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MGIC Investment Corporation (MTG - Analyst Report) reported fourth quarter 2012 operating loss of $1.91 per share, substantially worse than the Zacks Consensus Estimate of a loss of $1.69 per share. The company had reported an operating loss of $0.67 per share in the prior-year quarter.

 
For the full year 2012, loss per share was $4.59 compared to a loss per share of $2.42 for the full year 2011. 
 
Total revenue for the quarter came in at $371.4 million, down 16.9% year over year. Net premiums written were reported at $260.7 million down 1.2% year over year. The company’s new insurance written soared 67% year over year to $7.0 billion in the quarter.
 
GIC's primary insurance in force stood at $162.1 billion as of Dec 31, 2012, compared with $172.9 billion as of Dec 31, 2011.
 
Losses incurred were $688.6 million, up 43% year over year. 
 
Net underwriting and other expenses were $51.5 million, up 1.6% year over year. Investment income plunged 46.0% year over year to $21.7 million.
 
Persistency (the percentage of insurance remaining in force from the previous year) was 79.8% as of Dec 31, 2012, compared with 82.9% as of Dec 31, 2011. 
 
Book value per share decreased to 97 cents per share as of Dec 31, 2012 compared with $5.95 as of Dec 31, 2011.
 
At Dec 31, 2012, MGIC's risk-to-capital ratio was 44.7 to 1, exceeding the maximum allowed by many jurisdictions, and its policyholder position was $640 million below the required minimum of $1.2 billion.
 
The company has been reporting annual net loss for the past consecutive 6 years. We do not expect the company to return to profitability in 2013 given high unemployment rates, low cure rates, low housing values, changes to the company’s rescission practices and unfavorable resolution of ongoing legal proceedings. 
 
MGIC retains a Zacks Rank #3(Hold) 
 
Other companies in the same industry, Radian Group Inc. (RDN - Snapshot Report), Genworth Financial Inc. (GNW - Analyst Report), MBIA Inc. are all witnessing losses from their mortgage businesses. 

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