Back to top

Analyst Blog

MGIC Investment Corporation (MTG - Analyst Report) has raised capital worth $1145.35 million. The capital has been raised in two parts with $695.25 million from the issue of shares and $450 million from the issue of 2.00% convertible senior notes due 2020.

Interest on the notes will be paid at a rate of 2.00% per year, semi-annually on Apr 1 and Oct 1 of each year, effective Oct 1, 2013.
The total number of shares issued were 135 million. The underwriters were given a 30-day option to purchase up to an additional 20-25 million shares and $50 million of notes.
The proceeds from the issue will be used for general corporate purposes. The funds will primarily be used to provide additional capital support for its mortgage insurance business run by subsidiary Mortgage Guaranty Insurance Corporation (MGIC). Capital support will also be provided to other subsidiaries of the company. The funds will also be used to service debt thereby improving overall liquidity.
The debt can be converted for 143.8332 shares of common stock per $1,000 principal amount of notes.
The issue is being managed by The Goldman Sachs Group, Inc. (GS - Analyst Report). 
This move by the company clearly shows remedial measures taken by it after its risk to adjusted capital breached the maximum allowable permissible limits. The preliminary risk-to-capital ratio at MGIC's combined insurance operations was 47.8 to 1 as of Dec. 31, 2012.
Mortgage insurance regulators commonly allow for a maximum risk-to-capital ratio of 25 to 1. The drain in capital has come on the back of continuous loss suffered by the company since the mortgage market tumbled back in 2007. 
MGIC, the principal subsidiary of MGIC Investment Corporation, is the largest private mortgage insurer in U.S. on the basis of $162.1 billion primary insurance in force covering 1.0 million mortgages as of Dec 31, 2012. 
Another player in the same industry Radian Group Inc. (RDN - Snapshot Report) has also been suffering from loss from the last six years. It raised $689.3 million of capital from a combination of issue of common stock and notes. Yet another company Triad Guaranty Inc. has filed for bankruptcy. 

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UTD THERAPE… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%