MGIC Out of The Hat, For Now
MGIC, posted a narrower than expected loss $34 million.
The #1 US mortgage insurer raised about $840 million last month selling stock and convertible debt to bolster capital after a record Q4 loss of $1.47 billion.
MGIC's claims costs soared to $691.6 vs $181.8 million a year earlier. The number of delinquent loans MGIC insures rose 49% over 12 months to 113,589 as of March 31.
MGIC's quarterly loss would have been wider, had the company not reduced by $264 million a $1.2 billion special reserve
that it created in Q4 for additional losses expected from Wall Street mortgage-related transactions it insured.
The Nattering One muses... with the reserve drawdown, the loss was really $300 million.
We suspect that MGIC's estimates of $1.8 - $2 billion in 2008 claims will prove to be on the light side.
As mortgage resets and layoffs take their toll over the next six months, the draw down of the remaining $1 billion reserve...
will "unexpectedly" accelerate in the months to come. Keeps your eyes peeled on this one.
As Nattered before, when the mortgage insurance safety net disappears, the lenders REO high wire act comes to an abrupt end...
with an "unforseen" fire sale of assets that will crater current real estate prices even further.
Hattip to Bloomberg.
The #1 US mortgage insurer raised about $840 million last month selling stock and convertible debt to bolster capital after a record Q4 loss of $1.47 billion.
MGIC's claims costs soared to $691.6 vs $181.8 million a year earlier. The number of delinquent loans MGIC insures rose 49% over 12 months to 113,589 as of March 31.
MGIC's quarterly loss would have been wider, had the company not reduced by $264 million a $1.2 billion special reserve
that it created in Q4 for additional losses expected from Wall Street mortgage-related transactions it insured.
The Nattering One muses... with the reserve drawdown, the loss was really $300 million.
We suspect that MGIC's estimates of $1.8 - $2 billion in 2008 claims will prove to be on the light side.
As mortgage resets and layoffs take their toll over the next six months, the draw down of the remaining $1 billion reserve...
will "unexpectedly" accelerate in the months to come. Keeps your eyes peeled on this one.
As Nattered before, when the mortgage insurance safety net disappears, the lenders REO high wire act comes to an abrupt end...
with an "unforseen" fire sale of assets that will crater current real estate prices even further.
Hattip to Bloomberg.
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