MGIC losses spike in 4Q after settlement with Freddie Mac


Stacy Vogel Davis
Reporter- The Business Journal

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Losses ballooned for MGIC Investment Corp. in the fourth quarter, due in large part to a settlement charge with Freddie Mac.

The Milwaukee-based company reported a loss of $386.7 million, or $1.91 per share, in the quarter ending Dec. 31, nearly triple the loss of $135.3 million, or 67 cents per share, reported for the fourth quarter of 2011. The loss includes a $267.5 million charge for the settlement of its pool insurance dispute with Freddie Mac. It also includes a $100 million increase in loss reserve estimates for its dispute with Countrywide Financial and another lender.

For the full year, the company reported a loss of $927.1 million, or $4.59 per share, up from $485.9 million, or $2.42 per share, in 2011.

Revenue for the fourth quarter was $371.4 million, compared with $447 million in the fourth quarter last year.

As of Dec. 31, MGIC’s risk-to-capital ratio was 44.7 to 1, well above the most common maximum among regulators of 25 to 1. The company expects the ratio to rise even more in 2013, the release said.

There was some good news for MGIC (NYSE: MTG). The company wrote $7 billion in new insurance in the fourth quarter, up from $4.2 billion in the fourth quarter of 2011, the release said. The percentage of delinquent loans, including bulk loans, dropped from 16.1 percent as of Dec. 31, 2011, to 13.9 percent as of Dec. 31, 2012.

Stacy Vogel Davis covers banking, financial services and retail for The Business Journal.

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