News for 'TGIC' - (DJ UPDATE: MGIC Loss Widens On Higher Claims Costs, Lower Revenue)
--MGIC net loss of $165.2 million widens on higher claims and a decline in revenue
--Operating results miss consensus
--Company warns that it could regulatory challenges as it ap! proaches key capital thresholds
(Adds background on mortgage insurance in the fourth paragraph, new warning on potential regulatory overhang in the fifth.)
By Erik Holm
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--MGIC Investment Corp.'s (MTG) third-quarter loss widened more than expected as the mortgage insurer suffered from higher claims costs and a decline in revenue.
The net loss of $165.2 million, or 82 cents a share, was more than triple the prior-year loss of $51.5 million, or 26 cents. The operating loss, which excludes some investment results, was about 88 cents, missing by 13 cents the consensus estimate of analysts polled by Thomson Reuters.
MGIC shares fell 11% to $2.16.
The loss is the latest in a long string of tough quarters. Amid the housing-market crash and years of record foreclosures, mortgage insurers have suffered from billions of dollars ! in losses on policies they sold in the years just before the bubble bu rst. MGIC alone has lost more than $4 billion since 2007.
The losses forced two smaller rivals, PMI Group Inc. (PMI) and Old Republic International Corp. (ORI), to stop selling new coverage in August. PMI was placed under the supervision of insurance regulators. At Old Republic, waivers granted to its mortgage-insurance subsidiaries that allowed it to keep writing new business expired.
MGIC added a new warning to a long list of risk factors in its quarterly earnings release on Friday that said it could face the same fate. Waivers from Fannie Mae (FNMA) and from several state regulators expire at the end of the year. The company still meets minimum capital requirements, making the waivers unnecessary for now, but the company is close to some critical thresholds.
In addition, the National Association of Insurance Commissioners is close to adopting a new accounting rule that would prevent mortgage insurers from counting so-called def! erred tax assets toward their capital if it is close to breaching those capital requirements.
In the third quarter, MGIC's premium revenue dropped 7.2% to $275 million. Claims costs jumped 20% to $463 million.
The percentage of delinquent loans, excluding bulk loans, was 13%, compared with 15% a year earlier and 15.8% in the previous quarter.
-By Erik Holm, Dow Jones Newswires; 212-416-2892; erik.holm@dowjones.com
--Nathalie Tadena contributed to this article.
(END) Dow Jones Newswires
October 21, 2011 10:06 ET (14:06 GMT)
Copyright (c) 2011 Dow Jones & Company, Inc.- - 10 06 AM EDT 10-21-11
