The nation's largest mortgage insurer, MGIC Investment Corp., posted yet another large loss in the fourth quarter, $135 million, but managed to obtain an operating waiver from the Wisconsin Insurance Commissioner, as well as Fannie Mae and Freddie Mac.
The waiver allows Mortgage Guaranty Insurance -- which has a coverage market share of 24% -- to continue writing new MI policies.
The waiver expires at yearend 2013. MGIC also is required to contribute $200 million of capital to the MI unit by the end of this month as part of the waiver.
For the full year MGIC lost $486 million. In 4Q 2010 MGIC lost $187 million.
The waiver allows the company to write new business through Mortgage Guaranty Insurance, or a separately capitalized subsidiary, MGIC Indemnity Corp.
At the end of December, the parent company contributed $200 million in capital to the mortgage insurance subsidiary, which brought it into compliance with Wisconsin's minimum policyholder position standards. At that time, while the company said there was no need to use MIC or the waiver to write new business, it expected MGIC's capital to diminish in 2012 and thereafter.
MGIC's risk-to-capital ratio as of Dec. 31, 2011 was 20.3-to-1 and its policyholder position exceeded the minimum required by $185 million.
MGIC wrote $4.2 billion of new insurance in 4Q, not including policies on $813 million of Home Affordable Refinance Program loans.
For the full year, the company wrote $14.2 billion of NIW, up from $12.3 billion one year earlier. There was also $2.9 billion of activity related to HARP loans, down from $3.2 billion in 2010.
As of Dec. 31, the company had delinquencies of 13.79% (excluding bulk loans) compared to 14.94% one year earlier.
MGIC suffered charges of $482 million in 4Q, up from $448 million, due to an increase in the estimated claim rates on primary defaults occurring in prior periods.
