Hello and welcome everyone to the MBIA Inc. Third Quarter 2026 Financial Results Conference Call. I would now like to turn the call over to Greg Diamond, Managing Director of Investor and Media Relations at MBIA. Please go ahead, sir.

Thank you, Leslie. Welcome to MBIA's Financial Results Conference Call. After the market closed yesterday, we issued and posted several items on our websites, including our financial results, 10Q, quarterly operating supplement, and statutory financial statements for both MBIA Insurance Corporation and the National Public Finance Guarantee Corporation. We also posted updates to the listings of our insurance company's insured portfolios. Regarding today's call, please note that anything said on the call is qualified by the information provided in the company's 10-K, 10-Qs, and other SEC filings as our company's definitive disclosures are incorporated in those documents. We urge investors to read our 10-K and 10-Qs as they contain our most current disclosures about the company and its financial and operating results. Those documents also contain information that may not be addressed on today's call. The definition and reconciliations of the non-GAAP terms included in our remarks today are also included in our 10-K and 10-Qs as well as our financial results report and the quarterly operating supplement. The recorded replay of today's call will become available on the MBIA website approximately two hours after the end of the call. And now here's our safe harbor disclosure statement. Our remarks on today's conference call may contain forward-looking statements. Important factors such as general market conditions and the competitive environment could cause our actual results to differ materially from the projected results referenced in our forward-looking statements. Risk factors are detailed in our 10-K and 10-Qs, which are available on our website at mbaa.com. The company cautions not to place undue reliance on any such forward-looking statements. The company also undertakes no obligation to publicly correct or update any forward-looking statement if it later becomes aware that such statement is no longer accurate. For our call today, Bill Fallon and Joe Sachinger will provide introductory comments, and then a question and answer session will follow. Now, here is Bill Fallon. Thanks, Greg.

Good morning, everyone. Thank you for being with us today. While our third quarter 2026 net loss was greater than last year's third quarter loss, our year-to-date results compare favorably to last year. Joe will provide more details on this quarter's results shortly. Regarding our operations, our priority continues to be resolving National's PREPA exposure, which remains at $390 million of gross par outstanding as of September 30, 2026, and $35 million of saleable PREPA bankruptcy claims consisting of custodial receipts and uninsured bonds. Since our last conference call, The U.S. District Court for Puerto Rico granted permanent injunctive relief to three of the oversight board members that President Trump attempted to fire. The Title III Court scheduled oral argument for November 18, 2026 on summary judgment for the accounting counterclaim regarding the calculation of net revenue. The prep of bondholders petitioned the First Circuit Court of Appeals for an appeal on the Title III Court's stay of the bondholders filing to lift the automatic stay and appoint a receiver for PREPA. And all arguments were heard on the administrative claim appeal to the First Circuit and a ruling is pending. Regarding the balance of Nationals Insured Portfolio, those credits have continued to perform generally consistent with our expectations. The gross par amount outstanding for Nationals Insured Portfolio has declined by approximately $2.6 billion from year-end 2025 to about $19.7 billion at September 30, 2026. National's leverage ratio of gross par to statutory capital was 20 to 1 at the end of the quarter, down from 24 to 1 at year-end 2025. As of September 30, 2026, National had total claims-paying resources of $1.4 billion and statutory capital and surplus of $974 million. Now, Joe will provide additional comments about our financial results.

Thank you, Bill, and good morning, everyone. I will begin with a review of our third quarter 2026 GAAP and non-GAAP results, followed by an overview of our holding company liquidity and our statutory results. The company reported a consolidated gap net loss of $24 million or a negative 49 cents per share for the third quarter of 2026, compared with a consolidated gap net loss of $8 million or a negative 17 cents per share for the third quarter of 2025. The larger gap net loss in the current quarter was primarily attributable to a smaller loss in LAE benefit. In the third quarter of 2026, we recorded a loss in LAE benefit of $12 million. This benefit was largely driven by the impact of an increase in the interest rates used to discount our loss reserves, which lowered the present value of those reserves, principally with respect to NBIA Insurance Corps for their first lien RMBS exposures. By comparison, in the third quarter of 2025, we recorded a loss in LAE benefit of $50 million. That benefit was primarily driven by revising our PREPA loss scenarios to reflect developments at that time, including national sale of PREPA bankruptcy claims at prices above our previous estimates. The company's adjusted net loss, which is a non-GAAP measure, was $3 million, or a negative six cents per share, for the third quarter of 2026, compared with adjusted net income of $51 million, or $1.03 per share, for the third quarter of 2025. The unfavorable variance was primarily driven by three million dollars of losses in LAE at National in the current quarter, reflecting the accrual of LAE and the accretion of lost reserves, compared with a $54 million loss in LAE benefit in the third quarter of 2025, primarily from the favorable developments associated with National's PREPA reserves and recoveries. As of September 30th, 2026, NBIA Inc.'s book value per share was negative $46.87 per share, reflecting a decrease of $2.60 per share from year-end 2025. This decrease was primarily due to our consolidated gap net loss of $110 million for the first nine months of 2026 and an increase in unrealized losses on our investment portfolios recorded in other comprehensive income. The increase in unrealized investment losses largely resulted from higher interest rates, which reduced the fair value of our fixed income investments. Included in MBIA Inc.'s book value per share as of September 30th, 2026, is a negative $54.87 per share of NBIA Insurance Corp's book value. I will now turn to the corporate segment balance sheet. The corporate segment, which primarily comprises the activities of the holding company, NBIA Inc., had total assets of approximately $577 million as of September 30, 2026. Within this total are the following material assets. Unencumbered cash and liquid assets held by MBIA Inc. totaled $335 million compared with $357 million at December 31st, 2025. The decrease since year end 2025 primarily reflects ongoing debt service payments and operating expenses. partially offset by investment income. We continue to manage holding company liquidity carefully with a primary focus on meeting our outstanding obligations and preserving our financial flexibility. In addition to the unencumbered cash and liquid assets, the corporate segments assets included approximately $124 million of assets at market value pledged to guaranteed investment agreement contract holders. These assets fully collateralized the principal amounts of those contracts. The segment's assets also included $70 million of assets at MBIA Services Corp., our management services company, to support its operating obligations. I'll now turn to the statutory results of our insurance companies beginning with National. National reported statutory net income of $18 million for the third quarter of 2026 compared with statutory net income of $73 million for the third quarter of 2025. The unfavorable variance was primarily attributable to loss in LAE activity. National recorded $4 million of statutory loss in LAE this quarter, compared with a $56 million loss in LAE benefit in the third quarter of 2025. As noted earlier, the expense in the current quarter reflects the accrual of LAE and accretion of reserves, while the benefit in the third quarter of 2025 was primarily driven by adjustments to our PREPA loss scenarios and assumptions and the sale of PREPA bankruptcy claims at prices above our previous estimates. As of September 30th, 2026, national statutory capital was $974 million, up $37 million compared with December 31st, 2025. The increase was primarily driven by National's statutory net income of $39 million for the first nine months of 2026. As of September 30, 2026, National's claims-paying resources were $1.4 billion, unchanged from year-end 2025. Now I'll turn to MBIA Insurance Court. MBIA Insurance Corp reported a statutory net loss of $3 million for the third quarter of 2026, compared with a statutory net loss of $25 million for the third quarter of 2025. The favorable variance was primarily attributable to lower loss in LAE. and BIA Insurance Corp reported loss in LAE of $4 million in the current quarter compared with $25 million in the third quarter of 2025. The larger loss in LAE in the third quarter of 2025 primarily reflected reserve adjustments associated with lower expected recoveries of paid claims relating to the ZOHAR CDOs. As of September 30, 2026, MBIA Insurance Corp's statutory capital was $102 million, reflecting an increase of $23 million from year-end 2025. The increase was principally driven by MBIA Insurance Corp's statutory net income of $25 million for the first nine months of 2026. Claims paying resources totaled $335 million as of September 30th, 2026, increasing $18 million from year-end 2025. MBIA Insurance Corp's insured gross power outstanding was just under $1.8 billion as of September 30th, 2026, declining approximately 13% from year-end 2025 reflecting the scheduled amortization of the insured portfolio. And now we will turn the call over to the operator to begin the question and answer session.

Thank you. If you would like to ask a question at this time, please press star 1 on your telephone keypad. If you wish to remove yourself from the queue, please press star 2. We ask that when posing your question, you please pick up your handset to allow optimal sound quality. We will now take our first question from Tommy McJoy with KBW. Please go ahead.

Hey, good morning, guys. First question, what was the amount of the As of Right dividend that National paid to NBIA Inc. in the fourth quarter?

I think that's usually in October.

versus the $63 million as of right dividend last year.

Hi, this is Joe. We have not yet paid the as of right dividend. We typically pay it in December, Tommy, not October. So we do expect to pay that dividend this coming December. And we expect it to be in a similar amount as the last two years, perhaps slightly higher.

Okay, got it.

And then, you know, from your vantage point, does the Democratic sweep in the midterms change the outlook for how you expect the oversight board to get constructed in terms of nominations from the different, you know, House and Senate leaders? And do you have a viewpoint on how that could ultimately impact how creditor friendly and maybe resolution focused that oversight board will be?

With regard to the results of the elections and the implications that you're talking about, we do think it's possible that puts more focus on the three vacant positions. And the current administration has the ability, going through the process outlined in PROMESA, to fill those three vacancies. In a sense, they could do it today. I don't know where the different parties stand in terms of providing lists to the president. But we do think there's an increased possibility that those three positions could be filled in the sense before the end of the year, which we think would help move things along. So that's probably the biggest highlight coming out of that.

Okay, got it. And then just on the litigation side, understand there's a few You know, hearings coming up here later in the month. In terms of the case, sort of looking at the net revenue debate in terms of how that gets calculated, could you just kind of summarize what you're seeing there in terms of that case development, in terms of if you feel like the sides are getting closer together, further apart? There's a lot of stuff to track there, so we just wanted to understand your sort of take on that case specifically. Thanks.

Yeah, Tommy, without going into a lot of details, and obviously people have read all the court filings, there clearly is a difference of opinion with regard to what the board thinks and what the bondholders think. Again, collectively, as one of the bondholders, we feel we have a very strong case on that one. I don't know that there's really any movement in terms of the sides getting closer together as you asked that part of the question. But again, I think we feel pretty good Hard to know with litigation what the final outcome will be, but hopefully we will know soon.

Thanks.

Thank you for your question. We will take our next question from Patrick Sattelhofer with Kahn Brothers. Good morning, guys.

Good morning. First question is just, why have you not yet sold the custodial receipts you created in July? Last year's, that was pre-sold. It looks like prices have held up. I'm just curious why you're holding on to these receipts longer than last year's batch.

Patrick, we continue to look at the market and look at opportunities, as I think you're aware. It's not a really deep and liquid market. We're, I think, pretty aware of what the possibilities are, and we want to make sure that it's beneficial to shareholders. So we'll continue to look at that. As you know, some of these court decisions could impact the price up or down. There could be other events, but we're looking at that all the time.

Sounds good. And then a few years ago, you publicly announced and ran the sale process. Since then, you've mostly or substantially resolved a lot of the gating issues that seemed to prevent a sale then. So the question is, are you running a sale process now? And if not, why aren't you given the kind of rapid burn of shareholder value from kind of ongoing operational costs?

Yeah, I think you summarized it correctly. We believe that a transaction would be beneficial to shareholders. We set out to do that several years ago. Everything that you just described, as I've mentioned in previous calls, I think the feedback from that process, was really twofold. One was reduce your prep exposure or eliminate it. Two was to get dividends from National Uptown Holding Company. We clearly did the second one and provided the actual shareholder dividend three years ago. We reduced our prep exposure significantly from the time we started. This is down by two thirds. As you referenced, there are the custodial receipts that deal with another 35 million. While we've not started a formal process. I think people know that we are in runoff and based on the sale process from a few years ago, we would obviously look to sell the company, sell national, do whatever it is that's beneficial to shareholders as soon as possible. Thank you. Thank you.

Thank you. Our next question comes from Carlos Pardo, private investor.

Oh, hi. Good afternoon from London. Hope all well. My first question is the usual question, but this time with a twist. The 71 million bypass authorization that you have in the books, is it correct that you can still use it, as we discussed before, that you can use it if you would like to, and that there are no legal or regulatory constraints in order to use it? And could it be used for dividends?

So with regard to the $71 million authorization, and I will apologize, Carlos, you broke up there for a little bit. The $71 million authorization is valid. We have the ability to use that. That applies to both the holding company and to national. There are no regulatory constraints on that. It's not the same as dividends. Dividends are something that the company looks at on a regular basis. and the board can approve at any point in time. There's not an authorization ahead of time. And so therefore the 71 million does not apply to that.

Okay, but MBI Inc., the holding company could pay a dividend in theory without having to go to the regulator.

That's correct.

We do not. Perfect, thank you. The other question that, yeah, Chris, go ahead.

No, no, go ahead.

No, no, you can go ahead, please.

Yeah, no, there is no regulatory oversight in terms of DFS with regard to the holding company. So the holding company has the ability to declare and pay dividends.

Exactly. So it would be just a liquidity constraint rather than a regulatory constraint. Perfect. Thank you. That's very helpful. The other question that I have is that I sent you a letter with my understanding and the rationale for using the right-back capacity of 71 million, and basically it was a proposal that was also supported by EHR holders. Could you please explain why this has not been done, and what is the rationale for not using this capacity at this stage?

With regard to dividends, I think as most people know, if you go back to about the time PREPA entered Title III, which is a little over nine years ago, we repurchased over 80 million shares during that period at an average price of $7.74. That's not necessarily equivalent to today's share price because in addition to those share repurchases, we had the special dividend three years ago, which was $8 share. which is a little bit over $400 million in total. So during the time that PrEP has been in Title III, we've returned over a billion dollars to shareholders through share buybacks and through dividends. We think given that we're in runoff, it's very important to distribute money to the shareholders via both of those approaches. We continue to look at those and with regard to the current situation and your question about repurchases of shares, As I think most of the people know, most of those share repurchases have been done through national. There has not been any capacity at national for the last couple of years. That could change based on the stock price at any given time and our financial results. So therefore, over the last couple of years, the dividends would have to come from the holding company. And there again, as we've articulated in the past, We look at several things in terms of the use of the liquidity of the holding company. That could be shareholder dividends. It could be debt repurchases. We obviously have obligations, primarily the Inc. debt and the MTNs of the holding company, not only in the next couple of years, meaning 27 and 28, but we also have maturities beyond that. So we take all those things into account and make decisions that we think are best for the company.

Yes, but what is the specific reason not to use, and I understand that national is constrained, but the holding company is not constrained, and you could use the $71 million FISA authorization. What is the exact reason why you are not doing that?

Yeah, the $71 million is not a specific amount of money. It's just an authorization. So the money would come from the holding company. and the liquidity. And as I just mentioned, we look at several things in terms of utilizing that liquidity. We obviously have all the obligations I mentioned, but we look at debt and stock repurchases at any point in time. And if we think it makes sense, then we'll do it.

Okay, perfect. We have a meeting later this month, so we can discuss further there. The other question that I have is that the same process, I know that it is not necessarily active at the moment. But that you would listen to authors, as we just discussed with Representative Cam Brothers. What is the starting price for this selling process? I mean, if someone would come, or I would come tomorrow, and I would offer you $300 million, knowing that the market cap at the moment is $225 million, would you accept it? Or is it something that you consider? I mean, what is your starting price for the selling process?

Yeah, I don't think it's appropriate for us to discuss price of particular transactions on this call. If for some reason you are interested in making a bid for the company, you should contact us after the call. I also want to clarify, you have a call with Greg Diamond, the head of our investor and media relations next week, not with anybody else at the company.

Yes, so I will be discussing this issue. Then another question that I have is that my understanding, now we go to the COP. In the COP, NDIA Inc. is not bound by the terms of the COP, so it is only national. I've been reviewing the COP, and NDIA Inc. would be free to act without being constrained by the terms of the COP. Is that correct?

I think it depends on what type of actions you're talking about.

But NDI Inc. is not a particular co-op, and there is no definition of affiliates, so the co-op is only binding on nationals.

Carlos, do you have a specific question?

Yes, basically, NDI Inc., could you please confirm that NDI Inc. is not a particular co-op?

Okay, so let's hypothetically say I agree that it's not. What's the follow-up question?

Basically, NDIA Inc. would be free to contact the Oversight Board with a proposal and negotiate directly if you want it.

I'm sorry, I didn't understand that.

Yeah, NDIA Inc. would be able to contact the Oversight Board, for example, and make a contract proposal if NDIA Inc. wants it. That's basically my question.

The PREPA claims are held at national, so any proposal would come from national. Making a distinction in this case between national and Inc. is irrelevant in our view.

Yeah, well, I respectfully disagree. And coming also to the offer that the oversight board made of approximately 40%, as you mentioned last time, 30% to 40%, has any counteroffer been made by the court?

We can't talk about the confidential negotiations that may or may not be going on between the creditors and the oversight board.

Well, in my opinion, and this is only my opinion, I think that making a counteroffer of 60% would be beneficial for NDISR holders. So that's something that I will be discussing during our meetings later this month. Then also one question that I have about the COP is that unfortunately our lawyers are going to be dissolved, got solved. So my question is what is the process now that our lawyers are going to be dissolved? Are we going to be trying to find those that are a little bit more effective because the strategy didn't work over the last few years? So what is the process to replace them?

Yeah, given the announcement and the process going on at Weill Gotsha, we are currently represented and have adequate or appropriate representation. We're very comfortable with the representation advice that Weill has provided. We're in conversations with the lawyers there. in terms of next steps. And we are comfortable that we will have legal representation without any disruption during this process.

Perfect. Would you consider a different law firm if we suggest a different law firm that has a different strategy? Is there something that you are willing to listen to?

Well, at this point, almost by definition, we're going to end up with a different law firm at some point. given that the while is winding down. So stay tuned and we'll let you know how that plays out. Perfect.

I will be proactive and I will be suggesting something also during our conversation this week. And then also another question that I have is what are the costs of being a member of the co-op annually? Do you have any idea of how much this is costing in terms of your legal costs? Also, I can imagine that there are some common costs with the other members of the co-op. What is the cost of having the co-op running?

In our view, there is no incremental cost to being a member of the co-op group.

You are paying fees, so there should be some kind of fee here. I mean, of course, you would have to compare to the cost of running it alone, but what is the cost of being a member of the co-op?

There are no fees to be a member of the co-op group.

Well, you have to pay lawyers, and the lawyers have to participate in the co-op, so I think that you have some understanding of what it is costing to be in the co-op.

Why don't you follow up with Greg on that, because maybe we're not understanding, but in our view, actually, it probably reduces expenses, given that some of the things are shared by different parties, but there is no incremental cost in our view.

Okay, and finally, the course is now scheduled to end at the end of August 20, 2027. What is the plan in terms of extending it?

It's early at this point, so there's no sort of plan at this point in terms of what might happen come August.

Yes, and would you consider extending it only if Any of the members of the co-op would decide to buy our claims?

I think those are two separate things. We can sell our claims if we get an attractive offer. But again, in terms of extending it, we think there's great benefit to the co-op group at this point. And again, August in some ways is a ways off. So we have plenty of time to make decisions there. But we think there's a great benefit to the co-op.

Have we approached any of the members of the club in order to make any offer or to see whether they are interested in buying our claims?

Yeah, again, that's not something that we would discuss. Those would be confidential discussions and back and forth. So not anything I can comment on at this time.

Okay, perfect. So, thank you for your time, and let's continue discussing later in the month, and probably in a different way. Thank you so much. Thank you for your time. Thank you.

Thank you. We will now take our next question from John Staley with Staley Advisors. Please go ahead.

Thank you. Bill, I have a couple of questions. I'm not current on it, but at one time I was aware there was an incentive plan in place that paid bonuses, so to speak, upon exit to yourself and a couple of other executives. Is that plan still in place?

There is a plan that takes effect on a change of control, so sale of a company. At this point, I am the only one left who was covered by that. There were many other executives at one point who have all left the firm.

Okay. And as they've left the firm, the incentive payment to you is still in place. And as I recall, it was reasonably substantial.

Yes, it's all in the proxy. And that's why I know you have the information.

Yes. But it's still in place. Do you have any direct or indirect exposure to this commuter railroad in Florida, this Brightliner?

I can happily say no. We have no exposure whatsoever.

All right. That leads me to a question. Affiliated Guarantee is deeply involved in that. As I understand it, from a very, very high level, they did a bankruptcy reconstruction in which they excluded the municipal part, but I think there had to be additional investments made. But it's certainly an impaired credit, or at least one that has potential problems for affiliates. would suggest that for them to keep their rating, there's indications they may be looking to increase their capital. And I remember some time ago when I had a discussion with you about an assured guarantee acquiring MBIA, I said, well, maybe because all the positions merge and they're already insuring most everything and they get a big benefit. You said no? The real benefits to capital. So it seems to me that if Assured Guarantee is looking to enhance its capital, whether it's because of Brightliner or some other credit issues, they would be more incented than normal to try to get something done with you guys. And I wondered if you had any reaction to that thought.

Well, I think you've summarized the situation that Assured faces with regard to Brightline, which, as you mentioned, is the railroad down in Florida. Again, they would be the experts on that particular situation. We are aware of it. In terms of whether that makes a combination between MBA and Assured more or less likely, similar things, I can't really comment on that at this point in time.

All right. The other thing that has happened is that the, and he was on the call earlier, that the Kahn brothers have come back into ownership. And between the Kahn brothers and I think it's Levin, who's a private investor, they combined have over 15% ownership. I wonder if you're getting any suggestions from them as shareholders to try to accelerate This wrap up, even though I recognize from the earlier comments, there seem to be a number of very significant legal decisions and court decisions that are going to be occurring over the near term. But are you getting any encouragement from your larger shareholders to get this thing wrapped up?

Yeah, I won't comment on any discussions we have with specific shareholders. But as you know, we speak to shareholders on a regular basis. Greg, in particular, speaks to many of them. But I've had conversations with many of our investors as well. And I think the group that is most focused on wrapping this up, as you suggest, is actually the company or management. So again, as was referenced by one of the earlier callers, we started a process at this point almost four years ago, I guess it was, and everything we've been doing is trying to accelerate and come up with some transaction that would benefit shareholders. So we think we're making progress towards that. We'd all like it to be as fast as possible. I think the litigation has sort of delayed the timeline from what we originally set out, but we're doing everything we can to make that happen.

Thank you very much, Bill.

Thanks, John.

Thank you for your question. As a reminder, if you would like to ask a question, please press star one on your telephone keypad now. We will take our next question from Paul Sanders with Hutch Capital. Please go ahead.

Good morning, guys. Thanks for taking my call. Good morning. I've got just a couple sort of housekeeping questions, I guess. First one is the investment agreement. Principal balance was down pretty substantially, about $57 million. I know that there were maturities there. It sort of lines up with what the maturities were, but I just kind of wanted to ask, were those like voluntary prepayments, or were those just scheduled maturity payments?

Those were scheduled maturity payments.

Great. My other one is on Elcor Alexandria. The gross par insured is dropping like on a consistent basis each quarter, like 11 or 12 million. Is that national making claims payments on those or is the issuer paying like amortization payments, which is reducing your exposure?

National is making claim payments, regular claim payments on Alcor.

And obviously that's because Elcor is not making those. My reading of that one is that that credit seems to be in pretty good shape, especially with some like meaningful positive things happening this year with leasing of one of those buildings. Can you provide any sort of color, I guess, on that credit and why National's making those and not the issuer itself?

Yeah. on that. Paul, just to be clear, Elcor is making partial payments, so they are paying some of the debt service. They're just not paying 100% of it. So National then pays the difference. And everything you described is correct. There is what we think is positive activity with regard to that credit. You mentioned the additional building being leased. So we do think, despite What happened over the last couple of years, it is moving in a very positive direction.

And yeah, I don't want to really belabor that one because I don't worry about it too much. But do you know or can you like, I guess, give us your opinion or do you think they'll sell those buildings or how do you think that will get settled there?

I think at this point it's hard and it would just be speculation. But again, I think because of the sort of underlying economic conditions right now with regard to that building, we're pretty optimistic about it.

Yep, agreed. The last question for me really is I saw some headlines on the U.S. Virgin Islands issuing new gross like tax receipts debt and it said they were going to issue $500 million and the use of proceeds would be for Repaying Other Gross Receipts Debt and Other General Purposes. Can you tell us, are the proceeds of that new issuance, is that happening and is that to repay our national rep debt or is it just kind of coming in peri-pursue with us?

It's pretty much the latter, so it will not be repaying our debt to the best of our knowledge.

Got it. Okay. And yeah, one more comment for me while I have you is I would sort of respectfully disagree a little bit with Carlos before on the share repurchases. I agree with you really in that I actually think it would be better for shareholders to focus on the debt, particularly the ones that you can buy at a large discount. So I think you can kind of create similar book value expansion with some of those medium-term notes, but also obviously, which I know you're focused on, probably reducing the negative carry associated with the cash and your Inc. debt as well. So that's not a question, just a comment that I wanted to add. So thanks for your time.

No, thank you.

Thank you. We will take our next question from Nell Byers, private investor.

Hi, good morning. Thank you for taking my call.

Morning.

A couple of facts I just wanted to confirm before my first question, just to clarify. So the first thing, NBIA Inc.'s reported operating expenses are running roughly $65 plus million a year, going on three straight years, like $69 and $24, $68, $25, and through last night's reporting about $48 million through the first three quarters of 26. That would be one thing I just want to confirm. And then second, the co-ops term has now been extended five times since National joined. Now with the next extension running through August 31st and a possible extension after that through November 27th. So it doesn't look like there's really any kind of committed end date there. So is that a fair wrap up of those facts there?

The operating expenses are as reported. And as we've stated, I think already in the discussion today, the agreement goes through August. And to your point, it's been extended in the past. You know, I can't comment whether or not it will be at that point among all the bondholders, but it's always a possibility.

Great. Okay. Yes. Thanks. So with those $65 million plus or minus in expenses being reported and the outcome pending on the co-op side, I'd just like to note, does the board have an internal threshold, some type of dollar amount or date beyond which it would pivot? from the co-op to look at other options of private transfer, sale, or settlement. And if there isn't one, if there isn't some type of threshold there, how does the board distinguish between this patience and your desire to see this out versus funding the sunk cost on continuing? And I understand, too, that it's national and it's just PREPA related. How do you distinguish between that patience and just running the cost out?

With regard to the co-op or the PREPA situation, first of all, there's nothing in the co-op agreement that prevents us from selling our claims. So we've sold many in the past. As I mentioned earlier on the call, we had $1.2 billion of exposure when PREPA filed Title III claims. back in 2017. We reduced that by approximately two-thirds. As you know, we sold custodial receipts last year. We do have other custodial receipts right now, which if we had what we thought was an appropriate price, we could sell those. The remaining 390, which is insured par, is a little bit more difficult to get rid of. There was an attractive price at which to do it. We can do that irrespective of the co-op agreement. So again, that's not preventing us from winding down our prep exposure. With regard to the operating expenses, the only thing I would say is I think for shareholders, the way I think most of the shareholders look at it is some of those expenses are associated with MBI Inc., are the ones that really affect the shareholders of the operating expenses at the holding company and at national.

Right. Okay. So really, there is not a threshold that's being looked at.

When you say threshold, we're trying to reduce our exposure as quickly as we can, again, but it's got to be at attractive prices. Okay.

Okay.

I'm not sure when you say threshold what you're looking for.

Yeah, just wondering if overall if it ends up being four years. So if there's an extension in August and an extension in November, that potential for remaining in the co-op then could look out for a total of four years that National's in that. And it's national, not necessarily being the party that's unilaterally controlling everything there, largely the bondholders. Yeah, just wondering if, I guess, following up on that then, looking down the road with the expenses and the company being in the runoff, Just trying to figure out if there's any kind of deadline or a point in time where the board or management has said we're ready to pivot if we get to X, Y, or Z. Yeah, again, the co-op agreements are relevant, I think, for what you're talking about.

The question is, can we reduce our prep exposure at attractive prices, or does the prep exposure somehow prevent an attractive sale or transaction related to the company? Again, I think the timeline is driven more by the litigation schedule. I take your point that perhaps implicitly the bondholders could impact the litigation schedule, but for the most part, that's driven by the judges and the courts. So again, we continue to look for ways to reduce our exposure, and we've never felt that the co-op agreement We've been frustrated by the pace of litigation through the court system.

Right.

Sure.

Okay. And one other question, if you don't mind. So on the second quarter call, I believe you characterized the O Board's proposal as roughly 30 to 40 cents on the dollar against PREPA bonds trading around maybe 75 cents. and looking at National's own disclosed lost LAE reserves against $508 million of insured debt service, that implies an expected recovery somewhere in the mid-50s, that's implied, which would be well above the rejected offer in that $0.30 to $0.40 range. I'm just curious, did the co-op counter and other, an offer anywhere near that reserve supply level, or did the co-op counter at all?

Again, I can't comment on the negotiations. Those are all confidential in terms of any offers or counteroffers, unless or until they're made public.

Okay, so that's just, okay, that cannot be disclosed. Okay, I think... Final question, if you don't mind, I guess. So August 25, National sold $374 million of the custodial receipts. That was the price you described as higher than your prior estimate, but that was not disclosed. What did National realize as a percentage of fate? And is that something you can disclose?

Ask the question again, Neil. I didn't catch the last part. The percentage of what?

Percentage of the face value.

Yeah, we didn't and don't disclose that.

It won't be disclosed. Okay, thanks.

Okay, thank you.

All right, that was it for me.

Thank you.

Thank you. Thank you. At this time, I'm showing no further questions in the queue. I'd like to turn the floor back over to Greg Diamond for closing remarks.

Thank you, Leslie, and thanks to those of you listening to our call. Please contact me directly if you have any additional questions. We also recommend that you visit our website at mba.com for additional information on our company. Thank you for your interest in MBIA. Good day and goodbye.

This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.