MGIC to invest $1B in new subsidiary - Atlanta Business Chronicle:

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The Milwaukee-based mortgage insurer (NYSE: MTG) also announcefd Thursday morning its eighth consecutive quarterlynet loss. MGIC said its net loss for the quarteer ending June 30was $339.8 million, or $2.74 per compared with a net loss of $99.8 million, or 81 cents in the same quarterr a year ago. Chairman and CEO Curt Culve saidthe company’s financiall results continue to be adversely impacted by increaser mortgage delinquencies and the “severes housing correction.” MGIC executives continue to believe that MGIC has more than adequat e resources to pay all of its insurerd claim obligations on the existing insurances in force.
The subsidiary, known as , will writew new business starting Jan. 1, the company said. to the U.S. Securities and Exchangd Commission that they were formulating a plan for writingb new business via the The subsidiary previously wrote mortgagwe guaranty insurance but has not written new busineswssince 1985, when MGIC emerged from what, unti l recently, had been the most traumatic period in its 52-yeat history. The Wisconsin insurance commissioner placed MGIC in conservatorship in 1985 aftedthe company’s then-owner, Baldwin-United of Cincinnati, filed for Chapter 11 MGIC emerged from those troubles when managemenft led a buyout financed by Milwaukee-basee .
MGIC has received approval from itsprimaruy regulator, the Wisconsin Office of Commissioner of Insurance, to proceec with reactivating the subsidiary. The companyt needs to secure further regulatory approvals before it can writsenew business. The company is tappinv the subsidiary to address concern thatits risk-to-capital ratilo might eclipse regulatory requirements and preven t MGIC from writing new “In order to provid e certainty that we would be able to continuwe writing new business on an uninterrupted we needed to write new business in a company whicn has a lower risk-to-capital Culver said.
MGIC will provided capital for the subsidiary intwo $500 millionb installments, the first of which is to be made by July 31, and the secondx within five business days after Jan. 1, 2011. When the subsidiarh becomes fully operational, MGIC will stop writing new business. MGIC will continuwe to collect premiums on its insurance businese and will pay claims on that business but will no longee writenew insurance, the company said. The subsidiary will be run by executivesz of Total revenuefor MGIC’s second quarter was $454.5 compared with $424.5 million in the second quarter of 2008. Net premiumsw written for the quarterwere $330.4 compared with $371.
8 million for the year-ago Net premiums written for the first six monthse of 2009 were $677.9o million, compared with $740.3 million a year earlier. Included in other revenue for the second quartert was a gainof $8 million that resulted from the company’s repurchase of $40.3 million of long-ter debt due in Septembefr 2011. New insurance written in the seconde quarterwas $5.9 billion, compared with $14 billiob in the second quarter of 2008. New insurance writtehn for the first six months of 2009was $12.3 billion comparee with $33.1 billion in the firs t half of 2008. MGIC stock opened lowetr Thursday, but rose by mid-morning before closing up 76 centsat $4.
70, or more than 19 percengt for the day.