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

Financial Strength Ratings of National
National’s current financial strength ratings from the major rating agencies are summarized below:
Agency Ratings Outlook
S&P A Outlook Developing
Moody’s Baa1 Outlook Developing
Each rating of National should be evaluated independently. The ratings reflect the respective rating
agency’s current assessment of the creditworthiness of National and its ability to pay claims on its policies of
insurance. Any further explanation as to the significance of the above ratings may be obtained only from the
applicable rating agency.
The above ratings are not recommendations to buy, sell or hold the Series 2009 Bonds, and such ratings
may be subject to revision or withdrawal at any time by the rating agencies. Any downward revision or withdrawal
of any of the above ratings may have an adverse effect on the market price of the Series 2009 Bonds. National does
not guaranty the market price of the Series 2009 Bonds nor does it guaranty that the ratings on the Series 2009
Bonds will not be revised or withdrawn.
National Financial Information
Based upon statutory financials, as of September 30, 2009, National had cash and admitted assets of
$7.2 billion (unaudited), total liabilities of $6.7 billion (unaudited), and total surplus of $0.5 billion (unaudited)
determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory
authorities.
For further information concerning National, see the financial statements of MBIA Inc. and its subsidiaries
as of September 30, 2009, prepared in accordance with generally accepted accounting principles, included in the
Quarterly Report on Form 10-Q of MBIA Inc. for the quarter ended September 30, 2009, which are hereby
incorporated by reference into this appendix and shall be deemed to be a part hereof.
Recent Litigation
On March 11, 2009, a complaint was filed in the United States District Court of the Southern District of
New York against the Company and its subsidiaries, MBIA Corp. and National, entitled Aurelius Capital Master,
Ltd. et al. v. MBIA Inc. et al., 09-cv-2242 (S.D.N.Y.). The lead plaintiffs, Aurelius Capital Master, Ltd., Aurelius
Capital Partners, LP, Fir Tree Value Master Fund, L.P., Fir Tree Capital Opportunity Master Fund, L.P., and Fir
Tree Mortgage Opportunity Master Fund, L.P., purport to be acting as representatives for a class consisting of all
holders of securities, instruments, or other obligations for which MBIA Corp., before February 18, 2009, issued
financial guarantee insurance other than United States municipal/governmental bond securities. The complaint
alleges that certain of the terms of the transactions entered into by the Company and its subsidiaries (the
“Transactions”), which were approved by the New York State Department of Insurance, constituted fraudulent
conveyances under §§ 273, 274 and 276 of New York Debtor and Creditor Law and a breach of the implied
covenant of good faith and fair dealing under New York common law. The Complaint seeks, inter alia, (a) a
declaration that the alleged fraudulent conveyances are null and void and set aside, (b) a declaration that National is
responsible for the insurance policies issued by MBIA Insurance Corporation up to February 17, 2009, and (c) an
award of damages in an unspecified amount together with costs, expenses and attorneys’ fees in connection with the
action. Defendants filed their motion to dismiss on May 6, 2009.
On April 6, 2009, a complaint was filed in the Court of Chancery for the State of Delaware against two
subsidiaries of the Company, MBIA Corp. and National, entitled Third Avenue Trust and Third Avenue Variable
Series Trust v. MBIA Insurance Corp. and MBIA Insurance Corp. of Illinois, CA 4486-UCL. Plaintiffs allege that
they are holders of approximately $400 million of surplus notes issued by MBIA Corp. (for purposes of this section,
the “Notes”) in January 2008. The complaint alleges (Count I) that certain of the Transactions breached the terms of
the Notes and the Fiscal Agency Agreement dated January 16, 2008 pursuant to which the Notes were issued. The
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