Morgan Stanley has resolved its legal conflicts with bond insurer MBIA, ending a long-running dispute tied to guarantees of mortgage securities that will result in the bank recording a $1.8bn pre-tax loss, the FT reports. MBIA will pay Morgan Stanley $1.1bn as part of the settlement, which will end lawsuits the companies launched against one another and extinguish $4bn in insurance contracts tied to mortgage securities that Morgan Stanley purchased from the bond insurer, the FT says, citing a person with direct knowledge of the matter. The settlement ends Morgan Stanley’s role in a 2009 lawsuit launched by 18 banks against the insurer and New York state’s financial regulator for restructuring the company during the height of the financial crisis in a way that allegedly harmed Wall Street counterparties. Morgan Stanley had about $2.7bn in exposure to MBIA in the form of derivatives and another $144m in exposure to bond insurers overall related to guarantees on mortgages and other asset-backed securities, according to its third-quarter filing with the US Securities and Exchange Commission.