We are downgrading our recommendation on the shares of MBIA Inc. (MBI) to Underperform as macroeconomic conditions continue to contribute to losses on the company’s structured finance products.

MBIA’s third quarter results missed the Zacks Consensus Estimate abysmally. Results were dragged down by higher losses on MBI’s coverage of mortgage-related securities and complex investments, which weighed down income from investments and premiums.

With ratings cut to junk status, MBI has also lost major market share. However, the company’s long-tailed business model is generating scheduled premiums. Though MBIA has undertaken its business restructuring, the legal challenges are expected to act as an impediment to business prospects and capital-raising efforts

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