MILWAUKEE, Aug. 3 /PRNewswire-FirstCall/ -- Mortgage Guaranty Insurance Corporation ("MGIC") today announced that, in connection with discussions to have its wholly owned subsidiary MGIC Indemnity Corporation ("MIC") approved as an eligible mortgage insurer by Fannie Mae and Freddie Mac, MGIC has delayed the date on which it plans to make its first contribution of capital to MIC to a date to be determined by MGIC and acceptable to the Office of the Commissioner of Insurance of Wisconsin ("OCI"). The OCI has approved this delay at MGIC's request. In addition, as discussed below, MGIC expects the amount of capital to be contributed to MIC by MGIC will be reduced.
As previously announced, in connection with a plan for MIC to begin writing new mortgage insurance business as of January 1, 2010, the OCI allowed MGIC to contribute up to $1 billion to MIC. MGIC's contribution was to be made in two $500 million installments, the first of which was to be made not later than July 31, 2009. The second contribution was to be made within five business days after January 1, 2011 if MIC was then writing new business and the contribution was not disallowed by the OCI. MIC's writing new business is subject to the specific authorization of the OCI.
The plan to use MIC to write new business was driven by MGIC's concern that in the future MGIC might not meet regulatory capital requirements to continue to write new business. These requirements are present in certain states while other jurisdictions do not have specific capital requirements. It is possible that as part of obtaining GSE approval of MIC as an eligible mortgage insurer, MIC would write new business in certain states and MGIC would continue to write new business in the remaining jurisdictions. If this structure were implemented, the amount of capital needed by MIC to write new business would be less than what it would need if it wrote business in all jurisdictions. As a result, MGIC would reduce its contribution of capital to MIC.
The amount of capital that MGIC would contribute to MIC will be determined as part of the discussions with GSEs on their approving MIC as an eligible mortgage insurer. These discussions are ongoing and include alternatives other than MIC writing new business in certain states and MGIC continuing to write new business in the remaining jurisdictions. In addition, TARP or other governmental funding could be alternatives to MIC.
About MGIC
MGIC (www.mgic.com), the principal subsidiary of MGIC Investment Corporation, is the nation's leading provider of private mortgage insurance coverage with $220.1 billion primary insurance in force covering 1.4 million mortgages as of June 30, 2009.
