Standard & Poors has upgraded its rating of MGIC Investment Corp. to B-, up from CCC+, as a result of the company’s capital raise last week.
MGIC offered 135 million shares of common equity at $5.15 each and jointly,$450 million in senior convertible notes. Proceeds were expected to be more than $1.2 billion.
The funds raised will help shore up Milwaukee-based MGIC’s insurance subsidiaries’ capital positions.
“The extent of the capital raise mitigates, if not eliminates, our concerns in the near term regarding a regulatory take-over of the company, because MGIC’s consolidated risk-to-capital ratio exceeded 47x as of year-end 2012,” said Ron Joas, Standard & Poor’s credit analyst.
The company reported pretax losses of about $929 million in 2012, mainly because of second quarter reserve charges related to a decline in cure activity in late-stage delinquencies and a fourth quarter settlement with Freddie Mac and Countrywide. MGIC would otherwise have had nearly break-even results in the fourth quarter, S&P reported.
