MGIC Investment Corp, the leading U.S. mortgage insurer, posted a larger-than-expected $1.47 billion fourth quarter loss as more homeowners fell behind on their mortgage payments.
The company lost $18.17 per share, much higher than the $8.13 per share analysts polled by Reuters had expected, and a far cry from profit of $121.5 million, or $1.47 per share, a year earlier.
For the entire year, MGIC lost $1.67 billion, or $20.54 per share, as claims almost quadrupled to $2.37 billion from $613.6 million.
Revenue for the fourth quarter was $399.1 million, up 8.7 percent from $367.2 million a year ago.
Net premiums written increased nearly 25 percent to $380.5 million during the quarter, up from $367.1 million in the same quarter in 2006.
New insurance written was $76.8 billion, compared to $58.2 billion in 2006, with $211.7 billion primary insurance in force at the end of 2007, compared with $176.5 billion the previous year.
MGIC said claims totaled $1.35 billion during the fourth quarter, up from $187.3 million a year earlier and $50 million more than it had estimated last month, with larger losses realized in places like Florida and California.
It also set aside $1.2 billion for losses related to securitizations and took a $33 million charge for collapsed subprime mortgage venture C-BASS.
The company also revealed that it had hired an advisor to explore ways to shore up capital, but noted that it has “adequate” capital to meet its claim obligations.
Starting March 3, MGIC will require at least 5 percent down on homes in so-called restricted markets, including entire states like Arizona, California, Florida and Nevada.
It’s been a terrible year for mortgage insurers, as both Radian and Milwaukee-based MGIC recorded their first ever quarterly losses.Shares of MGIC fell $2.07, or 14.60%, to $12.11 in early afternoon trading on Wall Street.
Mortgage insurance is typically required by mortgage lenders when the loan-to-value exceeds 80 percent.
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