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MGIC Rallies as Freddie Mac Insurance Clash Eases

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MGIC Rallies as Freddie Mac Insurance Clash Eases
Curt Culver, chief executive officer of MGIC Investment Corp., poses in this undated company photograph. Source: MGIC via Bloomberg

Nov. 1 (Bloomberg) -- MGIC Investment Corp. led a rally of mortgage guarantors after the company reached a preliminary deal with Freddie Mac to resolve a coverage dispute that threatened to prevent the insurer from backing some loans.

MGIC jumped 16 percent to $1.99 at 10:05 a.m. in New York. Philadelphia-based Radian Group Inc. climbed 15 percent after reporting its first profit in four quarters.

Radian and MGIC have outlasted rivals such as PMI Group Inc. and Triad Guaranty Inc. that were prohibited by regulators from selling new coverage after capital fell short or the missed standards imposed by Freddie Mac. Milwaukee-based MGIC will make payments to Freddie Mac over four years under the arrangement, which was announced yesterday, the deadline for reaching a deal over how much coverage the insurer must provide on groups of loans it backed for the government-sponsored mortgage firm.

MGIC is “pleased with the spirit of cooperation all parties have again demonstrated” in reaching the preliminary accord, Chief Executive officer Curt Culver said in a statement late yesterday. “While there can be no guaranty the open matters can be successfully resolved, I am hopeful we will continue to make progress.”

Genworth Financial Inc., which backs mortgages and sells life insurance, advanced 5.4 percent. Old Republic International Corp. climbed 1.4 percent.

To contact the reporter on this story: Zachary Tracer in New York at ztracer1@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

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