Jan. 21--Rising homeowner loan defaults led to a loss for MGIC Investment Corp. in the fourth quarter, and a return to profitability is unlikely in 2009, the company said Tuesday.

The Milwaukee company, the nation's largest insurer of mortgages, posted a loss of $273.3 million, or $2.21 a share, compared with a loss of $1.47 billion, or $18.17, a year earlier.

Analysts surveyed by Bloomberg News had been expecting a loss of $1.14 a share.

On a terrible day for most financial stocks Tuesday, shares of MGIC lost 67 cents -- almost 24 percent -- to close at $2.13.

"It's fairly apparent that the mortgage market continues to deteriorate, and their results are consistent with that," said Thane Bublitz, a stock analyst with Thrivent Asset Management in Appleton.

Lenders normally require home purchasers to buy mortgage insurance if the down payment is less than 20 percent of a home's price. The insurance protects the lender if the borrower defaults on the loan.

MGIC Chairman and Chief Executive Officer Curt S. Culver said the drop in home values and the recession caused a significant increase in delinquencies in the fourth quarter and for all 2008.

In a conference call with analysts, MGIC executives said they expected delinquencies to peak in the third quarter this year.

But in an interview, Michael J. Zimmerman, senior vice president for investor relations, said that whether delinquencies would plateau or decline rapidly at that point was difficult to predict. The projection also depends on how many jobs are lost -- leaving people less able to make monthly mortgage payments -- in the recession.

The portion of loans that were delinquent, excluding bulk loans, on Dec. 31 was 9.51 percent, up from 4.88 percent a year ago. Including bulk loans, the portion of delinquent loans was 12.37 percent, up from 7.45 percent.

Net premiums written in the quarter were $360.7 million, down from $380.5 million a year ago. New insurance written was $5.5 billion, down from $24 billion.

Total revenue in the quarter rose 3.1 percent, to $411.5 million, from $399.1 million in the same quarter a year ago.

MGIC also said the company was considering its options to obtain additional capital for maintaining risk-to-capital levels needed to meet regulatory requirements.

One possible source is the U.S. Treasury.

Although government investment available through the Capital Purchase Program has been going to banks, MGIC has been in discussions with the Treasury for several months.

"As of this point, their capital seems sufficient," Bublitz said of MGIC. "But that's all dependent on what their loss experience is over the next two, three, four quarters."

Bublitz said predictions about losses were muddied right now because there was a patchwork of foreclosure moratoriums in place around the country, and because more sweeping moratorium or mortgage mitigation efforts could be forthcoming from Congress.

MGIC INVESTMENT CORP.:

4th quarter percent

12/31 2008 2007 change

Revenue $411.5 $399.1 3.1

Net income -273.3 -1,466.6 n.a.

EPS (diluted) -2.21 -18.17 n.a.

12 months

Revenue $1,721.5 $1,693.2 1.7

Net income -518.9 -1,670.0 n.a.

EPS (diluted) -4.55 -20.54 n.a.

Figures in millions except for earnings per share. Percentages are based on unrounded sales and income figures.

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