Note 12: Commitments and Contingencies

The following commitments and contingencies provide an update to those discussed in “Note 18: Commitments and Contingencies” in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, and should be read in conjunction with the complete descriptions provided in the aforementioned Form 10-K.

Litigation

Zohar Litigation Trust-A v. Tilton, et al. (f/k/a MBIA Insurance Corp. v. Tilton et al.),Adversary Case No. 20-50776 (KBO) (Bankr. Del.)

On July 30, 2020, MBIA Corp. commenced an adversary proceeding in the Zohar Funds Bankruptcy Cases against Lynn Tilton and certain affiliated entities seeking damages incurred by MBIA Corp. in connection with insurance policies it issued on senior notes issued by Zohar I and Zohar II. On July 23, 2021, the court denied in part and granted in part Tilton’s and her affiliated defendants’ motion to dismiss the complaint. The court denied defendants’ motion with respect to MBIA’s claims for breach of contract, tortious interference, unjust enrichment, and malicious prosecution of claims Tilton brought against MBIA in Delaware. On February 1, 2022, MBIA filed its most recent Amended Complaint pursuant to and in accordance with the court’s multiple rulings on defendants’ motion to dismiss and related filings regarding the parties’ pleadings. Defendants filed their Answer to MBIA’s most recent Amended Complaint on April 13, 2022. Following the confirmation of a liquidation plan of the Zohar Collateral by the Delaware Bankruptcy Court and that plan becoming effective on August 2, 2022, MBIA Corp.’s claims in this adversary proceeding, among other assets, were transferred and assigned to a litigation trust (Zohar Litigation Trust-A, or the "Trust") and distributed to MBIA Corp. in the form of interests in the Trust subject to oversight by MBIA Corp. and another former Zohar creditor. As a result, on September 12, 2022, the court ordered the substitution of the Trust, as successor-in-interest to MBIA Corp., for MBIA Corp. as plaintiff in this adversary proceeding. Accordingly, MBIA Corp. is no longer the plaintiff or party to this adversary proceeding. On September 13, 2022, the Delaware Bankruptcy Court ordered the consolidation of this adversary proceeding for discovery and pretrial proceedings with an adversary proceeding commenced in 2020 by the Zohar Funds against Lynn Tilton in the Delaware Bankruptcy Court. Pursuant to that order, all pleadings concerning the now-consolidated proceedings shall be filed only in the adversary proceeding captioned Zohar III, Corp. v. Patriarch Partners, LLC, Adv. Proc. No. 20-50534 (KBO).

MBIA Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Note 12: Commitments and Contingencies (continued)

The Trust is party to a non-recourse, fully contingent engagement agreement with its legal counsel. Under the agreement, all deferred hourly fees, interest, and advanced litigation expenses are payable solely out of successful litigation recovery proceeds. In addition, the Trust's legal counsel has no recourse against the Trust’s general assets, and its compensation is secured strictly by a charging lien over the active litigation claims and any resulting proceeds. Since any payment obligation depends on the realization of litigation recoveries, the Company has evaluated this arrangement and determined that a loss is reasonably possible, but not probable, under Accounting Standards Codification 450, Contingencies, and accordingly, no balance sheet liability was recorded as of June 30, 2026. Due to the inherent uncertainties of active litigation, the fluid nature of court proceedings, and the dependency on a future recovery pool, the ultimate financial exposure or range of potential payouts under this agreement is not reasonably estimable.

Other

Refer to “Note 1: Business Developments and Risks and Uncertainties” for updates regarding PREPA's Title III proceedings. There are otherwise no material updates to the Company's commitments and contingencies or legal proceedings pending or, to the knowledge of the Company, threatened, to which the Company or any of its subsidiaries is a party.