Delinquent loans covered by the mortgage insurer MGIC Investment Corp. continued to surge in the fourth quarter, and the company said it does not expect to return to profitability this year.
The Milwaukee insurer also reported Tuesday that the volume of insurance it wrote in the quarter fell 43.6% from the previous quarter and 77.2% from the year earlier, to $5.5 billion.
MGIC said its "view of potential losses" on coverage of loans originated in 2006 and 2007 has continued to grow since November and that it is considering options to raise capital because of the risk that it might fall below regulatory requirements. It gave the same warning in October when it issued third-quarter results.
In a press release, chief executive Curt Culver said MGIC has the resources to meet its claim obligations.
Delinquencies among mortgages it insured on a loan-by-loan basis increased by 197 basis points from the previous quarter and 452 basis points from the year earlier, to 9.5%.
Overall, MGIC's net loss grew 141.3% from the previous quarter but fell 81.4% from the year earlier, to $273.3 million.
During a conference call, Mr. Culver said about 15% of claims were denied in the fourth quarter — almost twice the rate of the previous quarter — because of fraud and misrepresentations affecting loans made in late 2005 and 2006 and 2007.
He also said that he hoped the government would look favorably on his company's request for assistance under the Troubled Asset Relief Program.
MGIC began talks with the Treasury Department about the company's eligibility in late October, he said.