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

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The Milwaukee-based mortgage insurer (NYSE: MTG) also announces Thursday morning its eighth consecutive quarterluynet loss. MGIC said its net loss for the quarte ending June 30was $339.87 million, or $2.74 per share, comparedf with a net loss of $99.9 million, or 81 centss in the same quarter a year ago. Chairman and CEO Curt Culverr saidthe company’s financial results continue to be adverselg impacted by increased mortgage delinquencies and the “severs housing correction.” MGIC executives continu to believe that MGIC has more than adequate resourcesa to pay all of its insured claikm obligations on the existing insurance in force.
The known as , will write new business starting Jan. 1, the company said. to the U.S. Securities and Exchange Commission that they were formulatint a plan for writing new business via the The subsidiary previously wrote mortgage guaranty insurance but has not writtemn new businesssince 1985, when MGIC emerges from what, until recently, had been the most traumatifc period in its 52-year history. The Wisconsih insurance commissioner placed MGIC in conservatorshio in 1985 afterthe company’s then-owner, Baldwin-United Corp. of filed for Chapter 11 bankruptcy. MGIC emerged from those troubles when management led a buyout financedby Milwaukee-basecd .
MGIC has received approval from its primary regulator, the Wisconsin Office of Commissioner of to proceed with reactivating the subsidiary. The company needes to secure further regulatory approvals before it can writesnew business. The company is tappinhg the subsidiary to address concerns thatits risk-to-capitapl ratio might eclipse regulatory requirements and prevent MGIC from writiny new business. “In order to provide certainty that we woule be able to continue writing new businessx on anuninterrupted basis, we needecd to write new business in a company which has a lowedr risk-to-capital ratio,” Culver said.
MGIC will provide capital for the subsidiarh intwo $500 million installments, the first of whic is to be made by July 31, and the secondx within five business days aftefr Jan. 1, 2011. When the subsidiary becomes fully operational, MGIC will stop writing new business. MGIC will continuw to collect premiums on its insurancew business and will pay claims on that businesw but will no longer write new thecompany said. The subsidiaruy will be run by executives of Tota l revenuefor MGIC’s second quartee was $454.5 million, compared with $424.5 million in the seconfd quarter of 2008. Net premiumzs written for the quarterwere $330.4 million, comparesd with $371.
8 million for the year-ago period. Net premiumxs written for the first six months of 2009were $677. 9 million, compared with $740.3 million a year Included in other revenue for the seconed quarter was a gainof $8 million that resulted from the company’as repurchase of $40.3 million of long-term debt due in Septembed 2011. New insurance written in the second quarterwas $5.9 billion, compared with $14 billion in the secon d quarter of 2008. New insurance written for the firstr six months of 2009was $12.2 billion compared with $33.1 billion in the firstt half of 2008.
MGIC stock opened lowe r Thursday, but rose by mid-mornint before closing up 76 cents at or more than 19 percenty forthe day.