MGIC Announces Status Update Regarding Freddie Mac
MILWAUKEE, Sept. 28, 2012 /PRNewswire/ -- MGIC Investment Corporation (NYSE: MTG) announced the following update on the status of the matters in the August 1, 2012 letter from Freddie Mac.
- The amount of the capital contribution from MGIC Investment to Mortgage Guaranty Insurance Corporation ("MGIC"), MGIC Investment's principal insurance subsidiary, is reduced to $100 million from the prior $200 million. Also, the date by which such contribution is to be made is extended to December 1, 2012 from September 30, 2012.
- The jurisdictions in which MGIC Indemnity Corporation ("MIC"), MGIC's subsidiary, is approved by Freddie Mac to write new business is expanded to cover all of the 16 jurisdictions besides Wisconsin that have specific regulatory capital requirements when MGIC is not able to write new business in a jurisdiction because MGIC would not meet those requirements, after considering any waiver that may be granted. Also, the period for which MIC is approved is through December 31, 2013 rather than the prior December 31, 2012 date.
Continuation of Freddie Mac's approval of MIC requires the $100 million capital contribution be made by December 1, 2012. It also requires the two additional conditions in Freddie Mac's August 1, 2012 letter be met.
The first condition is that by October 31, 2012 MGIC and Freddie Mac must reach agreement as to substantially all terms to resolve their pool insurance dispute. The status of the parties' communications regarding this dispute is subject to a confidentiality agreement with Freddie Mac. Therefore, MGIC Investment will make no comment about this condition.
The second condition is that by December 31, 2012 the Office of the Commissioner of Insurance of Wisconsin ("OCI") must provide written confirmation to Freddie Mac that MIC's capital will be available to MGIC to support MGIC's policyholder obligations without segregation of those obligations. MGIC understands OCI, Freddie Mac and the Federal Housing Finance Administration have had discussions relative to this condition and that these discussions will be continuing.
Curt Culver, Chairman and CEO of MGIC Investment and MGIC, said "I am pleased with the spirit of cooperation all parties have shown in moving forward to reach this point. While there can be no guaranty that the open matters that remain can be successfully resolved, I am hopeful we will continue to make progress."
As with Freddie Mac's January 23 and August 1, 2012 letters, Freddie Mac's expanded approval for MIC may be withdrawn by Freddie Mac at any time. The August 1, 2012 letter from Freddie Mac is filed as an exhibit to the August 2, 2012 8-K report of MGIC Investment. The description of the August 1, 2012 letter in this press release is only a summary and readers should consult the actual letter for the exact terms.
MGIC (www.mgic.com), the principal subsidiary of MGIC Investment Corporation, is the nation's largest private mortgage insurer as measured by $166.7 billion primary insurance in force covering 1.0 million mortgages as of June 30, 2012. MGIC serves lenders throughout the United States, Puerto Rico, and other locations helping families achieve homeownership sooner by making affordable low-down-payment mortgages a reality.
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SOURCE MGIC Investment Corporation