MGIC, Sherman Stakeholder, Warns of Fourth Quarter Loss

 
MGIC Investment Corporation (NYSE: MTG), a 25 percent stakeholder in debt purchasing giant Sherman Financial, said earlier this week it expects to lose $1.3 billion in the fourth quarter of 2007. MGIC will report earnings on February 13.

The Milwaukee-based private mortgage insurance agency reported in an investor update on Tuesday that increasing delinquencies in the loans it backs are driving up claims and that average claim size is also increasing, resulting in lower earnings. MGIC said that year-end 2007 delinquency inventory was 107,120 loans, an increase of approximately 16,000 loans from the end of the third quarter.

MGIC also said it is increasing its paid loss forecast for 2008 to $1.8 – $2.0 billion.

MGIC announced Thursday that it is paying a dividend of $0.025 per share for the fourth quarter. The company also announced Thursday that it has made three promotions in its executive ranks:

• Jeffrey Lane has been promoted to Executive Vice President, General Counsel and Secretary of both MGIC Investment Corporation and MGIC. Lane has served as Senior Vice President, General Counsel and Secretary since 1996.
  
• Michael Zimmerman has been promoted to Senior Vice President, Investor Relations of MGIC. Zimmerman came to MGIC from Household Bank in 1995, and has held several positions with advancing responsibilities during his 13 years with the company.
• Jeffrey Nielsen has been promoted to Vice President, Financial Planning/Analysis of MGIC. Nielsen has served in MGIC’s financial division since 1987.

Sherman Financial, one of the largest debt purchasers in the world, last year saw its management team purchase a portion of MGIC’s stake in the company (“Sherman Management Pays $519 million for 37% of Firm,” Sept. 24, 2007). After the transaction, MGIC owned 24.2 percent of Sherman with fellow mortgage insurer Radian Group controlling 21.8 percent and the management team of Sherman owing 54 percent.