MGIC Refuses New Business After 2Q Loss

The largest U.S. mortgage insurer MGIC Investment (MTG) is not accepting any new business after a huge loss in the second quarter.

MGIC said it will stop writing new business and instead will provide up to $1 billion to subsidiary Mortgage Indemnity Corp. (MIC) to write new mortgage guaranty insurance beginning next year.

The news sent shares down 8% to $3.62 in pre-market trading. "When MIC is fully operational, MGIC will stop writing new business," the company said in a statement.

During the quarter, the company recorded a loss of $339.8, or $2.74 a share, compared with a loss of $99.9 million, or 81 cents a share, a year earlier. Analysts expected a loss of 93 cents.

Revenue actually grew 7% to $454.5 million from $424.5 million last year.

MGIC wrote $5.9 billion of new insurance in the quarter, compared with $14 billion a year ago, as consumers shun the company due to record defaults that have threatened its stability.

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