Armonk, N.Y.-based bond insurer MBIA reported a third-quarter net loss of more than $800 million, primarily on increases to loss reserves on its mortgage exposures.

MBIA's third-quarter net loss of $806.5 million, or loss per share of $3.48, compares with the prior year's net loss of $37 million, or net loss per share of 30 cents.

Consolidated revenues dropped from $431 million for the third quarter of 2007 to $320 million this year.

The company also reported net written premiums of $928 million compared to $299 million for the same period last year.

For the nine months, MBIA recorded a net loss of $1.5 billion, or loss per share of $6.97, compared to net income of $374 million, $2.84 a share.

Consolidated revenues were down from $1.9 billion in 2007 to $732 million.

Net written premiums stood at $1.22 billion compared to $654 million last year.

The net loss for the third quarter, the company said, was driven by increases to loss reserves on the company's second lien residential mortgage exposures and net realized and unrealized losses attributable to the company's Asset Liability Management business.

Case loss reserves were increased by $961 million on second lien residential mortgage securitizations. The company said the addition to the reserves “reflect an observed increase in delinquencies and a higher level of assumed future losses.”

In a statement, Jay Brown, MBIA chief executive officer, said the company continues to work at increasing its liquidity and managed to reinsure a $159 billion portfolio of U.S. public finance bonds that were originally insured by another insurer that is suffering through the financial turmoil.

For the first nine months of 2008, MBIA said it paid a total of $904 million in claims associated with its second lien residential mortgage exposures, including $491 million in the third quarter.

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MBIA Says Mortgage Exposures Hurt Bottom Line

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