MGIC Investment Corp. has contributed $200 million to increase the statutory capital of Milwaukee-based Mortgage Guaranty Insurance Corp.
The investment will allow the largest Fannie Mae and Freddie Mac insurer to write new business in the event it doesn’t meet minimum capital requirements in a particular state.
The company detailed the capital investment strategy in October, when MGIC reported higher losses on the mortgages it insures and posted a net loss of $165.2 million, or 82 cents per share, for the third quarter.
Fourth quarter results showed a loss of 93 cents per share, a wider loss than expected.
In addition to the investment, the Wisconsin Office of the Commissioner of Insurance waived specific capital requirements and both Fannie Mae and Freddie Mac have approved MGIC subsidiary MGIC Indemnity Corp. as an eligible insurer for its GSEs if MGIC proves unable to meet nationwide capital regulations.
As of Dec. 31, 2011, MGIC meets the capital requirements for each state and is an eligible insurer for Fannie Mae and Freddie Mac.
“Because MGIC is able to write new business on a nationwide basis without the need for any waiver of capital requirements, there is no immediate need to extend the OCI’s waiver or to use MIC,” according to a company release. “However, we expect MGIC’s capital to diminish in 2012 and thereafter. Thus, we remain in discussions with OCI, Fannie Mae and Freddie Mac regarding the terms under which this strategy may be continued. “
