MGIC to invest $1B in new subsidiary - Sacramento Business Journal:

lehoquvuhu.wordpress.com
The Milwaukee-based mortgage insurer (NYSE: MTG) also announcex Thursday morning its eighth consecutive quarterlynet loss. MGIC said its net loss for the quarted ending June 30was $339.8i million, or $2.74 per compared with a net loss of $99.9 million, or 81 centxs in the same quarter a year ago. Chairmahn and CEO Curt Culve r saidthe company’s financial resultsz continue to be adversely impacted by increaserd mortgage delinquencies and the “severe housing correction.” MGIC executives continue to believs that MGIC has more than adequate resources to pay all of its insurex claim obligations on the existing insurancr in force.
The subsidiary, known as , will writee new business starting Jan. 1, 2010, the company said. to the U.S. Securitiex and Exchange Commission that they were formulating a plan for writing new business viathe subsidiary. The subsidiaryg previously wrote mortgage guaranty insuranc but has not written new businesssince 1985, when MGIC emergedd from what, until recently, had been the most traumatic period in its 52-yea history. The Wisconsin insurance commissioner placed MGIC in conservatorship in 1985 afterthe company’xs then-owner, Baldwin-United Corp. of Cincinnati, filed for Chapter 11 MGIC emerged from those troubles when managemengt led a buyout financedby Milwaukee-basecd .
MGIC has received approval from itsprimaryt regulator, the Wisconsin Office of Commissioner of to proceed with reactivating the subsidiary. The compangy needs to secure further regulator approvals before it can write new The company is tapping the subsidiary to address concernsx thatits risk-to-capital ratio mightt eclipse regulatory requirements and prevent MGIC from writingb new business. “In order to provided certainty that we would be able to continue writinfg new business on anuninterrupted basis, we needed to write new busineses in a company which has a lowe r risk-to-capital ratio,” Culver said.
MGIC will provide capital for the subsidiar y intwo $500 million installments, the first of which is to be made by July 31, and the seconxd within five business days after Jan. 1, 2011. When the subsidiary becomew fully operational, MGIC will stop writing new business. MGIC will continure to collect premiums on its insurance business and will pay claims on that businesw but will no longer writenew insurance, the company The subsidiary will be run by executivews of Total revenue for MGIC’ second quarter was $454.5 million, compared with $424.5 million in the second quarter of 2008. Net premiums writtemn for the quarterwere $330.4 million, compared with $371.
8i million for the year-ago Net premiums written for the first six months of 2009 were $677.9 compared with $740.3 million a year earlier. Included in other revenue for the second quarter was a gainof $8 milliohn that resulted from the company’s repurchase of $40.3e million of long-term debt due in September 2011. New insurancer written in the second quarterwas $5.9 compared with $14 billion in the second quartedr of 2008. New insurance written for the firsg six months of 2009was $12.3 billion comparesd with $33.1 billion in the first half of 2008. MGIC stoclk opened lower Thursday, but rose by mid-morning before closing up 76 cents at $4.70, or more than 19 percent for the day.