MGIC Announces Changes to Captive Reinsurance Programs
|September 25, 2008|
MGIC Investment Corporation's primary subsidiary, Mortgage Guaranty Insurance Corporation ("MGIC"), announced that effective January 1, 2009 it will no longer cede new business under excess of loss reinsurance treaties with lender captive insurance companies. Loans reinsured through December 31, 2008 will run off pursuant to the terms of the particular captive treaty. Quota share reinsurance arrangements are not affected by this announcement.
MGIC Investment and MGIC have taken a series of actions in 2008 to address their financial strength, which has been adversely impacted by higher losses resulting from the continuing dislocation in residential housing and related mortgage lending. In addition to this announcement, these actions encompassed raising $840 million through securities sales; changing underwriting guidelines; increasing premiums; entering into a reinsurance agreement covering new business written beginning in April 2008; amending the bank credit facility; and selling MGIC's stake in Sherman Financial.