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MGIC's third-quarter loss exceeds analysts' forecasts [Milwaukee Journal Sentinel]

By Paul Gores, Milwaukee Journal Sentinel
McClatchy-Tribune Information Services

Nov. 10--Mortgage insurer MGIC Investment Corp. reported a wider third-quarter loss Friday as revenue fell and claims rose.

Also Friday, Milwaukee-based MGIC said it will pay $267.5 million to Freddie Mac under a preliminary deal to resolve a dispute over coverage on pools of loans.

MGIC will pay $100 million upon completion of the settlement and the remaining $167.5 million in 48 monthly installments, the insurer said in a regulatory filing.

For the quarter, MGIC posted a loss of $246.9 million, or $1.22 a share, compared with a loss of $165.2 million, or 82 cents, a year earlier.

Analysts polled by Yahoo Finance had expected a loss of 60 cents a share.

The results are "disappointing," Jasper Burch, an analyst at Macquarie Group Ltd., wrote in a note to clients. "Litigation remains a material overhang to the stock."

It was the ninth consecutive quarterly loss for the company, which has been hit hard by the housing slump and high unemployment. Mortgage insurers like MGIC pay lenders part of their costs when borrowers default on mortgage loans.

Revenue at the nation's biggest private mortgage insurer fell 9% to $306.2 million from $337.2 million.

Losses incurred, driven mainly by increases in claims, rose to $490.1 million from $462.7 million.

Among positive developments in the quarter: New insurance written totaled $7 billion, up from $3.9 billion, and the percentage of delinquent loans fell to 14.51% from 15.85%.

MGIC shares fell 1 cent to close at $1.67. The company's stock has plunged more than 50% this year as losses drained capital.

Bloomberg News contributed to this report.


(c)2012 Milwaukee Journal Sentinel

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Distributed by MCT Information Services

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