Though MBIA has ceased to write protection on single names, it had seven single-name investment grade corporate credit default swaps on its books last year. The notional outstandings of these vanilla trades was $276 million. The negative mark-to-market on this position was $4 million at the end of 2002. The company said that by the end of this year it will have just one vanilla position: a double-A rated single name net exposure of $41 million.
Speaking on MBIA’s earnings conference call earlier today, a company spokesman said: “Marking-to-market can provide useful information. But when you pass it through the income statement, it causes artificial distortions.” He added that he expects the mark-to-market value to become positive as the bulk of MBIA’s current synthetic positions reach maturity during the next three to four years.