MBIA Inc. (MBI), one of the world's largest bond insurers, on Tuesday said it will restate financial results from 1998 through 2004 to correct its accounting for two reinsurance agreements with Converium Re.

One agreement involved the purchase by Armonk, New York-based MBIA (search) of reinsurance to cover losses related to a bankrupt hospital network. The other involved MBIA's agreement to cede $101 million of net premiums to Converium (search) over a six-year period ended Oct. 1, 2004.

MBIA announced the restatement after last November saying it received subpoenas from the U.S. Securities and Exchange Commission (search) and New York Attorney General Eliot Spitzer (search) as part of their ongoing investigation of the insurance industry in their probes of non-traditional insurance products that might help companies smooth earnings.

The company said the probes include the transaction with the hospital network, Delaware Valley Obligated Group, which was run by the Pittsburgh-based Allegheny Health, Education and Research Foundation (AHERF). MBIA said it is cooperating with the investigations.

MBIA said the restatement, which follows an investigation by the company's audit committee, will reduce 1998 net income to $386 million, or $2.57 per share, from the originally reported $433 million, or $2.88 per share.

The reduction reflects a $47 million after-tax loss in the third quarter of 1998 related to $265 million in AHERF bonds that MBIA insured. MBIA said Converium reimbursed it for $70 million of the $170 million loss it experienced on the bonds.

MBIA expects restated earnings to be reduced by smaller amounts in each of the years 1999 through 2001. It also expects earnings to be little changed in 2002 and increased by small amounts in 2003 and 2004.

The company said it doesn't expect the restatement to affect its credit ratings or materially affect its financial position. It expects to file its annual report with audited financials by the March 16 deadline, but said a delay was possible.

MBIA shares fell 48 cents to $58.87 in Tuesday morning trading on the New York Stock Exchange.