Updated from 10:16 a.m. EST

Mortgage insurer

MGIC Investment

(MTG) - Get MGIC Investment Corporation Report

on Wednesday reported a staggering $1.47 billion fourth-quarter loss, as delinquencies and losses took their toll.

The Milwaukee-based company posted a diluted loss per share for the fourth quarter of $18.17, vs. a profit of $121.5 million, or $1.47 a share, for the year-ago period. Analysts had expected a loss of $6.77 a share, according to Thomson Financial.

MGIC posted a full-year net loss of $1.67 billion, compared with net income of $564.7 million for 2006.

Shares were losing 14.7% to $12.09 in recent Wednesday morning trading, just off its lows for the day.

Chairman and CEO Curt Culver, in a press release, attributed the awful earnings to the "low cure rates coupled with higher loss severities and higher delinquencies had a material impact on the company's financial results both in the quarter and for the year." He said investors should not expect a return to stability in 2008.

"...

Given the company's expectations for credit loss development, unless the cure rate and loss severity improves, the company does not foresee net income for 2008," he said.

Culver, on a conference call with analysts, said the company expects to see a $500 million to $700 million credit back in 2008, due to the reserves that were set aside for discontinued businesses. But that won't change the fact that 2008 will be a difficult year. Indeed, new insurance written for the quarter included $2.4 billion of bulk business way below the $5.1 billion in the same period last year.

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The hardest-hit markets of California, Florida and the Midwest contributed to the losses, showing increases in both the number and size of loans that were delinquent. Including bulk loans, the percentage of loans that were delinquent at the end of December was 7.45%, a jump from 6.13% in 2006.

"It went from boom to bust very quickly," Culver said.

The quarter also took a hit from the joint venture of C-BASS, which was responsible for an after-tax charge of $33 million related to equity losses. The result was a reduction in the carrying value of the $50 million note from C-BASS to zero.

The company also announced it had retained an advisor to help it raise capital, following the lead of bond insurers

MBIA

(MBI) - Get MBIA Inc. Report

and

Ambac

( ABK), also hard-hit by mortgage-related woes. MBIA was able to raise more than $2 billion from sources including private equity firm Warburg Pincus. MGIC insisted during its call that the capital would be used for new business opportunities, not to shore up the balance sheet.

Standard & Poor's recently upgraded MGIC from strong sell to sell. "We believe that a nationwide decline in home prices will continue to weigh on

MGIC's shares as the company has insured the riskier spectrum of borrowers," Analyst Stuart Plesser wrote. "Although we look for defaults and the severity of claims to increase significantly in '08, recent interest rate cuts should help somewhat"

One glimmer of positive news was that total revenues for the quarter were up 8.7% to $399.1 million, an increase over the $367.2 million in the prior year's quarter. The increase in revenues resulted primarily from an increase in earned premiums and investment income partially offset by a decrease in other revenue.

The company also noted during the call that it was seeing much stronger loans to underwrite in January.