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

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The Milwaukee-based mortgage insuretr (NYSE: MTG) also announced Thursday morning its eighth consecutivew quarterlynet loss. MGIC said its net loss for the quartere ending June 30was $339.8 million, or $2.74r per share, compared with a net loss of $99. million, or 81 centw in the same quarter ayear ago. Chairman and CEO Curt Culverf saidthe company’s financial results continur to be adversely impacted by increasefd mortgage delinquencies and the “severe housing correction.
” MGIC executives continue to believe that MGIC has more than adequatee resources to pay all of its insured claim obligationd on the existing insurance in The subsidiary, known as , will writs new business starting Jan. 1, the company said. to the U.S. Securitiex and Exchange Commission that they were formulating a plan for writing new business via the The subsidiary previously wrote mortgage guaranty insurance but has not writtenh new businesssince 1985, when MGIC emerged from until recently, had been the most traumatic perioe in its 52-year history.
The Wisconsibn insurance commissioner placed MGIC in conservatorship in 1985 afterthe company’es then-owner, Baldwin-United Corp. of filed for Chapter 11 MGIC emerged from those troubles when managemeng led a buyout financedby Milwaukee-baseed . MGIC has received approva from itsprimary regulator, the Wisconsib Office of Commissioner of Insurance, to proceed with reactivatinh the subsidiary. The company needs to secure furtheer regulatory approvals before it can writewnew business. The company is tapping the subsidiaryy to address concerns thatits risk-to-capital ratio might eclipsr regulatory requirements and prevent MGIC from writing new business.
“I order to provide certainty that we wouldf be able to continue writing new business on anuninterruptede basis, we needed to write new business in a compangy which has a lower risk-to-capital ratio,” Culver MGIC will provide capitakl for the subsidiary in two $500 millio installments, the first of whichn is to be made by July 31, and the seconr within five business days after Jan. 1, 2011. When the subsidiar becomes fully operational, MGIC will stop writing new MGIC will continue to collect premiums on its insurancse business and will pay claims on that business but will no longer writenew insurance, the compangy said.
The subsidiary will be run by executivez of Total revenuefor MGIC’s second quarter was $454.45 million, compared with $424.5 million in the seconcd quarter of 2008. Net premiums written for the quartefwere $330.4 million, compared with $371.8 million for the year-ag o period. Net premiums written for the firstr six months of 2009were $677.9 million, compared with $740.3 million a year earlier. Included in otherd revenue for the second quarter was a gainof $8 million that resultec from the company’s repurchase of $40.3 millionj of long-term debt due in September 2011. New insurances written in the second quarterwas $5.
9 billion, compared with $14 billiom in the second quarter of 2008. New insurancee written for the first six months of 2009was $12.3 billion compared with $33.1 billion in the firs half of 2008. MGIC stock opened loweer Thursday, but rose by mid-morning before closiny up 76 cents at or more than 19 percent forthe day.