Mortgage Guaranty Insurance Corp. (MGIC) on Monday revealed plans to delay its first capital infusion into MGIC Indemnity Corp. (MIC), which is slated to begin writing new mortgage insurance business as of Jan. 1, 2010.

MGIC said the Office of the Commissioner of Insurance of Wisconsin approved the delay as the company attempts to have MIC approved as an eligible mortgage insurer by mortgage giants Fannie Mae ($0.00 0%) and Freddie Mac ($0.00 0%). It also said it will likely reduce the amount planned for the MIC capital contribution.

"It is possible that as part of obtaining GSE approval of MIC as an eligible mortgage insurer, MIC would write new business in certain states and MGIC would continue to write new business in the remaining jurisdictions," MGIC said in a corporate statement Monday. "If this structure were implemented, the amount of capital needed by MIC to write new business would be less than what it would need if it wrote business in all jurisdictions."

MGIC originally planned to contribute $1bn to MIC in two $500m installments with the first arriving by July 31 and the second coming in 2011.

It announced the formation of MIC after posting a $339.8m loss for Q209.

Fitch Ratings downgraded the insurer financial strength to triple-B minus from triple-B after the loss. The ratings agency noted, however, that a capital restructuring and the formation of MIC would allow MGIC to continue to operate in the midst of increasing mortgage delinquencies.

Write to Diana Golobay.