MGIC 2Q loss widens, plans to shift new business

 

Friday, Jul 17,2009, 12:32:02 PM   Click:

MILWAUKEE_Private provider of mortgage insurance MGIC Investment Corp. 's loss for the second quarter widened, the company said Thursday that crimes have increased due to rising unemployment, falling real estate prices and the recession.

It also said it plans to spend recently wrote to a subsidiary of Insurance starts on 1 January, and the parent company will stop writing new business.

For the three months ended June 30 MGIC lost $ 339.8 million, or $ 2.74 per share, compared to a loss of $ 99.9 million, or 81 cents per share, during the year there is a quarter.

Revenue rose 7 percent, to $ 454.5 million against 424.5 million in the second quarter last year. Which included a gain of $ 8 million which has enabled the acquisition of $ 40.3 million of long-term debt.

Analysts polled by Thomson Reuters expected a loss of $1.20 per share, on revenue of $432.9 million.

Net premiums written for the quarter were $330.4 million, compared with $371.8 million for the year earlier. New insurance written in the second quarter slid to $5.9 billion, from $14 billion in the 2008 period.

The percentage of delinquent loans, excluding bulk loans, doubled, to 12.04 percent from 6.02 percent last year. Including bulk loans, the percentage of delinquent loans rose to 14.97 percent from 8.6 percent.

The company said the state of Wisconsin has allowed MGIC to contribute up to $1 billion to its subsidiary MGIC Indemnity Corp. to enable that entity to begin writing new mortgage guaranty insurance as of Jan. 1. MGIC plans to provide the capital in two $500 million installments, with the first slated for July 31.


However, the state's insurance commissioner must still specifically authorize the subsidiary to begin writing insurance, as must each state.

The subsidiary must also be approved as an eligible insurer by Fannie Mae and/or Freddie Mac, neither of which has yet done so.

"We cannot predict whether these approvals will be obtained and if so on what conditions," the company said.

If they must continue to write new business through the parent company, MGIC "will need either additional capital or relief from the regulatory capital requirements in 16 states," the company continue. In 14 of those state, relief will require new legislation or insurance regulation changes.

MGIC said it has not yet tried to raise capital from private sources, but has had discussions with the U.S. Treasury to seek a capital investment.