MGIC Investment Corp. (NYSE: MTG) Expects Losses Well Into 2011 ... or Longer

Another disastrous quarter and news the company will sell about $1 billion in notes and stock has MGIC Investment Corp. (NYSE:MTG) under immense pressure, as they continue on the path of losses for the 11th quarter in a row.

First-quarter losses were $150.1 million, or $1.20 a share for MGIC, a little better than the same quarter last year when they lost $184.6 million, or $1.49 a share.

In a statement, the company said, “We currently expect to incur substantial losses for 2010 and losses in declining amounts thereafter.”
 
MGIC Investment Corp. is the largest insurer of mortgages in the United States, and so is a bellwether in the industry, and that doesn't bode well for the overall sector or the U.S. housing market, which continues to struggle in spite of media reports implying things are getting better.

For example, over 932,000 homes were foreclosed on, went to auction or were delivered a default notice in the first quarter alone, a 16 percent increase over last year during the same time.

So the idea the housing market is recovering is a joke, and the numbers completely and easily confirm that. It shouldn't get any better in 2010, and the projections by MGIC that this will continue on for them incrementally, says there will eventually be slight improvement, but it'll happen over a much longer period of time than is being reported and portrayed by the mainstream media outlets.

As for the selling of stock and notes by the company, it reveals it's struggling to raise capital, and this is probably the only avenue they have left.

According to MGIC, they have already initiated their stock offering, which is being handled by Goldman Sachs (NYSE:GS), of $700 million, and are also offering $300 million in senior notes which will be due in 2017. The notes are convertible to shares of common stock in MGIC if an investor would want to do that.

The capital is expected to be used to repay debt due in 2011 and possibly to increase capital levels at the company.