The split produced additional litigation because the banks claimed the move was illegal. A New York State Supreme Court recently upheld the New York State Insurance Department's decision to permit the division.

Brown says the total commutation of CDS—which amounts to more than $13 billion—have virtually no financial impact on the first quarter results because the settlements fall within earlier earnings estimates and there will be no impact on its second-quarter income statement or statutory capital.

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

With the litigation behind MBIA, Brown says it will take time for National Public Finance to write substantial new business, but it is primed to begin the long road back to prominence.

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

MBIA reports first-quarter net income of $164 million compared to $10 million for the same period a year ago. Revenues were down 43 percent to $219 million. The company credited the improvement in net income with reduction in losses, no investment loss and a decrease in operating expenses.