Milwaukee-based mortgage insurer MGIC Investment Corporation will pay $267.5 million to Freddie Mac under a settlement to the pool insurance dispute between the companies and the Federal Housing Finance Agency.
The company will pay $100 million by December 11 and the remaining $167.5 million in 48 equal installments starting on January 2.
The full charge will be recorded in the fourth quarter for MGIC. In order to partially offset the negative effect on statutory capital, MGIC Investment Corp. will transfer $100 million to subsidiary Mortgage Guaranty Insurance Corporation.
MGIC has also met all conditions that will allow its subsidiary MGIC Indemnity Corporation to serve as a limited mortgage insurer through the end of 2013 for both Freddie Mac and Fannie Mae.
MIC is currently writing business in Florida, Idaho, Missouri, New Jersey, New York, North Carolina, Ohio and Puerto Rico. Under Fannie Mae conditions, it may not write business in Wisconsin.
The Wisconsin Office of the Commissioner of Insurance ordered MIC to pay a dividend to MGIC in the event the OCI determines that MGIC is reasonably likely to be unable to honor its claim obligations or the MGIC fails to honor its valid claim obligations.
“I am very pleased that the implementation of our plan, designed over three years ago, to write new business through a combination of MGIC and MIC, can continue to be implemented,” said Curt Culver, chairman and CEO of MGIC Investment Corporation and MGIC. “I want to express my thanks to our business partners at Freddie Mac and Fannie Mae, to the FHFA, and to MGIC’s principal regulator, the Wisconsin OCI, for its efforts in concluding this matter. I appreciate the trust that our customers continue to place in MGIC for their mortgage insurance solutions and want to thank them for their business.”
