MGIC Plans Stock Sale to Bolster Capital
MGIC Investment Corp. said Tuesday that it had filed plans to issue additional shares of common stock with the Securities and Exchange Commission, in a bid to raise new capital for its mortgage insurance arm. Fitch Ratings warned on February 25 that MGIC -- along with other mortgage insurers -- needed to bolster capital in order for its insurance sub to maintain its current 'AA' rating. The company said it had not yet established the amount of common stock it planned to offer, and that it might raise capital in other forms. A decision on the company's capital-raising plans are expected in the next few weeks. In its SEC filing, MGIC suggested that it expects a profitable book of new insurance underwritten in 2008, but said that "we do not believe we can participate fully in the opportunities we see for the 2008 and subsequent books without additional capital." MGIC stopped insuring home equity securitizations in the fourth quarter of 2007, and said in early February that it would pull back dramatically in underwriting new insurance in various key U.S. states. Under new policies that went into effect this week, MGIC will no longer underwrite mortgage insurance on loans where the loan-to-value is above 95 percent in any market it deems "restricted." Restricted markets include the entire states of California, Florida, and Nevada. For more information, visit http://www.mgic.com.