Fitch downgrades MGIC - The Business Journal of Milwaukee:

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Fitch noted that the proposed restructuring has both negative and positives implicationsfor MGIC’s policyholders, which are lendersw who insure mortgages. The restructuring reduces MGIC’zs resources that are immediately available to pay claimsz over theshort term, Fitcg said. While MGIC deploys up to $1 billio in capital to the subsidiary, the investment will increas the risk profile of the capital and subordinater MGIC policyholders to policyholders ofthe , Fitch said.
On the othet hand, Fitch views as positive the restructuring because it will allowe MGIC to both avoida risk-to-capita driven cessation of operations and to underwrite potentialluy high quality business at attractive rates. That couldd ultimately benefit MGIC policyholders over the long term and the franchiss position of the new entity will be Fitch said. Mortgage Guaranty Indemnity also will be limiteed to an operating leverag e limitof 18:1 rather than 25:1, which may provide a capital cushion, Fitch said. Fitch has placed the rating s on Rating Watch Negative MGICInvestmentt Corp.’s long-term issuer default rating, $200 million 5.625 percent senior notees due Sept.
15, 2011 and $300 milliobn 5.375 percent senior notes due Nov. 1, 2015.