In its first earnings conference call since ending litigationwith banks over the insuring of structured financial instrumentsthis week, MBIA Inc. executives breathed a huge sigh of relief andspoke about a reinvigorated future for the guarantee insurer.

“Let me say, with a newly refreshed level of enthusiasm,good-morning everyone, it truly is a good morning and a pleasure tospeak with you today,” says CEO Joseph W. Brown Jr. at the start ofthe conference call with analysts.

Brown was upbeat because of the settlements this week withBank of America and Societe Generale that ends litigation and relieves thecompany of its obligations for insuring billions of dollars ofcredit default swaps.

Insuring the CDS became an issue more than four years ago whenthe housing market burst and banks began to take losses on mortgagebacked securities MBIA insured. The exposure led to the split ofMBIA Inc. into two insurers, MBIA Corp., which covered the CDSrisks, and National Public Finance Guarantee Corp., which insuresmunicipal bonds.

The split produced additional litigation because the banksclaimed the move was illegal. A New York State Supreme Courtrecently upheld the New York State Insurance Department'sdecision to permit the division.

Brown says the total commutation of CDS—which amounts to morethan $13 billion—have virtually no financial impact on the firstquarter results because the settlements fall within earlierearnings estimates and there will be no impact on itssecond-quarter income statement or statutory capital.

The major agreement between Bank of America and MBIA, Brownsays, “has reduced substantially” the prospect that the companywould be placed in rehabilitation. He notes that while the companywould have survived, it would have negatively impacted NationalPublic Finance, delaying its ability to write new business.

With the litigation behind MBIA, Brown says it willtake time for National Public Finance to write substantial newbusiness, but it is primed to begin the long road back toprominence.

Brown says MBIA has not only eliminated the most volatilepayment risks but it now has access to a $500 million loanfacility with Bank of America as part of the agreement. Brown saysthe loan is a bridge for MBIA until it recovers the remaining $1billion-plus in outstanding CDS it insured. He adds that once theoutstanding amount is recovered “the risk of rehabilitation will bereduced to insignificant levels.”

MBIA reports first-quarter net income of $164 millioncompared to $10 million for the same period a year ago. Revenueswere down 43 percent to $219 million. The company credited theimprovement in net income with reduction in losses, no investmentloss and a decrease in operating expenses.