No new capital for MBIA

MBIA (MBI) isn’t looking to raise more capital. The bond insurer’s CEO, Jay Brown, said in his latest letter to shareholders Tuesday evening that “in my view we have adequate equity capital to get through this crisis and it makes no economic sense to our current owners to raise equity capital at today’s price levels.” The comments come ahead of next Monday’s scheduled first-quarter earnings release, in which Wall Street analysts expect MBIA to post a loss as large as $2.42 a share.

The capital-raising question returned to the fore last week, after rival Ambac (ABK) posted a $1.7 billion loss, prompting analysts at Goldman Sachs to project that MBIA and Ambac would need to return to the market to raise $3.4 billion apiece to rebuild their slimming cushions against future losses. Ambac rejected that notion, saying it expected normal cash inflows from insurance premiums to help it to maintain its financial strength, and MBIA said much the same thing Tuesday. Referring to insured mortgage transactions that are expected to lead to future losses, Brown wrote, “Despite external speculation to the contrary, our insurance business model is constructed to handle most, if not all, of these payments from normal cash flow of the business.”

Brown also warned shareholders to prepare for another big mark-to-market loss, as the wide spreads in the credit markets reduce the value of MBIA’s derivatives holdings. Brown won’t say how big that number is, as MBIA is still working through the math. But, he adds, “I can tell you with great certainty that no two people could ever agree on this calculation, so don’t be surprised when external sources propose wildly different possibilities for MBIA.”