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S&P Downgrades MGIC Investment's Ratings

The Associated Press

NEW YORK (AP) — Standard & Poor's downgraded credit and debt ratings of MGIC Investment Corp. on Friday after the company announced it was deferring interest on a debt offering.

MGIC Investment's counterparty credit rating was lowered to "CCC" from "BB+", and its preferred convertible debt rating was downgraded to "C'' from "B+", Standard & Poor's Ratings Service said.

The outlook is negative for these ratings, which have been removed from CreditWatch, where they had been placed with "negative implications" in December.

Standard & Poor's also lowered its counterparty credit and financial strength ratings on two subsidiaries, Mortgage Guaranty Insurance Corp. and MGIC Indemnity Co. to "BB" from "A-." They remain on CreditWatch with negative implications.

The ratings follow the announcement that MGIC Investment chose to defer interest on its $390 million subordinated convertible debt offering, Standard & Poor's credit analyst James Brender said.

Standard & Poor's noted that the MGIC group reported losses of $519 million in 2008 and $1.7 billion in 2007 — reflecting a rise in delinquent insured mortgages caused to home price declines.

"The downgrade of MGIC reflects the company's recent poor operating results and our concern that rising unemployment could delay MGIC's recovery," Brender said.

Shares of MGIC Investment Corp. rose 18 cents, or 21 percent, to close Friday at $1.04.