National Public Finance Guarantee

FREQUENTLY ASKED QUESTIONS

What is the ownership structure for National Public Finance Guarantee Corp.?

National Public Finance Guarantee Corporation ("National") is a wholly-owned subsidiary of an intermediate holding company, National Holdings, Inc. that is in turn owned by MBIA Inc. National, previously named MBIA Insurance Company of Illinois ("MBIA Illinois"), was an inactive direct subsidiary financial guarantee company of MBIA Insurance Corporation and was acquired in 1989. National is managed as a separate entity and dedicated solely to insuring U.S. public finance debt. Its insured portfolio consists of MBIA Corp.'s U.S. public finance portfolio, including the portfolio that MBIA Corp. reinsured from FGIC.

as of 9/30/2011

The information is provided only as of the date indicated and is qualified in its entirety by, and should be read in conjunction with the information filed by MBIA Inc. with the U.S. Securities and Exchange Commission.

What are National's claims-paying resources?

As of September 30, 2011, National's claims-paying resources are $5.5 billion.

as of 9/30/2011

Why doesn't your refunding activity always track the market and/or interest rates?

While refunding activity tends to be inversely correlated with interest rates, it is difficult to forecast, as issuers also refund for reasons other than lowering their cost of borrowing. In addition, tax laws limit the number of times an issue can be refunded. It also depends on which deals we have insured and when we become aware of the refunding to process it. For these reasons, we will not always track the market.

Updated as of 9/30/2011

Who are the senior officers of National?

The Chief Executive Officer of National is Bill Fallon, the Chief Risk Officer is Adam Bergonzi, the Head of Public Finance New Business is Chris Chafizadeh, the General Counsel is Daniel E. McManus, Jr. and the Chief Financial Officer is Christopher H. Young.

The business managers are Barbara Flickinger – Portfolio Surveillance - Western Region; Ted Galgano, New Business - Eastern Region, Jason Kissane, New Business - Western Region; Jerry Murray, Portfolio Reporting; Bill Rizzo, Portfolio Surveillance Eastern Region and Nicholas Sourbis, Fixed Income Investor Relations.

as of 9/30/2011

Where is National domiciled and headquartered?

National is domiciled in New York and is primarily regulated by the New York Department of Financial Services. The company is headquartered in Armonk, NY and has offices in New York, NY and San Francisco, CA.

as of 9/30/2011

Did the FGIC portfolio move to National?

Yes. The U.S. public finance business of Financial Guaranty Insurance Company (FGIC) that was reinsured by MBIA Insurance Corp. has been assumed by National.

as of 9/30/2011

How does the cut-through reinsurance arrangement work?

The reinsurance and assignment agreements between MBIA Insurance Corp. and National Public Finance Guarantee Corporation, which became effective as of January 1, 2009, enable covered policyholders to make claims for payment directly to National in accordance with the terms of the applicable agreements. To provide additional protection, National has also issued second-to-pay insurance policies for the benefit of the policyholders covered by the reinsurance and assignment agreements. The second-to-pay insurance policies are held by The Bank of New York Mellon as insurance trustee on behalf of the policyholders. These insurance policies provide that if MBIA Corp. or FGIC, as applicable, do not pay valid claims to the policyholders and ceding insurers under the applicable policies or agreements, such policyholders and ceding insurers may make a claim directly against National under the applicable second-to-pay insurance policy.

as of 9/30/2011

What are the advantages of the second-to-pay policies?

The second-to-pay policies are designed to further bolster policyholder protection and to provide policyholders that are covered under the cut-through reinsurance agreement with a direct policy claim on National Public Finance Guarantee Corporation. We believe that the issuance of the second-to-pay insurance policies also mitigates any concerns regarding potential different treatment under bankruptcy law of direct policyholders of National and those that are covered by the cut-through reinsurance agreements.

as of 9/30/2011

Can you describe the master services agreement between National and Optinuity Alliance Resources?

National Public Finance Guarantee Corporation entered into a Master Services Agreement ("MSA") with Optinuity Alliance Resources (Optinuity), a direct subsidiary of MBIA Inc., whereby Optinuity provides specified accounting, management, audit, and financial administrative services to National.

Administrative fees due, as a result of services provided from one entity to another, are actual costs incurred and include any fees for third party providers associated with the provision of the necessary services.

as of 9/30/2011