Fitch Cuts MGIC's Ratings on Business Concerns

The analysts at FBR Capital Markets may be the only ones' bullish on the future of MGIC. Fitch Ratings has cut its insurer financial strength rating on the mortgage insurance unit from "BBB-" down to "BB-" and cut the long-term issuer rating of the parent company to "B-" from "B". Fitch said it has concerns about capital adequacy, business continuity and holding company liquidity. "The ability of the operating company to continue to write new business remains uncertain, although recent developments indicate progress on that front," Fitch said. Parent company MGIC Investment Corp., it added, faces near to medium liquidity demands, with notes coming due in September 2011. Only FBR has a positive view on MGIC, keeping its outperform rating on the company. Standard & Poor's cut MGIC's financial strength rating from "BB" down to "B+", citing worries MGIC might not be able to repay those notes due next September. Plus it said there was a "high probability" the company would breach the 25:1 risk-to-capital regulatory requirement.