MGIC Prices $700m in Stock to Bolster Mortgage Insurance Business
MGIC Investment Corp. (MTG) on Wednesday priced the public offering and sale of 65.1m shares of common stock at $10.75 apiece. The sale yielded gross proceeds of $700m, which will help fuel additional liquidity at MGIC's mortgage insurance business, the company said. The company granted underwriters a 30-day option to purchase up to 9.8m additional shares. In a concurrent offering, MGIC priced $300m in aggregate principal amount of 5% convertible senior notes due 2017. The company plans to use the net proceeds from the offerings to repay some $78.4m of outstanding principal of senior notes due 2011. MGIC will also use proceeds to bolster liquidity at its primary insurance subsidiary, Mortgage Guaranty Insurance Corp. (MGIC). The capital-raising efforts come after MGIC on Tuesday reported a $150.1m net loss in Q110, narrowed from $184.6m a year earlier, as defaulted mortgages ease the financial strain on the mortgage insurance unit. The company wrote $1.8bn in new insurance during the quarter, compared with $6.4bn in the year-ago period. MGIC wrote an additional $684.8m of mortgage insurance under the Home Affordable Refinance Program (HARP), which it counts as modification of existing coverage. Write to Diana Golobay. Disclosure: the author holds no relevant investment positions.