Industry News

MGIC, Radian call off merger

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Mortgage insurers MGIC Investment Corp. and Radian Group Inc. have agreed to terminate a merger agreement that was complicated by both companies' potential losses in C-BASS LLC, a subsidiary that's invested in subprime mortgages. In agreeing to back out of the merger, the companies said they would drop all lawsuits and that no payments would be made in connection with the termination of the deal. When announced in February, the merger of MGIC and Radian was expected to create a company with $15 billion in total assets, more than $290 billion of primary mortgage insurance in force and a $104 billion financial guaranty portfolio. But MGIC said in August that it was not obligated to complete the merger because of potential losses at Credit-Based Asset Servicing and Securitization LLC, or C-BASS, a limited liability company owned by MGIC, Radian and the management of C-BASS. MGIC and Radian have both said they could lose their entire $1 billion investment in C-BASS, which owns high-risk m...