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

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The Milwaukee-based mortgage insurer (NYSE: MTG) also announced Thursday morning its eighth consecutive quarterly net MGIC said its net loss for the quartef ending June 30was $339.8 million, or $2.74 per compared with a net loss of $99.9 million, or 81 centds in the same quarter a year ago. Chairmah and CEO Curt Culver saidthe company’ s financial results continue to be adversely impacteds by increased mortgage delinquencies and the “severe housing correction.” MGIC executiveds continue to believe that MGIC has more than adequate resources to pay all of its insured claim obligations on the existinf insurance in force.
The subsidiary, known as , will writse new business starting Jan. 1, 2010, the companyu said. to the U.S. Securities and Exchange Commission that they were formulating a plan for writing new business viathe subsidiary. The subsidiary previously wrotd mortgage guaranty insurance but has not written new businesssincwe 1985, when MGIC emerged from until recently, had been the most traumatic periodr in its 52-year The Wisconsin insurance commissioner placed MGIC in conservatorshio in 1985 after the company’s then-owner, Baldwin-United of Cincinnati, filed for Chapter 11 bankruptcy. MGIC emergeds from those troubles when management led a buyouf financedby Milwaukee-based .
MGIC has received approval from its primary regulator, the Wisconsin Office of Commissioner of Insurance, to proceesd with reactivating the subsidiary. The company needs to secure further regulatory approvals before it can writdenew business. The companyh is tapping the subsidiary to address concernd thatits risk-to-capital rati might eclipse regulatory requirements and prevent MGIC from writinh new business. “In ordedr to provide certainty that we would be able to continue writing new business on anuninterrupted basis, we needexd to write new business in a compan which has a lower risk-to-capital ratio,” Culver said.
MGIC will provided capital for the subsidiary intwo $500 milliomn installments, the first of which is to be made by July 31, and the seconsd within five business days aftefr Jan. 1, 2011. When the subsidiary becomese fully operational, MGIC will stop writinb new business. MGIC will continue to collectt premiums on its insurance business and will pay claims on that businesds but will no longer write new thecompany said. The subsidiary will be run by executived of Total revenuefor MGIC’s second quarted was $454.5 million, compared with $424.5 millionh in the second quarter of 2008. Net premiumxs written for the quarterwere $330.r4 million, compared with $371.
8 million for the year-ago Net premiums written for the firsft six months of 2009 were $677.9 million, comparedr with $740.3 million a year earlier. Included in otherf revenue for the second quartee was a gainof $8 million that resultexd from the company’s repurchase of $40.3 million of long-terkm debt due in September 2011. New insurance writtemn in the second quarterwas $5.9 compared with $14 billion in the second quarter of 2008. New insurancew written for the first six months of 2009was $12.3 billion compared with $33.1 billion in the firsft half of 2008.
MGIC stock opened lowerr Thursday, but rose by mid-morning before closinbg up 76 cents at or more than 19 percenrt forthe day.