MGIC Investment Corporation Contributes $200 Million to Increase the Statutory Capital of Mortgage Guaranty Insurance Corporation

MILWAUKEE, Dec. 30, 2011  /PRNewswire/ -- In October 2011, MGIC Investment Corporation ("Investment") outlined its plan to seek to continue the strategy it had previously implemented to enable it to write new business on a nationwide basis in the event the capital of its principal insurance operation, Mortgage Guaranty Insurance Corporation ("MGIC"), did not meet regulatory requirements.  In connection with this plan, Investment last week contributed $200 million to increase the statutory capital of MGIC.

The strategy, which has been in place for about two years, includes a waiver from the Office of the Commissioner of Insurance for the State of Wisconsin ("OCI") of specific capital requirements.  The strategy also includes the separate approvals by Fannie Mae and Freddie Mac, given in late 2009 and early 2010, of MGIC's subsidiary MGIC Indemnity Corporation ("MIC") as an eligible insurer for each GSE if MGIC can no longer write new business in specified jurisdictions due to capital requirements. The OCI waiver and Fannie Mae's approval expire tomorrow; Freddie Mac's approval expires at the end of 2012.  Additional important information about the waiver and these approvals is included under "Additional Information" below. 

Curt S. Culver, CEO and Chairman of the Board of MGIC and Investment, said that the additional capital contribution is an important step in enabling the company to further support its policyholders and the US housing market by continuing to write new insurance on a nationwide basis. 

At December 31, 2011, giving effect to the $200 million contribution, MGIC meets the regulatory capital requirements in Wisconsin.  With regard to the capital requirements of all other jurisdictions having specific capital requirements for mortgage guaranty insurers and in which MGIC does business, at December 31, 2011, MGIC meets those requirements without the need for any waiver of them.  MGIC remains an eligible insurer for both Fannie Mae and Freddie Mac. 

Because MGIC is able to write new business on a nationwide basis without the need for any waiver of capital requirements, there is no immediate need to extend the OCI's waiver or to use MIC.  However, we expect MGIC's capital to diminish in 2012 and thereafter.  Thus, we remain in discussions with OCI, Fannie Mae and Freddie Mac regarding the terms under which this strategy may be continued. 

Additional Information

The OCI waiver was subject to termination by the OCI at any time in its discretion.  The continuation of the Fannie Mae and Freddie Mac approvals were (or are) subject to various conditions.  In addition, the Fannie Mae approval was subject to earlier withdrawal by Fannie Mae if there was non-compliance by MGIC or MIC with Fannie Mae's general qualified mortgage insurer approval requirements, as amended from time to time.  The Freddie Mac approval is subject to withdrawal by Freddie Mac at any time in its discretion.  Further information about the Fannie Mae approval, including the actual terms, may be found in Investment's Current Report on Form 8-K filed with the SEC on October 16, 2009; further information about the Freddie Mac approval may be found in Investment's Current Report on Form 8-K filed with the SEC on February 16, 2010.  No reader of the description of the waiver or GSE approvals in this press release (or in a document referred to in this press release) should infer that the terms on which such instruments may be extended, if such extensions occur, will not contain different conditions or other terms unfavorable to us.  Further information about the strategy, including with respect to the regulatory capital requirements and waivers of such requirements from jurisdictions other than Wisconsin, may be found in Item 1A, under the caption "Regulatory capital requirements may prevent us from continuing to write new insurance on an uninterrupted basis," in Investment's Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2011 filed with the SEC.

Safe Harbor Statement

The statement made in the fifth paragraph of this press release that we expect MGIC's capital to diminish in 2012 and thereafter is a forward looking statement.  Actual results may differ materially from the results contemplated by this forward looking statement. We are not undertaking any obligation to update this forward looking statement or other statements in this press release even though these statements may be affected by events or circumstances occurring after these statements were made. No investor should rely on such statements being current at any time other than the time at which this press release was issued.  Factors that could cause actual results to differ materially include, among other items, the development of existing delinquencies more favorably than in our internal forecasts; future delinquencies occurring in frequencies or severities lower than in such forecasts; premium earnings higher than in such forecasts; and investment income in greater amounts than in such forecasts.  On the other hand, if any of these factors actually developed worse than contemplated by these forecasts, or if other events occurred, such as adverse developments in litigation or other dispute resolution proceedings (in accordance with ASC 450-20 we have made no provision in our financial statements for such developments), MGIC's capital could diminish in amounts materially greater than in such forecasts.

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 $179.0 billion primary insurance in force covering 1.1 million mortgages as of September 30, 2011. 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.

SOURCE MGIC Investment Corporation