroup) 27,458 25,191 24,841 24, , ,578 2,578 1,588 12/01/ T-CP-6 Fannie Mae Pool FNCL /01/2012 Paydown 8,464 8,464 8,346 8, , /01/ U-F5-4 Fannie Mae Pool FNCL /15/2012 Salomon SmBarney (Citigroup) 15,629 14,338 14,210 14, , ,406 1, /01/ U-F5-4 Fannie Mae Pool FNCL /01/2012 Paydown 1,646 1,646 1,631 1, , /01/ W-LC-8 Fannie Mae Pool FNCL /15/2012 Salomon SmBarney (Citigroup) 2,659 2,439 2,405 2, , /01/ W-LC-8 Fannie Mae Pool FNCL /01/2012 Paydown /01/ C-QF-9 Fannie Mae Pool FNCL /15/2012 Salomon SmBarney (Citigroup) 14,937 13,703 13,513 13, , ,381 1, /01/ C-QF-9 Fannie Mae Pool FNCL /01/2012 Paydown 6,496 6,496 6,406 6, , /01/ D-SD-0 Fannie Mae Pool FNCL /01/2012 Paydown 34,279 34,279 33,805 33, , ,819 12/01/ E-TN-5 Fannie Mae Pool FNCL /15/2012 Salomon SmBarney (Citigroup) 25,406 23,308 23,048 23, , ,311 2,311 1,469 11/01/ E-TN-5 Fannie Mae Pool FNCL /01/2012 Paydown 2,564 2,564 2,535 2, , /01/ F-HE-5 Fannie Mae Pool FNCL /15/2012 Salomon SmBarney (Citigroup) 12,214 11,205 11,080 11, , ,112 1, /01/ F-HE-5 Fannie Mae Pool FNCL /01/2012 Paydown 4,128 4,128 4,082 4, , /01/ U-BS-7 Fannie Mae Pool FNCL /01/2012 Paydown 1,404 1,404 1,385 1, , /01/ U-BU-2 Fannie Mae Pool FNCL /15/2012 Salomon SmBarney (Citigroup) 29,132 26,727 26,355 26, , ,735 2,735 1,684 12/01/2023

128 SCHEDULE D - PART 4 Showing all Long-Term Bonds and Stocks SOLD, REDEEMED or Otherwise DISPOSED OF During Current Year Change in Book/Adjusted Carrying Value E14.2 F o CUSIP Identification Description r e i g n Disposal Date Name of Purchaser Number of Shares of Stock Consideration Par Value Actual Cost Prior Year Book/Adjusted Carrying Value Unrealized Valuation Increase/ (Decrease) Current Year (Amortization)/ Accretion Current Year s Other Than Temporary Impairment Recognized Total Change in B/A. C.V. ( ) Total Foreign Exchange Change in B/A. C.V. Book/ Adjusted Carrying Value at Disposal Date Foreign Exchange Gain (Loss) on Disposal Realized Gain (Loss) on Disposal Total Gain (Loss) on Disposal Bond Interest/Stock Dividends Received During Year Stated Contractual Maturity Date 31371U-BU-2 Fannie Mae Pool FNCL /01/2012 Paydown 1,900 1,900 1,873 1, , /01/2023 Salomon SmBarney 31371U-J4-2 Fannie Mae Pool FNCL /15/2012 (Citigroup) 48,796 44,767 44,573 44, , ,223 4,223 2,821 12/01/ U-J4-2 Fannie Mae Pool FNCL /01/2012 Paydown 3,432 3,432 3,417 3, , /01/2023 Salomon SmBarney 31371W-PT-6 Fannie Mae Pool FNCL /15/2012 (Citigroup) 14,049 12,889 12,833 12, , ,216 1, /01/ W-PT-6 Fannie Mae Pool FNCL /01/2012 Paydown 1,251 1,251 1,245 1, , /01/2023 Salomon SmBarney (Citigroup) 19,952 18,304 19,085 18,886 0 (48) 0 (48) 0 18, ,114 1,114 1,508 10/01/ U-JM-0 Fannie Mae Pool FNCL /15/ U-JM-0 Fannie Mae Pool FNCL /01/2012 Paydown 5,725 5,725 5,969 5,907 0 (182) 0 (182) 0 5, /01/ U-NW-3 Fannie Mae Pool FNCL /07/2012 Internal Adjustments /01/ U-NW-3 Fannie Mae Pool FNCL /01/2012 Paydown /01/2026 Salomon SmBarney (Citigroup) 12,219 11,210 11,080 11, , ,126 1, /01/ E-R9-4 Fannie Mae Pool FNCL /15/ E-R9-4 Fannie Mae Pool FNCL /01/2012 Paydown 48,875 48,875 48,308 48, , /01/ J-D3-9 Fannie Mae Pool FNCI /01/2012 Paydown 3,339 3,339 3,244 3, , /01/ R-CP-4 Fannie Mae Pool FNCI /22/2012 G.X. Clarke & Company 182, , , ,058 0 (453) 0 (453) 0 189,606 0 (6,896) (6,896) 4,890 03/01/ R-CP-4 Fannie Mae Pool FNCI /01/2012 Paydown 14,757 14,757 16,131 15,964 0 (1,208) 0 (1,208) 0 14, ,138 03/01/ N-V8-7 Fannie Mae Pool FNCL /15/2012 Salomon SmBarney (Citigroup) 16,423 15,067 17,076 17, ,061 0 (638) (638) 1,095 12/01/ N-V8-7 Fannie Mae Pool FNCL /01/2012 Paydown 27,532 27,532 31,201 31,123 0 (3,591) 0 (3,591) 0 27, /01/2033 Salomon SmBarney (Citigroup) 932, , , ,529 0 (10,119) 0 (10,119) 0 923, ,327 9,327 46,077 10/01/ W-W8-0 Fannie Mae Pool FNCI /13/ W-W8-0 Fannie Mae Pool FNCI /01/2012 Paydown 237, , , ,824 0 (18,326) 0 (18,326) 0 237, ,541 10/01/ Bonds - U.S. Special Revenue and Special Assessment and all Non-Guaranteed Obligations of Agencies and Authorities of Governments and Their Political Subdivisions 2,413,888 2,297,500 2,452,227 2,441,322 0 (55,174) 0 (55,174) 0 2,386, ,742 27, ,437 XXX Citibank CD - Guam 4% 01/9/ /09/2012 Maturity 60,000 60,000 60,000 60, , ,006 01/09/ Citibank CD - Guam 4% 01/9/ /09/2012 Maturity 50,000 50,000 50,000 50, , ,005 01/09/ AA AA W-AS W-CV W-DD W-DR Q-AE Q-AE J-AB J-AB RG L-AN R-AE W-AD UE UE AA AY CW CY-6 Aviation Capital Group Trust ACAP /13/2012 Jefferies & Co (JPM-BS) 1,422,862 1,830,048 1,464,038 1,742, , , ,760,630 0 (337,768) (337,768) 4,301 09/20/2033 Aviation Capital Group Trust ACAP /20/2012 Paydown 16,709 16,709 13,367 15, , /20/2033 Contimortgage Home Equity Trst CONHE /01/2012 Paydown 207, , , ,200 2,964 (787) 0 2, , ,614 03/15/2025 Contimortgage Home Equity Trst CONHE /01/2012 Paydown 267, , , ,514 34, , , ,397 07/15/2027 Contimortgage Home Equity Trst CONHE /01/2012 Paydown 642, , , ,521 12, , , ,483 09/15/2027 Contimortgage Home Equity Trst CONHE /01/2012 Paydown 10,538 10,538 10,534 10, , /15/2028 Countrywide Home Eqt Loan Trst CWHEL /14/2012 J.P. Morgan Chase & Co 5,917,822 9,278,310 3,432,975 2,469,748 0 (634,251) 0 (634,251) 0 1,835, ,082,325 4,082,325 7,162 07/15/2036 Countrywide Home Eqt Loan Trst CWHEL /15/2012 Paydown 684, , , , , , , ,400 07/15/2036 Countrywide Home Eqt Loan Trst Credit Suisse First Boston CWHEL /07/2012 LLC 7,119,069 11,037,317 3,173,229 2,508,436 0 (387,803) 0 (387,803) 0 2,120, ,998,436 4,998,436 11,174 10/15/2036 Countrywide Home Eqt Loan Trst CWHEL /15/2012 Paydown 564, , , , , , , /15/2036 Home Equity Asset Trust HEAT B1 12/25/2012 Paydown 0 321, /25/2036 Home Equity Asset Trust HEAT M8 12/25/2012 Paydown 0 7,256, /25/2037 Residential Fund Mtg Sec II RFMS H 12/01/2012 Paydown 55,177,879 55,177,879 15,804,072 27,916, ,261, ,261, ,177, ,611,657 04/25/2037 Residential Fund Mtg Sec II RFMS H 12/01/2012 Paydown 20,281,509 20,281,509 6,185,860 9,516, ,764, ,764, ,281, ,626 06/25/2037 Idaho Hsg & Fin Association Single Famil 02/01/2012 UBS/WAR 15,000 15,000 15,779 15, , /01/2015 Idaho Hsg & Fin Association Single Famil 01/03/2012 Call ,000 5,000 5,260 5, , /01/2015 JG Wentworth Rec IV LLC WENT 1998-A A 12/15/2012 Paydown 179, , , , , ,165 12/15/2017 Keycorp Student Loan Trust KSLT 2000-B A 10/25/2012 Paydown 2,104,046 2,104,046 1,751,618 1,778, , , ,104, ,320 07/25/2029 Provident Bnk Home Eqt Ln Trst PBHET /26/2012 Paydown 801, , , , , , , ,562 01/25/2031 Provident Bnk Home Eqt Ln Trst PBHET /26/2012 Paydown 514, , , , , , , ,168 03/25/2030

129 SCHEDULE D - PART 4 Showing all Long-Term Bonds and Stocks SOLD, REDEEMED or Otherwise DISPOSED OF During Current Year Change in Book/Adjusted Carrying Value E14.3 F o CUSIP Identification Description r e i g n Disposal Date Name of Purchaser Number of Shares of Stock Consideration Par Value Actual Cost Prior Year Book/Adjusted Carrying Value Unrealized Valuation Increase/ (Decrease) Current Year (Amortization)/ Accretion Current Year s Other Than Temporary Impairment Recognized Total Change in B/A. C.V. ( ) Total Foreign Exchange Change in B/A. C.V. Book/ Adjusted Carrying Value at Disposal Date Foreign Exchange Gain (Loss) on Disposal Realized Gain (Loss) on Disposal Total Gain (Loss) on Disposal Bond Interest/Stock Dividends Received During Year Stated Contractual Maturity Date REDI Trust Series Class A 05/31/2012 Paydown 26,662 26,662 5,519 5, , , , /31/2020 Residential Asset Sec Corp RASC 76113A-BU KS3 12/25/2012 Paydown 0 852, /25/ P-AB Henderson Rec I Llc HENDR AA NO 03/07/2012 Barclays Capital 4,932,604 4,732,933 4,732,691 4,732, ,732, , ,782 55,531 11/15/ P-AB Henderson Rec I Llc HENDR AA NO 02/15/2012 Paydown 123, , , , , /15/2033 General Electric Capital Corp GE 0 06/20 02/10/2012 Oppenheimer 4,060,804 4,100,000 3,895,074 3,995, , , ,003, ,153 57,153 4,435 06/20/2013 U36964-AZ Commerzbank AG CMZB 2 3/4 01/13/12 D 01/13/2012 Maturity 13,176,375 13,259,564 13,496,911 13,286,141 0 (26,029) 0 (26,029) (83,356) 13,259, ,513 01/13/ HSH Nordbank AG HSHN 2 3/4 01/20/12 D 01/20/2012 Maturity 5,484,583 5,519,210 5,619,825 5,532,074 0 (12,599) 0 (12,599) (34,708) 5,519, ,396 01/20/ Swedbank AB SWEDA 3 1/8 02/02/12 D 02/02/2012 Maturity 551, , , ,492 0 (1,840) 0 (1,840) (3,491) 554, ,033 02/02/ AB-4 New World Funding Ltd NWORL A A1J R 12/13/2012 Barclays Capital 34,000, ,801,244 21,781,869 27,000,189 37,086,268 (7,496) 42,297,092 (5,218,320) 0 21,781, ,218,131 12,218, /11/ AA-7 Stillwater ABS CDO STILL A D F 08/23/2012 Paydown 0 4,688, /03/ SCL Terminal Aereo Santiago S.A. Socieda D 06/04/2012 Paydown 29,425 28,331 28,331 28, , /15/ Autopista Central S.A. D 12/17/2012 Paydown /15/2026 Sociedad Concessionaria Vespucio Norte D 12/17/2012 Paydown /15/2030 Talca-Chilean Sociedad Concessionaria D 12/17/2012 Paydown /15/ Bonds - Industrial and Miscellaneous (Unaffiliated) 158,428, ,994,247 84,592, ,598,085 37,135,498 38,895,033 42,297,092 33,733,439 (121,555) 137,330, ,218,059 21,218,059 3,102,325 XXX Bonds - Subtotals - Bonds - Part 4 618,409,570 1,068,082, ,601, ,579,605 37,135,498 38,332,606 42,297,092 33,171,012 (121,555) 597,740, ,153,409 21,153,409 4,808,425 XXX Bonds - Summary item from Part 5 for Bonds 567, , , (1,031) 0 (1,031) 0 541, ,251 17,251 7,823 XXX Bonds - Subtotals - Bonds 618,976,972 1,068,624, ,143, ,579,605 37,135,498 38,331,575 42,297,092 33,169,981 (121,555) 598,282, ,170,660 21,170,660 4,816,248 XXX Boreal FR MYMT FD D 04/27/2012 Outside Source 2, ,480,386 5,671,385 6,571,168 (1,293,880) 0 0 (1,293,880) (91,786) 5,356, ,124,106 1,124,106 0 XXX Natixis Absolute Quant Bond 12 M D 04/27/2012 Outside Source ,117, ,691 1,135, (15,831) 948, , ,211 0 XXX Common Stocks - Money Market Mutual Funds 7,598,111 XXX 6,651,076 7,706,290 (1,293,880) 0 0 (1,293,880) (107,617) 6,304, ,293,317 1,293,317 0 XXX Common Stocks - Subtotals - Common Stocks - Part 4 7,598,111 XXX 6,651,076 7,706,290 (1,293,880) 0 0 (1,293,880) (107,617) 6,304, ,293,317 1,293,317 0 XXX Common Stocks - Subtotals - Common Stocks 7,598,111 XXX 6,651,076 7,706,290 (1,293,880) 0 0 (1,293,880) (107,617) 6,304, ,293,317 1,293,317 0 XXX Common Stocks - Subtotals - Preferred and Common Stocks 7,598,111 XXX 6,651,076 7,706,290 (1,293,880) 0 0 (1,293,880) (107,617) 6,304, ,293,317 1,293,317 0 XXX Totals 626,575,083 XXX 552,794, ,285,895 35,841,618 38,331,575 42,297,092 31,876,101 (229,172) 604,587, ,463,977 22,463,977 4,816,248 XXX

130 SCHEDULE D - PART 5 Showing all Long-Term Bonds and Stocks ACQUIRED During Year and Fully DISPOSED OF During Current Year Change in Book/Adjusted Carrying Value CUSIP Identification F o r e i g n Date Acquired Disposal Date Par Value (Bonds) or Number of Shares (Stocks) Actual Cost Consideration Book/ Adjusted Carrying Value at Disposal Description Name of Vendor Name of Purchaser FMS Wertmanagement AoR FMSWER 1 7/8 08/2 D 02/13/2012 Morgan Stanley & Co., Inc. 07/01/2012 Merrill Lynch 492, , , ,592 0 (1,031) 0 (1,031) ,251 17,251 7,823 4, Bonds - All Other Governments 492, , , ,592 0 (1,031) 0 (1,031) ,251 17,251 7,823 4, Citibank CD- Guam 01/9/17 08/31/2012 Conversion 12/01/2012 Maturity 50,000 50,000 50,000 50, Bonds - Industrial and Miscellaneous (Unaffiliated) 50,000 50,000 50,000 50, Bonds - Subtotals - Bonds 542, , , ,592 0 (1,031) 0 (1,031) ,251 17,251 7,823 4,767 Unrealized Valuation Increase/ (Decrease) Current Year s (Amortization)/ Accretion Current Year s Other Than Temporary Impairment Recognized Total Change In B./A. C.V. ( ) Total Foreign Exchange Change in B./A. C.V. Foreign Exchange Gain (Loss) on Disposal Realized Gain (Loss) on Disposal Total Gain (Loss) on Disposal Interest and Dividends Received During Year Paid for Accrued Interest and Dividends E Totals 542, , ,592 0 (1,031) 0 (1,031) ,251 17,251 7,823 4,767

131 SCHEDULE D - PART 6 - SECTION 1 Valuation of Shares of Subsidiary, Controlled or Affiliated Companies Stock of Such Company Owned Description Name of Subsidiary, Controlled or Affiliated Company NAIC Company Code or Alien Insurer Identification Number NAIC Valuation Method (See SVO Purposes and Procedures Manual) Do Insurer s Assets Include Intangible Assets Connected with Holding of Such Company s Stock? Total Amount of Such Intangible Assets by Insurer on Statement Date 9 10 CUSIP Identification Foreign Book / Adjusted Carrying Value % of Number of Shares Outstanding MBIA UK (Holdings) Ltd F ciB4 No 0 430,161,328 24,666, MBIA Mexico S.A. de C.V. F ciB4 No 0 12,589,652 9, Common Stocks - Alien Insurer 0 442,750,980 XXX XXX Common Stocks - Subtotals - Common Stocks 0 442,750,980 XXX XXX Totals - Preferred and Common Stocks 0 442,750,980 XXX XXX 1. Amount of insurer's capital and surplus from the prior period s statutory statement reduced by any admitted EDP, goodwill and net deferred tax assets included therein: $ 0 2. Total amount of intangible assets nonadmitted $ 0 SCHEDULE D - PART 6 - SECTION Total Amount of CUSIP Identification Name of Lower-Tier Company Name of Company Listed in Section 1 Which Controls Lower-Tier Company Intangible Assets Included in Amount Shown in Column 7, Section 1 Stock in Lower-Tier Company Owned Indirectly by Insurer on Statement Date 5 6 % of Number of Shares Outstanding Totals - Preferred and Common XXX XXX E16

132 SCHEDULE DA - PART 1 Showing all SHORT-TERM INVESTMENTS Owned December 31 of Current Year 1 2 Codes Change In Book/Adjusted Carrying Value Interest CUSIP Identification Fo rei gn Date Acquired Maturity Date Book/ Adjusted Carrying Value Unrealized Valuation Increase/ (Decrease) Current Year s (Amortization) / Accretion Current Year s Other Than Temporary Impairment Recognized Total Foreign Exchange Change in B./A.C.V. Par Value Actual Cost Amount Due And Accrued Dec. 31 of Current Year On Bond Not In Default Non-Admitted Due and Accrued Effective Rate of Amount Received During Year Description Code Name of Vendor Rate of When Paid BONY Deposit Reserve Demand Notes - USD 12/03/2012 Bank Sweep 12/01/2013 1,250, ,250,668 1,250, MON Barclays Bank PLC ECP 02/11/13 D 08/07/2012 Barclays Capital 02/11/ ,132, ,125 15,132,574 15,135, MAT Bonds - Industrial and Miscellaneous (Unaffiliated) - Issuer Obligations 16,383, ,125 16,383,242 16,386, XXX XXX XXX Bonds - Subtotals - Industrial and Miscellaneous (Unaffiliated) 16,383, ,125 16,383,242 16,386, XXX XXX XXX Total Bonds - Subtotals - Issuer Obligations 16,383, ,125 16,383,242 16,386, XXX XXX XXX Total Bonds - Subtotals - Bonds 16,383, ,125 16,383,242 16,386, XXX XXX XXX Paid for Accrued Interest E Total Short-Term Investments 16,383, ,125 XXX 16,386, XXX XXX XXX 114 0

133 Schedule DB - Part A - Section 1 Schedule DB - Part A - Section 2 Schedule DB - Part B - Section 1 Schedule DB - Part B - Section 2 Schedule DB - Part D Schedule DL - Part 1 Schedule DL - Part 2 E18, E19, E20, E21, E22, E23, E24

134 1 SCHEDULE E - PART 1 - CASH Amount of Interest Received During Year Amount of Interest Accrued December 31 of Current Year Rate of Depository Code Interest Balance * Banco Santander Spain ,185 XXX Bank of New York Brussels , ,485,424 XXX Bank of New York France XXX Caisse des Depots France XXX Citibank Chile ,004 XXX J P Morgan Chase New York , ,967,789 XXX Deposits in 0 depositories that do not exceed the allowable limit in any one depository (See Instructions)-open depositories XXX XXX XXX Totals-Open Depositories XXX XXX 153, ,776,402 XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX Total Cash on Deposit XXX XXX 153, ,776,402 XXX Cash in Company s Office XXX XXX XXX XXX 146 XXX Total Cash XXX XXX 153, ,776,548 XXX TOTALS OF DEPOSITORY BALANCES ON THE LAST DAY OF EACH MONTH DURING THE CURRENT YEAR 1. January 38,614, April 349,717, July 36,537, October 108,993, February 84,450, May 46,902, August 42,221, November 121,531, March 193,148, June 47,962, September 47,322, December 81,776,548 E25

135 SCHEDULE E - PART 2 - CASH EQUIVALENTS 1 Description 2 Code Show Investments Owned December 31 of Current Year Date Rate of Maturity Acquired Interest Date 6 Book/Adjusted Carrying Value 7 Amount of Interest Due & Accrued 8 Amount Received During Year E Total Cash Equivalents 0 0 0

136 States, etc. ANNUAL STATEMENT FOR THE YEAR 2012 OF THE MBIA Insurance Corporation SCHEDULE E PART 3 - SPECIAL DEPOSITS 1 2 Type of Deposits Purpose of Deposits Deposits For the Benefit of All Policyholders 3 4 Book/Adjusted Fair Carrying Value Value All Other Special Deposits 5 Book/Adjusted Carrying Value 1. Alabama AL Alaska AK Arizona AZ Arkansas AR B State requirement 115, , California CA Colorado CO Connecticut CT Delaware DE District of Columbia DC Florida FL Georgia GA B State requirement 108, , Hawaii HI Idaho ID Illinois IL Indiana IN Iowa IA Kansas KS Kentucky KY Louisiana LA Maine ME Maryland MD Massachusetts MA B State requirement 130, , Michigan MI Minnesota MN Mississippi MS Missouri MO Montana MT Nebraska NE Nevada NV New Hampshire NH B State requirement 50,114 51, New Jersey NJ New Mexico NM B State requirement 240, , New York NY B State requirement 1,596,869 1,652, North Carolina NC B State requirement 400, , North Dakota ND Ohio OH Oklahoma OK Oregon OR B State requirement 260, , Pennsylvania PA Rhode Island RI South Carolina SC South Dakota SD Tennessee TN Texas TX Utah UT Vermont VT Virginia VA B State requirement 265, , Washington WA West Virginia WV Wisconsin WI Wyoming WY American Samoa AS Guam GU Puerto Rico PR B State requirement 752, , US Virgin Islands VI B State requirement 501, , Northern Mariana Islands MP Canada CAN Aggregate Other Alien OT XXX XXX ,000 60, Total XXX XXX 4,422,516 4,543,942 60,000 60,000 DETAILS OF WRITE-INS Citibank CD- Guam 01/9/17 B State requirement ,000 60, Sum of remaining write-ins for Line 58 from overflow page XXX XXX Totals (Lines ) (Line 58 above) XXX XXX ,000 60,000 6 Fair Value E27

137 ALPHABETICAL INDEX ANNUAL STATEMENT BLANK Assets 2 Cash Flow 5 Exhibit of Capital Gains (Losses) 12 Exhibit of Net Investment Income 12 Exhibit of Nonadmitted Assets 13 Exhibit of Premiums and Losses (State Page) 19 Five-Year Historical Data 17 General Interrogatories 15 Jurat Page 1 Liabilities, Surplus and Other Funds 3 Notes To Financial Statements 14 Overflow Page For Write-Ins 101 Schedule A Part 1 E01 Schedule A Part 2 E02 Schedule A Part 3 E03 Schedule A Verification Between Years SI02 Schedule B Part 1 E04 Schedule B Part 2 E05 Schedule B Part 3 E06 Schedule B Verification Between Years SI02 Schedule BA Part 1 E07 Schedule BA Part 2 E08 Schedule BA Part 3 E09 Schedule BA Verification Between Years SI03 Schedule D Part 1 E10 Schedule D Part 1A Section 1 SI05 Schedule D Part 1A Section 2 SI08 Schedule D Part 2 Section 1 E11 Schedule D Part 2 Section 2 E12 Schedule D Part 3 E13 Schedule D Part 4 E14 Schedule D Part 5 E15 Schedule D Part 6 Section 1 E16 Schedule D Part 6 Section 2 E16 Schedule D Summary By Country SI04 Schedule D Verification Between Years SI03 Schedule DA Part 1 E17 INDEX1

138 ALPHABETICAL INDEX ANNUAL STATEMENT BLANK (Continued) Schedule DA Verification Between Years SI10 Schedule DB Part A Section 1 E18 Schedule DB Part A Section 2 E19 Schedule DB Part A Verification Between Years SI11 Schedule DB Part B Section 1 E20 Schedule DB Part B Section 2 E21 Schedule DB Part B Verification Between Years SI11 Schedule DB Part C Section 1 SI12 Schedule DB Part C Section 2 SI13 Schedule DB Part D E22 Schedule DB Verification SI14 Schedule DL Part 1 E23 Schedule DL Part 2 E24 Schedule E Part 1 Cash E25 Schedule E Part 2 Cash Equivalents E26 Schedule E Part 3 Special Deposits E27 Schedule E Verification Between Years SI15 Schedule F Part 1 20 Schedule F Part 2 21 Schedule F Part 3 22 Schedule F Part 4 23 Schedule F Part 5 24 Schedule F Part 6 Section 1 25 Schedule F Part 6 Section 2 27 Schedule F Part 7 28 Schedule F Part 8 29 Schedule F Part 9 30 Schedule H Accident and Health Exhibit Part 1 31 Schedule H Part 2, Part 3, and Part 4 32 Schedule H Part 5 Health Claims 33 Schedule P Part 1 Summary 34 Schedule P Part 1A Homeowners/Farmowners 36 Schedule P Part 1B Private Passenger Auto Liability/Medical 37 Schedule P Part 1C Commercial Auto/Truck Liability/Medical 38 Schedule P Part 1D Workers Compensation (Excluding Excess Workers Compensation) 39 INDEX2

139 ALPHABETICAL INDEX ANNUAL STATEMENT BLANK (Continued) Schedule P Part 1E Commercial Multiple Peril 40 Schedule P Part 1F Section 1 Medical Professional Liability Occurrence 41 Schedule P Part 1F Section 2 Medical Professional Liability Claims-Made 42 Schedule P Part 1G Special Liability (Ocean, Marine, Aircraft (All Perils), Boiler and Machinery) 43 Schedule P Part 1H Section 1 Other Liability Occurrence 44 Schedule P Part 1H Section 2 Other Liability Claims-Made 45 Schedule P Part 1I Special Property (Fire, Allied Lines, Inland Marine, Earthquake, Burglary & Theft) 46 Schedule P Part 1J Auto Physical Damage 47 Schedule P Part 1K Fidelity/Surety 48 Schedule P Part 1L Other (Including Credit, Accident and Health) 49 Schedule P Part 1M International 50 Schedule P Part 1N Reinsurance Nonproportional Assumed Property 51 Schedule P Part 1O Reinsurance Nonproportional Assumed Liability 52 Schedule P Part 1P Reinsurance Nonproportional Assumed Financial Lines 53 Schedule P Part 1R Section 1 Products Liability Occurrence 54 Schedule P Part 1R Section 2 Products Liability Claims Made 55 Schedule P Part 1S Financial Guaranty/Mortgage Guaranty 56 Schedule P Part 1T Warranty 57 Schedule P Part 2, Part 3 and Part 4 Summary 35 Schedule P Part 2A Homeowners/Farmowners 58 Schedule P Part 2B Private Passenger Auto Liability/Medical 58 Schedule P Part 2C Commercial Auto/Truck Liability/Medical 58 Schedule P Part 2D Workers Compensation (Excluding Excess Workers Compensation) 58 Schedule P Part 2E Commercial Multiple Peril 58 Schedule P Part 2F Section 1 Medical Professional Liability Occurrence 59 Schedule P Part 2F Section 2 Medical Professional Liability Claims Made 59 Schedule P Part 2G Special Liability (Ocean Marine, Aircraft (All Perils), Boiler and Machinery) 59 Schedule P Part 2H Section 1 Other Liability Occurrence 59 Schedule P Part 2H Section 2 Other Liability Claims Made 59 Schedule P Part 2I Special Property (Fire, Allied Lines, Inland Marine, Earthquake, Burglary, and Theft) 60 Schedule P Part 2J Auto Physical Damage 60 Schedule P Part 2K Fidelity, Surety 60 Schedule P Part 2L Other (Including Credit, Accident and Health) 60 Schedule P Part 2M International 60 Schedule P Part 2N Reinsurance Nonproportional Assumed Property 61 Schedule P Part 2O Reinsurance Nonproportional Assumed Liability 61 Schedule P Part 2P Reinsurance Nonproportional Assumed Financial Lines 61 Schedule P Part 2R Section 1 Products Liability Occurrence 62 Schedule P Part 2R Section 2 Products Liability Claims-Made 62 Schedule P Part 2S Financial Guaranty/Mortgage Guaranty 62 Schedule P Part 2T Warranty 62 Schedule P Part 3A Homeowners/Farmowners 63 INDEX3

140 ALPHABETICAL INDEX ANNUAL STATEMENT BLANK (Continued) Schedule P Part 3B Private Passenger Auto Liability/Medical 63 Schedule P Part 3C Commercial Auto/Truck Liability/Medical 63 Schedule P Part 3D Workers Compensation (Excluding Excess Workers Compensation) 63 Schedule P Part 3E Commercial Multiple Peril 63 Schedule P Part 3F Section 1 Medical Professional Liability Occurrence 64 Schedule P Part 3F Section 2 Medical Professional Liability Claims-Made 64 Schedule P Part 3G Special Liability (Ocean Marine, Aircraft (All Perils), Boiler and Machinery) 64 Schedule P Part 3H Section 1 Other Liability Occurrence 64 Schedule P Part 3H Section 2 Other Liability Claims-Made 64 Schedule P Part 3I Special Property (Fire, Allied Lines, Inland Marine, Earthquake, Burglary, and Theft) 65 Schedule P Part 3J Auto Physical Damage 65 Schedule P Part 3K Fidelity/Surety 65 Schedule P Part 3L Other (Including Credit, Accident and Health) 65 Schedule P Part 3M International 65 Schedule P Part 3N Reinsurance Nonproportional Assumed Property 66 Schedule P Part 3O Reinsurance Nonproportional Assumed Liability 66 Schedule P Part 3P Reinsurance Nonproportional Assumed Financial Lines 66 Schedule P Part 3R Section 1 Products Liability Occurrence 67 Schedule P Part 3R Section 2 Products Liability Claims-Made 67 Schedule P Part 3S Financial Guaranty/Mortgage Guaranty 67 Schedule P Part 3T Warranty 67 Schedule P Part 4A Homeowners/Farmowners 68 Schedule P Part 4B Private Passenger Auto Liability/Medical 68 Schedule P Part 4C Commercial Auto/Truck Liability/Medical 68 Schedule P Part 4D Workers Compensation (Excluding Excess Workers Compensation) 68 Schedule P Part 4E Commercial Multiple Peril 68 Schedule P Part 4F Section 1 Medical Professional Liability Occurrence 69 Schedule P Part 4F Section 2 Medical Professional Liability Claims-Made 69 Schedule P Part 4G Special Liability (Ocean Marine, Aircraft (All Perils), Boiler and Machinery) 69 Schedule P Part 4H Section 1 Other Liability Occurrence 69 Schedule P Part 4H Section 2 Other Liability Claims-Made 69 Schedule P Part 4I Special Property (Fire, Allied Lines, Inland Marine, Earthquake, Burglary and Theft) 70 Schedule P Part 4J Auto Physical Damage 70 Schedule P Part 4K Fidelity/Surety 70 Schedule P Part 4L Other (Including Credit, Accident and Health) 70 Schedule P Part 4M International 70 Schedule P Part 4N Reinsurance Nonproportional Assumed Property 71 Schedule P Part 4O Reinsurance Nonproportional Assumed Liability 71 Schedule P Part 4P Reinsurance Nonproportional Assumed Financial Lines 71 Schedule P Part 4R Section 1 Products Liability Occurrence 72 Schedule P Part 4R Section 2 Products Liability Claims-Made 72 INDEX4

141 ALPHABETICAL INDEX ANNUAL STATEMENT BLANK (Continued) Schedule P Part 4S Financial Guaranty/Mortgage Guaranty 72 Schedule P Part 4T Warranty 72 Schedule P Part 5A Homeowners/Farmowners 73 Schedule P Part 5B Private Passenger Auto Liability/Medical 74 Schedule P Part 5C Commercial Auto/Truck Liability/Medical 75 Schedule P Part 5D Workers Compensation (Excluding Excess Workers Compensation) 76 Schedule P Part 5E Commercial Multiple Peril 77 Schedule P Part 5F Medical Professional Liability Claims-Made 79 Schedule P Part 5F Medical Professional Liability Occurrence 78 Schedule P Part 5H Other Liability Claims-Made 81 Schedule P Part 5H Other Liability Occurrence 80 Schedule P Part 5R Products Liability Claims-Made 83 Schedule P Part 5R Products Liability Occurrence 82 Schedule P Part 5T Warranty 84 Schedule P Part 6C Commercial Auto/Truck Liability/Medical 85 Schedule P Part 6D Workers Compensation (Excluding Excess Workers Compensation) 85 Schedule P Part 6E Commercial Multiple Peril 86 Schedule P Part 6H Other Liability Claims-Made 87 Schedule P Part 6H Other Liability Occurrence 86 Schedule P Part 6M International 87 Schedule P Part 6N Reinsurance Nonproportional Assumed Property 88 Schedule P Part 6O Reinsurance Nonproportional Assumed Liability 88 Schedule P Part 6R Products Liability Claims-Made 89 Schedule P Part 6R Products Liability Occurrence 89 Schedule P Part 7A Primary Loss Sensitive Contracts 90 Schedule P Part 7B Reinsurance Loss Sensitive Contracts 92 Schedule P Interrogatories 93 Schedule T Exhibit of Premiums Written 95 Schedule T Part 2 Interstate Compact 96 Schedule Y Information Concerning Activities of Insurer Members of a Holding Company Group 97 Schedule Y Part 1A Detail of Insurance Holding Company System 98 Schedule Y Part 2 Summary of Insurer s Transactions With Any Affiliates 99 Statement of Income 4 Summary Investment Schedule SI01 Supplemental Exhibits and Schedules Interrogatories 100 Underwriting and Investment Exhibit Part 1 6 Underwriting and Investment Exhibit Part 1A 7 Underwriting and Investment Exhibit Part 1B 8 Underwriting and Investment Exhibit Part 2 9 Underwriting and Investment Exhibit Part 2A 10 Underwriting and Investment Exhibit Part 3 11 INDEX5

142 INDEX6