MGIC Gains as Insurer’s Freddie Mac Deal Clears Hurdles
MGIC Investment Corp. (MTG), the mortgage insurer that breached regulators’ capital limits, advanced the most on the KBW Insurance Index after saying Freddie Mac will allow the company to continue selling coverage.
MGIC gained 7.4 percent to $1.88 at 4:15 p.m. in New York. The shares have retreated 50 percent this year.
The insurer is transferring $100 million to a subsidiary to maintain approval from government mortgage buyer Freddie Mac, Milwaukee-based MGIC said in a statement late Nov. 30. MGIC will also pay $100 million to Freddie Mac by next week and $167.5 million more in 48 installments, beginning in January. The payments help resolve a coverage dispute, over which the companies reached a preliminary agreement in October.
“All other conditions required by Freddie Mac to continue Freddie Mac’s approval of MGIC’s subsidiary, MGIC Indemnity Corporation, as a limited mortgage insurer through Dec. 31, 2013 have been satisfied,” MGIC said in the statement.
MGIC said it will record a $267.5 million charge in the current quarter.
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