Welcome to the MBIA Inc.'s First Quarter 2015 Financial Results Conference Call. I would now like to turn the call over to Greg Diamond, Managing Director of Investor Relations at MBIA. Please go ahead.

Thank you, Maria. Welcome to MBIA's conference call for our first quarter 2015 financial results. After the market closed yesterday, we issued and posted several items on our websites, including our financial results press release, our 10-Q, our quarterly operating supplements, and the statutory financial statements for MBIA Insurance Corporation and National Public Finance Guarantee Corporation. We also posted updates to our insured portfolio listings. Please note that anything said on today's call is qualified by the information provided in the company's 10-Q, 10-K and other SEC filings, as our company's definitive disclosures are incorporated in those documents. Please investors read our 10-K from 2014 and our first quarter 2015 10-Q as they contain our most current disclosures about the company and its financial and operating results. The 10-K and 10-Q also contain information that may not be addressed on today's call. Regarding the non-GAAP terms included in our remarks today, the definitions and reconciliations of those items may be found in our most recent 10-K and 10-Q, financial results press release and the quarterly operating supplements. The recorded replay of today's call will become available approximately one hour after the end of the call, and the information for accessing it is included in yesterday's financial results press release. And now here is 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 be materially different than the projected results referenced in our forward-looking statements. Risk factors are detailed in our 10-K, which is available on our website at mbia.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, Jay Brown, Bill Fallon and Chuck Chaplin, will provide some brief introductory comments. Then the team will be open for a question-and-answer session that will follow. Now, here's Jay.

Thank you, Greg. Little has happened that impacts our financial results since our year end 2014 conference call on March 03. Speaking historically, that would be good news for a bond insurer. That's what we should expect to happen in our business over the short run, very little. So we are continuing to see a return to business as usual. Following me, Ed will cover National and provide an update on Puerto Rico and Chuck will take you through our financial results. In the meantime, I'd like to address a few items. Looking at our non-GAAP measure of combined operating income our first quarter result was a bit lower than in the first quarter of 2014, coming in at $34 million compared to $40 million last year. There are a couple of factors that affect that comparison which Chuck will take you through in greater detail, but more generally, declining scheduled premium earnings due to our shrinking insured portfolio and constrained investment income due to the lack of safe higher-yielding opportunities has continued to create some headwinds for us. However, we are slowly improving our market penetration in National while maintaining our pricing and underwriting discipline and we did have a net release of loss reserves in the quarter. Our Puerto Rico exposure continues to be a significant focal point and the developments we've seen both in the first quarter and since March 31 haven't changed our view on the ultimate loss potential. Our operating income combined with share repurchases and the favorable impact of foreign exchange rates contributed to an increase of $0.91 per share in our adjusted book value per share measure improving it to $25.78. In MBI Corp. where our strategy is to pay all claims, maximize the margin of safety for our policy holders and ultimately…

Thanks, Jay. We have previously discussed the headwinds National faces. While our more significant competitor in this low interest rate environment continues to be the uninsured market, we also need to enhance our marketing efforts. We hired Tom Weyl in January and the early results from his efforts are encouraging. After wrapping two deals in 2014 we have insured or have been collected to insure 10 deals through today, representing about $614 million of total par. Tom is hiring additional sales and marketing professionals which should give us more boots on the ground to communicate with investors and issuers across the country. The quality of the deals we are underwriting has been consistent with our business plan averaging those in play underlying credit quality. In the insured portfolio the uncertainty over Puerto Rico commands a lot of attention. We continue to work with Puerto Rico's government, its advisers and other creditors to craft a consensual solution to its current credit and liquidity issues. PREPA which is operating under forbearance agreement with its major credits we are confident that its stability and financial performance can be improved through thoughtful planning and good-faith negotiations. In the longer-term however economic growth will be needed to help the Commonwealth resolve its financial issues while ensuring an adequate standard of living for its citizens We've also been closely monitoring two large investment-grade exposures, Chicago's General Obligation Bonds and the Chicago Board of Education. The City of Chicago faces potential stresses from payments into the pension system required in the next year and the teachers' contract that expires next month. Meanwhile, Moody's downgraded both credits this winter triggering swap settlements. It is too soon to know how this will work out, but Chicago's large robust and diverse economy gives it a degree of flexibility that makes it very different than Detroit. Overall our $210 billion insured portfolio is performing well. Aside from the credits I mentioned, our exposures over $1 billion are well into investment-grade status. Based on National's credit assessments the low investment-grade rated credits amount to only 1.5% of the portfolio today. The rating agencies will be conducting their annual reviews of us in the near future and one outcome of that will be a reassessment of the excess capital position in National. I'm expecting that we will have capital that exceeds AAA level by over $1 billion under S&P's model and as Jay mentioned we'll be looking at ways to deploy a portion of that amount after there is more clarity on our Puerto Rico exposures. We are on track with our positive right dividend for 2015 of approximately $115 million and we remain confident that National has sufficient financial resources to honor its obligations to its insured bond holders. Now, I'll turn it over to Chuck to discuss the financial results.

Great, thanks Bill and good morning everyone. First our net income. Net income in the first quarter of 2015 on a consolidated GAAP basis was $69 million compared to $256 million in the Q1 of 2014. The pretax net gain on insured credit derivatives was $28 million in this year's quarter compared to $469 million in Q1 2014. Now in addition to our GAAP results we also report non-GAAP measures that we believe provide additional context for operating performance. Our combined operating income which reflects the results of our public finance insurance segment and our corporate segment was $34 million or $0.18 per share. Operating income was $40 million in last year's first quarter. Premiums net of DAC amortization were higher, but investment income and loss expense, both had adverse comparisons. We also took a final write down to our former headquarters facility in Armonk. Sequentially, the first quarter represented about $12 million improvement over the fourth quarter of 2014. We believe that operating income measures the periodic performance that inures to the benefit of our shareholders and it is important to note that while operating income includes an accounting provision for income taxes, we don't expect to pay cash taxes other than AMT for some time to come. In addition to combined operating income, we also report adjusted book value, which was $25.78 per share as of March 31, 2015 compared to $24.87 per share at year-end 2014, primarily driven by the share repurchase activity that Jay mentioned already plus gains on foreign exchange. The FX driver here is the appreciation of the U.S. dollar versus the euro from one €1.21 to €1.07 and that contributed about $0.23 per share to ABV. A 10% change in the value of the euro would create about a $0.20 impact on ABV…

Thank you. [Operator Instructions] Our first question comes from the line of Brett Gibson of JPMorgan.

Great, thank you. Good morning gentlemen. Couple questions for you. First, I wanted to talk about Corp. liquidity. This quarter operating expenses were about $19 million, that's been about flat over the last few quarters and I'm a little surprised that hasn’t come down. Can you talk about the long-term expense structure for Corp. and where we should expect that to trend over time?

Sure. We've had some expense reductions that affect the corporate segment and MBIA Corp. and I think your question is specific to MBIA Corp. right?

Yes.

Yes, over the past couple of years, so we had significant reduction in 2013 that sort of played out over the course of 2014 as we got the full benefit of that. We would expect that expenses will continue to decline, but at a somewhat slower pace than we thought over '13 to '14.

Okay. Second, you know, I want talk continuing with Corp. I want to talk about the excess spread reserve of $542 million, how sensitive is that to interest-rate movements and so for example if interest rates were to rise by another 50 basis points, what would the effect be on the level of access spread there?

I don’t know that. We believe that it is sensitive enough to interest rates to actually create an equation, but interest rates do affect the excess spread to the extent that it enhances the prepayment ability of the individual mortgage orders. So we have seen that as rates fell in first quarter 2015 that we did have some elevated prepayment experience.

Okay. Lastly I just wanted to talk about Puerto Rico and really just from a high-level, how you think about the prospect of wrapping all or part of a potential new issue out of Puerto Rico and then more conceptually, how do you think about increasing exposure to a counter party in distress, the puts and takes of that?

It's Bill speaking. In terms of Puerto Rico and again I think you mentioned the emphasis is conceptually, if in fact there was a benefit to National to wrapping a new deal we would obviously consider that. So it's really hard in the absence of any details to talk about what we would or wouldn't do. As you know, as an example in Detroit there was a wrap that both assured and National provided with regard to Detroit Water and Sewer as that got restructured and refinanced. So again in National's case we thought that was beneficial to National to do that. Again, very different in terms of details, but if there was a similar set of circumstances in Puerto Rico we would consider doing that.

Great thank you very much.

Our next question comes from the line of Brian Charles of RW Pressprich.

Good morning, I just have a couple of questions. One, regarding MBIA Corp. I'm looking at your supplement on page 27 you have in the middle of the page you have the table that has the case in salvage reserves for your Corp. exposure and I saw that your CDO exposure or at least your case reserves went down by about $13 million and $373 million at year end or $360 million at the first quarter and I am wondering was that, did they have to do with your BBB CMBS exposure and was it influenced at all by any reserves you might have taken for your Zohar exposure?

No, no it doesn't. Both CMBS exposure has been pretty stable, although we do have the one transaction that we acknowledge that we're paying claims on and there is no change in the Zohar reserve in the quarter. The change that you see is spread across a handful of transactions, so there's no dominant characteristics that I would give you about them.

Okay, and also do you, what is the size of that 1 CMBS exposure that you are paying out on. It used to be about $3 million, is that right?

Yes, the remaining par is a little bit under $300 million at this point.

Okay, and then secondly just one more question about the excess spread. The calculation that you have right now, are you assuming interest rates stay stable from this point or are you expecting them to rise or go down a little bit in your calculation that comes up with your current excess spread count?

I mean we use the forward curve for interest rates, but we do have an expectation at the elevated level that we observe today in Q1 does persist for several more quarters.

Okay, good enough. Alright, thank you. That's it.

Remember when you think about interest rates in excess spread there is two factors that play there. There is the actual difference between what is received on the mortgages versus what's paid out, that always will be effective negatively as interest rates rise. The other side of it is prepayment slowdown when interest rates rise. So it's not a precise negative movement at one time. You have both factors working in tandem. So it's more muted than you might think it would normally be for 1% or 2% change in interest rates.

Okay, right. Thank you.

Our next question comes from the line of Nagendra Jayanty of Claren Road.

Thanks for the time today. I have two questions related to Corp. The first one is on the operational cash flow liquidity in the operating supplement and noted that there were $6 million of cash premiums that came in and now it is lower then what we've seen in the prior year and years past. Just wondering if you had a comment on why that was the case and if we should expect that going forward?

The book of business is simply running off. That's all that's going on.

Okay, so we should kind of expect that number to be in that area given the future cash premiums that are expected seems like a low, this quarter seem like a low number versus what is projected?

I would say, there's actually a table that shows the expected future premiums here in the supplement.

Right.

And as Jay was pointing out the $6 million is affected by a reinsurance payment that was made in the quarter.

Okay got it, perfect.

That are our reinsurance payment.

Reinsurance payment. Okay. The second question is, I may have written this down wrong, but I'm unable to go back and look at your multi-sector CDO is by name, but it looked like last, at the end of last quarter there's a multi-sector CDO number 51 that was approximately $78.671 million of UPB and I didn't find it in your exposures this quarter and so was wondering if that had been commuted or if I'm just looking at that wrong, it doesn’t really exist anymore?

I know that there were no commutations in the first quarter.

Okay.

Again, that book of business is amortizing and from time-to-time the deal simply mature are unwound.

Perfect. Thank you very much.

[Operator Instructions] Our next question comes from the line of Geoffrey Dunn of Dowling & Partners.

Thank you, good morning. As we think about Puerto Rico and trying to get more clarity on the exposure there, is the issue really centered around PREPA or as you think about the ability to go talk to regulators about special dividends, is it a broader issue with the other exposures there which I think as you noted in the commentary that it's going to take a while for the economy to turn around and really firm things up for them financially. So, as you think about what needs to be the milestone markers to talk to regulators, what are we really trying to watch here?

Yes Geoff, it's Bill. With regard to the near-term the focus really is on PREPA, as you know, that's gotten most of the attention and that is the one that we're very focused on right now. We think the other credits as they pertain to our book don't have the volatility and don't have the same issues that PREPA does. So I think it's really a phased approach. One will be PREPA which I think will when there is some restructuring which we hope happens soon and is beneficial that, that should reduce the volatility which would allow us as Jay mentioned to then have conversations and request for excess or extraordinary dividends. Then there will be a sort of second phase which is the long-term economy in Puerto Rico and the impact on the rest of the credits.

Okay, great. Thank you.

I am showing no further questions at this time. I would now like to turn the floor back over Mr. Greg Diamond for any additional or closing remarks.

We got another question from the queue.

And we do have a question from the line of Jeff Rosenkranz of Cedar Ridge Partners.

Good morning guys. Another question on Puerto Rico, obviously there is a lot of fiscal stress and either going through a process here, but taking a step back can you maybe talk about a change from the outside that may be the bigger problem or the bigger challenges, a lack of leadership may be on the island and governor's popularity is quite low and the rollout of various iterations of tax reform hasn't been very successful. So can you maybe address your ability to negotiate and resolve this favorably in light of may be a lack of leadership politically?

Yes, Jeff, with regard to Puerto Rico it is a very dynamic and very complicated situation as you just alluded to. I think the complication is that it wasn't created by one administration, so the problems that we find in Puerto Rico and to be fair we find in other situations typically have built up over many, many years. I think actually the things that this administration has done in just over two years is actually quite positive when you look at some of the changes. Now you did reference the recent tax reform which did not pass, however we do think there is a way forward. As you know, there's talk that there may be some increase in taxes that could pass very, very soon, which I think then should lead to them putting together a budget for fiscal 2016, which should then allow them to pursue this financing for the Commonwealth, which is referred to sometimes as the PREPA financing of about$2.9 billion. So, I think there is a clear way forward and I think it is one of the situations where because the value added tax did not pass recently that people are starting to understand that there really is the need to do something and while there obviously are different political wins in motion here, I think something is likely to come fairly soon, but again, we can't predict exactly when that will be. It is a complicated situation, but I do think they are making progress despite some of the recent headlines.

Yes, I guess I would also add that we have to look at this in the perspective of the timeframes they have been trying to accomplish things. They put the value-added tax on the table in terms of an actual proposal less than six months ago and tried to get it through. If you think about tax reform anywhere in the United States it's typically a multi-year negotiated process. So it was not unexpected that this was going to be a difficult thing to achieve and they almost got there with the absence of six votes. So, I think it did the important thing which had highlighted that there's got to be some additional revenues in addition to significant cost cuts in the operation of the government there and so I wouldn’t count the governor or his party out quite yet. This is only their first real stumble on what has been a two-year process of trying to bring some fiscal stability to what has been a complicated situation.

Yes, I appreciate the perspective very much, thanks guys.

Our next question comes from the line of Nagendra Jayanty of Claren Road.

Hi sorry, one last question I forgot to ask before and that is on, I think there we've read some things from various interviews with some of the sell side analysts that there may be cases where the holding company may provide support to MBIA Corp. and as it relates to potentially some other large exposure and I was wondering how you may be thinking about that and what circumstances that might be the case? Thanks.

Yes, we don’t anticipate the need for any kind of assistance. We think that MBIA Corp. has adequate resources to beat all of its obligations as they come due.

I think what you have to assume is one of the things you learn, you should never say never and there could be circumstances where there would be a benefit to the holding company. I don’t think at this point in time we've indentified a particular sequence for circumstance that would be the case.

Okay, thanks very much.

Our next question comes from the line of Pete Taurasi [ph] of Barclays.

Hi good morning guys. I think Jay made a comment in the script about potentially eliminating the Mexico subsidiary of MBIA Corp. and just looking at the financials it looks like the carrying value of that entity was about $12 million at year-end included in Insurance Corp. surplus. So you can you just walk us through how the elimination of that subsidiary would work and what's the potential impact to MBIA Corp. balance sheet would be?

Sure this is Chuck Pete. You are right. At year end we had about $12 million. I think currently it is about $13 million of capital in the Mexico sub. There are two policies there and what we're attempting to do is to get the two policies terminated and replaced with policies at MBIA Corp. so that they would become direct obligations of Corp. as opposed to reinsurance obligations of Corp. and then to liquidate the legal entity. And so the $13 million of capital would be distributed to the parent. The real driver of it though is not so much the $13 million of capital, but it is the operating expense associated with the care and feeding of the legal entity down there for two policies which is just unnecessary.

Great, that makes sense and then just one follow-up going back to Zohar, you mentioned Zohar I and potential liquidity used there at the November Metro [ph] bullet approaches. If you were to make a payment there would there be any read through for II that you would have to account for and potential reserving for Zohar II?

Yes we depend on what actually causes a shortfall or a payment and its effect on other loans in there aren’t interpretation of their carrying value and the managers interpretations. So, yes you are correct there could be an impact on Zohar II or Zohar III if there is a shortfall on Zohar I for loans that also reoccur in different denominations in the other two transactions.

Yes, if I could just add one thing to that. One is we do reassess the reserve position every quarter and the liquidity impact is somewhat independent of that. And the other thing is on Zohar III which has some of the same collateral as in the I and II is not one that we have exposure to.

Okay, thank you.

And maybe just to be clear, the reserve we carry looks at both Zohar I and Zohar II. When Chuck was speaking earlier during his comments we were just talking about the liquidity event not the range of possible outcomes that occur across both transactions. I still saw you on the line Pete. Is there another question?

No that's it, thanks very much guys.

Okay, great.

At this time, I'm showing no further questions. I'll turn the floor back over to Mr. Greg Diamond for any additional or closing remarks.

Thank you, Maria and thanks to everyone to who joined us for today’s call. Please contact me directly if you have any additional questions. We also recommend that you visit our website at mbia.com for additional information on our company. Thank you for your interest in MBIA. Good day and good bye.

Thank you, ladies and gentlemen. This does conclude today’s call. You may now disconnect.