MGIC Investment Corp., the nation’s largest mortgage insurer in terms of policies-in-force, posted a $20 million loss for the first quarter, an improvement over the $34 million it dropped in the year-ago period.
Moreover, the company said it is likely to exceed the 25-to-1 risk-to-capital ratio that several states are requiring it to have to write new policies in the second half of the year. At the end of the first quarter, MGIC's risk-to-capital ratio for all of its operations (including reinsurance affiliates) stood at 22.2-to-1. For its mortgage insurance subsidiary the ratio was 20.3-to-1.
Although MGIC is first in PIFs with $172 billion of coverage, in recent quarters it has been surpassed by Radian and United Guaranty on new policies written.
In its new earnings release MGIC says for the company to continue to use its reinsurance affiliates, it might need to provide additional capital.
But although the MI reported improved results, it has looming debt problems. MGIC's debt obligations exceed the holding company's cash and investments. As of March 31, it had $490 million of cash and investments. But the firm has $906 million of debt coming due at various times in the future: $171 million in November 2015, $345 million in 2017 and $390 million due in 2063.
The annual interest cost on this combined debt is $61 million.
During the quarter it wrote $4.2 billion of new policies, compared to $3 billion in 1Q11. This total does not include $1.3 billion of Home Affordable Refinance Program transactions. MGIC considers HARP loans to be a modification of existing coverage.
Persistency was 82.2% at the end of the first quarter, compared with 83.7% one year prior.
MGIC booked total charges of $337 million in 1Q, compared to $310 million one year prior.
