MGIC To Capitalize Subsidiary To Write New Business

ge Guaranty Insurance Corp. (MGIC) reports that the Office of the Commissioner of Insurance (OCI) for the state of Wisconsin will allow a reactivation plan under which MGIC will contribute up to $1 billion to MGIC Indemnity Corp. (MIC), a wholly owned MGIC subsidiary, to enable MIC to write new mortgage guaranty insurance. MGIC will continue to write new business in each jurisdiction in which it currently operates until MIC begins operations there. Before MIC can begin writing new business, the OCI must specifically authorize MIC to do so, and MIC must obtain licenses in the states where it will transact business. MIC is currently seeking Fannie Mae's and Freddie Mac's approval to be an eligible mortgage insurer for loans purchased by those government-sponsored enterprises. Assuming MIC is approved as an eligible mortgage insurer, MIC plans to begin writing new business as of Jan. 1, 2010. MIC's additional capital will be provided in two $500 million installments, the first of which is to be made by July 31, 2009, and the second within five business days after Jan. 1, 2011, if MIC is then writing new business and the contribution is not disapproved by the OCI. To comply with the requirements of certain states, MIC will reinsure a portion of its new business in those states with another wholly owned subsidiary of MGIC. MGIC will capitalize this subsidiary by contributing $7.5 million in two equal installments at the same time as MGIC's contributions to MIC are made. MGIC will provide human resources, risk management, information systems and technology, finance and accounting and other business infrastructure to MIC, the company says. SOURC


Please enter your comment!
Please enter your name here