S&P lowers MGIC to B, MGIC Investment to CCC

Standard & Poor's said it lowered its ratings on MGIC to B from B+ and its unsolicited issuer credit rating on MGIC Investment Corp. to CCC from CCC+. The outlook is negative.

"High losses in the mortgage insurance sector are occurring amid an economy that is struggling to recover and that continues to exhibit significant weakness in the jobs and housing markets," said S&P credit analyst Ron Joas in a news release.

S&P said MGIC is at significant risk of adverse reserve development because macroeconomic conditions remain unsupportive of a more rapid turnaround in the underlying fundamentals of the mortgage insurance industry. While adverse deviation of a few percent would ordinarily not be considered significant, given the size of MGIC's existing reserves, even nominal deviations could have a significantly negative impact on MGIC's capital base, the agency said.

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