MGIC Investment shares tumble as 3Q loss widens

MGIC Investment reports wider 3Q loss, shares tumble

• On 4:36 pm EDT, Friday October 16, 2009

MILWAUKEE (AP) -- Mortgage insurer MGIC Investment Corp. reported a steeper third-quarter loss Friday, blaming a weak economy and high unemployment for elevated loan defaults.

The Milwaukee-based company said it lost $517.8 million, or $4.17 per share, compared with a loss of $115.4 million, or 93 cents a share a year ago.

The results were significantly worse than Wall Street expected. Analysts surveyed by Thomson Reuters expected a loss of $1.62 per share.

MGIC's shares fell 90 cents, or 12 percent, to close Friday at $6.42.

Revenue for the quarter fell to $413.3 million from $461.6 million a year ago.

Losses and expenses rose to $1.03 billion from $670.4 million a year earlier.

Although negative trends related to the recession and high unemployment persist, CEO Curt Culver said there are signs that the U.S. Treasury and private-sector loan-modification programs are beginning to help homeowners. Those measures haven't yet translated to any financial benefit to the company, however.

Delinquent loans were at 16.9 percent as of Sept. 30, compared with 10.2 percent on the same date a year ago.

The entire mortgage insurance industry has been hit hard by the deteriorating mortgage and housing markets. As more homeowners default on mortgage, the holders of those mortgages turn to insurers such as MGIC, making claims to recoup losses.

MGIC is the nation's leading private mortgage insurer with $216.8 billion in insurance in force covering 1.4 million mortgages as of Sept. 30.

It has been working on a plan to write new mortgage insurance through its subsidiary MGIC Indemnity Corp. That is because Mortgage Guarantee Insurance Corp., its principal mortgage insurance subsidiary, may no longer meet regulatory capital requirements in Wisconsin. That would prevent it from writing new mortgage insurance policies.

In a regulatory filing on Friday, the company said it is awaiting word from Wisconsin regulators, who must authorize the indemnity subsidiary to write business and it must get licenses in the jurisdictions in which it will do business.

The subsidiary must also get approval from Fannie Mae and Freddie Mac to write insurance for them.

The company said an agreement was reached with Fannie Mae on Wednesday in which the indemnity subsidiary was approved to write mortgage insurance through Dec. 31, 2011. The agreement requires MGIC to contribute $200 million to the subsidiary and the company must receive a waiver from Wisconsin regulators, allowing it to write new policies in Wisconsin if MGIC fails to meet the minimum regulatory capital requirements.

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