Oct. 21 (Reuters)—MGIC Investment Corp posted a wider third-quarter loss, saw more homeowners fall behind on their payments and is perilously close to reaching the maximum risk levels allowed, sending its shares down 15 percent before the bell.
MGIC Investment, Radian Inc., PMI Group, and life insurer Genworth's mortgage unit insured millions of mortgages, at low premiums, during the housing boom.
But when the loans went bust, they were left taking large losses, lowering their capital and raising their risk ratios.
At the end of September, the risk-to-capital ratio of MGIC's combined insurance operations was 24 to 1. Most states allow a maximum risk-to-capital ratio of 25 to 1.
The high combined risk ratio might require MGIC to add capital to its reinsurance units, the company said in a statement.
DELINQUENCIES RISE
New notices of delinquencies—a measure of how many homeowners fell behind on their payments in the quarter—were at the highest level this year at 44,342.
Cures were also at their lowest level this year at 34,335, as high unemployment and stagnating incomes let fewer Americans catch up with their interest payments.
MGIC saw its loss nearly triple to 82 cents a share, from a year ago.
MGIC said net paid claims, paid in case of a default or foreclosure, jumped 27 percent to $751 million from a year ago.
Shares of Milwaukee-based MGIC were down 15 percent at $2.04 in pre-market trade. They closed at $2.44, down 80 percent since the start of the year, on Thursday on the New York Stock Exchange.
MGIC's weak results sent shares of smaller rivals Radian and PMI Group down 13 percent and 8 percent respectively.
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