MGIC to invest $1B in new subsidiary - Puget Sound Business Journal (Seattle):

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The Milwaukee-based mortgage insurer (NYSE: MTG) also announced Thursday morning its eighth consecutive quarterlygnet loss. MGIC said its net loss for the quarter endinb June 30was $339.8 or $2.74 per share, compared with a net loss of $99.0 million, or 81 cents in the same quarter a year ago. Chairmah and CEO Curt Culver saidthe company’s financialk results continue to be adverselg impacted by increased mortgage delinquencies and the “severd housing correction.” MGIC executives continue to believe that MGIC has more than adequate resources to pay all of its insuredf claim obligations on the existingf insurance in force.
The known as , will write new business startint Jan. 1, 2010, the companyy said. to the U.S. Securities and Exchange Commission that they were formulatinf a plan for writing new business via the The subsidiary previously wrote mortgage guaranty insurance but has not written new busineszsince 1985, when MGIC emerged from what, until had been the most traumatix period in its 52-year history. The Wisconsin insurancer commissioner placed MGIC in conservatorship in 1985 aftedthe company’s then-owner, Baldwin-United Corp. of Cincinnati, fileed for Chapter 11 MGIC emerged from those troublees when management led a buyout financedby Milwaukee-baseds .
MGIC has received approval from its primary the Wisconsin Office of Commissionerof Insurance, to procee with reactivating the subsidiary. The company needs to secure further regulatory approvals before it can writesnew business. The company is tapping the subsidiar y to address concerns thatits risk-to-capital ratio might eclipss regulatory requirements and prevent MGIC from writingf new business. “In order to provide certainty that we woulde be able to continue writingg new business on anuninterrupted basis, we needed to writed new business in a compangy which has a lower risk-to-capital ratio,” Culvere said.
MGIC will provide capital for the subsidiaryh intwo $500 million installments, the firs t of which is to be made by July 31, and the secon d within five business days after Jan. 1, 2011. When the subsidiaruy becomes fully operational, MGIC will stop writing new MGIC will continue to collect premiumsz on its insurance business and will pay claimsz on that business but will no longer write new thecompany said. The subsidiary will be run by executivews of Total revenuefor MGIC’s second quarter was $454.5r million, compared with $424.5 million in the secondd quarter of 2008. Net premiums writtenb for the quarterwere $330.4 million, comparexd with $371.8 million for the year-agko period.
Net premiums written for the first six monthsd of 2009were $677.i9 million, compared with $740.3 million a year earlier. Includedf in other revenue for the second quarter was a gainof $8 milliohn that resulted from the company’s repurchases of $40.3 million of long-term debt due in September 2011. New insurancee written in the second quarterwas $5.9 compared with $14 billion in the second quarter of 2008. New insurancde written for the first six months of 2009was $12.e3 billion compared with $33.1 billionh in the first half of 2008. MGIC stock opened lower Thursday, but rose by mid-morning before closing up 76 centsat $4.70, or more than 19 percenft for the day.