Official Statement Airport Commission City and County of San ...

The available amount of each MBIA surety bond will be the initial face amount of said surety bond less the
amount of any previous deposits by MBIA Corp. with the Trustee with respect to such surety bond which have not
been reimbursed by the Commission. The Commission and MBIA Corp. have entered into a separate financial
guaranty agreement in connection with each MBIA surety bond (the “Guaranty Agreements”). Pursuant to the
Guaranty Agreements, the Commission is required to reimburse MBIA Corp,, within one year of any deposit, for the
amount of such deposit made by MBIA Corp. with the Trustee under each respective MBIA surety bond.
No optional redemption of the Participating Series of Bonds may be made until the MBIA surety bond is
reinstated. The MBIA surety bond is held by the Paying Agent in the Debt Service Reserve Fund and is provided as
an alternative to the Issuer depositing funds equal to the Debt Service Reserve Requirement for outstanding the
Participating Series of Bonds.
On February 18, 2009, MBIA Inc., the parent holding company of MBIA Corp., announced that it had
established a new U.S. public finance financial guarantee insurance company within the MBIA Inc. group by
restructuring MBIA Corp. and its subsidiaries. As part of the restructuring, (i) the stock of MBIA Insurance Corp.
of Illinois (which, effective March 19, 2009, was renamed National Public Finance Guarantee Corporation), an
existing public finance financial guarantee insurance subsidiary of MBIA Corp., was transferred to a newly
established intermediate holding company, National Public Finance Guarantee Holdings, Inc. (“National Holdings”),
also a subsidiary of MBIA Inc.; and (ii) effective January 1, 2009, MBIA Corp. ceded to National all of MBIA
Corp.’s U.S. public finance business, including the Policy, pursuant to that certain Quota Share Reinsurance
Agreement between MBIA Corp. and National (the “Reinsurance Agreement”). Pursuant to the Reinsurance
Agreement, MBIA Corp. paid to National approximately $2.89 billion (which equals the net unearned premium, loss
and loss adjustment expense reserves, net of the 22 percent ceding commission that MBIA Corp. received) as a
premium to reinsure the policies covered under the Reinsurance Agreement (each a “Covered Policy”). The Debt
Service Reserve Fund Surety Bond is a Covered Policy. National was further capitalized with $2.09 billion from
funds distributed by MBIA Corp. to MBIA Inc. as a dividend and return of capital, which was ultimately contributed
to National through National Holdings. The Reinsurance Agreement provides a cut-through provision enabling the
holder of a Covered Policy to make a claim for payment directly against National. In addition, National has also
issued second-to-pay policies for the benefit of the holder of a Covered Policy, granting such policyholder the right
to make a claim directly against National if MBIA Corp. did not honor such claim.
National Public Finance Guarantee Corporation (“National”)
National is an operating subsidiary of MBIA Inc., a New York Stock Exchange listed company. MBIA
Inc. is not obligated to pay the debts of or claims against National. National is domiciled in the State of New York
and is licensed to do business in and subject to regulation under the laws of 47 states, the District of Columbia and
the Commonwealth of Puerto Rico.
The principal executive offices of National are located at 113 King Street, Armonk, New York 10504 and
the main telephone number at that address is (914) 765-3333.
Regulation
As a financial guaranty insurance company licensed to do business in the State of New York, National is
also subject to the New York Insurance Law which, among other things, prescribes minimum capital requirements
and contingency reserves against liabilities for National, limits the classes and concentrations of investments that are
made by National and requires the approval of policy rates and forms that are employed by National. State law also
regulates the amount of both the aggregate and individual risks that may be insured by National, the payment of
dividends by National, changes in control with respect to National and transactions among National and its affiliates.
The MBIA Insurance Policy is not covered by the Property/Casualty Insurance Security Fund specified in
Article 76 of the New York Insurance Law.
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