MGIC Balking at Radian Merger

MGIC Investment Corp., Milwaukee, says it has informed the New York State Insurance Department that it is not obligated to complete the proposed merger with Radian Group Inc., Philadelphia, as a result of the impairments both companies will take in regard to C-BASS.The decision is a result of a preliminary assessment conducted by MGIC's management. The MGIC statement said Radian has informed MGIC that it disagrees with that assessment. The MGIC statement added that its management is "reviewing other developments that might affect MGIC's obligation to close. Whether MGIC will definitively conclude that it is not obligated to close the merger is a decision that will be made only by the board of directors of MGIC, which will not be asked to decide until MGIC's management has completed its analysis." MGIC has asked for additional information from Radian and says it does not expect the analysis to be completed until the week of Aug. 13. The two mortgage insurance firms recently announced that they had written down the value of their investment in Credit-Based Asset Servicing and Securitization LLC, a New York-based specialty servicer, by more than $1 billion combined. They also reported that C-BASS had been the subject of "unprecedented" margin calls.