Analyst Sees Brighter Outlook for MGIC's Loans.

Milwaukee -- An analyst at Friedman Billings Ramsey, Arlington, Va., has cut his 2008 loss estimates for MGIC Investment Corp. here by more than half, as the company's first-quarter results were better than anticipated. The cut, from an expected loss of $5 per share to an expected loss of $2.15 per share, also factors in the recent issuance of additional shares in the company.

FBR says it is encouraged by its expectations that MGIC will be slowing the pace of adding to its reserves in upcoming quarters.

MGIC's first-quarter loss of $0.41 per share beat both the consensus estimate of -$1.63 and FBR's -$1.16.

FBR analyst Steve Stelmach noted that MGIC has already built up its reserves by $3 billion. The research firm most recent assumptions call for $5.5 billion of losses incurred on the current book of business. Thus he believes much of the "heavy lifting" in the building of reserves and its negative impact on MGIC's earnings has been completed.

Because of its recent addition to its capital base, FBR said MGIC "is in a much better competitive position relative to many other competitors. Despite the recent downgrade (by Standard & Poor's), we expect MGIC to be able to maintain market share, given what we expect to be capacity constraints at other MI companies that have not yet raised capital."

In fact, he said, he ...