Listen to the last earnings call. They explicitly said the mortgage insurance company, even without the parent, could pay expected claims with cash on hand, even if they were in run off state, for the next FIVE YEARS! They do not need capital and the last thing they would do is go back to the market for the same.
If they added some of the backup protection of the parent company, they would be well within the risk ratio tolerance levels.
Lastly, the extremely profitable new business is generating lots of cash, and outpacing the new delinquencies as we will see on the 21st!
Shorts are getting a bit piggy in here, you should be covering and booking the little profit you may have made on this text book correction.
I think Genworth's move, and the approval of the new company, puts tremendous pressure on both Radian and MGIC to raise new capital. Think of it this way - over $1B of new capital has entered the industry in the past week: the $550M in the new company, and over $500 that Genworth has committed or promised to commit in the future (including the European shares, future tax sharing, capital contributions planned and promised). I think the GSEs will have Radian and MGIC on a very tight leash. If they don't turn things around by the end of this year, they both could be cut off.
Mortgage Guy, indeed they will need to raise equity eventally. Timing is the key and to be done at much higher prices. We may all be surprised by the upcoming 4th qtr. results. They need to be received well strengthen the current change in sentiment. Any dilution in either RDN and MTG at these prices and the shorts will have no problems covering the millions of shares short. This is most likely the reason they have yet to cover knowing that they may have millions to buy with no problem. SHorts also tend to do their due diligence...