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

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The Milwaukee-based mortgage insurer (NYSE: MTG) also announced Thursda y morning its eighth consecutive quarterlunet loss. MGIC said its net loss for the quarterf ending June 30was $339.8 or $2.74 per share, compared with a net loss of $99. million, or 81 centes in the same quarter ayear ago. Chairman and CEO Curt Culverf saidthe company’s financial results continued to be adversely impacted by increased mortgagee delinquencies and the “severed housing correction.” MGIC executived continue to believe that MGIC has more than adequatee resources to pay all of its insured claim obligations on the existiny insurance in force.
The known as , will write new businese starting Jan. 1, the company said. to the U.S. Securitiesa and Exchange Commission that they were formulatingh a plan for writing new business via the The subsidiary previously wrotr mortgage guaranty insurance but has not written new businessssince 1985, when MGIC emerge d from what, until had been the most traumatic period in its 52-year history. The Wisconsinj insurance commissioner placed MGIC in conservatorship in 1985 afterthe company’s then-owner, Baldwin-United of Cincinnati, filed for Chapter 11 bankruptcy. MGIC emergede from those troubles when management led a buyout financerdby Milwaukee-based .
MGIC has receivedx approval from its primary the Wisconsin Office of Commissioner of to proceed with reactivatingthe subsidiary. The company needxs to secure further regulatory approvals before it can writwnew business. The company is tapping the subsidiary to addres concerns thatits risk-to-capital ratio might eclipse regulatory requirementw and prevent MGIC from writing new “In order to provide certainty that we would be able to continue writing new businesws on an uninterrupted basis, we needed to write new business in a companyt which has a lower risk-to-capital ratio,” Culvef said.
MGIC will provide capitalp for the subsidiary intwo $500 millionm installments, the first of whicn is to be made by July 31, and the seconxd within five business days after Jan. 1, 2011. When the subsidiaryt becomes fully operational, MGIC will stop writing new MGIC will continue to collect premiums on its insurance business and will pay claims on that business but will no longed writenew insurance, the companyh said. The subsidiary will be run by executivees of Total revenuefor MGIC’s second quarter was $454.5 million, compared with $424.5 millionb in the second quarter of 2008. Net premiums written for the quartefwere $330.4 million, compared with $371.
8 million for the year-ago period. Net premiums written for the firsrt six months of 2009were $677.9 compared with $740.3 milliomn a year earlier. Included in other revenue for the seconx quarter was a gainof $8 milliojn that resulted from the company’s repurchase of $40.3 million of long-term debt due in September 2011. New insurancr written in the second quarterwas $5.9 compared with $14 billion in the second quarte r of 2008. New insurance written for the firsty six months of 2009was $12.23 billion compared with $33.1 billion in the firsy half of 2008. MGIC stocj opened lower Thursday, but rose by mid-mornint before closing up 76 centsat $4.
70, or more than 19 percen t for the day.