MBIA Inc. said Monday that it is selling its stake in Topstar, a tender option bond program that it created in tandem with a subsidiary of France's largest nonbank financial institution.

Separately, MBIA said yesterday that it had net income of $130.7 million, or $3.10 per share, in the first half of 1994, down 4.2% from $136.5 million, or $3.22 per share, in the first six month of 1993. For the second quarter, MBIA had net income of $65 million, or $1.54 per share, up 3% from $63.8 million, or $1.50, in second quarter 1993.

Core earnings, which discount refunding activity, rose 15% over MBIA's performance in both the first half and second quarter of 1993, the firm said in a press release.

"Our second quarter results again demonstrate MBIA's ability to generate earnings growth even during periods of lower municipal volume and reduced refunding activity," said David H. Elliott, MBIA's chairman, president, and chief executive officer.

MBIA, the holding company for Municipal Bond Investors Assurance Corp., said net premiums written totaled $167.6 million in the first half of the year, down 24.9% from $223.2 million in the same period the year before. In the second quarter, net premiums written were $91.1 million, down 32% from $134 million in the second quarter of last year.

At June 30, MBIA's qualified statutory capital base had grown to $1.6 billion from $1.5 billion at yearend 1993.

On the New York Stock Exchange yesterday, shares of MBIA Inc. closed down 3/8 points at 57 3/4.

The Topstar program, unveiled in late 1992, creates synthetic short-term securities by attaching tender options to long-term bonds in order to shorten their maturities.

MBIA said that it sold its 49% stake in the program to CDC Capital Inc., a U.S. subsidiary of Caisse des Depots et Consignations, MBIA's original partner in the venture.

Originally, the program was run by MBIA Investors Capital Corp., an alliance of MBIA and CDC Capital. Topstar was designed to meet the needs of money market funds, which are often unable to find high-quality short-term securities.

With the completion of the sale this week, CDC Capital owns 100% of the program and will continue to develop Topstar, changing MBIA Investors Capital Corp.'s name to CDC Municipal Products Inc., the press release said.

MBIA officials said the market for synthetic short-term securities remains viable and hinted that they might pursue a program similar to Topstar.

"If anything, we think the market has grown [since 1992] and think the natural-supply of variable-rate demand notes is either flat or shrinking or can't keep up with demand" said James E. Mailing, executive vice president at MBIA. "While we are pleased with our association with CDC, we believe our long-term goals are best pursued by developing the necessary capabilities internally."

Mailing declined to comment further, but rating agency officials said it would be possible for a bond insurer to enter such a business without threatening its triple-A rating.

"It's possible to do [such a] venture through a subsidiary, and if it was properly structured it would not necessarily be detrimental to their claims-paying ability," said David Litvack, senior vice president at Fitch Investors Service.

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