Nation's Top MI Firm Losing Less, but New Business Slides

MGIC Investment Corp., the nation's largest mortgage insurer, saw a slight improvement in its first quarter results, losing $150 million compared to a loss of $185 million for the same period last year. However its volume of new business continues to slide, with only $1.8 billion of new insurance written in the first quarter versus $6.4 billion for the first quarter of 2009. (The 1Q10 total, however, does not include nearly $685 million of insurance written on loans modified under the Home Affordable Refinance Program.) MGIC had total loan delinquencies of 18.14% compared to 13.51% a year ago. In the safe harbor portion of its earnings release, MGIC said it expects to incur substantial losses for this year and cannot assure investors when it will return to profitability. During the first quarter, rescissions mitigated MGIC's paid losses by $373 million. (For the full year 2009, rescissions mitigated paid losses by $1.2 billion.) The lawsuit Bank of America filed over the rescission policy has been moved back to California Superior Court in San Francisco from the U.S. District Court for the Northern District of California. MGIC also started an arbitration action against B of A and Countrywide on the rescission matter. Countrywide filed a response objecting to the arbitrator's jurisdiction over the matter. In its response, the lender said it is seeking damages of at least $150 million. MGIC also has commenced a public offering of $700 million of common stock and $300 million of convertible senior notes due 2017. Proceeds will be used to pay off at maturity or purchase prior to maturity $78.4 million in debt due in 2011 and for general corporate purposes, including increasing capital at its mortgage insurance subsidiary.