Mortgage Informer

NEW YORK -

Shares of mortgage insurers tumbled Thursday led by Triad Guaranty Inc., which said earlier in the day it was going to stop originating new business after a plan to create a new mortgage insurance operation with Lightyear Capital LLC collapsed.

Triad Guaranty (nasdaq: TGIC – news – people ) shares fell 43.9 percent to $1.15 in late morning trading. Earlier in the session, shares hit a low of 73 cents.

Triad Guaranty decided to go into run-off after negotiations with private equity firm Lightyear Capital LLC to create a new mortgage insurer fell apart and mortgage financier Freddie Mac (nyse: FRE – news – people ) rejected Triad Guaranty’s appeal of its suspension as an approved mortgage insurer.

Run-off is a scenario where an insurer books no new business and instead only generates revenue from existing claims.

Mortgage insurers have been facing mounting losses since the middle of 2007 as mortgage defaults have skyrocketed, leading to a spike in claims.

Shares of MGIC Investment Corp. (nyse: MTG – news – people ) fell 42 cents, or 4.3 percent, to $9.37.

Earlier this week MGIC said it reached a deal to reinsure new business with an affiliate of HCC Insurance Holdings Inc. (nyse: HCC – news – people ) That should help minimize future losses for the insurer, but does not protect it against claims from previously originated policies.

PMI Group Inc. shares fell 20 cents, or 4.7 percent, to $4.70.

Shares of Radian Group Inc. (nyse: RDN – news – people ) fell 25 cents, or 8.4 percent, to $2.73.

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Tags: Mortgage