MGIC Provides Investor Update

MGIC Investment Corporation (NYSE: MTG) announced today that year-end 2007 delinquency inventory was 107,120 loans, an increase of approximately 16,000 loans from the end of the third quarter. Cure rates have continued to deteriorate, resulting in a higher percentage of delinquent loans that become claims, and average claim size has also continued to increase. As a result, the Company expects incurred losses for the fourth quarter of 2007 to approximate $1.3 billion. The Company said its insurance in force at year-end 2007 was $211.7 billion. The Company also said it is increasing its paid loss forecast for 2008 to $1.8 - $2.0 billion.

I'm still short MTG - it's one of my favorite positions. Used the rally in financials today to buy back BKUNA, MTG, MBI puts that I had sold last week.

MGIC Investment Corp (MTG) to Become More Conservative

I just read an article about MGIC Investment Corp (MTG), the biggest mortgage insurer. This was published last Friday, December 7th:

But MGIC, going forward, will no longer insure loans for borrowers with credit scores below 575.

The insurer also is putting in some geographic restrictions in places like California and Florida -- two areas hard-hit by the mortgage crisis. MGIC will insure loans up to 95 percent of a home's value, meaning they won't insure homes with no equity...

Another change will limit the insurance MGIC offers people who have Alt-A loans, which generally require only limited verification of income.

So, if they aren't insuring those types of loans starting now, can I infer that they were insuring them up until this week?

And, if so, what were they thinking?

Disclosure: Author owns MTG puts.