Basic (in dollars per share)

$ (485,892)

$ (363,735)

$ (1,322,277)

Loss per share (notes 3 and 18):

$ (2.42)

^[1]

$ (2.06)

^[1]

$ (10.65)

Diluted (in dollars per share)

$ (2.42)

^[1]

$ (2.06)

^[1]

$ (10.65)

Weighted average common shares outstanding - basic (note 3) (in shares)

201,019

176,406

124,209

Weighted average common shares outstanding - diluted (note 3) (in shares)

201,019

176,406

124,209

Dividends per share (in dollars per share)

$ 0

[1]	Due to the use of weighted average shares outstanding when calculating earnings per share, the sum of the quarterly per share data may not equal the per share data for the year.

CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Securities, available-for-sale, at fair value (notes 6 and 7):
Fixed maturities (amortized cost, 2011 - $5,700,894; 2010 - $7,366,808)	$ 5,820,900	$ 7,455,238
Equity securities	2,747	3,044
Total investment portfolio	5,823,647	7,458,282
Cash and cash equivalents	995,799	1,304,154
Accrued investment income	55,666	70,305
Reinsurance recoverable on loss reserves (note 11)	154,607	275,290
Reinsurance recoverable on paid losses	19,891	34,160
Premiums receivable	71,073	79,567
Home office and equipment, net	28,145	28,638
Deferred insurance policy acquisition costs	7,505	8,282
Other assets	59,897	74,964
Total assets	7,216,230	9,333,642
Liabilities:
Loss reserves (notes 9 and 11)	4,557,512	5,884,171
Premium deficiency reserve (note 10)	134,817	178,967
Unearned premiums (note 11)	154,866	215,157
Senior notes (note 8)	170,515	376,329
Convertible senior notes (note 8)	345,000	345,000
Convertible junior debentures (note 8)	344,422	315,626
Other liabilities	312,283	349,337
Total liabilities	6,019,415	7,664,587
Contingencies (note 20)
Shareholders' equity (note 15):
Common stock, one dollar par value, shares authorized 460,000; shares issued 2011 and 2010 - 205,047; outstanding 2011 - 201,172; 2010 - 200,450	205,047	205,047
Paid-in capital	1,135,821	1,138,942
Treasury stock (shares at cost 2011 - 3,875; 2010 - 4,597)	(162,542)	(222,632)
Accumulated other comprehensive income, net of tax (note 3)	30,124	22,136
Retained (deficit) earnings	(11,635)	525,562
Total shareholders' equity	1,196,815	1,669,055
Total liabilities and shareholders' equity	$ 7,216,230	$ 9,333,642

CONSOLIDATED BALANCE SHEETS Parenthetical (USD $) In Thousands, except Per Share data, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Securities, available-for-sale, at fair value (notes 6 and 7):
Fixed maturities, amortized cost	$ 5,700,894	$ 7,366,808
Shareholders' equity:
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized (in shares)	460,000	460,000
Common stock, shares issued (in shares)	205,047	205,047
Common stock, shares outstanding (in shares)	201,172	200,450
Treasury stock, shares at cost (in shares)	3,875	4,597

This item represents the total of all debt securities grouped by maturity dates, at cost, net of adjustments including accretion, amortization, collection of cash, previous other-than-temporary impairments recognized in earnings (less any cumulative-effect adjustments, as defined), and fair value hedge accounting adjustments, if any, which are classified neither as held-to-maturity nor trading securities.

+ References+ Details

Total number of shares of common stock held by shareholders. May be all or portion of the number of common shares authorized. These shares represent the ownership interest of the common shareholders. Shares outstanding equals shares issued minus shares held in treasury and other adjustments, if any.

+ References+ Details

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $) In Thousands	Total	Common stock [Member]	Paid-in capital [Member]	Treasury stock [Member]	Accumulated other comprehensive income (loss) [Member]	Retained earnings [Member]	Comprehensive income (loss) [Member]
Balance at Dec. 31, 2008		$ 130,119	$ 367,067	$ (276,873)	$ (106,789)	$ 2,253,676
Cumulative effect of accounting change (convertible debt)		0	73,475	0	0	(6,442)
Balance (as adjusted)		130,119	440,542	(276,873)	(106,789)	2,247,234
Net loss	(1,322,277)					(1,322,277)	(1,322,277)
Change in unrealized investment gains and losses, net (note 6)	154,358	0	0	0	154,358	0	154,358
Noncredit component of impairment losses, net (note 6)		0	0	0	(1,764)	0	(1,764)
Common stock shares issued upon debt conversion (note 8)		44	263	0	0	0
Reissuance of treasury stock, net (note 15)		0	(11,613)	7,135	0	(545)
Equity compensation (note 18)		0	14,102	0	0	0
Defined benefit plan adjustments, net (note 13)	10,704	0	0	0	10,704	0	10,704
Unrealized foreign currency translation adjustment, net	17,646	0	0	0	17,646	0	17,646
Other		0	0	0	0	295
Comprehensive loss	(1,141,333)						(1,141,333)
Balance at Dec. 31, 2009		130,163	443,294	(269,738)	74,155	924,707
Net loss	(363,735)					(363,735)	(363,735)
Change in unrealized investment gains and losses, net (note 6)	(69,074)	0	0	0	(69,074)	0	(69,074)
Common stock shares issued (note 15)		74,884	697,492	0	0	0
Reissuance of treasury stock, net (note 15)		0	(14,425)	47,106	0	(35,410)
Equity compensation (note 18)		0	12,581	0	0	0
Defined benefit plan adjustments, net (note 13)	6,390	0	0	0	6,390	0	6,390
Unrealized foreign currency translation adjustment, net	10,665	0	0	0	10,665	0	10,665
Comprehensive loss	(415,754)						(415,754)
Balance at Dec. 31, 2010	1,669,055	205,047	1,138,942	(222,632)	22,136	525,562
Net loss	(485,892)					(485,892)	(485,892)
Change in unrealized investment gains and losses, net (note 6)	21,057	0	0	0	21,057	0	21,057
Reissuance of treasury stock, net (note 15)		0	(14,577)	60,090	0	(51,305)
Equity compensation (note 18)		0	11,456	0	0	0
Defined benefit plan adjustments, net (note 13)	(12,862)	0	0	0	(12,862)	0	(12,862)
Unrealized foreign currency translation adjustment, net	(207)	0	0	0	(207)	0	(207)
Comprehensive loss	(477,904)						(477,904)
Balance at Dec. 31, 2011	$ 1,196,815	$ 205,047	$ 1,135,821	$ (162,542)	$ 30,124	$ (11,635)

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Cash flows from operating activities:
Net loss	$ (485,892)	$ (363,735)	$ (1,322,277)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and other amortization	84,828	60,882	60,349
Deferred tax (benefit) provision	(738)	(75)	176,279
Realized investment gains, net	(143,430)	(102,581)	(92,874)
Net investment impairment losses	715	9,644	40,940
Gain on repurchase on senior notes	(27,688)	0	(27,238)
Other	(14,218)	(13,646)	55,764
Change in certain assets and liabilities:
Accrued investment income	14,639	9,523	11,028
Reinsurance recoverable on loss reserves	120,683	56,937	(99,239)
Reinsurance recoverable on paid losses	14,269	(24,863)	(3,572)
Premiums receivable	8,494	10,572	7,462
Deferred insurance policy acquisition costs	777	740	2,482
Real estate	4,599	(2,390)	29,028
Loss reserves	(1,326,659)	(820,819)	1,929,438
Premium deficiency reserve	(44,150)	(14,219)	(261,150)
Unearned premiums	(60,291)	(65,581)	(55,360)
Return premium	(28,300)	90,500	57,900
Income taxes payable (current)	(1,489)	293,681	(179,006)
Net cash (used in) provided by operating activities	(1,883,851)	(875,430)	329,954
Investment purchases:
Equity securities	(126)	(156)	(1,387)
Fixed maturities	(4,393,471)	(5,225,794)	(4,147,412)
Proceeds from sale of:
Equity securities	504	0	1,273
Fixed maturities	4,742,213	4,287,312	3,663,239
Proceeds from maturity of fixed maturities	1,407,325	740,959	554,980
Repayment of note receivable from joint ventures	0	83,500	0
Net (decrease) increase in payable for securities	(2,228)	2,275	(17,890)
Net cash provided by (used in) investing activities	1,754,217	(111,904)	52,803
Cash flows from financing activities:
Repayment of note payable	0	0	(200,000)
Repayment of long-term debt	(178,721)	(1,000)	(94,352)
Net proceeds from convertible senior notes	0	334,373	0
Common stock shares issued	0	772,376	0
Net cash (used in) provided by financing activities	(178,721)	1,105,749	(294,352)
Net (decrease) increase in cash and cash equivalents	(308,355)	118,415	88,405
Cash and cash equivalents at beginning of year	1,304,154	1,185,739	1,097,334
Cash and cash equivalents at end of year	$ 995,799	$ 1,304,154	$ 1,185,739

Nature of business

12 Months Ended

Dec. 31, 2011

Nature of business [Abstract]

Nature of business

1.	Nature of business

MGIC Investment Corporation is a holding company which, through Mortgage Guaranty Insurance Corporation ("MGIC") and several other subsidiaries, is principally engaged in the mortgage insurance business. We provide mortgage insurance to lenders throughout the United States and to government sponsored entities (“GSEs”) to protect against loss from defaults on low down payment residential mortgage loans. Our principal product is primary mortgage insurance. Primary mortgage insurance may be written through the flow channel, in which loans are insured in individual, loan-by-loan transactions. Primary mortgage insurance may also be written through the bulk channel, in which portfolios of loans are individually insured in single, bulk transactions. Prior to 2008, we wrote significant volume through the bulk channel, substantially all of which was Wall Street bulk business, which we discontinued writing in 2007. We have not written any business through the bulk channel since 2008. Prior to 2009, we also wrote pool mortgage insurance. Pool insurance generally covers the excess of the loss on a defaulted mortgage loan which exceeds the claim payment under the primary coverage, if primary insurance is required on that mortgage loan, as well as the total loss on a defaulted mortgage loan which did not require primary insurance. Pool insurance may have a stated aggregate loss limit for a pool of loans and may also have a deductible under which no losses are paid by the insurer until losses on the pool of loans exceed the deductible. We wrote an insignificant amount of pool business during 2009 and none in 2010 or 2011. Through certain other non-insurance subsidiaries, we also provide various services for the mortgage finance industry, such as contract underwriting and portfolio analysis and retention. We began our international operations in Australia, where we started to write business in June 2007. Since 2008, we are no longer writing new business in Australia. Our Australian operations are included in our consolidated financial statements; however they are not material to our consolidated results.

At December 31, 2011, our direct domestic primary insurance in force was $172.9 billion, which represents the principal balance in our records of all mortgage loans that we insure, and our direct domestic primary risk in force was $44.5 billion, which represents the insurance in force multiplied by the insurance coverage percentage. Our direct pool risk in force at December 31, 2011 was approximately $1.9 billion ($0.7 billion on pool policies with aggregate loss limits and $1.2 billion on pool policies without aggregate loss limits). See Note 20 – “Litigation and contingencies” for a discussion of our interpretation of the appropriate aggregate loss limit on certain pool policies we have with Freddie Mac. At December 31, 2011, our loss reserves under these policies have been limited under our interpretation of the aggregate. Our risk in force in Australia at December 31, 2011 was approximately $0.9 billion which represents the risk associated with 100% coverage on the insurance in force. However the mortgage insurance we provided in Australia only covers the unpaid loan balance after the sale of the underlying property.

Capital

The insurance laws or regulations of 16 jurisdictions, including Wisconsin, our domiciliary state, require a mortgage insurer to maintain a minimum amount of statutory capital relative to the risk in force (or a similar measure) in order for the mortgage insurer to continue to write new business. We refer to these requirements as the “Capital Requirements.” While formulations of minimum capital may vary in certain jurisdictions, the most common measure applied allows for a maximum permitted risk-to-capital ratio of 25 to 1. A risk-to-capital ratio will increase if the percentage decrease in capital exceeds the percentage decrease in insured risk. Therefore, as capital decreases, the same dollar decrease in capital will cause a greater percentage decrease in capital and a greater increase in the risk-to-capital ratio. Wisconsin does not regulate capital by using a risk-to-capital measure but instead requires us to maintain a minimum policyholder position (“MPP”). The “policyholder position” of a mortgage insurer is its net worth or surplus, contingency reserve and a portion of the reserves for unearned premiums.

In December 2011, our holding company, MGIC Investment Corporation, contributed $200 million to increase the statutory capital of MGIC to approximately $1.6 billion at December 31, 2011. (As of December 31, 2011, there was $487 million of cash and investments at our holding company). At December 31, 2011, MGIC's risk-to-capital ratio was 20.3 to 1 and its policyholder position exceeded the MPP by $185 million. We currently expect MGIC's risk-to-capital to exceed 25 to 1 in the second half of 2012. At December 31, 2011, the risk-to-capital ratio of our combined insurance operations (which includes reinsurance affiliates) was 22.2 to 1. A higher risk-to-capital ratio on a combined basis may indicate that, in order for MGIC to continue to utilize reinsurance arrangements with its subsidiaries or subsidiaries of our holding company, additional capital contributions to the reinsurance affiliates could be needed. These reinsurance arrangements permit MGIC to write insurance with a higher coverage percentage than it could on its own under certain state-specific requirements.

The National Association of Insurance Commissioners (“NAIC”) adopted Statement of Statutory Accounting Principles No. 101 (“SSAP No. 101”) effective January 1, 2012. As MGIC approaches a risk-to-capital ratio of 25 to 1, under SSAP No. 101, the benefit to statutory capital allowed for deferred tax assets will be eliminated. Effectively, MGIC's risk-to-capital ratio, computed while excluding any deferred tax assets from the capital base, must be under 25 to 1 in order to include such deferred tax assets in the amount of available statutory capital. Any exclusion of these assets would negatively impact our statutory capital for purposes of calculating compliance with the Capital Requirements. At December 31, 2011, deferred tax assets of $142 million were included in MGIC's statutory capital. For more information about factors that could negatively impact our compliance with Capital Requirements, which depending on the severity of adverse outcomes could result in material non-compliance with Capital Requirements, see Note 20 – “Litigation and contingencies” and Note 14 – “Income taxes.” As discussed below, in accordance with Accounting Standards Codification (“ASC”) 450-20, we have not accrued an estimated loss in our financial statements to reflect possible adverse developments in litigation or other dispute resolution proceedings. An accrual, if one was required and depending on the amount, could result in material non-compliance with Capital Requirements.

Although we currently meet the Capital Requirements of the jurisdictions in which we write business, in December 2009, the Office of the Commissioner of Insurance of the State of Wisconsin (“OCI”) issued an order waiving, until December 31, 2011, its Capital Requirements. On January 23, 2012, the OCI issued an order (the “New Order”) waiving, until December 31, 2013, its Capital Requirements. In place of the Capital Requirements, the New Order provides, as did the prior order, that MGIC can write new business as long as it maintains regulatory capital that the OCI determines is reasonably in excess of a level that would constitute a financially hazardous condition. Pursuant to the New Order, MGIC contributed $200 million to MGIC Indemnity Corporation (“MIC”), a direct subsidiary of MGIC, in January 2012, as part of the plan discussed below to write new mortgage insurance in MIC in certain jurisdictions.

The New Order requires MGIC Investment Corporation, beginning January 1, 2012 and continuing through the earlier of December 31, 2013 and the termination of the New Order (the “Covered Period”), to make cash equity contributions to MGIC as may be necessary so that its “Liquid Assets” are at least $1 billion (this portion of the New Order is referred to as the “Keepwell Provision”). “Liquid Assets”, which include those of MGIC as well as those held in certain of our subsidiaries, excluding MIC and its reinsurance affiliates, are the sum of (i) the aggregate cash and cash equivalents, (ii) fair market value of investments and (iii) assets held in trusts supporting the obligations of captive mortgage reinsurers to MGIC. As of December 31, 2011, “Liquid Assets” were approximately $6.4 billion. Although we do not expect that MGIC's Liquid Assets will fall below $1 billion during the Covered Period, we do expect the amount of Liquid Assets to continue to decline materially after December 31, 2011 and through the end of the Covered Period as MGIC's claim payments and other uses of cash continue to exceed cash generated from operations. For more information about factors that could negatively impact MGIC's Liquid Assets, see Note 20 – “Litigation and contingencies” and Note 14 – “Income taxes.”

MGIC previously applied for waivers in all jurisdictions besides Wisconsin that have Capital Requirements and received waivers from some of them. Most of the waivers that MGIC received expired December 31, 2011. We expect to reapply for waivers in all other jurisdictions that have Capital Requirements, and whose laws allow waivers (“Waiver Jurisdictions”), before they are needed. Some jurisdictions denied our original request for a waiver and others may deny future requests. The OCI and insurance departments of other jurisdictions, in their sole discretion, may modify, terminate or extend their waivers. Any modification or extension of the Keepwell Provision requires our written consent. If the OCI or another insurance department modifies or terminates its waiver, or if it fails to grant a waiver or renew its waiver after expiration, depending on the circumstances, MGIC could be prevented from writing new business anywhere, in the case of the waiver from the OCI, or in the particular jurisdiction, in the case of the other waivers, if MGIC does not comply with the Capital Requirements unless MGIC obtained additional capital to enable it to comply with the Capital Requirements. New insurance written in the jurisdictions that have Capital Requirements represented approximately 50% of new insurance written in each of 2010 and 2011. If we were prevented from writing new business in all jurisdictions, our insurance operations in MGIC would be in run-off (meaning no new loans would be insured but loans previously insured would continue to be covered, with premiums continuing to be received and losses continuing to be paid on those loans) until MGIC either met the Capital Requirements or obtained a necessary waiver to allow it to once again write new business.

We cannot assure you that all Waiver Jurisdictions will grant a waiver of their Capital Requirements, the OCI or any other jurisdiction that has granted a waiver of its Capital Requirements will not modify or revoke the waiver, or will renew the waiver when it expires, or that MGIC could obtain the additional capital necessary to comply with the Capital Requirements. Depending on the circumstances, the amount of additional capital we might need could be substantial.

We have implemented a plan to write new mortgage insurance in MIC in selected jurisdictions in order to address our expectation that in the future MGIC will not meet the Capital Requirements discussed above and may not be able to obtain appropriate waivers of these requirements in all jurisdictions in which Capital Requirements are present. As of December 31, 2011, MIC had statutory capital of $234 million (which does not include the $200 million contribution that was made in January 2012, in accordance with the New Order). MIC has received the necessary approvals, including from the OCI, to write business in all of the jurisdictions in which MGIC would be prohibited from continuing to write new business in the event of MGIC's failure to meet Capital Requirements and obtain waivers of those requirements. Depending on the level of losses that MGIC experiences in the future, however, it is possible that regulatory action by one or more jurisdictions, including those that do not have specific Capital Requirements, may prevent MGIC from continuing to write new insurance in some or all of the jurisdictions in which MIC is not eligible to insure loans purchased or guaranteed by Fannie Mae or Freddie Mac. If this were to occur, we would need to seek the GSEs' approval to allow MIC to write business in those jurisdictions. MIC has obtained the appropriate licenses to write business in all jurisdictions.

In October 2009, we, MGIC and MIC entered into an agreement with Fannie Mae under which MGIC agreed to contribute $200 million to MIC (which MGIC did in 2009) and Fannie Mae approved MIC as an eligible mortgage insurer through December 31, 2011. On January 23, 2012, we, MGIC and MIC, entered into a new agreement with Fannie Mae (the “Fannie Mae Extension”) under which we agreed to contribute $200 million to increase the statutory capital of MGIC (our $200 million contribution in December 2011 met this requirement), MGIC agreed to contribute $200 million to MIC on or before January 31, 2012, which MGIC did, and Fannie Mae extended its approval of MIC as an eligible mortgage insurer through December 31, 2013. Under the Fannie Mae Extension, MIC will be eligible to write mortgage insurance only in those jurisdictions (other than Wisconsin) in which MGIC cannot write new insurance due to MGIC's failure to meet Capital Requirements and if MGIC fails to obtain relief from those requirements or a specific waiver of them. The Fannie Mae Extension includes other conditions and restrictions, including the continued effectiveness of the OCI's New Order and the continued applicability of the Keepwell Provisions in the New Order. As noted above, we cannot assure you that the OCI will not modify or revoke the New Order, or that it will renew it when it expires.

On February 11, 2010, Freddie Mac notified MGIC that it may utilize MIC to write new business in jurisdictions in which MGIC does not meet Capital Requirements and does not obtain appropriate waivers of those requirements. Freddie Mac's approval, scheduled to expire December 31, 2012, contained various conditions to MIC's eligibility, including that MIC could not be capitalized with more than the $200 million contribution made in 2009, without prior approval from Freddie Mac. On January 23, 2012, Freddie Mac agreed to modify its approval in order to allow the $200 million contribution from MGIC to MIC that is provided for in the New Order and the Fannie Mae Extension (the “Freddie Mac Approval”).

Under the Freddie Mac Approval, MIC may write business only in those jurisdictions where MGIC does not meet the Capital Requirements and does not obtain appropriate waivers of those requirements. Freddie Mac anticipates that MGIC will obtain waivers of the minimum capital requirements of most jurisdictions that have such requirements. Therefore, as of the date of the Freddie Mac Approval, approval of MIC as an eligible mortgage insurer is only given for New York, Kansas, Kentucky, Idaho and Puerto Rico. The Freddie Mac Approval, includes certain conditions and restrictions to its continued effectiveness, including requirements that MGIC contribute $200 million to MIC on or before January 31, 2012, which MGIC did; MIC provide MGIC access to the capital of MIC in an amount necessary for MGIC to maintain sufficient liquidity to satisfy its obligations under insurance policies issued by MGIC; while MIC is writing new business under the Freddie Mac approval, MIC may not exceed a risk-to-capital ratio of 20:1; MGIC and MIC comply with all terms and conditions of the New Order and the New Order remain effective. As noted above, we cannot assure you that the OCI will not modify or revoke the New Order, or that it will renew it when it expires. As noted above, Freddie Mac has approved MIC as a Limited Insurer only through December 31, 2012 and Freddie Mac may modify the terms and conditions of its approval at any time without notice and may withdraw its approval of MIC as an eligible insurer at any time in its sole discretion. Unless Freddie Mac extends the term of its approval of MIC, whether MIC will continue as an eligible mortgage insurer after December 31, 2012 will be determined by Freddie Mac's mortgage insurer eligibility requirements then in effect.

In 2011, one of our competitors, Republic Mortgage Insurance Company (“RMIC”), ceased writing new insurance commitments after the waiver of Capital Requirements that it received from its domiciliary state expired. In early 2012, RMIC was placed under the supervision of the insurance department of its domiciliary state and that insurance department issued a partial claim payment plan, under which RMIC's claim payments will be made at 50% for an initial period not to exceed one year, with the remaining amount deferred. In 2011, another competitor, PMI Mortgage Insurance Co. (“PMI”) and the subsidiary it established to write new business if PMI was no longer able to do so, ceased issuing new mortgage insurance commitments when PMI was placed under the supervision of the insurance department of its domiciliary state. Later that year, the insurance department took possession and control of PMI and issued a partial claim payment plan, under which PMI's claim payments will be made at 50%, with the remaining amount deferred. (PMI's parent company subsequently filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code.)

A failure to meet the Capital Requirements to insure new business does not necessarily mean that MGIC does not have sufficient resources to pay claims on its insurance liabilities. While we believe that MGIC has sufficient claims paying resources to meet its claim obligations on its insurance in force, even in scenarios in which it fails to meet Capital Requirements, we cannot assure you that the events that led to MGIC failing to meet Capital Requirements would not also result in it not having sufficient claims paying resources. Furthermore, our estimates of MGIC's claims paying resources and claim obligations are based on various assumptions. These assumptions include our anticipated rescission activity; the timing of the receipt of claims on loans in our delinquency inventory and future claims that we anticipate will ultimately be received; future housing values and future unemployment rates. These assumptions are subject to inherent uncertainty and require judgment by management. Current conditions in the domestic economy make the assumptions about when anticipated claims will be received, housing values and unemployment rates highly volatile in the sense that there is a wide range of reasonably possible outcomes. Our anticipated rescission activity is also subject to inherent uncertainty due to the difficulty of predicting the amount of claims that will be rescinded and the outcome of any legal proceedings related to rescissions that we make, including those with Countrywide. (For more information about the Countrywide legal proceedings, see Note 20 – “Litigation and contingencies.”)

Historically, rescissions of policies for which claims have been submitted to us were not a material portion of our claims resolved during a year. However, beginning in 2008, our rescissions of policies have materially mitigated our paid losses. In each of 2009 and 2010, rescissions mitigated our paid losses by approximately $1.2 billion and in 2011, rescissions mitigated our paid losses by approximately $0.6 billion (in each case, the figure includes amounts that would have either resulted in a claim payment or been charged to a deductible under a bulk or pool policy, and may have been charged to a captive reinsurer). In recent quarters, 17% to 20% of claims received in a quarter have been resolved by rescissions, down from the peak of approximately 28% in the first half of 2009. In the second half of 2011, Countrywide materially increased the percentage of loans for which it is rebutting the assertions that we make prior to rescinding a loan. When we receive a rebuttal prior to a rescission, we do not rescind coverage until after we respond to the rebuttal. Therefore, in addition to our substantial pipeline of claims investigations, we have a substantial pipeline of pre-rescission rebuttals that, based on our historical experience with such rebuttals, we expect will eventually result in rescissions. We continue to expect that the percentage of claims that will be resolved through rescissions will continue to decline after resolution of the rebuttal pipeline.

Our loss reserving methodology incorporates the effects we expect rescission activity to have on the losses we expect to pay on our delinquent inventory. A variance between ultimate actual rescission rates and these estimates, as a result of the outcome of claims investigations, litigation, settlements or other factors, could materially affect our losses. We estimate rescissions mitigated our incurred losses by approximately $2.5 billion in 2009 and $0.2 billion in 2010. In 2011, we estimate that rescissions had no significant impact on our losses incurred. All of these figures include the benefit of claims not paid in the period as well as the impact of changes in our estimated expected rescission activity on our loss reserves in the period. At December 31, 2011, we had 175,639 loans in our primary delinquency inventory; a significant portion of these loans will cure their delinquency or be rescinded and will not involve paid claims.

If the insured disputes our right to rescind coverage, the outcome of the dispute ultimately would be determined by legal proceedings. Legal proceedings disputing our right to rescind coverage may be brought up to three years after the lender has obtained title to the property (typically through a foreclosure) or the property was sold in a sale that we approved, whichever is applicable, although in a few jurisdictions there is a longer time to bring such an action. For the majority of our rescissions that are not subject to a settlement agreement, the period in which a dispute may be brought has not ended. We consider a rescission resolved for financial reporting purposes even though legal proceedings have been initiated and are ongoing. Although it is reasonably possible that, when the proceedings are completed, there will be a determination that we were not entitled to rescind in all cases, we are unable to make a reasonable estimate or range of estimates of the potential liability. Under ASC 450-20, an estimated loss from such proceedings is accrued for only if we determine that the loss is probable and can be reasonably estimated. Therefore, when establishing our loss reserves, we do not include additional loss reserves that would reflect an adverse outcome from ongoing legal proceedings, including those with Countrywide. For more information about these legal proceedings, see Note 20 – “Litigation and contingencies.”

In addition to the proceedings involving Countrywide, we are involved in legal proceedings with respect to rescissions that we do not consider to be collectively material in amount. Although it is reasonably possible that, when these discussions or proceedings are completed, there will be a conclusion or determination that we were not entitled to rescind in all cases, we are unable to make a reasonable estimate or range of estimates of the potential liability.

In 2010, we entered into a settlement agreement with a lender-customer regarding our rescission practices. In April 2011, Freddie Mac advised its servicers that they must obtain its prior approval for rescission settlements and Fannie Mae advised its servicers that they are prohibited from entering into such settlements. In addition, in April 2011, Fannie Mae notified us that we must obtain its prior approval to enter into certain settlements. We continue to discuss with other lender-customers their objections to material rescissions and have reached settlement terms with several of our significant lender-customers. Any definitive agreement with these customers would be subject to GSE approval. One GSE has approved one of our settlement agreements, but this agreement remains subject to the approval of the other GSE. We believe that it is probable (within the meaning of ASC 450-20) that this agreement will be approved by the other GSE. As a result, we considered the terms of the agreement when establishing our loss reserves at December 31, 2011. This agreement did not have a significant impact on our established loss reserves. Neither GSE has approved our other settlement agreements and the terms of these other agreements were not considered when establishing our loss reserves at December 31, 2011. There can be no assurances that both GSEs will approve any settlement agreements and the GSEs may approve some of our settlement agreements and reject others based on the specific terms of those agreements.

See additional disclosure regarding statutory capital in Note 17 – “Statutory capital.”

Basis of presentation

12 Months Ended

Dec. 31, 2011

Basis of presentation [Abstract]

Basis of presentation

2.	Basis of presentation

The accompanying financial statements have been prepared on the basis of accounting principles generally accepted in the United States of America (GAAP), as codified in the Accounting Standards Codification. In accordance with GAAP, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Principles of consolidation

The consolidated financial statements include the accounts of MGIC Investment Corporation and its majority-owned subsidiaries. All intercompany transactions have been eliminated.

The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure.

Summary of significant accounting policies [Abstract]

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+ Details

Summary of significant accounting policies

12 Months Ended

Dec. 31, 2011

Summary of significant accounting policies

3.	Summary of significant accounting policies

Fair Value Measurements

In accordance with fair value guidance, we applied the following fair value hierarchy in order to measure fair value for assets and liabilities:

Level 1 – Quoted prices for identical instruments in active markets that we have the ability to access. Financial assets utilizing Level 1 inputs primarily include certain U.S. Treasury securities and obligations of U.S. government corporations and agencies and Australian government and semi government securities.

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and inputs, other than quoted prices, that are observable in the marketplace for the financial instrument. The observable inputs are used in valuation models to calculate the fair value of the financial instruments. Financial assets utilizing Level 2 inputs primarily include certain municipal and corporate bonds.

Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or value drivers are unobservable. Level 3 inputs reflect our own assumptions about the assumptions a market participant would use in pricing an asset or liability. Financial assets utilizing Level 3 inputs include certain state and auction rate (backed by student loans) securities. Non-financial assets which utilize Level 3 inputs include real estate acquired through claim settlement.

To determine the fair value of securities available-for-sale in Level 1 and Level 2 of the fair value hierarchy, independent pricing sources have been utilized. One price is provided per security based on observable market data. To ensure securities are appropriately classified in the fair value hierarchy, we review the pricing techniques and methodologies of the independent pricing sources and believe that their policies adequately consider market activity, either based on specific transactions for the issue valued or based on modeling of securities with similar credit quality, duration, yield and structure that were recently traded. A variety of inputs are utilized by the independent pricing sources including benchmark yields, reported trades, non-binding broker/dealer quotes, issuer spreads, two sided markets, benchmark securities, bids, offers and reference data including data published in market research publications. Inputs may be weighted differently for any security, and not all inputs are used for each security evaluation. Market indicators, industry and economic events are also considered. This information is evaluated using a multidimensional pricing model. Quality controls are performed by the independent pricing sources throughout this process, which include reviewing tolerance reports, trading information and data changes, and directional moves compared to market moves. This model combines all inputs to arrive at a value assigned to each security. In addition, on a quarterly basis, we perform quality controls over values received from the pricing sources which include reviewing tolerance reports, trading information and data changes, and directional moves compared to market moves. We have not made any adjustments to the prices obtained from the independent pricing sources.

Assets classified as Level 3 are as follows:

Securities available-for-sale classified in Level 3 are not readily marketable and are valued using internally developed models based on the present value of expected cash flows. Our Level 3 securities primarily consist of auction rate securities as observable inputs or value drivers are unavailable due to events described in Note 6 – “Investments.” Due to limited market information, we utilized a discounted cash flow (“DCF”) model to derive an estimate of fair value of these assets at December 31, 2011 and 2010. The assumptions used in preparing the DCF model included estimates with respect to the amount and timing of future interest and principal payments, the probability of full repayment of the principal considering the credit quality and guarantees in place, and the rate of return required by investors to own such securities given the current liquidity risk associated with them. The DCF model for the auction rate securities is based on the following key assumptions:

Nominal credit risk as substantially all of the underlying collateral of these securities is ultimately guaranteed by the United States Department of Education;

Liquidity by December 31, 2012 through December 31, 2014;

Continued receipt of contractual interest; and

Discount rates ranging from 2.30% to 4.30%, which include a spread for liquidity risk.

Real estate acquired through claim settlement is fair valued at the lower of our acquisition cost or a percentage of appraised value. The percentage applied to appraised value is based upon our historical sales experience adjusted for current trends.

Investments

Our entire investment portfolio is classified as available-for-sale and is reported at fair value. The related unrealized gains or losses are, after considering the related tax expense or benefit, recognized as a component of accumulated other comprehensive income in shareholders' equity. Realized investment gains and losses are reported in income based upon specific identification of securities sold. (See Note 6 – “Investments.”)

In April 2009, new accounting guidance regarding the recognition and presentation of other-than-temporary impairments was issued. This guidance was effective beginning with the quarter ending June 30, 2009. The guidance required us to separate an other-than-temporary impairment (“OTTI”) of a debt security into two components when there are credit related losses associated with the impaired debt security; we assert that we do not have the intent to sell the security, and it is more likely than not that we will not be required to sell the security before recovery of our cost basis. Under this guidance the amount of the OTTI related to a credit loss is recognized in earnings, and the amount of the OTTI related to other factors (such as changes in interest rates or market conditions) is recorded as a component of other comprehensive income (loss). If we determine it is more likely than not that we will have to sell a debt security prior to the anticipated recovery, the decline in fair value below amortized cost is recognized as an OTTI in earnings. In periods after recognition of an OTTI on debt securities, we account for such securities as if they had been purchased on the measurement date of the OTTI at an amortized cost basis equal to the previous amortized cost basis less the OTTI recognized in earnings. For debt securities for which OTTI were recognized in earnings, the difference between the new amortized cost basis and the cash flows expected to be collected will be accreted into net investment income.

Each quarter we perform reviews of our investments in order to determine whether declines in fair value below amortized cost were considered other-than-temporary in accordance with applicable guidance. In evaluating whether a decline in fair value is other-than-temporary, we consider several factors including, but not limited to:

our intent to sell the security or whether it is more likely than not that we will be required to sell the security before recovery;

extent and duration of the decline;

failure of the issuer to make scheduled interest or principal payments;

change in rating below investment grade; and

adverse conditions specifically related to the security, an industry, or a geographic area.

Under the current guidance a debt security impairment is deemed other than temporary if (1) we either intend to sell the security, or it is more likely than not that we will be required to sell the security before recovery or (2) we do not expect to collect cash flows sufficient to recover the amortized cost basis of the security.

Home office and equipment

Home office and equipment is carried at cost net of depreciation. For financial statement reporting purposes, depreciation is determined on a straight-line basis for the home office, equipment and data processing hardware over estimated lives of 45, 5 and 3 years, respectively. For income tax purposes, we use accelerated depreciation methods.

Home office and equipment is shown net of accumulated depreciation of $65.2 million, $62.9 million and $60.1 million at December 31, 2011, 2010 and 2009, respectively. Depreciation expense for the years ended December 31, 2011, 2010 and 2009 was $2.3 million, $2.9 million and $4.3 million, respectively.

Deferred insurance policy acquisition costs

Costs associated with the acquisition of mortgage insurance business, consisting of employee compensation and other policy issuance and underwriting expenses, are initially deferred and reported as deferred insurance policy acquisition costs ("DAC"). For each underwriting year of business, these costs are amortized to income in proportion to estimated gross profits over the estimated life of the policies. We utilize anticipated investment income in our calculation. This includes accruing interest on the unamortized balance of DAC. The estimates for each underwriting year are reviewed quarterly and updated when necessary to reflect actual experience and any changes to key variables such as persistency or loss development. If a premium deficiency exists, we reduce the related DAC by the amount of the deficiency or to zero through a charge to current period earnings. If the deficiency is more than the related DAC balance, we then establish a premium deficiency reserve equal to the excess, by means of a charge to current period earnings.

Loss reserves

Reserves are established for reported insurance losses and loss adjustment expenses based on when we receive notices of default on insured mortgage loans. We define a default as an insured loan with a mortgage payment that is 45 days or more past due. Reserves are also established for estimated losses incurred on notices of default not yet reported to us. Even though the accounting standard, ASC 944, regarding accounting and reporting by insurance entities specifically excludes mortgage insurance from its guidance relating to loss reserves, we establish loss reserves using the general principles contained in the insurance standard. However, consistent with industry standards for mortgage insurers, we do not establish loss reserves for future claims on insured loans which are not currently in default. Loss reserves are established by estimating the number of loans in our inventory of delinquent loans that will result in a claim payment, which is referred to as the claim rate, and further estimating the amount of the claim payment, which is referred to as claim severity. Our loss estimates are established based upon historical experience, including rescission and loan modification activity. Adjustments to reserve estimates are reflected in the financial statements in the years in which the adjustments are made. The liability for reinsurance assumed is based on information provided by the ceding companies.

The incurred but not reported ("IBNR") reserves result from defaults occurring prior to the close of an accounting period, but which have not been reported to us. Consistent with reserves for reported defaults, IBNR reserves are established using estimated claim rates and claim amounts for the estimated number of defaults not reported.

Reserves also provide for the estimated costs of settling claims, including legal and other expenses and general expenses of administering the claims settlement process. (See Note 9 – “Loss reserves.”)

Premium deficiency reserve

After our loss reserves are initially established, we perform premium deficiency tests using our best estimate assumptions as of the testing date. Premium deficiency reserves are established, if necessary, when the present value of expected future losses and expenses exceeds the present value of expected future premium and already established reserves. The discount rate used in the calculation of the premium deficiency reserve was based upon our pre-tax investment yield at year-end. Products are grouped for premium deficiency purposes based on similarities in the way the products are acquired, serviced and measured for profitability.

Calculations of premium deficiency reserves require the use of significant judgments and estimates to determine the present value of future premium and present value of expected losses and expenses on our business. The present value of future premium relies on, among other factors, assumptions about persistency and repayment patterns on underlying loans. The present value of expected losses and expenses depends on assumptions relating to severity of claims and claim rates on current defaults, and expected defaults in future periods. These assumptions also include an estimate of expected rescission activity. Assumptions used in calculating the deficiency reserves can be affected by volatility in the current housing and mortgage lending industries and these effects could be material. To the extent premium patterns and actual loss experience differ from the assumptions used in calculating the premium deficiency reserves, the differences between the actual results and our estimate will affect future period earnings. (See Note 10 - “Premium deficiency reserve.”)

Revenue recognition

We write policies which are guaranteed renewable contracts at the insured's option on a single, annual or monthly premium basis. We have no ability to reunderwrite or reprice these contracts. Premiums written on a single premium basis and an annual premium basis are initially deferred as unearned premium reserve and earned over the policy term. Premiums written on policies covering more than one year are amortized over the policy life in accordance with the expiration of risk which is the anticipated claim payment pattern based on historical experience. Premiums written on annual policies are earned on a monthly pro rata basis. Premiums written on monthly policies are earned as coverage is provided. When a policy is cancelled, all premium that is non-refundable is immediately earned. Any refundable premium is returned to the lender. Cancellations include rescissions and policies cancelled due to claim payment. When a policy is rescinded, all previously collected premium is returned to the lender and when a claim is paid we return any premium received since the date of default. The liability associated with our estimate of premium to be returned is accrued for separately and separate components of this liability are included in “Other liabilities” and “Premium deficiency reserves” on our consolidated balance sheet. Changes in these liabilities affect premiums written and earned and change in premium deficiency reserve, respectively. In periods prior to 2010, the liability associated with premium to be returned on claim payments is included in loss reserves and changes to this estimate affect losses incurred. This policy did not have a significant impact on premiums written and earned or losses incurred in periods prior to 2010. The actual return of premium for all periods affects premiums written and earned. Policy cancellations also lower the persistency rate which is a variable used in calculating the rate of amortization of deferred insurance policy acquisition costs.

Fee income of our non-insurance subsidiaries is earned and recognized as the services are provided and the customer is obligated to pay. Fee income consists primarily of contract underwriting and related fee-based services provided to lenders and is included in “Other revenue” on the statement of operations.

Income taxes

Federal tax law permits mortgage guaranty insurance companies to deduct from taxable income, subject to certain limitations, the amounts added to contingency loss reserves, which are recorded for regulatory purposes. Generally, the amounts so deducted must be included in taxable income in the tenth subsequent year. However, to the extent incurred losses exceed 35% of net premiums earned in a calendar year, early withdrawals may be made from the contingency reserves with regulatory approval, which would lead to amounts being included in taxable income earlier than the tenth year. The deduction is allowed only to the extent that U.S. government non-interest bearing tax and loss bonds are purchased and held in an amount equal to the tax benefit attributable to such deduction. We account for these purchases as a payment of current federal income taxes. There were no purchases of tax and loss bonds in 2009, 2010 or 2011. The last tax and loss bonds we held were redeemed in 2009.

Deferred income taxes are provided under the liability method, which recognizes the future tax effects of temporary differences between amounts reported in the financial statements and the tax bases of these items. The expected tax effects are computed at the current federal tax rate. We review the need to establish a deferred tax asset valuation allowance on a quarterly basis. We analyze several factors, among which are the severity and frequency of operating losses, our capacity for the carryback or carryforward of any losses, the expected occurrence of future income or loss and available tax planning alternatives. As discussed in Note 14 –“Income Taxes,” we have reduced our benefit from income tax through the recognition of a valuation allowance.

We provide for uncertain tax positions and the related interest and penalties based on our assessment of whether a tax benefit is more likely than not to be sustained under any examination by taxing authorities.

Benefit plans

We have a non-contributory defined benefit pension plan covering substantially all employees, as well as a supplemental executive retirement plan. Retirement benefits are based on compensation and years of service. We recognize these retirement benefit costs over the period during which employees render the service that qualifies them for benefits. Our policy is to fund pension cost as required under the Employee Retirement Income Security Act of 1974.

We offer both medical and dental benefits for retired domestic employees, their spouses and eligible dependents until the retiree reaches the age of 65. Under the plan retirees pay a premium for these benefits. We accrue the estimated costs of retiree medical and dental benefits over the period during which employees render the service that qualifies them for benefits. Historically benefits were generally funded as they were due, however beginning in 2009 some benefits have been paid from the fund. The cost to us has not been significant. (See Note 13 – “Benefit plans.”)

Reinsurance

Loss reserves and unearned premiums are reported before taking credit for amounts ceded under reinsurance treaties. Ceded loss reserves are reflected as "Reinsurance recoverable on loss reserves." Ceded unearned premiums are included in “Other assets.” Ceded losses paid are reflected as “Reinsurance recoverable on paid losses.” Ceded premiums payable are included in “Other liabilities.” We remain liable for all reinsurance ceded. (See Note 11 – “Reinsurance.”)

Foreign Currency Translation

Assets and liabilities denominated in a foreign currency are translated at the year-end exchange rates. Operating results are translated at average rates of exchange prevailing during the year. Unrealized gains and losses, net of deferred taxes, resulting from translation are included in accumulated other comprehensive income in stockholders' equity. Gains and losses resulting from transactions in a foreign currency are recorded in current period net income at the rate on the transaction date.

Share-Based Compensation

We have certain share-based compensation plans. Under the fair value method, compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period which generally corresponds to the vesting period. The fair value of awards classified as liabilities is remeasured at each reporting period until the award is settled. Awards under our plans generally vest over periods ranging from one to five years. (See Note 18 – “Share-based compensation plans.”)

Earnings per share

Our basic EPS is based on the weighted average number of common shares outstanding, which excludes participating securities with non-forfeitable rights to dividends of 1.1 million, 1.8 million and 1.9 million, respectively, for the years ended December 31, 2011, 2010 and 2009 because they were anti-dilutive due to our reported net loss. Typically, diluted EPS is based on the weighted average number of common shares outstanding plus common stock equivalents which include certain stock awards, stock options and the dilutive effect of our convertible debt. In accordance with accounting guidance, if we report a net loss from continuing operations, then our diluted EPS is computed in the same manner as the basic EPS. In addition, if any common stock equivalents are anti-dilutive they are always excluded from the calculation. The following is a reconciliation of the weighted average number of shares; however for the years ended December 31, 2011, 2010 and 2009, common stock equivalents of 55.6 million, 47.4 million and 37.6 million, respectively, were not included because they were anti-dilutive.

	Years Ended December 31,

	2011			2010			2009
	(In thousands, except per share data)

Basic loss per share:
Average common shares outstanding		201,019			176,406			124,209
Net loss	$	(485,892	)	$	(363,735	)	$	(1,322,277	)
Basic loss per share	$	(2.42	)	$	(2.06	)	$	(10.65	)

Diluted loss per share:

Weighted-average shares - Basic		201,019			176,406			124,209
Common stock equivalents		-			-			-

Weighted-average shares - Diluted		201,019			176,406			124,209

Net loss	$	(485,892	)	$	(363,735	)	$	(1,322,277	)
Diluted loss per share	$	(2.42	)	$	(2.06	)	$	(10.65	)

Other comprehensive income

Our total other comprehensive income was as follows:

	Years Ended December 31,

	2011			2010			2009
	(In thousands)

Net loss	$	(485,892	)	$	(363,735	)	$	(1,322,277	)
Other comprehensive income (loss)		7,988			(52,019	)		180,944

Total other comprehensive loss	$	(477,904	)	$	(415,754	)	$	(1,141,333	)

Other comprehensive income (loss) (net of tax):
Change in unrealized gains and losses on investments	$	21,057		$	(69,074	)	$	154,358
Noncredit component of impairment loss		-			-			(1,764	)
Amortization related to benefit plans		(12,862	)		6,390			10,704
Unrealized foreign currency translation adjustment		(207	)		10,665			17,646

Other comprehensive income (loss)	$	7,988		$	(52,019	)	$	180,944

The tax expense (benefit) on other comprehensive income was $3.6 million, $5.9 million (adjusted for the valuation allowance, see Note 14 – “Income taxes”) and $98.1 million for the years ended December 31, 2011, 2010 and 2009, respectively.

Our total accumulated other comprehensive income was as follows:

	December 31,

	2011			2010
	(In thousands)

Accumulated other comprehensive income (loss):

Unrealized gains (losses) on investments	$	53,561		$	32,503
Defined benefit plans		(43,642	)		(30,780	)
Foreign currency translation adjustment		20,205			20,413

Total accumulated other comprehensive income	$	30,124		$	22,136

Cash and cash equivalents

We consider money market funds and investments with original maturities of three months or less to be cash equivalents.

Reclassifications

Certain reclassifications have been made in the accompanying financial statements to 2010 and 2009 amounts to conform to the 2011 presentation.

Subsequent events

We have considered subsequent events through the date of this filing.

Related party transactions

The entire disclosure for all significant accounting policies of the reporting entity.

+ References+ Details

New accounting policies

12 Months Ended

Dec. 31, 2011

New accounting policies [Abstract]

New accounting policies

4.	New accounting policies

In June 2011, as amended in December 2011, new guidance was issued requiring entities to present net income and other comprehensive income in either a single continuous statement or in two separate, but consecutive, statements of net income and other comprehensive income. The option to present items of other comprehensive income in the statement of changes in equity is eliminated. The guidance is effective for interim and annual periods beginning after December 15, 2011. Early adoption is permitted. Full retrospective application is required. We are currently evaluating the provisions of this guidance and intend to meet the new requirements beginning in the first quarter of 2012.

In May 2011, new guidance was issued regarding fair value measurement. The guidance in the new standard is intended to harmonize the fair value measurement and disclosure requirements for United States and International standards. Many of the changes in the standard represent clarifications to existing guidance, but the standard also includes some new guidance and new required disclosures. The guidance is effective for interim and annual periods beginning after December 15, 2011. We are currently evaluating the provisions of this guidance and the impact on our financial statements and disclosures.

In October 2010, new guidance was issued on accounting for costs associated with acquiring or renewing insurance contracts. The new guidance will likely change how insurance companies account for acquisition costs, particularly in determining what costs are deferrable. The new requirements are effective for fiscal years beginning after December 15, 2011, either prospectively or by retrospective adjustment. We are currently evaluating the provisions of this guidance, however we do not expect the new guidance to have a material impact on our financial statements and disclosures.

Related party transactions

12 Months Ended

Dec. 31, 2011

5.	Related party transactions

Credit Based Asset Servicing and Securitization LLC (“C-BASS”), a former minority-owned, unconsolidated, joint venture investment, provided certain services to us during 2009 in exchange for fees. The impact of these transactions was not material to us.

The entire disclosure for related party transactions, including the nature of the relationship(s), a description of the transactions, the amount of the transactions, the effects of any change in the method of establishing the terms of the transaction from the previous period, stated interest rate, expiration date, terms and manner of settlement per the agreement with the related party, and amounts due to or from related parties. If the entity and one or more other entities are under common ownership or management control and this control affects the operating results or financial position, disclosure includes the nature of the control relationship even if there are no transactions between the entities. Disclosure may also include the aggregate amount of current and deferred tax expense for each statement of earnings presented where the entity is a member of a group that files a consolidated tax return, the amount of any tax related balances due to or from affiliates as of the date of each statement of financial position presented, the principal provisions of the method by which the consolidated amount of current and deferred tax expense is allocated to the members of the group and the nature and effect of any changes in that method. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

Investments, Debt and Equity Securities [Abstract]

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

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-Number 210

-Article 4

-Section 08

-Paragraph k

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-Name Regulation S-X (SX)

-Number 210

-Article 3A

-Section 04

-Paragraph b

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-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 57

-Paragraph 1-4

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+ Details

Investments

12 Months Ended

Dec. 31, 2011

Investments

6.	Investments

The amortized cost, gross unrealized gains and losses and fair value of the investment portfolio at December 31, 2011 and 2010 are shown below.

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2011:	Cost		Gains		Losses (1)			Value
	(In thousands)
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	592,108	$	4,965	$	(36	)	$	597,037
Obligations of U.S. states and political subdivisions		2,255,192		74,918		(6,639	)		2,323,471
Corporate debt securities		2,007,720		32,750		(7,619	)		2,032,851
Residential mortgage-backed securities		441,589		4,113		(285	)		445,417
Commercial mortgage-backed securities		257,530		7,404		-			264,934
Debt securities issued by foreign sovereign governments		146,755		10,441		(6	)		157,190
Total debt securities		5,700,894		134,591		(14,585	)		5,820,900
Equity securities		2,666		82		(1	)		2,747

Total investment portfolio	$	5,703,560	$	134,673	$	(14,586	)	$	5,823,647

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2010:	Cost		Gains		Losses (1)			Value
	(In thousands)
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	1,092,890	$	16,718	$	(6,822	)	$	1,102,786
Obligations of U.S. states and political subdivisions		3,549,355		85,085		(54,374	)		3,580,066
Corporate debt securities		2,521,275		54,975		(11,291	)		2,564,959
Residential mortgage-backed securities		53,845		3,255		-			57,100
Debt securities issued by foreign sovereign governments		149,443		1,915		(1,031	)		150,327
Total debt securities		7,366,808		161,948		(73,518	)		7,455,238
Equity securities		3,049		40		(45	)		3,044

Total investment portfolio	$	7,369,857	$	161,988	$	(73,563	)	$	7,458,282

(1)

There were no other-than-temporary impairment losses recorded in other comprehensive income at December 31, 2011 and 2010.

Our foreign investments primarily consist of the investment portfolio supporting our Australian domiciled subsidiary. This portfolio is comprised of Australian government and semi government securities, rated AAA, by one or more of the following major rating agencies: Moody's, Standard & Poor's and Fitch Ratings, representing 94% of the market value of our foreign investments with the remaining 6% invested in corporate securities.

The amortized cost and fair values of debt securities at December 31, 2011, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Because most auction rate and mortgage-backed securities provide for periodic payments throughout their lives, they are listed below in separate categories.

	Amortized		Fair
December 31, 2011	Cost		Value
	(In thousands)

Due in one year or less	$	1,238,386	$	1,240,917
Due after one year through five years		1,860,588		1,900,400
Due after five years through ten years		897,967		942,561
Due after ten years		828,573		856,774
		4,825,514		4,940,652

Residential mortgage-backed securities		441,589		445,417
Commercial mortgage-backed securities		257,530		264,934
Auction rate securities (1)		176,261		169,897

Total at December 31, 2011	$	5,700,894	$	5,820,900

(1) At December 31, 2011, 100% of auction rate securities had a contractual maturity greater than 10 years.

At December 31, 2011 and 2010, the investment portfolio had gross unrealized losses of $14.6 million and $73.6 million, respectively. For those securities in an unrealized loss position, the length of time the securities were in such a position, as measured by their month-end fair values, is as follows:

	Less Than 12 Months						12 Months or Greater						Total
	Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
December 31, 2011	Value			Losses			Value			Losses			Value			Losses
	(In thousands)
U.S. Treasury securities and obligations of U.S. government corporations and agencies		$	78,546		$	36		$	-		$	-		$	78,546		$	36
Obligations of U.S. states and political subdivisions			188,879			837			137,965			5,802			326,844			6,639
Corporate debt securities			689,396			6,709			28,174			910			717,570			7,619
Residential mortgage- backed securities			120,405			285			-			-			120,405			285
Debt securities issued by foreign sovereign governments			484			6			-			-			484			6
Equity securities			-			-			33			1			33			1
Total investment portfolio		$	1,077,710		$	7,873		$	166,172		$	6,713		$	1,243,882		$	14,586

	Less Than 12 Months						12 Months or Greater						Total
	Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
December 31, 2010	Value			Losses			Value			Losses			Value			Losses
	(In thousands)
U.S. Treasury securities and obligations of U.S. government corporations and agencies		$	258,235		$	6,822		$	-		$	-		$	258,235		$	6,822
Obligations of U.S. states and political subdivisions			1,160,877			32,415			359,629			21,959			1,520,506			54,374
Corporate debt securities			817,471			9,921			28,630			1,370			846,101			11,291
Debt securities issued by foreign sovereign governments			105,724			1,031			-			-			105,724			1,031
Equity securities			2,723			45			-			-			2,723			45
Total investment portfolio		$	2,345,030		$	50,234		$	388,259		$	23,329		$	2,733,289		$	73,563

The securities in an unrealized loss position for 12 months or greater are primarily auction rate securities (“ARS”) backed by student loans. See further discussion of these securities below. The unrealized losses in all categories of our investments were primarily caused by the difference in interest rates at December 31, 2011 and December 31, 2010, respectively, compared to the interest rates at the time of purchase as well as the discount rate applied in our auction rate securities discounted cash flow model.

Under the current guidance a debt security impairment is deemed other than temporary if we either intend to sell the security, or it is more likely than not that we will be required to sell the security before recovery or we do not expect to collect cash flows sufficient to recover the amortized cost basis of the security. During 2011 we recognized OTTI losses in earnings of $0.7 million, related to further impairments on certain ARS previously impaired in 2010. During 2010 we recognized OTTI losses in earnings of $9.6 million. During 2009 we recognized OTTI losses in earnings of $40.9 million and an additional $1.8 million of OTTI losses in other comprehensive income. In 2010, our OTTI losses were primarily related to certain securities for which the expected cash flows are not sufficient to recover the amortized cost. In 2009, our OTTI losses were primarily related to securities for which we had the intent to sell.

The following table provides a rollforward of the amount related to credit losses recognized in earnings for which a portion of an OTTI loss was recognized in accumulated other comprehensive income (loss) for the years ended December 31, 2011 and 2010.

	2011		2010
	(In thousands)

Beginning balance	$	-	$	1,021
Addition for the amount related to the credit loss for which an OTTI was not previously recognized		-		-
Additional increases to the amount related to the credit loss for which an OTTI was previously recognized		-		-
Reductions for securities sold during the period (realized)				(1,021	)
Ending balance	$	-	$	-

The fair value of our ARS backed by student loans was approximately $170 million and $358 million at December 31, 2011 and 2010, respectively. ARS are intended to behave like short-term debt instruments because their interest rates are reset periodically through an auction process, most commonly at intervals of 7, 28 and 35 days. The same auction process has historically provided a means by which we may rollover the investment or sell these securities at par in order to provide us with liquidity as needed. The ARS we hold are collateralized by portfolios of student loans, substantially all of which are ultimately 97% guaranteed by the United States Department of Education. At December 31, 2011, our ARS portfolio was 83% AAA/Aaa-rated by one or more of the major rating agencies.

In mid-February 2008, auctions began to fail due to insufficient buyers, as the amount of securities submitted for sale in auctions exceeded the aggregate amount of the bids. For each failed auction, the interest rate on the security moves to a maximum rate specified for each security, and generally resets at a level higher than specified short-term interest rate benchmarks. At December 31, 2011, our entire ARS portfolio, consisting of 19 investments, was subject to failed auctions; however, from the period when the auctions began to fail through December 31, 2011, $361 million in par value of ARS was either sold or called, with the average amount we received being approximately 97% of par which approximated the aggregate fair value prior to redemption. To date, we have collected all interest due on our ARS.

As a result of the persistent failed auctions, and the uncertainty of when these investments could be liquidated at par, the investment principal associated with failed auctions will not be accessible until successful auctions occur, a buyer is found outside of the auction process, the issuers establish a different form of financing to replace these securities, or final payments come due according to the contractual maturities of the debt issues. However, we continue to believe we will have liquidity to our ARS portfolio by December 31, 2014.

Net investment income is comprised of the following:

	2011			2010			2009
	(In thousands)

Fixed maturities	$	202,301		$	236,734		$	291,304
Equity securities		330			315			819
Cash equivalents		496			1,526			3,056
Interest on Sherman note		-			10,796			11,323
Other		926			1,081			1,389

Investment income		204,053			250,452			307,891
Investment expenses		(2,783	)		(3,199	)		(3,213	)

Net investment income	$	201,270		$	247,253		$	304,678

The net realized investment gains (losses), including impairment losses, and change in net unrealized appreciation (depreciation) of investments are as follows:

	2011		2010			2009
	(In thousands)
Net realized investment gains (losses) on investments:
Fixed maturities	$	142,284	$	93,017		$	51,109
Equity securities		330		151			116
Joint ventures		-		(466	)		-
Other		101		235			709

	$	142,715	$	92,937		$	51,934

Change in net unrealized appreciation (depreciation):
Fixed maturities	$	31,576	$	(71,304	)	$	237,521
Equity securities		86		(4	)		144
Other		-		-			(2,263	)

	$	31,662	$	(71,308	)	$	235,402

The reclassification adjustment relating to the change in unrealized investment gains and losses is as follows:

	2011		2010			2009
	(In thousands)

Net unrealized holding gains (losses) arising during the period, net of tax, included in accumulated other comprehensive income	$	68,822	$	(7,534	)	$	143,378
Less: net gains (losses) reclassified out of accumulated other comprehensive income into earnings for the period		47,765		61,540			(9,216	)
Change in unrealized investment gains (losses), net of tax	$	21,057	$	(69,074	)	$	152,594

Note: Components of the 2009 and 2010 “Change in unrealized investment gains (losses), net of tax” have been reclassified. The total “Change in unrealized investment gains (losses), net of tax” remains unchanged.

The tax expense related to the changes in net unrealized appreciation (depreciation) was $10.6 million, $1.0 million (adjusted for the valuation allowance, see Note 14 – “Income taxes”) and $82.8 million for 2011, 2010 and 2009, respectively.

The gross realized gains, gross realized losses and impairment losses are as follows:

	2011			2010			2009
	(In thousands)


Gross realized gains	$	158,659		$	119,325		$	112,148
Gross realized losses		(15,229	)		(16,278	)		(19,274	)
Impairment losses		(715	)		(9,644	)		(40,940	)

Net realized gains on securities	$	142,715		$	93,403		$	51,934

Loss from joint ventures		-			(466	)		-
Total net realized gains	$	142,715		$	92,937		$	51,934

We had $22.3 million and $21.8 million of investments on deposit with various states at December 31, 2011 and 2010, respectively, due to regulatory requirements of those state insurance departments.

Tabular disclosure of investments in certain debt and equity securities (and certain other trading assets) which include all debt and equity securities (other than those equity securities accounted for under the equity or cost methods of accounting) with readily determinable fair values. Other trading assets include assets that are carried on the balance sheet at fair value and held for trading purposes. A debt security represents a creditor relationship with an enterprise that is in the form of a security. Debt securities include, among other items, US Treasury securities, US government securities, municipal securities, corporate bonds, convertible debt, commercial paper, and all securitized debt instruments. An equity security represents an ownership interest in an enterprise or the right to acquire or dispose of an ownership interest in an enterprise at fixed or determinable prices. Equity securities include, among other things, common stock, certain preferred stock, warrant rights, call options, and put options, but do not include convertible debt. An entity may opt to provide the reader with additional narrative text to better understand the nature of investments in debt and equity securities (and other trading assets).

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-Name Accounting Standards Codification

-Glossary Debt Security

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-Topic 320

+ Details

Fair value measurements

12 Months Ended

Dec. 31, 2011

Fair Value Disclosures [Abstract]

Fair value measurements

7.	Fair value measurements

Fair value measurements for items measured at fair value included the following as of December 31, 2011 and 2010:

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
December 31, 2011

U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	597,037	$	597,037	$	-	$	-
Obligations of U.S. states and political subdivisions		2,323,471		-		2,209,245		114,226
Corporate debt securities		2,032,851		1,455		1,971,168		60,228
Residential mortgage-backed securities		445,417		-		445,417		-
Commercial mortgage-backed securities		264,934		-		264,934		-
Debt securities issued by foreign sovereign governments		157,190		147,976		9,214		-
Total debt securities		5,820,900		746,468		4,899,978		174,454
Equity securities		2,747		2,426		-		321
Total investments	$	5,823,647	$	748,894	$	4,899,978	$	174,775
Real estate acquired (1)	$	1,621	$	-	$	-	$	1,621

December 31, 2010

U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	1,102,786	$	1,102,786	$	-	$	-
Obligations of U.S. states and political subdivisions		3,580,066		-		3,284,376		295,690
Corporate debt securities		2,564,959		2,563		2,492,343		70,053
Residential mortgage-backed securities		57,100		-		57,100		-
Debt securities issued by foreign sovereign governments		150,327		135,457		14,870		-
Total debt securities		7,455,238		1,240,806		5,848,689		365,743
Equity securities		3,044		2,723		-		321
Total investments	$	7,458,282	$	1,243,529	$	5,848,689	$	366,064
Real estate acquired (1)	$	6,220	$	-	$	-	$	6,220

(1)

Real estate acquired through claim settlement, which is held for sale, is reported in Other Assets on the consolidated balance sheet.

There were no significant transfers of securities between Level 1 and Level 2 during 2011 or 2010.

For assets and liabilities measured at fair value using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances for the years ended December 31, 2011 and 2010 is as follows:

	Obligations of U.S. States and Political Subdivisions			Corporate Debt Securities			Equity Securities		Total Investments			Real Estate Acquired
	(In thousands)
Balance at December 31, 2010	$	295,690		$	70,053		$	321	$	366,064		$	6,220
Total realized/unrealized gains (losses):
Included in earnings and reported as realized investment gains (losses), net		(7,883	)		200			-		(7,683	)		-
Included in earnings and reported as net impairment losses recognized in earnings		-			(662	)		-		(662	)		-
Included in earnings and reported as losses incurred, net		-			-			-		-			(371	)
Included in other comprehensive income		6,894			637			-		7,531			-
Purchases		-			-			-		-			5,279
Sales		(180,475	)		(10,000	)		-		(190,475	)		(9,507	)
Transfers into Level 3		-			-			-		-			-
Transfers out of Level 3		-			-			-		-			-
Balance at December 31, 2011	$	114,226		$	60,228		$	321	$	174,775		$	1,621

Amount of total losses included in earnings for the year ended December 31, 2011 attributable to the change in unrealized losses on assets still held at December 31, 2011	$	-		$	-		$	-	$	-		$	-

	Obligations of U.S. States and Political Subdivisions			Corporate Debt Securities			Equity Securities		Total Investments			Real Estate Acquired
	(In thousands)
Balance at December 31, 2009	$	370,341		$	129,338		$	321	$	500,000		$	3,830
Total realized/unrealized gains (losses):
Included in earnings and reported as realized investment gains (losses), net		-			(2,880	)		-		(2,880	)		-
Included in earnings and reported as net impairment losses recognized in earnings		-			(2,677	)		-		(2,677	)		-
Included in earnings and reported as losses incurred, net		-			-			-		-			(1,926	)
Included in other comprehensive income		4,913			5,342			-		10,255			-
Purchases		-			-			-		-			15,606
Sales		(79,564	)		(59,070	)		-		(138,634	)		(11,290	)
Transfers into Level 3		-			-			-		-			-
Transfers out of Level 3		-			-			-		-			-
Balance at December 31, 2010	$	295,690		$	70,053		$	321	$	366,064		$	6,220

Amount of total losses included in earnings for the year ended December 31, 2010 attributable to the change in unrealized losses on assets still held at December 31, 2010	$	-		$	-		$	-	$	-		$	-

Additional fair value disclosures related to our investment portfolio are included in Note 6 – “Investments”. Fair value disclosures related to our debt are included in Note 8 – “Debt.”

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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-Name Statement of Financial Accounting Standard (FAS)

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+ Details

Debt

12 Months Ended

Dec. 31, 2011

Debt [Abstract]

Debt

Senior Notes

In September 2011 we repaid our $77.4 million, 5.625% Senior Notes that came due. At December 31, 2011 we had outstanding $171 million, 5.375% Senior Notes due in November 2015. During 2011 we repurchased $129 million in par value of our 5.375% Senior Notes due in November 2015. We recognized a gain on the repurchases of approximately $27.7 million, which is included in other revenue on the Consolidated Statements of Operations for the year ended December 31, 2011. At December 31, 2010 we had outstanding $77.4 million, 5.625% Senior Notes due in September 2011 and $300 million, 5.375% Senior Notes due in November 2015. Covenants in the Senior Notes include the requirement that there be no liens on the stock of the designated subsidiaries unless the Senior Notes are equally and ratably secured; that there be no disposition of the stock of designated subsidiaries unless all of the stock is disposed of for consideration equal to the fair market value of the stock; and that we and the designated subsidiaries preserve our corporate existence, rights and franchises unless we or any such subsidiary determines that such preservation is no longer necessary in the conduct of its business and that the loss thereof is not disadvantageous to the Senior Notes. A designated subsidiary is any of our consolidated subsidiaries which has shareholders' equity of at least 15% of our consolidated shareholders' equity. We were in compliance with all covenants at December 31, 2011.

If we fail to meet any of the covenants of the Senior Notes discussed above; there is a failure to pay when due at maturity, or a default results in the acceleration of maturity of, any of our other debt in an aggregate amount of $40 million or more; or we fail to make a payment of principal on the Senior Notes when due or a payment of interest on the Senior Notes within thirty days after due and we are not successful in obtaining an agreement from holders of a majority of the Senior Notes to change (or waive) the applicable requirement or payment default, then the holders of 25% or more of our Senior Notes would have the right to accelerate the maturity of those notes. In addition, the trustee, U.S. Bank National Association, of the Senior Notes could, independent of any action by holders of Senior Notes, accelerate the maturity of the Senior Notes.

At December 31, 2011 and 2010, the fair value of the amount outstanding under our Senior Notes was $116.7 million and $355.6 million, respectively. The fair value was determined using publicly available trade information.

Interest payments on the Senior Notes were $19.3 million, $20.5 million and $25.8 million for the years ended December 31, 2011, 2010, and 2009, respectively.

Convertible Senior Notes

At December 31, 2011 and 2010 we had outstanding $345 million principal amount of 5% Convertible Senior Notes due in 2017. Interest on the Convertible Senior Notes is payable semi-annually in arrears on May 1 and November 1 of each year. We do not have the right to defer interest payments on the Convertible Senior Notes. The Convertible Senior Notes will mature on May 1, 2017, unless earlier converted by the holders or repurchased by us. Covenants in the Convertible Senior Notes include a requirement to notify holders in advance of certain events and that we and the designated subsidiaries (defined above) preserve our corporate existence, rights and franchises unless we or any such subsidiary determines that such preservation is no longer necessary in the conduct of its business and that the loss thereof is not disadvantageous to the Convertible Senior Notes.

If we fail to meet any of the covenants of the Convertible Senior Notes; there is a failure to pay when due at maturity, or a default results in the acceleration of maturity of, any of our other debt in an aggregate amount of $40 million or more; a final judgment for the payment of $40 million or more (excluding any amounts covered by insurance) is rendered against us or any of our subsidiaries which judgment is not discharged or stayed within certain time limits; or we fail to make a payment of principal on the Convertible Senior Notes when due or a payment of interest on the Convertible Senior Notes within thirty days after due and we are not successful in obtaining an agreement from holders of a majority of the Convertible Senior Notes to change (or waive) the applicable requirement or payment default, then the holders of 25% or more of the Convertible Senior Notes would have the right to accelerate the maturity of those notes. In addition, the trustee of the Convertible Senior Notes could, independent of any action by holders, accelerate the maturity of the Convertible Senior Notes.

The Convertible Senior Notes are convertible, at the holder's option, at an initial conversion rate, which is subject to adjustment, of 74.4186 shares per $1,000 principal amount at any time prior to the maturity date. This represents an initial conversion price of approximately $13.44 per share. These Convertible Senior Notes will be equal in right of payment to our existing Senior Notes, discussed above, and will be senior in right of payment to our existing Convertible Junior Debentures, discussed below. Debt issuance costs are being amortized to interest expense over the contractual life of the Convertible Senior Notes. The provisions of the Convertible Senior Notes are complex. The description above is not intended to be complete in all respects. Moreover, that description is qualified in its entirety by the terms of the notes, which are contained in the Supplemental Indenture, dated as of April 26, 2010, between us and U.S. Bank National Association, as trustee, and the Indenture dated as of October 15, 2000, between us and the trustee.

At December 31, 2011 and 2010, the fair value of the amount outstanding under our Convertible Senior Notes was $202.3 million and $400.5 million, respectively. The fair value was determined using publicly available trade information.

Interest payments on the Convertible Senior Notes were $17.3 million and $8.9 million for the year ended December 31, 2011 and 2010, respectively.

Convertible Junior Subordinated Debentures

At December 31, 2011 and 2010 we had outstanding $389.5 million principal amount of 9% Convertible Junior Subordinated Debentures due in 2063 (the “debentures”). The debentures have an effective interest rate of 19% that reflects our non-convertible debt borrowing rate at the time of issuance. At December 31, 2011 and 2010 the amortized value of the principal amount of the debentures is reflected as a liability on our consolidated balance sheet of $344.4 million and $315.6 million, respectively, with the unamortized discount reflected in equity. The debentures rank junior to all of our existing and future senior indebtedness.

Interest on the debentures is payable semi-annually in arrears on April 1 and October 1 of each year. As long as no event of default with respect to the debentures has occurred and is continuing, we may defer interest, under an optional deferral provision, for one or more consecutive interest periods up to ten years without giving rise to an event of default. Deferred interest will accrue additional interest at the rate then applicable to the debentures. During an optional deferral period we may not pay or declare dividends on our common stock. Violations of the covenants under the Indenture governing the debentures, including covenants to provide certain documents to the trustee, are not events of default under the Indenture and would not allow the acceleration of amounts that we owe under the debentures. Similarly, events of default under, or acceleration of, any of our other obligations, including those described above, would not allow the acceleration of amounts that we owe under the debentures. However, violations of the events of default under the Indenture, including a failure to pay principal when due under the debentures and certain events of bankruptcy, insolvency or receivership involving our holding company would allow acceleration of amounts that we owe under the debentures.

Interest on the debentures that would have been payable on the scheduled interest payment dates of April 1, 2009, October 1, 2009 and April 1, 2010 had been deferred past the scheduled payment date. During this deferral period the deferred interest continued to accrue and compound semi-annually at an annual rate of 9%.

On October 1, 2010 we paid each of those deferred interest payments, including the compound interest on each. The interest payments, totaling approximately $57.5 million, were made from the net proceeds of our April 2010 common stock offering. We have remained current on these interest payments since October 1, 2010. We continue to have the right to defer interest that is payable on subsequent scheduled interest payment dates if we give the required 15 day notice. Any deferral of such interest would be on terms equivalent to those described above.

When interest on the debentures is deferred, we are required, not later than a specified time, to use reasonable commercial efforts to begin selling qualifying securities to persons who are not our affiliates. The specified time is one business day after we pay interest on the debentures that was not deferred, or if earlier, the fifth anniversary of the scheduled interest payment date on which the deferral started. Qualifying securities are common stock, certain warrants and certain non-cumulative perpetual preferred stock. The requirement to use such efforts to sell such securities is called the Alternative Payment Mechanism.

The net proceeds of Alternative Payment Mechanism sales are to be applied to the payment of deferred interest, including the compound portion. We cannot pay deferred interest other than from the net proceeds of Alternative Payment Mechanism sales, except at the final maturity of the debentures or at the tenth anniversary of the start of the interest deferral. The Alternative Payment Mechanism does not require us to sell common stock or warrants before the fifth anniversary of the interest payment date on which that deferral started if the net proceeds (counting any net proceeds of those securities previously sold under the Alternative Payment Mechanism) would exceed the 2% cap. The 2% cap is 2% of the average closing price of our common stock times the number of our outstanding shares of common stock. The average price is determined over a specified period ending before the issuance of the common stock or warrants being sold, and the number of outstanding shares is determined as of the date of our most recent publicly released financial statements.

We are not required to issue under the Alternative Payment Mechanism a total of more than 10 million shares of common stock, including shares underlying qualifying warrants. In addition, we may not issue under the Alternative Payment Mechanism qualifying preferred stock if the total net proceeds of all issuances would exceed 25% of the aggregate principal amount of the debentures.

The Alternative Payment Mechanism does not apply during any period between scheduled interest payment dates if there is a “market disruption event” that occurs over a specified portion of such period. Market disruption events include any material adverse change in domestic or international economic or financial conditions.

The provisions of the Alternative Payment Mechanism are complex. The description above is not intended to be complete in all respects. Moreover, that description is qualified in its entirety by the terms of the debentures, which are contained in the Indenture, dated as of March 28, 2008, between us and U.S. Bank National Association, as trustee.

We may redeem the debentures prior to April 6, 2013, in whole but not in part, only in the event of a specified tax or rating agency event, as defined in the Indenture. In any such event, the redemption price will be equal to the greater of (1) 100% of the principal amount of the debentures being redeemed and (2) the applicable make-whole amount, as defined in the Indenture, in each case plus any accrued but unpaid interest. On or after April 6, 2013, we may redeem the debentures in whole or in part from time to time, at our option, at a redemption price equal to 100% of the principal amount of the debentures being redeemed, plus any accrued and unpaid interest, if the closing sale price of our common stock exceeds 130% of the then prevailing conversion price of the debentures for at least 20 of the 30 trading days preceding notice of the redemption. We will not be able to redeem the debentures, other than in the event of a specified tax event or rating agency event, during an optional deferral period.

The debentures are currently convertible, at the holder's option, at an initial conversion rate, which is subject to adjustment, of 74.0741 common shares per $1,000 principal amount of debentures at any time prior to the maturity date. This represents an initial conversion price of approximately $13.50 per share. If a holder elects to convert their debentures, deferred interest owed on the debentures being converted is also converted into shares of our common stock. The conversion rate for any deferred interest is based on the average price that our shares traded at during a 5-day period immediately prior to the election to convert. In lieu of issuing shares of common stock upon conversion of the debentures occurring after April 6, 2013, we may, at our option, make a cash payment to converting holders equal to the value of all or some of the shares of our common stock otherwise issuable upon conversion.

The fair value of the debentures was approximately $189.6 million and $432.4 million, respectively, at December 31, 2011 and 2010, as determined using available pricing for these debentures or similar instruments.

Interest payments on the debentures were $35.1 million and $75.0 million for the years ended December 31, 2011 and 2010, respectively. There were no interest payments made on the debentures in 2009 as we were in a deferral period that ended October 1, 2010 as discussed above.

Other debt

In June 2009, we repaid the $200 million that was then outstanding under our bank revolving credit facility and terminated the facility. Interest payments related to that facility were $6.4 million for the year ended December 31, 2009.

Premium Deficiency Reserve [Abstract]

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References+ Details

Loss reserves

12 Months Ended

Dec. 31, 2011

Loss reserves [Abstract]

Loss reserves

9.	Loss reserves

As described in Note 3 – “Summary of significant accounting policies”, we establish reserves to recognize the estimated liability for losses and loss adjustment expenses related to defaults on insured mortgage loans. Loss reserves are established by estimating the number of loans in our inventory of delinquent loans that will result in a claim payment, which is referred to as the claim rate, and further estimating the amount of the claim payment, which is referred to as claim severity.

Estimation of losses is inherently judgmental. The conditions that affect the claim rate and claim severity include the current and future state of the domestic economy, including unemployment, and the current and future strength of local housing markets. Current conditions in the housing and mortgage industries make these assumptions more volatile than they would otherwise be. The actual amount of the claim payments may be substantially different than our loss reserve estimates. Our estimates could be adversely affected by several factors, including a further deterioration of regional or national economic conditions, including unemployment, leading to a reduction in borrowers' income and thus their ability to make mortgage payments, and a further drop in housing values that could result in, among other things, greater losses on loans that have pool insurance, and may affect borrower willingness to continue to make mortgage payments when the value of the home is below the mortgage balance and mitigation from rescissions being materially less than assumed. Changes to our estimates could result in a material impact to our results of operations and capital position, even in a stable economic environment.

The following table provides a reconciliation of beginning and ending loss reserves for each of the past three years:

	2011			2010			2009
	(In thousands)

Reserve at beginning of year	$	5,884,171		$	6,704,990		$	4,775,552
Less reinsurance recoverable		275,290			332,227			232,988
Net reserve at beginning of year (1)		5,608,881			6,372,763			4,542,564
Adjustment to reserves (2)		-			(92,000	)		-
Adjusted beginning reserves		5,608,881			6,280,763			4,542,564

Losses incurred:
Losses and LAE incurred in respect of default notices received in:
Current year		1,814,035			1,874,449			2,912,679
Prior years (3)		(99,328	)		(266,908	)		466,765
Subtotal (4)		1,714,707			1,607,541			3,379,444

Losses paid:
Losses and LAE paid in respect of default notices received in:
Current year		121,383			60,897			62,491
Prior years		2,838,069			2,256,206			1,605,668
Reinsurance terminations (5)		(38,769	)		(37,680	)		(118,914	)
Subtotal (6)		2,920,683			2,279,423			1,549,245
Net reserve at end of year (7)		4,402,905			5,608,881			6,372,763
Plus reinsurance recoverables		154,607			275,290			332,227

Reserve at end of year	$	4,557,512		$	5,884,171		$	6,704,990

(1)

At December 31, 2010, 2009 and 2008 the estimated reduction in loss reserves related to rescissions approximated $1.3 billion, $2.1 billion and $0.5 billion, respectively.

(2)

In periods prior to 2010 an estimate of premium to be refunded in conjunction with claim payments was included in Loss Reserves. In 2010, we separately stated portions of this liability in Other liabilities and Premium deficiency reserve on the consolidated balance sheet.

(3)

A negative number for prior year losses incurred indicates a redundancy of prior year loss reserves, and a positive number for prior year losses incurred indicates a deficiency of prior year loss reserves.

(4)

Rescissions did not have a significant impact on incurred losses in 2011. Rescissions mitigated our incurred losses by an estimated $0.2 billion and $2.5 billion in 2010 and 2009, respectively.

(5)

In a termination, the reinsurance agreement is cancelled, with no future premium ceded and funds for any incurred but unpaid losses transferred to us. The transferred funds result in an increase in our investment portfolio (including cash and cash equivalents) and a decrease in net losses paid (reduction to losses incurred). In addition, there is an offsetting decrease in the reinsurance recoverable (increase in losses incurred), and thus there is no net impact to losses incurred. (See Note 11 – “Reinsurance”)

(6)

Rescissions mitigated our paid losses by an estimated $0.6 billion, $1.0 billion and $0.9 billion in 2011, 2010 and 2009, respectively, which excludes amounts that may have been applied to a deductible.

(7)

At December 31, 2011, 2010 and 2009 the estimated reduction in loss reserves related to rescissions approximated $0.7 billion, $1.3 billion and $2.1 billion, respectively.

The “Losses incurred” section of the table above shows losses incurred on default notices received in the current year and in prior years. The amount of losses incurred relating to default notices received in the current year represents the estimated amount to be ultimately paid on such default notices. The amount of losses incurred relating to default notices received in prior years represents the actual claim rate and severity associated with those defaults notices resolved in the current year differing from the estimated liability at the prior year-end, as well as a re-estimation of amounts to be ultimately paid on defaults remaining in inventory from the end of the prior year. This re-estimation of the estimated claim rate and estimated severity is the result of our review of current trends in default inventory, such as percentages of defaults that have resulted in a claim, the amount of the claims, changes in the relative level of defaults by geography and changes in average loan exposure.

In 2011, net losses incurred were $1,715 million, comprised of $1,814 million of current year loss development, offset by $99 million of favorable prior years' loss development. In 2010, net losses incurred were $1,608 million, comprised of $1,875 million of current year loss development, offset by $267 million of favorable prior years' loss development. In 2009, net losses incurred were $3,379 million, comprised of which $2,913 million of current year loss development and $466 million of unfavorable prior years' loss development.

Losses incurred on default notices received in the current year decreased slightly in 2011 compared to 2010 primarily due to a decrease in the number of new default notices received, net of cures on those notices received, from 108,701 in 2010 to 86,592 in 2011. Losses incurred on default notices received in the current year decreased more significantly in 2010 compared to 2009 primarily due to a more significant decrease in the number of new default notices received, net of cures on those notices received, which was 161,081 in 2009. These factors were somewhat offset by a smaller benefit from captive arrangements.

The development of the reserves in 2011, 2010 and 2009 is reflected in the “Prior years” line in the table above. The $99 million decrease in losses incurred in 2011 that was related to defaults that occurred in prior years resulted primarily from a decrease in the estimated severity on primary defaults (approximately $165 million) and a decrease in estimated loss adjustment expenses (approximately $114 million), offset by an increase in the estimated claim rate on primary defaults (approximately $200 million). The decrease in the severity was based on the resolution of approximately 57% of the prior year default inventory. The decrease in estimated loss adjustment expense was based on recent historical trends in the costs associated with resolving a claim. The increase in the claim rate was also based on the resolution of the prior year default inventory, as well as a re-estimation of amounts to be ultimately paid on defaults remaining in inventory from the end of the prior year and estimated incurred but not reported items from the end of the prior year. The remaining decrease in losses incurred that was related to defaults that occurred in prior years (approximately $20 million) related to a decrease in estimated severity and claim rates on pool defaults.

The $267 million decrease in losses incurred in 2010 that was related to defaults that occurred in prior years primarily resulted from a decrease in the expected claim rate on the defaults that occurred in prior periods (approximately $432 million), partially offset by an increase in severity on pool defaults that occurred in prior periods (approximately $185 million). The decrease in the claim rate was based on the resolution of approximately 55% of the prior year default inventory, as well as a re-estimation of amounts to be ultimately paid on defaults remaining in inventory from the end of the prior year. The decrease in the claim rate was due to greater cures experienced during 2010, a portion of which resulted from loan modifications. The increase in pool severity was based on the resolution of defaults that occurred in prior periods with higher claim amounts, which in part, were applied to remaining deductibles on certain pool policies. The remaining decrease in losses incurred related to prior years (approximately $20 million) related to LAE reserves and reinsurance.

The $467 million increase in losses incurred in 2009 that was related to defaults that occurred in prior years primarily resulted from an increase in the claim rate on defaults that occurred in prior periods (approximately $337 million) and an increase in severity on defaults that occurred in prior periods (approximately $137 million). The increase in the claim rate was based on the resolution of approximately 50% of the prior year default inventory, as well as a re-estimation of amounts to be ultimately paid on defaults remaining in inventory from the end of the prior year. The increase in the claim rate was likely due to general economic conditions, including the unemployment rate, as well as further decreases in home values which may affect borrower willingness to continue to make mortgage payments. The increase in severity was related to the weakening of the housing and mortgage markets which resulted in adverse claim sizes. The offsetting decrease in losses incurred related to prior years (approximately $7 million) related to LAE reserves and reinsurance.

The “Losses paid” section of the table above shows the breakdown between claims paid on default notices received in the current year and default notices received in prior years. It has historically taken, prior to the last few years, on average, approximately twelve months for a default which is not cured to develop into a paid claim, therefore, most losses paid relate to default notices received in prior years. Due to a combination of reasons that have slowed the rate at which claims are received and paid, including foreclosure moratoriums and suspensions, servicing delays, court delays, loan modifications, our fraud investigations and our claim rescissions and denials for misrepresentation, it is difficult to estimate how long it may take for current and future defaults that do not cure to develop into paid claims. In 2011, we experienced an increase in claims paid on default notices received in the current year due to fewer claim investigations and an increase in short sales. The “Losses paid” section of the table also includes a decrease in losses paid related to terminated reinsurance agreements as noted in footnote (5) of the table above.

The liability associated with our estimate of premiums to be refunded on expected claim payments is accrued for separately at December 31, 2011 and 2010 and approximated $114 million and $113 million, respectively. Separate components of this liability are included in “Other liabilities” and “Premium deficiency reserve” on our consolidated balance sheet. (See Note 3 – “Summary of significant accounting policies – Revenue recognition”)

The decrease in the primary default inventory experienced during 2011 and 2010 was generally across all markets and all book years. However the percentage of loans in the inventory that have been in default for 12 or more consecutive months has increased, as shown in the table below. Historically as a default ages it becomes more likely to result in a claim.

Aging of the Primary Default Inventory

	December 31,				December 31,				December 31,
	2011				2010				2009

Consecutive months in default
3 months or less		31,456	18	%		37,640	18	%		48,252	19	%
4 - 11 months		46,352	26	%		58,701	27	%		98,210	39	%
12 months or more		97,831	56	%		118,383	55	%		103,978	42	%


Total primary default inventory		175,639	100	%		214,724	100	%		250,440	100	%

Primary claims received inventory included in ending default inventory		12,610	7	%		20,898	10	%		16,389	7	%

The length of time a loan is in the default inventory can differ from the number of payments that the borrower has not made or is considered delinquent. These differences typically result from a borrower making monthly payments that do not result in the loan becoming fully current. The number of payments that a borrower is delinquent is shown in the table below.

Number of Payments Delinquent

	December 31,				December 31,				December 31,
	2011				2010				2009


3 payments or less		42,804	24	%		51,003	24	%		60,970	24	%
4 - 11 payments		47,864	27	%		65,797	31	%		105,208	42	%
12 payments or more		84,971	49	%		97,924	45	%		84,262	34	%


Total primary default inventory		175,639	100	%		214,724	100	%		250,440	100	%

Before paying a claim, we can review the loan file to determine whether we are required, under the applicable insurance policy, to pay the claim or whether we are entitled to reduce the amount of the claim. For example, all of our insurance policies provide that we can reduce or deny a claim if the servicer did not comply with its obligation to mitigate our loss by performing reasonable loss mitigation efforts or diligently pursuing a foreclosure or bankruptcy relief in a timely manner. We also do not cover losses resulting from property damage that has not been repaired. We are currently reviewing the loan files for the majority of the claims submitted to us.

In addition, subject to rescission caps in certain of our Wall Street bulk transactions, all of our insurance policies allow us to rescind coverage under certain circumstances. Because we can review the loan origination documents and information as part of our normal processing when a claim is submitted to us, rescissions occur on a loan by loan basis most often after we have received a claim. Historically, rescissions of policies for which claims have been submitted to us were not a material portion of our claims resolved during a year. However, beginning in 2008, our rescissions of policies have materially mitigated our paid losses. In each of 2009 and 2010, rescissions mitigated our paid losses by approximately $1.2 billion and in 2011, rescissions mitigated our paid losses by approximately $0.6 billion (in each case, the figure includes amounts that would have either resulted in a claim payment or been charged to a deductible under a bulk or pool policy, and may have been charged to a captive reinsurer). In recent quarters, 17% to 20% of claims received in a quarter have been resolved by rescissions, down from the peak of approximately 28% in the first half of 2009. In the second half of 2011, Countrywide materially increased the percentage of loans for which it is rebutting the assertions that we make prior to rescinding a loan. When we receive a rebuttal prior to a rescission, we do not rescind coverage until after we respond to the rebuttal. Therefore, in addition to our substantial pipeline of claims investigations, we have a substantial pipeline of pre-rescission rebuttals that, based on our historical experience with such rebuttals, we expect will eventually result in rescissions. We continue to expect that the percentage of claims that will be resolved through rescissions will continue to decline after resolution of the rebuttal pipeline.

Our loss reserving methodology incorporates the effects we expect rescission activity to have on the losses we will pay on our delinquent inventory. A variance between ultimate actual rescission rates and these estimates, as a result of the outcome of claims investigations, litigation, settlements or other factors, could materially affect our losses. We estimate rescissions mitigated our incurred losses by approximately $2.5 billion in 2009 and $0.2 billion in 2010. In 2011, we estimate that rescissions had no significant impact on our losses incurred. All of these figures include the benefit of claims not paid in the period as well as the impact of changes in our estimated expected rescission activity on our loss reserves in the period. At December 31, 2011, we had 175,639 loans in our primary delinquency inventory; a significant portion of these loans will cure their delinquency or be rescinded and will not involve paid claims.

The table below represents our estimate of the impact rescissions have had on reducing our loss reserves, paid losses and losses incurred.

	2011		2010			2009
	(In billions)

Estimated rescission reduction - beginning reserve	$	1.3	$	2.1		$	0.5

Estimated rescission reduction - losses incurred		-		0.2			2.5

Rescission reduction - paid claims		0.6		1.2			1.2
Amounts that may have been applied to a deductible		-		(0.2	)		(0.3	)
Net rescission reduction - paid claims		0.6		1.0			0.9

Estimated rescission reduction - ending reserve	$	0.7	$	1.3		$	2.1

The $2.5 billion estimated mitigation of incurred losses during 2009 represents both the claims not paid in the period due to rescissions, as well as an increasing default inventory and an increasing expected rescission rate for those loans in default. Even though rescissions mitigated our paid losses by a similar amount in 2010 as compared to 2009, the estimated mitigation of incurred losses declined to $0.2 billion for 2010. This decrease was caused by a decline in our default inventory in 2010, compared to an increase in 2009, as well as a modest decline in the expected rescission rate for loans in our default inventory during 2010, compared to a significantly increasing expected rescission rate during 2009 and a decrease in severity on expected rescissions.

The decrease in the estimated mitigation of incurred losses in 2011 compared to 2010 is due to a decline in the expected rescission rate for loans in our default inventory during 2011 compared to a more modest decline in 2010.

At December 31, 2011, our loss reserves continued to be significantly impacted by expected rescission activity. We expect that the reduction of our loss reserves due to rescissions will continue to decline because our recent experience indicates new notices in our default inventory have a lower likelihood of being rescinded than those already in the inventory.

The liability associated with our estimate of premiums to be refunded on expected future rescissions is accrued for separately. At December 31, 2011 and 2010 the estimate of this liability totaled $58 million and $101 million, respectively. Separate components of this liability are included in “Other liabilities” and “Premium deficiency reserve” on our consolidated balance sheet. Changes in the liability affect premiums written and earned and change in premium deficiency reserve, respectively.

A rollforward of our primary default inventory for the years ended December 31, 2011, 2010 and 2009 appears in the table below. The information concerning new notices and cures is compiled from monthly reports received from loan servicers. The level of new notice and cure activity reported in a particular month can be influenced by, among other things, the date on which a servicer generates its report, the number of business days in a month and by transfers of servicing between loan servicers.

	2011			2010			2009


Default inventory at beginning of period		214,724			250,440			182,188
Plus: New Notices		169,305			205,069			259,876
Less: Cures		(149,643	)		(183,017	)		(149,251	)
Less: Paids (including those charged to a deductible or captive)		(51,138	)		(43,826	)		(29,732	)
Less: Rescissions and denials		(7,609	)		(13,942	)		(12,641	)
Default inventory at end of period		175,639			214,724			250,440

Pool insurance notice inventory decreased from 43,329 at December 31, 2010 to 32,971 at December 31, 2011. The pool insurance notice inventory was 44,231 at December 31, 2009.

Premium deficiency reserves

12 Months Ended

Dec. 31, 2011

Premium deficiency reserves

10.	Premium deficiency reserve

Beginning in 2007, when we stopped writing Wall Street bulk business, we began to separately measure the performance of these transactions and established a premium deficiency reserve related to this business. This premium deficiency reserve as of December 31, 2011, 2010 and 2009 was $135 million, $179 million and $193 million, respectively. The $135 million premium deficiency reserve as of December 31, 2011 reflects the present value of expected future losses and expenses that exceeded the present value of expected future premiums and already established loss reserves. The discount rate used in the calculation of the premium deficiency reserve at December 31, 2011 was 2.3%. The discount rate used in the calculation of the premium deficiency reserve at December 31, 2010 was 2.5%.

The components of the premium deficiency reserve at December 31, 2011, 2010 and 2009 appear in the table below.

	December 31,
	2011			2010			2009
	(In millions)
Present value of expected future premium	$	494		$	506		$	427

Present value of expected future paid losses
and expenses		(1,455	)		(1,760	)		(2,157	)

Net present value of future cash flows		(961	)		(1,254	)		(1,730	)

Established loss reserves		826			1,075			1,537

Net deficiency	$	(135	)	$	(179	)	$	(193	)

Each quarter, we re-estimate the premium deficiency reserve on the remaining Wall Street bulk insurance in force. The premium deficiency reserve primarily changes from quarter to quarter as a result of two factors. First, it changes as the actual premiums, losses and expenses that were previously estimated are recognized. Each period such items are reflected in our financial statements as earned premium, losses incurred and expenses. The difference between the amount and timing of actual earned premiums, losses incurred and expenses and our previous estimates used to establish the premium deficiency reserves has an effect (either positive or negative) on that period's results. Second, the premium deficiency reserve changes as our assumptions relating to the present value of expected future premiums, losses and expenses on the remaining Wall Street bulk insurance in force change. Changes to these assumptions also have an effect on that period's results.

The decrease in the premium deficiency reserve for the years ended December 31, 2011, 2010 and 2009 was $44 million, $14 million and $261 million, respectively, as shown in the charts below. The decrease represents the net result of actual premiums, losses and expenses as well as a net change in assumptions for these periods. The change in assumptions for 2011 is primarily related to higher estimated ultimate premiums resulting principally from an increase in the projected persistency rate, somewhat offset by higher estimated ultimate losses resulting principally from an increase in the number of projected claims that will ultimately be resolved as a claim paid. The change in assumptions for 2010 is primarily related to higher estimated ultimate premiums, which is principally related to an increase in the projected persistency rate. The change in assumptions for 2009 primarily related to lower estimated ultimate losses, offset by lower estimated ultimate premiums, both due to higher expected rates of rescission.

	Year ended December 31,
	2011						2010						2009
	(In millions)

Premium Deficiency Reserve at beginning of period				$	(179	)				$	(193	)				$	(454	)
Adjustment to premium deficiency reserve (1)					-						(37	)					-
Adjusted premium deficiency reserve at beginning of period					(179	)					(230	)					(454	)

Paid claims and loss adjustment expenses	$	334					$	426					$	584
Decrease in loss reserves		(249	)					(425	)					(360	)
Premium earned		(120	)					(128	)					(156	)
Effects of present valuing on future premiums, losses and expenses		(8	)					(25	)					21

Change in premium deficiency reserve to reflect actual premium, losses and expenses recognized					(43	)					(152	)					89

Change in premium deficiency reserve to reflect change in assumptions relating to future premiums, losses, expenses and discount rate (2)					87						203						172

Premium Deficiency Reserve at end of period				$	(135	)				$	(179	)				$	(193	)

(1) In periods prior to 2010 an estimate of premium to be refunded in conjunction with claim payments was included in Loss Reserves. In 2010, we separately stated this liability in Premium deficency reserve on the consolidated balance sheet. (See Note 3 - "Summary of significant accounting policies - Revenue recognition")

(2) A positive number for changes in assumptions relating to premiums, losses, expenses and discount rate indicates a redundancy of prior premium deficiency reserves.

Each quarter we perform a premium deficiency analysis on the portion of our book of business not covered by the premium deficiency described above. As of December 31, 2011, the analysis concluded that there was no premium deficiency on such portion of our book of business. For the reasons discussed below, our analysis of any potential deficiency reserve is subject to inherent uncertainty and requires significant judgment by management. To the extent, in a future period, expected losses are higher or expected premiums are lower than the assumptions we used in our analysis, we could be required to record a premium deficiency reserve on this portion of our book of business in such period.

The calculation of premium deficiency reserves requires the use of significant judgments and estimates to determine the present value of future premium and present value of expected losses and expenses on our business. The present value of future premium relies on, among other things, assumptions about persistency and repayment patterns on underlying loans. The present value of expected losses and expenses depends on assumptions relating to severity of claims and claim rates on current defaults, and expected defaults in future periods. These assumptions also include an estimate of expected rescission activity. Similar to our loss reserve estimates, our estimates for premium deficiency reserves could be adversely affected by several factors, including a deterioration of regional or economic conditions leading to a reduction in borrowers' income and thus their ability to make mortgage payments, and a drop in housing values that could expose us to greater losses. Assumptions used in calculating the deficiency reserves can also be affected by volatility in the current housing and mortgage lending industries. To the extent premium patterns and actual loss experience differ from the assumptions used in calculating the premium deficiency reserves, the differences between the actual results and our estimates will affect future period earnings and could be material.

Reinsurance

12 Months Ended

Dec. 31, 2011

Reinsurance [Abstract]

Reinsurance

11.	Reinsurance

We cede a portion of our business to reinsurers and record assets for reinsurance recoverable on loss reserves and prepaid reinsurance premiums. We cede primary business to reinsurance subsidiaries of certain mortgage lenders (“captives”). The majority of ceded premiums relates to these agreements. Historically, most of these reinsurance arrangements are aggregate excess of loss reinsurance agreements, and the remainder have been quota share agreements. Under the aggregate excess of loss agreements, we are responsible for the first aggregate layer of loss (typically 4% or 5%), the captives are responsible for the second aggregate layer of loss (typically 5% or 10%) and we are responsible for any remaining loss. The layers are typically expressed as a percentage of the original risk on an annual book of business reinsured by the captive. The premium cessions on these agreements typically range from 25% to 40% of the direct premium. Under a quota share arrangement premiums and losses are shared on a pro-rata basis between us and the captives, with the captive's portion of both premiums and losses typically ranging from 25% to 50%. Effective January 1, 2009, we are no longer ceding new business under excess of loss reinsurance treaties with lender captive reinsurers. Loans reinsured on an excess of loss basis through December 31, 2008 will run off pursuant to the terms of the particular captive arrangement. New business remains eligible to be ceded under quota share reinsurance arrangements, limited to a 25% cede rate. During 2009 through 2011, many of our captive arrangements have either been terminated or placed into run-off.

Under these agreements the captives are required to maintain a separate trust account, of which we are the sole beneficiary. Premiums ceded to a captive are deposited into the applicable trust account to support the captive's layer of insured risk. These amounts are held in the trust account and are available to pay reinsured losses. The trust assets are primarily invested in money market funds and government issued securities. The captive's ultimate liability is limited to the assets in the trust account. When specific time periods are met and the individual trust account balance has reached a required level, then the individual captive may make authorized withdrawals from its applicable trust account. In most cases, the captives are also allowed to withdraw funds from the trust account to pay verifiable federal income taxes and operational expenses. Conversely, if the account balance falls below certain thresholds, the individual captive may be required to contribute funds to the trust account. However, in most cases, our sole remedy if a captive does not contribute such funds is to put the captive into run-off (in a run-off, no new loans are reinsured by the captive but loans previously reinsured continue to be covered, with premium and losses continuing to be ceded on those loans). In the event that the captive's incurred but unpaid losses exceed the funds in the trust account, and the captive does not deposit adequate funds, we may also be allowed to terminate the captive agreement, assume the captive's obligations, transfer the assets in the trust accounts to us, and retain all future premium payments.

The reinsurance recoverable on loss reserves as of December 31, 2011 and 2010 was approximately $155 million and $275 million, respectively. The reinsurance recoverable on loss reserves related to captive agreements was approximately $142 million at December 31, 2011, which was supported by $359 million of trust assets, while at December 31, 2010 the reinsurance recoverable on loss reserves related to captives was $248 million which was supported by $484 million in trust assets. As of December 31, 2011 and 2010 there was an additional $27 million and $26 million, respectively, of trust assets in captive agreements where there was no related reinsurance recoverable on loss reserves. During 2011 and 2010, $39 million and $38 million, respectively, of trust fund assets were transferred to us as a result of captive terminations. The transferred funds resulted in an increase in our investment portfolio (including cash and cash equivalents) and a decrease in our net losses paid (reduction in losses incurred). In addition, there is an offsetting decrease in the reinsurance recoverable (increase in losses incurred), and thus there is no net impact to losses incurred.

Since 2005, we have entered into three separate aggregate excess of loss reinsurance agreements under which we ceded approximately $130 million of risk in force in the aggregate to three special purpose reinsurance companies. In 2008, we terminated one of these excess of loss reinsurance agreements. The remaining amount of ceded risk in force at December 31, 2011 was approximately $23.8 million. Additionally, certain pool polices written by us have been reinsured with one domestic reinsurer. We receive a ceding commission under certain reinsurance agreements.

Generally, reinsurance recoverables on primary loss reserves, paid losses and prepaid reinsurance premiums are supported by trust funds or letters of credit. As such, we have not established an allowance against these recoverables.

The effect of these agreements on premiums earned and losses incurred is as follows:

	2011			2010			2009
	(In thousands)
Premiums earned:
Direct	$	1,170,868		$	1,236,949		$	1,406,977
Assumed		3,891			3,091			3,339
Ceded		(50,924	)		(71,293	)		(107,975	)

Net premiums earned	$	1,123,835		$	1,168,747		$	1,302,341

Losses incurred:
Direct	$	1,775,122		$	1,716,538		$	3,637,706
Assumed		5,229			4,128			4,290
Ceded		(65,644	)		(113,125	)		(262,552	)

Net losses incurred	$	1,714,707		$	1,607,541		$	3,379,444

See Note 20 – “Litigation and contingencies” for a discussion of requests or subpoenas for information regarding captive mortgage reinsurance arrangements.

In the third quarter of 2011, our Australian writing company terminated a reinsurance agreement under which it had assumed business from a third party. As a result of that termination, it returned approximately $7 million in unearned premium and it has no further obligations under this reinsurance agreement. The termination of this reinsurance agreement had no significant impact on our remaining risk in force in Australia.

In June 2008 we entered into a reinsurance agreement that was effective on the risk associated with up to $50 billion of qualifying new insurance written each calendar year. The term of the reinsurance agreement began April 1, 2008 and was scheduled to end on December 31, 2010, subject to two one-year extensions that could have been exercised by the reinsurer. Effective March 20, 2009, we terminated this reinsurance agreement. The termination resulted in a reinsurance fee of $26.4 million as reflected in our results of operations for the year ended December 31, 2009. There are no further obligations under this reinsurance agreement.

The entire disclosure pertaining to the existence, magnitude and information about insurance that has been ceded to or assumed from another insurance company, including the methodologies and assumptions used in determining recorded amounts.

Investments in joint ventures [Abstract]

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 113

-Paragraph 120

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef

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Reference 4: http://www.xbrl.org/2003/role/presentationRef

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-Paragraph 27

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Regulation S-X (SX)

-Number 210

-Article 7

-Section 03

-Paragraph 13

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-Publisher AICPA

-Name Statement of Position (SOP)

-Number 92-5

-Paragraph 19

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Regulation S-X (SX)

-Number 210

-Article 7

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+ Details

Investments in joint ventures

12 Months Ended

Dec. 31, 2011

Investments in joint ventures

12.	Investments in joint ventures

C-BASS

C-BASS, a limited liability company, was an unconsolidated, less than 50%-owned investment of ours that was not controlled by us. Historically, C-BASS was principally engaged in the business of investing in the credit risk of subprime single-family residential mortgages. In 2007, C-BASS ceased its operations and was managing its portfolio pursuant to a consensual, non-bankruptcy restructuring, under which its assets are to be paid out over time to its secured and unsecured creditors. In November 2010, C-BASS filed for Chapter 11 bankruptcy protection. In June 2011 the remaining assets were liquidated and distributed to creditors under an approved bankruptcy plan and as a result our interest in C-BASS was eliminated. Since 2007, the carrying value of our investment in C-BASS has been zero.

Sherman

During the period in which we held an equity interest in Sherman Financial Group, LLC (“Sherman”), an unconsolidated, minority-owned joint venture, Sherman was principally engaged in the business of purchasing and collecting for its own account delinquent consumer assets which were primarily unsecured, and in originating and servicing subprime credit card receivables. The borrowings used to finance these activities were included in Sherman's balance sheet. A substantial portion of Sherman's consolidated assets were investments in consumer receivable portfolios that do not have readily ascertainable market values. Sherman's results of operations were sensitive to estimates by Sherman's management of ultimate collections on these portfolios.

In August 2008 we sold our entire interest in Sherman to Sherman. Our interest sold represented approximately 24.25% of Sherman's equity. The sale price was $124.5 million in cash and Sherman's unsecured promissory note in the principal amount of $85 million (the “Note”). The scheduled maturity of the Note was February 13, 2011 and it paid interest, monthly, at the annual rate equal to three-month LIBOR plus 500 basis points. Sherman repaid the Note in December 2010 for approximately $83.5 million. The carrying value of the Note at the time of repayment was approximately $84.0 million. The loss recognized on the repayment of $0.5 million is included in net realized investment gains on the statement of operations for the year ended December 31, 2010.

The entire disclosure for equity investment, or group of investments, for which combined disclosure is appropriate, including: (a) the name of each investee and percentage of ownership of common stock, (b) accounting policies for investments in common stock, (c) difference between the amount at which the investment is carried and the amount of underlying equity in net assets and the accounting treatment of the difference, (d) the total fair value of each identified investment for which a market value is available, (e) summarized information as to assets, liabilities, and results of operations of the investees (for investments in unconsolidated subsidiaries, common stock of joint ventures, or other investments using the equity method), and (f) material effects of possible conversions, exercises, or contingent issuances of the investee. Other disclosures include (a) the names of any investee in which the investor owns 20 percent or more of the voting stock and investment is not accounted for using the equity method, and the reasons why not, and (b) the names of any investee in which the investor owns less than 20 percent of the voting stock and the investment is accounted for using the equity method, and the reasons why it is.

+ References+ Details

Benefit plans

12 Months Ended

Dec. 31, 2011

Benefit plans [Abstract]

Benefit plans

13.	Benefit plans

We have a non-contributory defined benefit pension plan covering substantially all domestic employees, as well as a supplemental executive retirement plan. We also offer both medical and dental benefits for retired domestic employees and their spouses under a postretirement benefit plan. In October 2008 we amended our postretirement benefit plan. The amendment, which was effective January 1, 2009, terminated the benefits provided to retirees once they reach the age of 65. This amendment reduced our accumulated postretirement benefit obligation as of December 31, 2008. The benefit from this amendment was amortized to net periodic benefit cost in 2009 and future periods. The following tables provide the components of aggregate annual net periodic benefit cost, changes in the benefit obligation and the funded status of the pension, supplemental executive retirement and other postretirement benefit plans as recognized in the consolidated balance sheet:

	Pension and Supplemental									Other Postretirement
	Executive Retirement Plans									Benefits
Components of Net Periodic Benefit Cost for fiscal year ending
	12/31/2011			12/31/2010			12/31/2009			12/31/2011			12/31/2010			12/31/2009
	(In thousands)
1. Company Service Cost	$	8,917		$	8,531		$	8,154		$	1,090		$	1,126		$	1,280
2. Interest Cost		16,098			15,535			14,300			1,350			1,183			1,463
3. Expected Return on Assets		(17,373	)		(14,502	)		(15,340	)		(3,299	)		(2,891	)		(2,229	)
4. Other Adjustments		-			-			-			-			-			-
Subtotal		7,642			9,564			7,114			(859	)		(582	)		514
5. Amortization of :
a. Net Transition Obligation/(Asset)		-			-			-			-			-			-
b. Net Prior Service Cost/(Credit)		661			650			716			(6,217	)		(6,138	)		(6,059	)
c. Net Losses/(Gains)		4,010			5,924			6,330			632			764			1,704
Total Amortization		4,671			6,574			7,046			(5,585	)		(5,374	)		(4,355	)
6. Net Periodic Benefit Cost		12,313			16,138			14,160			(6,445	)		(5,956	)		(3,841	)
7. Cost of settlements or curtailments		-			-			-			-			-			-
8. Total Expense for Year	$	12,313		$	16,138		$	14,160		$	(6,445	)	$	(5,956	)	$	(3,841	)

Development of Funded Status
	Pension and Supplemental						Other Postretirement
	Executive Retirement Plans						Benefits
	12/31/2011			12/31/2010			12/31/2011			12/31/2010
	(In thousands)

Actuarial Value of Benefit Obligations
1. Measurement Date	12/31/2011			12/31/2010			12/31/2011			12/31/2010
2. Accumulated Benefit Obligation	$	297,145		$	270,684		$	25,007		$	26,200

Funded Status/Asset (Liability) on the Consolidated Balance Sheet
1. Projected Benefit Obligation	$	(318,048	)	$	(291,456	)	$	(25,007	)	$	(26,200	)
2. Plan Assets at Fair Value		305,748			284,080			42,578			44,362
3. Funded Status - Overfunded/Asset		N/A			N/A		$	17,571		$	18,162
4. Funded Status - Underfunded/Liability	$	(12,300	)	$	(7,376	)		N/A			N/A

Accumulated Other Comprehensive Income
	12/31/2011		12/31/2010		12/31/2011			12/31/2010
	(In thousands)
1. Net Actuarial (Gain)/Loss	$	95,298	$	81,802	$	14,109		$	13,463
2. Net Prior Service Cost/(Credit)		2,278		2,847		(41,072	)		(47,290	)
3. Net Transition Obligation/(Asset)		-		-		-			-
4. Total at Year End	$	97,576	$	84,649	$	(26,964	)	$	(33,827	)

The changes in the projected benefit obligation are as follows:

	Pension and Supplemental						Other Postretirement
	Executive Retirement Plans						Benefits
Change in Projected Benefit Obligation
	12/31/2011			12/31/2010			12/31/2011			12/31/2010
	(In thousands)
1. Benefit Obligation at Beginning of Year	$	291,456		$	258,592		$	26,200		$	24,144
2. Company Service Cost		8,917			8,531			1,090			1,126
3. Interest Cost		16,098			15,535			1,350			1,183
4. Plan Participants' Contributions		-			-			261			327
5. Net Actuarial (Gain)/Loss due to Assumption Changes		23,037			10,425			397			(2,925	)
6. Net Actuarial (Gain)/Loss due to Plan Experience		(6,544	)		3,624			(3,643	)		3,695
7. Benefit Payments from Fund (1)		(14,692	)		(5,769	)		(560	)		(510	)
8. Benefit Payments Directly by Company		(316	)		(231	)		(87	)		(120	)
9. Plan Amendments		92			749			-			(720	)
10. Other Adjustment		-			-			-			-
11. Benefit Obligation at End of Year	$	318,048		$	291,456		$	25,007		$	26,200

(1) In 2011, includes lump sum payments of $8.2 million from our pension plan to eligible participants, which were former employees with vested benefits of $50 thousand or less. Additional former employees may elect this option in 2012.

The changes in the fair value of the net assets available for plan benefits are as follows:

Change in Plan Assets
	12/31/2011			12/31/2010			12/31/2011			12/31/2010
	(In thousands)
1. Fair Value of Plan Assets at Beginning of Year	$	284,080		$	243,369		$	44,362		$	38,920
2. Company Contributions		20,316			15,231			-			-
3. Plan Participants' Contributions		-			-			261			327
4. Benefit Payments from Fund		(14,692	)		(5,769	)		(560	)		(510	)
5. Benefit Payments paid directly by Company		(316	)		(231	)		(87	)		(120	)
6. Actual Return on Assets		16,360			31,480			(1,224	)		5,951
7. Other Adjustment		-			-			(173	)		(207	)
8. Fair Value of Plan Assets at End of Year	$	305,748		$	284,080		$	42,578		$	44,361

	Pension and Supplemental						Other Postretirement
	Executive Retirement Plans						Benefits
Change in Accumulated Other Comprehensive Income (AOCI)
	12/31/2011			12/31/2010			12/31/2011			12/31/2010
	(In thousands)
1. AOCI in Prior Year	$	84,649		$	93,403		$	(33,827	)	$	(36,190	)
2. Increase/(Decrease) in AOCI
a. Recognized during year - Prior Service (Cost)/Credit		(661	)		(650	)		6,217			6,138
b. Recognized during year - Net Actuarial (Losses)/Gains		(4,010	)		(5,924	)		(632	)		(764	)
c. Occurring during year - Prior Service Cost		92			749			-			(720	)
d. Occurring during year - Net Actuarial Losses/(Gains)		17,507			(2,929	)		1,278			(2,291	)
3. AOCI in Current Year	$	97,576		$	84,649		$	(26,964	)	$	(33,827	)

Amortizations Expected to be Recognized During Next Fiscal Year Ending
	12/31/2012		12/31/2012
	(In thousands)
1. Amortization of Net Transition
Obligation/(Asset)	$	-	$	-
2. Amortization of Prior Service Cost/(Credit)		643		(6,217	)
3. Amortization of Net Losses/(Gains)		5,911		842

The projected benefit obligations, net periodic benefit costs and accumulated postretirement benefit obligation for the plans were determined using the following weighted average assumptions.

	Pension and Supplemental						Other Postretirement
	Executive Retirement Plans						Benefits
Actuarial Assumptions
	12/31/2011			12/31/2010			12/31/2011			12/31/2010
Weighted-Average Assumptions Used to Determine Benefit Obligations at year end
1. Discount Rate		5.25	%		5.75	%		4.75	%		5.50	%
2. Rate of Compensation Increase		3.00	%		3.00	%		N/A			N/A

Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost for Year
1. Discount Rate		5.75	%		6.00	%		5.50	%		5.75	%
2. Expected Long-term Return on Plan Assets		6.00	%		6.00	%		7.50	%		7.50	%
3. Rate of Compensation Increase		3.00	%		3.00	%		N/A			N/A

Assumed Health Care Cost Trend Rates at year end
1. Health Care Cost Trend Rate Assumed for Next Year		N/A			N/A			8.00	%		8.50	%
2. Rate to Which the Cost Trend Rate is Assumed to Decline (Ultimate Trend Rate)		N/A			N/A			5.00	%		5.00	%
3. Year That the Rate Reaches the Ultimate Trend Rate		N/A			N/A			2018			2018

In selecting a discount rate, we performed a hypothetical cash flow bond matching exercise, matching our expected pension plan and postretirement medical plan cash flows, respectively, against a selected portfolio of high quality corporate bonds. The modeling was performed using a bond portfolio of noncallable bonds with at least $50 million outstanding. The average yield of these hypothetical bond portfolios was used as the benchmark for determining the discount rate. In selecting the expected long-term rate of return on assets, we considered the average rate of earnings expected on the classes of funds invested or to be invested to provide for the benefits of these plans. This included considering the trusts' targeted asset allocation for the year and the expected returns likely to be earned over the next 20 years.

The weighted-average asset allocations of the plans are as follows:

							Other Postretirement
	Pension Plan						Benefits
Plan Assets
	12/31/2011			12/31/2010			12/31/2011			12/31/2010
Allocation of Assets at year end
1. Equity Securities		38	%		38	%		100	%		100	%
2. Debt Securities		62	%		62	%		0	%		0	%
3. Other		0	%		0	%		0	%		0	%
4. Total		100	%		100	%		100	%		100	%

In accordance with fair value guidance, we applied the following fair value hierarchy in order to measure fair value of our benefit plan assets:

Level 1 – Quoted prices for identical instruments in active markets that we have the ability to access. Financial assets utilizing Level 1 inputs include equity securities, mutual funds, money market funds and certain U.S. Treasury securities and obligations of U.S. government corporations and agencies.

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and inputs, other than quoted prices, that are observable in the marketplace for the financial instrument. The observable inputs are used in valuation models to calculate the fair value of the financial instruments. Financial assets utilizing Level 2 inputs include certain municipal, corporate and foreign bonds.

To determine the fair value of securities in Level 1 and Level 2 of the fair value hierarchy, independent pricing sources have been utilized. One price is provided per security based on observable market data. To ensure securities are appropriately classified in the fair value hierarchy, we review the pricing techniques and methodologies of the independent pricing sources and believe that their policies adequately consider market activity, either based on specific transactions for the issue valued or based on modeling of securities with similar credit quality, duration, yield and structure that were recently traded. A variety of inputs are utilized including benchmark yields, reported trades, non-binding broker/dealer quotes, issuer spreads, two sided markets, benchmark securities, bids, offers and reference data including market research publications. Inputs may be weighted differently for any security, and not all inputs are used for each security evaluation. Market indicators, industry and economic events are also considered. This information is evaluated using a multidimensional pricing model. In addition, on a quarterly basis, we perform quality controls over values received from the pricing source (the “Trustee”) which include comparing values to other independent pricing sources. In addition, we review annually the Trustee's auditor's report on internal controls in order to determine that their controls around valuing securities are operating effectively. We have not made any adjustments to the prices obtained from the independent sources.

The following table sets forth by level, within the fair value hierarchy, the pension plan assets at fair value as of December 31, 2011.

Assets at Fair Value as of December 31, 2011

Pension Plan	Level 1		Level 2		Level 3		Total
	(In thousands)
Domestic Mutual Funds	$	58,699	$	-	$	-	$	58,699
International Mutual Funds		32,664		-		-		32,664
Common Stocks		45,770		-		-		45,770
Corporate Bonds		-		118,575		-		118,575
U.S. Government Securities		13,137		-		-		13,137
Municipals		-		18,362		-		18,362
Foreign Bonds		-		15,411		-		15,411
Foreign Stocks		3,130		-		-		3,130
Total Assets at fair value	$	153,400	$	152,348	$	-	$	305,748

Our pension plan portfolio is designed to achieve the following objectives over each market cycle and for at least 5 years:

Fixed income allocation

Protect actuarial benefit payment stream through asset liability matching

Reduce volatility of investment returns compared to actuarial benefit liability

Equity allocation

Protect long tailed liabilities through the use of equity portfolio

Achieve competitive investment results

The primary focus in developing asset allocation ranges for the portfolio is the assessment of the portfolio's investment objectives and the level of risk that is acceptable to obtain those objectives. To achieve these goals the minimum and maximum allocation ranges for fixed income securities and equity securities are:

	Minimum			Maximum
Fixed income		40	%		100	%
Equity		0	%		60	%
Cash equivalents		0	%		10	%

The following table sets forth by level, within the fair value hierarchy, the postretirement plan assets at fair value as of December 31, 2011.

Assets at Fair Value as of December 31, 2011

Postretirement Plan	Level 1		Level 2		Level 3		Total
	(In thousands)
Domestic Mutual Funds	$	30,229	$	-	$	-	$	30,229
International Mutual Funds		12,349		-		-		12,349
Total Assets at fair value	$	42,578	$	-	$	-	$	42,578

Our postretirement plan portfolio is designed to achieve the following objectives over each market cycle and for at least 5 years:

Total return should exceed growth in the Consumer Price Index

Achieve competitive investment results

	Minimum			Maximum
Fixed income		0	%		10	%
Equity		90	%		100	%

Given the long term nature of this portfolio and the lack of any immediate need for significant cash flow, it is anticipated that the equity investments will consist of growth stocks and will typically be at the higher end of the allocation ranges above.

Investment in international oriented funds is limited to a maximum of 30% of the equity range. The current international allocation is invested in two mutual funds with 5% of the equity allocation in a fund which has the objective of investments primarily in equity securities of emerging markets countries, and 25% of the equity allocation in a fund investing in securities of companies based outside the United States. It invests in companies primarily based in Europe and the Pacific Basin, and includes common and preferred stocks, convertibles, ADR's, EDR's, bonds and cash. In addition to the foreign mutual funds, separately managed accounts have investments in equity securities of foreign corporations, and fixed income securities issued by foreign entities.

The following tables show the estimated future contributions and estimated future benefit payments.

	Pension and Supplemental		Other Postretirement
	Executive Retirement Plans		Benefits
Company Contributions
	12/31/2011		12/31/2011
	(In thousands)
Company Contributions for the Year Ending:
1. Current	$	20,316	$	-
2. Current + 1		984		-

Benefit Payments (Total)
	12/31/2011		12/31/2011
	(In thousands)
Actual Benefit Payments for the Year Ending:
1. Current	$	15,008	$	387
Expected Benefit Payments for the Year Ending:
2. Current + 1		10,377		907
3. Current + 2		11,383		1,033
4. Current + 3		14,051		1,227
5. Current + 4		14,194		1,318
6. Current + 5		15,098		1,472
7. Current + 6 - 10		95,553		10,686

Health care sensitivities

For measurement purposes, an 8.0% health care trend rate was used for benefits for retirees before they reach age 65 for 2011. In 2012, the rate is assumed to be 8.0%, decreasing to 5.0% by 2018 and remaining at this level beyond.

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plan. A 1% change in the health care trend rate assumption would have the following effects on other postretirement benefits:

	1-Percentage		1-Percentage
	Point Increase		Point Decrease
	(In thousands)

Effect on total service and interest cost components	$	573	$	(408	)
Effect on postretirement benefit obligation		4,463		(3,490	)

We have a profit sharing and 401(k) savings plan for employees. At the discretion of the Board of Directors, we may make a profit sharing contribution of up to 5% of each participant's eligible compensation. We provide a matching 401(k) savings contribution on employees' before-tax contributions at a rate of 80% of the first $1,000 contributed and 40% of the next $2,000 contributed. We recognized profit sharing expense and 401(k) savings plan expense of $3.6 million, $3.7 million and $3.1 million in 2011, 2010 and 2009, respectively.

The entire disclosure for pension and other postretirement benefits.

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-Publisher FASB

-Name Implementation Guide (Q and A)

-Number FAS88

-Paragraph 63

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-Publisher FASB

-Name Accounting Standards Codification

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-URI http://asc.fasb.org/topic&trid=2235017

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-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 158

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+ Details

Income taxes

12 Months Ended

Dec. 31, 2011

Income taxes [Abstract]

Income taxes

14.	Income taxes

Net deferred tax assets and liabilities as of December 31, 2011 and 2010 are as follows:

	2011			2010
	(In thousands)

Total deferred tax assets	$	683,645		$	651,568
Total deferred tax liabilities		(86,490	)		(249,989	)

Net deferred tax asset before valuation allowance		597,155			401,579
Valuation allowance		(608,761	)		(410,333	)
Net deferred tax liability	$	(11,606	)	$	(8,754	)

The components of the net deferred tax liability as of December 31, 2011 and 2010 are as follows:

	2011			2010
	(In thousands)

Convertible debentures	$	(15,785	)	$	(25,864	)
Net operating loss		506,614			432,827
Loss reserves		60,478			85,425
Unrealized (appreciation) depreciation in investments		(42,009	)		(31,379	)
Mortgage investments		18,944			17,934
Deferred compensation		17,447			19,080
Investments in joint ventures		(3,018	)		(165,598	)
Premium deficiency reserves		47,186			62,638
Loss due to "other than temporary" impairments		11,068			14,160
Other, net		(3,770	)		(7,644	)

Net deferred tax asset before valuation allowance		597,155			401,579
Valuation allowance		(608,761	)		(410,333	)
Net deferred tax liability	$	(11,606	)	$	(8,754	)

We review the need to adjust the deferred tax asset valuation allowance on a quarterly basis. We analyze several factors, among which are the severity and frequency of operating losses, our capacity for the carryback or carryforward of any losses, the expected occurrence of future income or loss and available tax planning alternatives. Based on our analysis and the level of cumulative operating losses, we have reduced our benefit from income tax through the recognition of a valuation allowance.

Beginning with the first quarter of 2009, any benefit from income taxes, relating to operating losses, has been reduced or eliminated by the establishment of a valuation allowance. During 2009, our deferred tax asset valuation allowance was reduced by the deferred tax liability related to $102.3 million of income that was recorded in other comprehensive income. During 2010, our deferred tax valuation allowance was increased due to a decrease in the deferred tax liability related to $63.5 million of losses that were recorded in other comprehensive income. During 2011, our deferred tax asset valuation allowance was reduced due to an increase in the deferred tax liability related to $2.3 million of income that was recorded in other comprehensive income. In the event of future operating losses, it is likely that the valuation allowance will be adjusted by any taxes recorded to equity for changes in other comprehensive income.

The effect of the change in valuation allowance on the benefit from income taxes was as follows:

	2011			2010			2009
	(In thousands)

Benefit from income taxes	$	(196,835	)	$	(145,334	)	$	(681,266	)
Change in valuation allowance		198,428			149,669			238,490

Tax provision (benefit)	$	1,593		$	4,335		$	(442,776	)

The increase in the valuation allowance that was included in other comprehensive income was zero, $22.2 million and zero for the years ended December 31, 2011, 2010 and 2009, respectively. The total valuation allowance as of December 31, 2011, December 31, 2010 and December 31, 2009 was $608.8 million, $410.3 million and $238.5 million, respectively.

Legislation enacted in 2009 expanded the carryback period for certain net operating losses from 2 years to 5 years. A total benefit for income taxes of $282.0 million was recorded during 2009 in the Consolidated Statement of Operations for the carryback of 2009 losses. The refund related to these benefits was received in the second quarter of 2010.

Giving full effect to the carryback of net operating losses for federal income tax purposes, we have approximately $1,448 million of net operating loss carryforwards on a regular tax basis and $582 million of net operating loss carryforwards for computing the alternative minimum tax as of December 31, 2011. The increase in net operating carryforwards from operating losses during 2011 was partially offset by a onetime inclusion of taxable income. The taxable income related to the cancellation of indebtedness triggered by the conclusion of bankruptcy proceedings for C-BASS, a joint venture investment. Any unutilized carryforwards are scheduled to expire at the end of tax years 2029 through 2031.

The following summarizes the components of the provision for (benefit from) income taxes:

	2011			2010			2009
	(In thousands)

Current	$	598		$	1,618		$	(621,170	)
Deferred		(945	)		(19	)		175,194
Other		1,940			2,736			3,200

Provision for (benefit from) income taxes	$	1,593		$	4,335		$	(442,776	)

We received zero, $289.1 million and $437.5 million in federal income tax refunds in 2011, 2010 and 2009, respectively. Proceeds received in 2010 were primarily from the carryback of 2009 losses. Proceeds received in 2009 were primarily from the redemption of tax and loss bonds. We did not own any tax and loss bonds at December 31, 2011, 2010, or 2009.

The reconciliation of the federal statutory income tax benefit rate to the effective income tax (benefit) rate is as follows:

	2011			2010			2009


Federal statutory income tax benefit rate		(35.0	) %		(35.0	) %		(35.0	) %
Valuation allowance		41.0			41.6			13.5
Tax exempt municipal bond interest		(5.4	)		(10.5	)		(3.6	)
Other, net		(0.3	)		5.1			-

Effective income tax (benefit) rate		0.3	%		1.2	%		(25.1	) %

The Internal Revenue Service (“IRS”) completed separate examinations of our federal income tax returns for the years 2000 through 2004 and 2005 through 2007 and issued assessments for unpaid taxes, interest and penalties related to our treatment of the flow-through income and loss from an investment in a portfolio of residual interests of Real Estate Mortgage Investment Conduits (“REMICs”). This portfolio has been managed and maintained during years prior to, during and subsequent to the examination period. The IRS indicated that it did not believe that, for various reasons, we had established sufficient tax basis in the REMIC residual interests to deduct the losses from taxable income. The IRS assessment related to the REMIC issue is $190.7 million in taxes and penalties. There would also be applicable interest, which may be substantial. Additional state income taxes along with any applicable interest may become due when a final resolution is reached and could also be substantial. We appealed these assessments within the IRS and, in 2007, we made a payment of $65.2 million with the United States Department of the Treasury related to this assessment. In August 2010, we reached a tentative settlement agreement with the IRS. Because net operating losses that we incurred in 2009 were carried back to taxable years that were included in the settlement agreement, it was subject to review by the Joint Committee on Taxation of Congress. Following that review, the IRS indicated that it is reconsidering the terms of the settlement. We are attempting to address the IRS' concerns, but there is a risk that we may not be able to settle the proposed adjustments with the IRS or, alternatively, that the terms of any final settlement will be more costly to us than the currently proposed settlement. In the event that we are unable to reach any settlement of the proposed adjustments, we would be required to litigate their validity in order to avoid a full concession to the IRS. Any such litigation could be lengthy and costly in terms of legal fees and related expenses. We adjusted our tax provision and liabilities for the effects of the tentative settlement agreement in 2010. The IRS' reconsideration of the terms of the settlement agreement did not change our belief that the previously recorded items are appropriate. However, we would need to make appropriate adjustments, which could be material, to our tax provision and liabilities if our view of the probability of success in this matter changes, and the ultimate resolution of this matter could have a material negative impact on our effective tax rate, results of operations, cash flows and statutory capital. In this regard, see Note 1 – “Nature of business -Capital.”

The IRS is currently conducting an examination of our federal income tax returns for the years 2008 and 2009, which is scheduled to be completed in 2012. The adjustments that are currently proposed by the IRS are temporary in nature and would have no material effect on the financial statements.

Under current guidance, when evaluating a tax position for recognition and measurement, an entity shall presume that the tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information. The interpretation adopts a benefit recognition model with a two-step approach, a more-likely-than-not threshold for recognition and derecognition, and a measurement attribute that is the greatest amount of benefit that is cumulatively greater than 50% likely of being realized. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	Unrecognized tax benefits
	2011		2010		2009
	(In thousands)

Balance at beginning of year	$	109,282	$	91,117	$	87,965
Additions based on tax positions related to the current year		-		-		258
Additions for tax positions of prior years		798		18,165		2,894
Reductions for tax positions of prior years		-		-		-
Settlements		-		-		-
Balance at end of year	$	110,080	$	109,282	$	91,117

The total amount of the unrecognized tax benefits that would affect our effective tax rate is $97.5 million. We recognize interest accrued and penalties related to unrecognized tax benefits in income taxes. During 2011, we recognized $0.8 million in interest. As of December 31, 2011 and 2010, we had $26.7 million and $25.9 million of accrued interest related to uncertain tax positions, respectively. The statute of limitations related to the consolidated federal income tax return is closed for all years prior to 2000. Although the IRS is reconsidering the terms of our settlement agreement with them, as discussed above, if approved our total amount of unrecognized tax benefits would be reduced by $104.0 million during 2012, while after taking into account prior payments and the effect of available NOL carrybacks, any net cash outflows would approximate $23 million.

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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-Publisher SEC

-Name Regulation S-X (SX)

-Number 210

-Section 08

-Paragraph h

-Article 4

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-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 109

-Paragraph 136, 172

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-Name Statement of Financial Accounting Standard (FAS)

-Number 109

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-Publisher FASB

-Name Accounting Standards Codification

-Topic 740

-SubTopic 10

-Section 50

-Paragraph 15

-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319

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-Name Accounting Standards Codification

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-Publisher FASB

-Name Accounting Standards Codification

-Topic 235

-SubTopic 10

-Section S99

-Paragraph 1

-Subparagraph (SX 210.4-08.(h))

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-Publisher FASB

-Name Accounting Standards Codification

-Topic 740

-SubTopic 10

-Section 50

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+ Details

Shareholders' equity

12 Months Ended

Dec. 31, 2011

Shareholders' equity [Abstract]

Shareholders' equity

15.	Shareholders' equity

In April 2010 we completed the public offering and sale of 74,883,720 shares of our common stock at a price of $10.75 per share. We received net proceeds of approximately $772.4 million, after deducting underwriting discount and offering expenses. The shares of common stock sold were newly issued shares.

We have 28.9 million authorized shares reserved for conversion under our convertible debentures and 25.7 million authorized shares reserved for conversion under our convertible senior notes. (See Note 8 – “Debt”)

We have a Shareholders Rights Agreement (the “Agreement”) that seeks to diminish the risk that our ability to use our net operating losses (“NOLs”) to reduce potential future federal income tax obligations may become substantially limited and to deter certain abusive takeover practices. The benefit of the NOLs, would be substantially limited, and the timing of the usage of the NOLs could be substantially delayed, if we were to experience an “ownership change” as defined by Section 382 of the Internal Revenue Code.

Under the Agreement each outstanding share of our Common Stock is accompanied by one Right. The Distribution Date occurs on the earlier of ten days after a public announcement that a person has become an Acquiring Person, or ten business days after a person announces or begins a tender offer in which consummation of such offer would result in a person becoming an Acquiring Person. An Acquiring Person is any person that becomes, by itself or together with its affiliates and associates, a beneficial owner of 5% or more of the shares of our Common Stock then outstanding, but excludes, among others, certain exempt and grandfathered persons as defined in the Agreement. The Rights are not exercisable until the Distribution Date. Each Right will initially entitle shareholders to buy one-half of one share of our Common Stock at a Purchase Price of $25 per full share (equivalent to $12.50 for each one-half share), subject to adjustment. Each exercisable Right (subject to certain limitations) will entitle its holder to purchase, at the Rights' then-current Purchase Price, a number of our shares of Common Stock (or if after the Shares Acquisition Date, we are acquired in a business combination, common shares of the acquiror) having a market value at the time equal to twice the Purchase Price. The Rights will expire on August 17, 2012, or earlier as described in the Agreement. The Rights are redeemable at a price of $0.001 per Right at any time prior to the time a person becomes an Acquiring Person. Other than certain amendments, the Board of Directors may amend the Rights in any respect without the consent of the holders of the Rights.

The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

Share-based compensation plans [Abstract]

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+ Details

Dividend restrictions

12 Months Ended

Dec. 31, 2011

Dividend restrictions [Abstract]

Dividend restrictions

16.	Dividend restrictions

Our insurance subsidiaries are subject to statutory regulations as to maintenance of policyholders' surplus and payment of dividends. The maximum amount of dividends that the insurance subsidiaries may pay in any twelve-month period without regulatory approval by the Office of the Commissioner of Insurance of the State of Wisconsin is the lesser of adjusted statutory net income or 10% of statutory policyholders' surplus as of the preceding calendar year end. Adjusted statutory net income is defined for this purpose to be the greater of statutory net income, net of realized investment gains, for the calendar year preceding the date of the dividend or statutory net income, net of realized investment gains, for the three calendar years preceding the date of the dividend less dividends paid within the first two of the preceding three calendar years.

The senior notes, convertible senior notes and convertible debentures, discussed in Note 8 – “Debt”, are obligations of MGIC Investment Corporation, our holding company, and not of its subsidiaries. The payment of dividends from our insurance subsidiaries, which prior to raising capital in the public markets in 2008 and 2010 had been the principal source of our holding company cash inflow, is restricted by insurance regulation. MGIC is the principal source of dividend-paying capacity. In 2009 through 2011, MGIC has not paid any dividends to our holding company. In 2012, MGIC and our other insurance subsidiaries cannot pay any dividends to our holding company without approval from the OCI.

In the fourth quarter of 2008, we suspended the payment of dividends to shareholders.

Statutory capital

12 Months Ended

Dec. 31, 2011

Statutory capital [Abstract]

Statutory capital

17.	Statutory capital

Accounting Principles

The accounting principles used in determining statutory financial amounts differ from GAAP, primarily for the following reasons:

Under statutory accounting practices, mortgage guaranty insurance companies are required to maintain contingency loss reserves equal to 50% of premiums earned. Such amounts cannot be withdrawn for a period of ten years except as permitted by insurance regulations. With regulatory approval a mortgage guaranty insurance company may make early withdrawals from the contingency reserve when incurred losses exceed 35% of net premiums earned in a calendar year. Changes in contingency loss reserves impact the statutory statement of operations. Contingency loss reserves are not reflected as liabilities under GAAP and changes in contingency loss reserves do not impact GAAP operations. A premium deficiency reserve that may be recorded on a GAAP basis when present value of expected future losses and expenses exceeds the present value of expected future premiums and already established loss reserves, may not be recorded on a statutory basis if the present value of expected future premiums and already established loss reserves and statutory contingency reserves, exceeds the present value of expected future losses and expenses. On a GAAP basis, when calculating a premium deficiency reserve policies are grouped based on how they are acquired, serviced and measured. On a statutory basis, a premium deficiency reserve is calculated on all policies in force.

Under statutory accounting practices, insurance policy acquisition costs are charged against operations in the year incurred. Under GAAP, these costs are deferred and amortized as the related premiums are earned commensurate with the expiration of risk.

Under statutory accounting practices, purchases of tax and loss bonds are accounted for as investments. Under GAAP, purchases of tax and loss bonds are recorded as payments of current income taxes.

Under statutory accounting practices, changes in deferred tax assets and liabilities are recognized as a separate component of gains and losses in statutory surplus. Under GAAP, changes in deferred tax assets and liabilities are recorded on the statement of operations as a component of the (benefit) provision for income tax.

Under statutory accounting practices, fixed maturity investments are generally valued at amortized cost. Under GAAP, those investments which we do not have the ability and intent to hold to maturity are considered to be available-for-sale and are recorded at fair value, with the unrealized gain or loss recognized, net of tax, as an increase or decrease to shareholders' equity.

Under statutory accounting practices, certain assets, including certain deferred tax assets, designated as non-admitted assets, are charged directly against statutory surplus. Such assets are reflected on the GAAP financial statements.

The statutory net income, surplus and the contingency reserve liability of the insurance subsidiaries (excluding the non-insurance subsidiaries of our parent company), as well as the surplus contributions made to MGIC and other insurance subsidiaries and dividends paid by MGIC to us, are included below. The surplus amounts included below are the combined surplus of our insurance operations as utilized in our risk-to-capital calculations.

Year Ended	Net (loss)					Contingency
December 31,	Income			Surplus		Reserve
	(In thousands)

2011	$	(436,277	)	$	1,657,349	$	4,104
2010		113,651			1,692,392		5,480
2009		(44,669	)		1,442,407		417,587

Year Ended December 31,	Additions to the surplus of MGIC from parent company funds		Additions to the surplus of other insurance subsidiaries from parent company funds		Dividends paid by MGIC to the parent company
	(In thousands)

2011	$	200,000	$	-	$	-
2010		200,000		-		-
2009		-		-		-

Statutory capital

The Office of the Commissioner of Insurance of Wisconsin is MGIC's principal insurance regulator. To assess a mortgage guaranty insurer's capital adequacy, Wisconsin's insurance regulations require that a mortgage guaranty insurance company maintain “policyholders position” of not less than a minimum computed under a formula. Policyholders position is the insurer's net worth or surplus, contingency reserve and a portion of the reserves for unearned premiums, with credit given for authorized reinsurance. The minimum required by the formula depends on the insurance in force and whether the loans insured are primary insurance or pool insurance and further depends on the LTV ratio of the individual loans and their coverage percentage (and in the case of pool insurance, the amount of any deductible). If a mortgage guaranty insurer does not meet MPP it may be prohibited from writing new business until its policyholders position meets the minimum.

Some states that regulate us have provisions that limit the risk-to-capital ratio of a mortgage guaranty insurance company to 25 to 1. This ratio is computed on a statutory basis for our insurance entities and is our net risk in force divided by our policyholders' position. Policyholders' position consists primarily of statutory policyholders' surplus, plus the statutory contingency reserve. The statutory contingency reserve is reported as a liability on the statutory balance sheet. A mortgage insurance company is required to make annual contributions to the contingency reserve of approximately 50% of net earned premiums. These contributions must generally be maintained for a period of ten years. However, with regulatory approval a mortgage insurance company may make early withdrawals from the contingency reserve when incurred losses exceed 35% of net earned premium in a calendar year. If an insurance company's risk-to-capital ratio exceeds the limit applicable in a state, it may be prohibited from writing new business in that state until its risk-to-capital ratio falls below the limit.

At December 31, 2011, MGIC exceeded MPP by approximately $185 million, and we exceeded MPP by approximately $249 million on a combined basis. At December 31, 2011 MGIC's risk-to-capital was 20.3 to 1 and was 22.2 to 1 on a combined basis. See Note 1 – “Nature of business – Capital” for a discussion of our capital plans.

Share-based compensation plans

12 Months Ended

Dec. 31, 2011

Share-based compensation plans

18.	Share-based compensation plans

We have a stock incentive plan that was adopted in May 2011. When the 2011 plan was adopted, no further awards could be made under our previous 2002 plan. All share based compensation granted in 2011 was granted under the 2002 plan prior to the adoption of the 2011 plan. The purpose of the 2011 plan is to motivate and incent performance by and to retain the services of, key employees and non-employee directors through receipt of equity-based and other incentive awards under the plan. The maximum number of shares of stock that can be awarded under the 2011 plan is 7.0 million. Awards issued under the plan that are subsequently forfeited will not count against the limit on the maximum number of shares that may be issued under the plan. In addition, shares used for income tax withholding or used for payment of the exercise price of an option will not be counted against such limit. The plan provides for the award of stock options, stock appreciation rights, restricted stock and restricted stock units, as well as cash incentive awards. No awards may be granted after May 5, 2021 under the 2011 plan. The exercise price of options is the closing price of the common stock on the New York Stock Exchange on the date of grant. The vesting provisions of options, restricted stock and restricted stock units are determined at the time of grant. Shares issued under the 2011 plan are treasury shares if available, otherwise they will be newly issued shares. Treasury shares will continue to be issued for nonvested unit awards under the 2002 plan.

The compensation cost that has been charged against income for the share-based plans was $12.1 million, $13.7 million and $15.2 million for the years ended December 31, 2011, 2010 and 2009, respectively. The related income tax benefit, before valuation allowance, recognized for the share-based compensation plans was $4.2 million, $1.5 million and $5.3 million for the years ended December 31, 2011, 2010 and 2009, respectively.

A summary of option activity in the stock incentive plans during 2011 is as follows:

	Weighted
	Average		Shares
	Exercise		Subject
	Price		to Option

Outstanding, December 31, 2010	$	60.08		1,749,700

Granted		-		-
Exercised		-		-
Forfeited or expired		58.28		(329,200	)

Outstanding, December 31, 2011	$	60.50		1,420,500

There were no options granted or exercised in 2011, 2010 or 2009.

The following is a summary of stock options outstanding, all of which are exercisable, at December 31, 2011:

	Options Outstanding and Exercisable
					Weighted
Exercise			Remaining		Average
Price			Average		Exercise
Range	Shares		Life (years)		Price

$43.70 - 43.70		349,500		1.1	$	43.70

$63.80 - 68.20		1,071,000		1.1	$	65.98

Total		1,420,500		1.1	$	60.50

The aggregate intrinsic value of options outstanding and options exercisable at December 31, 2011 was zero. The aggregate intrinsic value represents the total pre-tax intrinsic value based on our closing stock price of $3.73 as of December 31, 2011 which would have been received by the option holders had all option holders exercised their options on that date. Because our closing stock price at December 31, 2011 was below all exercise prices, none of the outstanding options had any intrinsic value.

A summary of restricted stock or restricted stock unit activity during 2011 is as follows:

	Weighted Average Grant Date Fair Market Value		Shares

Restricted stock outstanding at December 31, 2010	$	14.69		3,457,266


Granted		8.94		1,368,295
Vested		8.32		(1,698,956	)
Forfeited		60.01		(180,843	)

Restricted stock outstanding at December 31, 2011	$	12.88		2,945,762

At December 31, 2011, the 2.9 million shares of restricted stock outstanding consisted of 2.3 million shares that are subject to performance conditions (“performance shares”) and 0.6 million shares that are subject only to service conditions (“time vested shares”). The weighted-average grant date fair value of restricted stock granted during 2010 and 2009 was $6.82 and $3.11, respectively. The fair value of restricted stock granted is the closing price of the common stock on the New York Stock Exchange on the date of grant. The total fair value of restricted stock vested during 2011, 2010 and 2009 was $14.9 million, $8.5 million and $1.3 million, respectively.

As of December 31, 2011, there was $22.6 million of total unrecognized compensation cost related to nonvested share-based compensation agreements granted under the 2002 Plan. Of this total, $21.6 million of unrecognized compensation costs relate to performance shares and $1.0 million relates to time vested shares. The unrecognized costs associated with the performance shares may or may not be recognized in future periods, depending upon whether or not the performance conditions are met. The cost associated with the time vested shares is expected to be recognized over a weighted-average period of 0.2 years.

During 2011, we also granted 449,350 shares that will be settled as cash payments over the vesting period under the 2002 stock incentive plan. The grant date fair value of these restricted share units was $8.94 in 2011. During 2011, 5,400 shares of this grant were forfeited. As of December 31, 2011, there was $1.0 million of total unrecognized compensation cost related to nonvested shares under this grant. The unrecognized compensation cost associated with this grant is expected to be recognized over a period of 2.1 years.

At December 31, 2011, 7.0 million shares were available for future grant under the 2011 stock incentive plan.

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

Reference 1: http://www.xbrl.org/2003/role/presentationRef

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+ Details

Leases

12 Months Ended

Dec. 31, 2011

Leases [Abstract]

Leases

19.

Leases

We lease certain office space as well as data processing equipment and autos under operating leases that expire during the next six years. Generally, rental payments are fixed.

Total rental expense under operating leases was $5.4 million, $6.3 million and $6.8 million in 2011, 2010 and 2009, respectively.

At December 31, 2011, minimum future operating lease payments are as follows (in thousands):

2012	$	4,379
2013		3,151
2014		1,098
2015		294
2016 and thereafter		137

Total (1)	$	9,059

(1) Minimum payments have not been reduced by minimum sublease rentals of $525 thousand due in the future under noncancelable subleases.

Litigation and contingencies [Abstract]

The entire disclosure for lessee entity's leasing arrangements including, but not limited to, all of the following: (a.) The basis on which contingent rental payments are determined, (b.) The existence and terms of renewal or purchase options and escalation clauses, (c.) Restrictions imposed by lease agreements, such as those concerning dividends, additional debt, and further leasing.

+ References+ Details

Litigation and contingencies

12 Months Ended

Dec. 31, 2011

Litigation and contingencies

20.	Litigation and contingencies

Consumers are bringing a growing number of lawsuits against home mortgage lenders and settlement service providers. Mortgage insurers, including MGIC, have been involved in litigation alleging violations of the anti-referral fee provisions of the Real Estate Settlement Procedures Act, which is commonly known as RESPA, and the notice provisions of the Fair Credit Reporting Act, which is commonly known as FCRA. MGIC's settlement of class action litigation against it under RESPA became final in October 2003. MGIC settled the named plaintiffs' claims in litigation against it under FCRA in December 2004, following denial of class certification in June 2004. Since December 2006, class action litigation has been brought against a number of large lenders alleging that their captive mortgage reinsurance arrangements violated RESPA. On December 11, 2011, seven mortgage insurers (including MGIC) and a large mortgage lender (which was the named plaintiffs' lender) were named as defendants in a complaint, alleged to be a class action, filed in U.S. District Court for the Central District of California. On December 30, 2011, a similar complaint was filed in the U.S. District Court for the Eastern District of Pennsylvania by different plaintiffs against the same seven mortgage insurers and another large lender. The complaints in both cases alleged various causes of action related to the captive mortgage reinsurance arrangements of these two mortgage lenders, including that the defendants violated RESPA by paying excessive premiums to the lenders' captive reinsurer in relation to the risk assumed by that captive. The named plaintiffs' loans were not insured by MGIC. MGIC denies any wrongdoing and intends to vigorously defend itself against the allegations in the lawsuits. There can be no assurance that we will not be subject to further litigation under RESPA (or FCRA) or that the outcome of any such litigation, including the lawsuits mentioned above, would not have a material adverse effect on us.

In June 2005, in response to a letter from the New York Insurance Department, we provided information regarding captive mortgage reinsurance arrangements and other types of arrangements in which lenders receive compensation. In February 2006, the New York Insurance Department requested MGIC to review its premium rates in New York and to file adjusted rates based on recent years' experience or to explain why such experience would not alter rates. In March 2006, MGIC advised the New York Insurance Department that it believes its premium rates are reasonable and that, given the nature of mortgage insurance risk, premium rates should not be determined only by the experience of recent years. In February 2006, in response to an administrative subpoena from the Minnesota Department of Commerce (the “MN Department”), which regulates insurance, we provided the MN Department with information about captive mortgage reinsurance and certain other matters. We subsequently provided additional information to the MN Department, and beginning in March 2008, the MN Department has sought additional information as well as answers to questions regarding captive mortgage reinsurance on several occasions, including as recently as May 2011.

In addition, beginning in June 2008, and as recently as December 2011, we received various subpoenas from the U.S. Department of Housing and Urban Development (“HUD”), seeking information about captive mortgage reinsurance similar to that requested by the MN Department, but not limited in scope to the state of Minnesota. In January 2012, we received correspondence from the Consumer Financial Protection Bureau (“CFPB”) indicating that the CFPB had opened an investigation into captive mortgage reinsurance premium ceding practices by private mortgage insurers. In that correspondence, the CFPB also requested certain information regarding captive mortgage reinsurance transactions in which we participated. Other insurance departments or other officials, including attorneys general, may also seek information about or investigate captive mortgage reinsurance.

Various regulators, including the CFPB, state insurance commissioners and state attorneys general may bring actions seeking various forms of relief, including civil penalties and injunctions against violations of RESPA. The insurance law provisions of many states prohibit paying for the referral of insurance business and provide various mechanisms to enforce this prohibition. While we believe our captive reinsurance arrangements are in conformity with applicable laws and regulations, it is not possible to predict the eventual scope, duration or outcome of any such reviews or investigations nor is it possible to predict their effect on us or the mortgage insurance industry.

We are subject to comprehensive, detailed regulation by state insurance departments. These regulations are principally designed for the protection of our insured policyholders, rather than for the benefit of investors. Although their scope varies, state insurance laws generally grant broad supervisory powers to agencies or officials to examine insurance companies and enforce rules or exercise discretion affecting almost every significant aspect of the insurance business. Given the recent significant losses incurred by many insurers in the mortgage and financial guaranty industries, our insurance subsidiaries have been subject to heightened scrutiny by insurance regulators. State insurance regulatory authorities could take actions, including changes in capital requirements or termination of waivers of capital requirements, that could have a material adverse effect on us. In addition, we are uncertain whether the CFPB, established by the Dodd-Frank Act to regulate the offering and provision of consumer financial products or services under federal law, will issue any rules or regulations that affect our business apart from any action it may take as a result of its investigation of captive mortgage reinsurance. Such rules and regulations could have a material adverse effect on us.

In September 2010, a housing discrimination complaint was filed against MGIC with HUD alleging that MGIC violated the Fair Housing Act and discriminated against the complainant on the basis of her sex and familial status when MGIC underwrote her loan for mortgage insurance. In May 2011, HUD commenced an administrative action against MGIC and two of its employees, seeking, among other relief, aggregate fines of $48,000. The HUD complainant elected to have charges in the administrative action proceed in federal court and in July 2011, the U.S. Department of Justice (“DOJ”) filed a civil complaint in the U.S. District Court for the Western District of Pennsylvania against MGIC and these employees on behalf of the complainant. The complaint seeks redress for the alleged housing discrimination, including compensatory and punitive damages for the alleged victims and a civil penalty payable to the United States. MGIC denies that any unlawful discrimination occurred and disputes many of the allegations in the complaint.

In October 2010, a separate purported class action lawsuit was filed against MGIC by the HUD complainant in the same District Court in which the DOJ action is pending alleging that MGIC discriminated against her on the basis of her sex and familial status when MGIC underwrote her loan for mortgage insurance. In May 2011, the District Court granted MGIC's motion to dismiss with respect to all claims except certain Fair Housing Act claims.

MGIC intends to vigorously defend itself against the allegations in both the class action lawsuit and the DOJ lawsuit. Based on the facts known at this time, we do not foresee the ultimate resolution of these legal proceedings having a material adverse effect on us.

Five previously-filed purported class action complaints filed against us and several of our executive officers were consolidated in March 2009 in the United States District Court for the Eastern District of Wisconsin and Fulton County Employees' Retirement System was appointed as the lead plaintiff. The lead plaintiff filed a Consolidated Class Action Complaint (the “Complaint”) in June 2009. Due in part to its length and structure, it is difficult to summarize briefly the allegations in the Complaint but it appears the allegations are that we and our officers named in the Complaint violated the federal securities laws by misrepresenting or failing to disclose material information about (i) loss development in our insurance in force, and (ii) C-BASS (a former minority-owned, unconsolidated, joint venture investment), including its liquidity. The Complaint also named two officers of C-BASS with respect to the Complaints' allegations regarding C-BASS. Our motion to dismiss the Complaint was granted in February 2010. In March 2010, plaintiffs filed a motion for leave to file an amended complaint. Attached to this motion was a proposed Amended Complaint (the “Amended Complaint”). The Amended Complaint alleged that we and two of our officers named in the Amended Complaint violated the federal securities laws by misrepresenting or failing to disclose material information about C-BASS, including its liquidity, and by failing to properly account for our investment in C-BASS. The Amended Complaint also named two officers of C-BASS with respect to the Amended Complaint's allegations regarding C-BASS. The purported class period covered by the Amended Complaint began on February 6, 2007 and ended on August 13, 2007. The Amended Complaint sought damages based on purchases of our stock during this time period at prices that were allegedly inflated as a result of the purported violations of federal securities laws. In December 2010, the plaintiffs' motion to file an amended complaint was denied and the Complaint was dismissed with prejudice. In January 2011, the plaintiffs appealed the February 2010 and December 2010 decisions to the United States Court of Appeals for the Seventh Circuit; during oral argument before the Appeals Court regarding the case on January 12, 2012, the plaintiffs confirmed the appeal was limited to issues regarding C-BASS. In June 2011, the plaintiffs filed a motion with the District Court for relief from that court's judgment of dismissal on the ground of newly discovered evidence consisting of transcripts the plaintiffs obtained of testimony taken by the Securities and Exchange Commission in its now-terminated investigation regarding C-BASS. We are opposing this motion and the matter is awaiting decision by the District Court. We are unable to predict the outcome of these consolidated cases or estimate our associated expenses or possible losses. Other lawsuits alleging violations of the securities laws could be brought against us.

We understand several law firms have, among other things, issued press releases to the effect that they are investigating us, including whether the fiduciaries of our 401(k) plan breached their fiduciary duties regarding the plan's investment in or holding of our common stock or whether we breached other legal or fiduciary obligations to our shareholders. We intend to defend vigorously any proceedings that may result from these investigations.

With limited exceptions, our bylaws provide that our officers and 401(k) plan fiduciaries are entitled to indemnification from us for claims against them.

In December 2009, Countrywide filed a complaint for declaratory relief in the Superior Court of the State of California in San Francisco against MGIC. This complaint alleges that MGIC has denied, and continues to deny, valid mortgage insurance claims submitted by Countrywide and says it seeks declaratory relief regarding the proper interpretation of the insurance policies at issue. In October 2011, the United States District Court for the Northern District of California, to which the case had been removed, entered an order staying the litigation in favor of the arbitration proceeding we commenced against Countrywide in February 2010.

In the arbitration proceeding, we are seeking a determination that MGIC is entitled to rescind coverage on the loans involved in the proceeding. From January 1, 2008 through December 31, 2011, rescissions of Countrywide-related loans mitigated our paid losses on the order of $435 million. This amount is the amount we estimate we would have paid had the loans not been rescinded. On a per loan basis, the average amount that we would have paid had the loans not been rescinded was approximately $72,100. Various materials exchanged by MGIC and Countrywide bring into the dispute loans we did not previously consider to be Countrywide-related and loans on which MGIC rescinded coverage subsequent to those specified at the time MGIC began the proceeding (including loans insured through the bulk channel), and set forth Countrywide's contention that, in addition to the claim amounts under policies it alleges MGIC has improperly rescinded, Countrywide is entitled to other damages of almost $700 million as well as exemplary damages. Countrywide and MGIC have each selected 12 loans for which a three-member arbitration panel will determine coverage. While the panel's determination will not be binding on the other loans at issue, the panel will identify the issues for these 24 “bellwether” loans and strive to set forth findings of fact and conclusions of law in such a way as to aid the parties to apply them to the other loans at issue. The hearing before the panel on the bellwether loans was scheduled to begin in September 2012, but we and Countrywide have agreed that the parties will take steps to delay the hearing at least 60 days.

We intend to defend MGIC against any further proceedings arising from Countrywide's complaint and to advocate MGIC's position in the arbitration, vigorously. Although it is reasonably possible that, when the proceedings are completed, there will be a determination that we were not entitled to rescind in all cases, we are unable to make a reasonable estimate or range of estimates of the potential liability. Under ASC 450-20, an estimated loss is accrued for only if we determine that the loss is probable and can be reasonably estimated. Therefore, we have not accrued any reserves that would reflect an adverse outcome in this proceeding. An accrual for an adverse outcome in this (or any other) proceeding would be a reduction to our capital.

At December 31, 2011, 38,127 loans in our primary delinquency inventory were Countrywide-related loans (approximately 22% of our primary delinquency inventory). Of these 38,127 loans, we expect a significant portion will cure their delinquency or be rescinded and will not involve paid claims. From January 1, 2008 through December 31, 2011, of the claims on Countrywide-related loans that were resolved (a claim is resolved when it is paid or rescinded; claims that are submitted but which are under review are not resolved until one of these two outcomes occurs), approximately 78% were paid and the remaining 22% were rescinded.

The flow policies at issue with Countrywide are in the same form as the flow policies that we use with all of our customers, and the bulk policies at issue vary from one another, but are generally similar to those used in the majority of our Wall Street bulk transactions. Because our rescission practices with Countrywide do not differ from our practices with other servicers with which we have not entered into settlement agreements, an adverse result in the Countrywide proceeding may adversely affect the ultimate result of rescissions involving other servicers and lenders. From January 1, 2008 through December 31, 2011, we estimate that total rescissions mitigated our incurred losses by approximately $3.1 billion, which included approximately $2.6 billion of mitigation on paid losses, excluding $0.6 billion that would have been applied to a deductible. At December 31, 2011, we estimate that our total loss reserves were benefited from rescissions by approximately $0.7 billion.

In addition to the rescissions at issue with Countrywide, we have a substantial pipeline of claims investigations and pre-rescission rebuttals (including those involving loans related to Countrywide) that we expect will eventually result in future rescissions. For additional information about rescissions as well as rescission settlement agreements, see Note 9 – “Loss reserves.”

MGIC and Freddie Mac disagree on the amount of the aggregate loss limit under certain pool insurance policies insuring Freddie Mac that share a single aggregate loss limit. We believe the initial aggregate loss limit for a particular pool of loans insured under a policy decreases to correspond to the termination of coverage for that pool under that policy while Freddie Mac believes the initial aggregate loss limit remains in effect until the last of the policies that provided coverage for any of the pools terminates. The aggregate loss limit is approximately $535 million higher under Freddie Mac's interpretation than under our interpretation. We account for losses under our interpretation although it is reasonably possible that were the matter to be decided by a third party our interpretation would not prevail. The differing interpretations had no effect on our results until the second quarter of 2011. For 2011, our incurred losses would have been $192 million higher in the aggregate had they been recorded based on Freddie Mac's interpretation, and our capital and Capital Requirements would have been negatively impacted. We expect the incurred losses that would have been recorded under Freddie Mac's interpretation will continue to increase in future quarters. We have discussed the disagreement with Freddie Mac in an effort to resolve it and expect that these discussions will continue.

In addition to the matters described above, we are involved in other legal proceedings in the ordinary course of business. In our opinion, based on the facts known at this time, the ultimate resolution of these ordinary course legal proceedings will not have a material adverse effect on our financial position or results of operations.

Our mortgage insurance business utilizes its underwriting skills to provide an outsourced underwriting service to our customers known as contract underwriting. As part of our contract underwriting activities, we are responsible for the quality of our underwriting decisions in accordance with the terms of the contract underwriting agreements with customers. We may be required to provide certain remedies to our customers if certain standards relating to the quality of our underwriting work are not met, and we have an established reserve for such obligations. Through December 31, 2011, the cost of remedies provided by us to customers for failing to meet the standards of the contracts has not been material. Claims for remedies may be made a number of years after the underwriting work was performed. A material portion of our new insurance written through the flow channel in recent years, including for 2006 and 2007, has involved loans for which we provided contract underwriting services. We believe the rescission of mortgage insurance coverage on loans for which we provided contract underwriting services may make a claim for a contract underwriting remedy more likely to occur. Beginning in the second half of 2009, we experienced an increase in claims for contract underwriting remedies, which continued into 2011. Hence, there can be no assurance that contract underwriting remedies will not be material in the future.

See Note 14 – “Income taxes” for a description of federal income tax contingencies.

Unaudited quarterly financial data

12 Months Ended

Dec. 31, 2011

Unaudited quarterly financial data [Abstract]

Unaudited quarterly financial data

21.	Unaudited quarterly financial data

	Quarter												2011
2011:	First			Second			Third			Fourth			Year
	(In thousands, except share data)

Net premiums written	$	274,463		$	270,399		$	255,745		$	263,773		$	1,064,380
Net premiums earned		288,546			284,454			275,094			275,741			1,123,835
Investment income, net of expenses		56,543			55,490			48,898			40,339			201,270
Loss incurred, net		310,431			459,552			462,654			482,070			1,714,707
Change in premium deficiency reserves		(9,018	)		(11,035	)		(12,388	)		(11,709	)		(44,150	)
Underwriting and other operating expenses		57,550			54,043			52,477			50,680			214,750
Interest expense		26,042			26,326			25,761			25,142			103,271
Net income (loss)		(33,661	)		(151,732	)		(165,205	)		(135,294	)		(485,892	)
Income (loss) per share (a):
Basic		(0.17	)		(0.75	)		(0.82	)		(0.67	)		(2.42	)
Diluted		(0.17	)		(0.75	)		(0.82	)		(0.67	)		(2.42	)

	Quarter												2010
2010:	First			Second			Third			Fourth (b)			Year
	(In thousands, except share data)

Net premiums written	$	256,058		$	295,346		$	278,982		$	271,409		$	1,101,795
Net premiums earned		271,952			309,174			296,496			291,125			1,168,747
Investment income, net of expenses		68,859			62,868			58,465			57,061			247,253
Loss incurred, net		454,511			320,077			384,578			448,375			1,607,541
Change in premium deficiency reserves		(13,566	)		(10,619	)		(8,887	)		(18,275	)		(51,347	)
Underwriting and other operating expenses		59,945			54,050			57,606			53,541			225,142
Interest expense		21,018			25,099			26,702			25,770			98,589
Net income (loss)		(150,091	)		24,551			(51,528	)		(186,667	)		(363,735	)
Income (loss) per share (a):
Basic		(1.20	)		0.14			(0.26	)		(0.93	)		(2.06	)
Diluted		(1.20	)		0.13			(0.26	)		(0.93	)		(2.06	)

(a)

Due to the use of weighted average shares outstanding when calculating earnings per share, the sum of the quarterly per share data may not equal the per share data for the year.

(b)

In prior periods, the liability associated with premium to be returned on claim payments is included in loss reserves and changes to this estimate affect losses incurred. See Note 3 – “Summary of significant accounting policies – Revenue recognition.”

SCHEDULE I-SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES [Abstract]

The entire disclosure for the quarterly financial data in the annual financial statements. The disclosure may include a tabular presentation of financial information for each fiscal quarter for the current and previous year, including revenues, gross profit, income or loss before extraordinary items and earnings per share data. It also includes an indication if the information in the note is unaudited, comments on the aggregate effect of year-end adjustments, and an explanation of matters or transactions that affect comparability or are pertinent to an understanding of the information furnished.

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SCHEDULE I-SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES

12 Months Ended

Dec. 31, 2011

SCHEDULE I-SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES

MGIC INVESTMENT CORPORATION

SCHEDULE I - SUMMARY OF INVESTMENTS -

OTHER THAN INVESTMENTS IN RELATED PARTIES

December 31, 2011

Type of Investment	Amortized Cost		Fair Value		Amount at which shown in the balance sheet
	(In thousands)
Fixed maturities:
Bonds:
United States Government and government agencies and authorities	$	592,108	$	597,037	$	597,037
States, municipalities and political subdivisions		2,255,192		2,323,471		2,323,471
Foreign governments		146,755		157,190		157,190
Public utilities		317,977		323,982		323,982
Mortgage-backed		699,119		710,351		710,351
All other corporate bonds		1.689.743		1,708,869		1,708,869

Total fixed maturities		5,700,894		5,820,900		5,820,900
Equity securities:
Common stocks:
Industrial, miscellaneous and all other		2,666		2,747		2,747

Total equity securities		2,666		2,747		2,747

Total investments	$	5,703,560	$	5,823,647	$	5,823,647

SCHEDULE II-CONDENSED FINANCIAL INFORMATION OF REGISTRANT [Abstract]

The entire disclosure for the schedule applicable to insurance companies summarizing investments held as of the most recent audited balance sheet. At a minimum, such summary is by three major categories of investments including: (1) fixed maturities primarily consisting of bonds, including convertibles and bonds with warrants, and redeemable preferred stocks, (2) equity securities primarily consisting of common stocks and nonredeemable preferred stocks, and (3) other investments including mortgage loans on real estate, real estate held for investment, real estate acquired in satisfaction of debt, policy loans, other long-term investments, and short-term investments not otherwise categorized. The information provided with respect to each item within each category includes: (A) the original cost of equity securities and, as to fixed maturity securities, original cost reduced by repayments and adjusted for amortization of premiums or accrual of discounts, (B) fair value as of the reporting date, and (C) the amount at which the item within each category is shown in the statement of financial position; with respect to (C), if the amount at which shown in the statement of financial position is different from the items original [amortized] cost or fair value, an explanation of the difference may be included herein.

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SCHEDULE II-CONDENSED FINANCIAL INFORMATION OF REGISTRANT

12 Months Ended

Dec. 31, 2011

SCHEDULE II-CONDENSED FINANCIAL INFORMATION OF REGISTRANT

MGIC INVESTMENT CORPORATION

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CONDENSED BALANCE SHEETS

PARENT COMPANY ONLY

December 31, 2011 and 2010

	2011			2010
	(In thousands)
ASSETS

Fixed maturities (amortized cost, 2011-$421,250; 2010-$844,383)	$	428,985		$	832,484
Cash and cash equivalents		57,636			58,380
Investment in subsidiaries, at equity in net assets		1,544,017			1,786,522
Accounts receivable - affiliates		-			686
Income taxes receivable		23,864			21,412
Accrued investment income		3,720			5,610
Other assets		11,785			16,530
Total assets	$	2,070,007		$	2,721,624

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Senior notes	$	170,515		$	376,329
Convertible senior notes		345,000			345,000
Convertible junior debentures		344,422			315,626
Accounts payable - affiliates		84			-
Accrued interest		13,171			15,609
Other liabilities		-			5
Total liabilities		873,192			1,052,569

Shareholders' equity
Common stock, (one dollar par value, shares authorized 460,000; shares issued 2011 and 2010 - 205,047; shares outstanding 2011 - 201,172 ; 2010 - 200,450)		205,047			205,047
Paid-in capital		1,135,821			1,138,942
Treasury stock (shares at cost, 2011 - 3,875; 2010 - 4,597)		(162,542	)		(222,632	)
Accumulated other comprehensive income, net of tax		30,124			22,136
Retained (deficit) earnings		(11,635	)		525,562
Total shareholders' equity		1,196,815			1,669,055
Total liabilities and shareholders' equity	$	2,070,007		$	2,721,624

See accompanying supplementary notes to Parent Company condensed financial statements.

CONDENSED STATEMENTS OF OPERATIONS

PARENT COMPANY ONLY

Years Ended December 31, 2011, 2010 and 2009

	2011			2010			2009
	(In thousands)
Revenues:
Equity in undistributed net loss of subsidiaries	$	(437,731	)	$	(270,844	)	$	(1,326,671	)
Investment income, net of expenses		15,693			5,573			1,026
Realized investment gains (losses), net		4,724			163			(38	)
Other income		27,688			-			27,378
Total losses		(389,626	)		(265,108	)		(1,298,305	)

Expenses:
Operating expenses		(133	)		2,116			350
Interest expense		103,271			98,589			89,266
Total expenses		103,138			100,705			89,616
Loss before tax		(492,764	)		(365,813	)		(1,387,921	)
Benefit from income taxes		(6,872	)		(2,078	)		(65,644	)
Net loss		(485,892	)		(363,735	)		(1,322,277	)
Other comprehensive income (loss), net		7,988			(52,019	)		180,944
Comprehensive loss	$	(477,904	)	$	(415,754	)	$	(1,141,333	)

See accompanying supplementary notes to Parent Company condensed financial statements.

CONDENSED STATEMENTS OF CASH FLOWS

PARENT COMPANY ONLY

Years Ended December 31, 2011, 2010 and 2009

	2011			2010			2009
	(In thousands)
Cash flows from operating activities:
Net loss	$	(485,892	)	$	(363,735	)	$	(1,322,277	)
Adjustments to reconcile net loss to net cash used in operating activities:		437,731			270,844			1,326,671
Equity in undistributed net loss of subsidiaries
Other		7,378			40,638			1,842
Change in certain assets and liabilities:
Accounts receivable - affiliates		770			658			(41	)
Income taxes receivable		(2,452	)		6,330			(54,755	)
Accrued investment income		1,890			(5,474	)		267
Accrued interest		(2,438	)		(33,795	)		33,286
Net cash used in operating activities		(43,013	)		(84,534	)		(15,007	)

Cash flows from investing activities:
Transactions with subsidiaries		(200,000	)		(200,000	)		(1,050	)
Purchase of fixed maturities		(130,503	)		(977,408	)		(6,618	)
Sale of fixed maturities		551,493			135,413			2,336
Net cash provided by (used in) investing activities		220,990			(1,041,995	)		(5,332	)

Cash flows from financing activities:
Repayment of note payable		-			-			(200,000	)
Repayment of long-term debt		(178,721	)		(1,000	)		(94,352	)
Net proceeds from convertible senior notes		-			334,373			-
Common stock shares issued		-			772,376			-
Net cash (used in) provided by financing activities		(178,721	)		1,105,749			(294,352	)

Net decrease in cash and cash equivalents		(744	)		(20,780	)		(314,691	)
Cash and cash equivalents at beginning of year		58,380			79,160			393,851
Cash and cash equivalents at end of period	$	57,636		$	58,380		$	79,160

See accompanying supplementary notes to Parent Company condensed financial statements.

The entire disclosure for condensed financial information, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document.

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SCHEDULE IV-REINSURANCE

12 Months Ended

Dec. 31, 2011

SCHEDULE IV-REINSURANCE [Abstract]

SCHEDULE IV-REINSURANCE

MGIC INVESTMENT CORPORATION

SCHEDULE IV - REINSURANCE

MORTGAGE INSURANCE PREMIUMS EARNED

Years Ended December 31, 2011, 2010 and 2009

	Gross Amount		Ceded to Other Companies		Assumed From Other Companies		Net Amount		Percentage of Amount Assumed to Net
	(In thousands of dollars)
Year ended December 31,
2011	$	1,170,868	$	50,924	$	3,891	$	1,123,835		0.3	%

2010		1,236,949		71,293		3,091		1,168,747		0.3	%

2009		1,406,977		107,975		3,339		1,302,341		0.3	%

The entire disclosure for the supplemental schedule of reinsurance information required to be filed for each period for which an audited income statement is presented. Reinsurance schedule includes the type of insurance, gross amount of premiums, premiums ceded to other companies, premiums assumed from other companies, net amount of premium revenue, and the percentage of the premiums assumed to net premium revenue.

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Basis of presentation (Policies)	12 Months Ended
Basis of presentation (Policies)	Dec. 31, 2011
Basis of presentation [Abstract]
Principles of consolidation	Principles of consolidation The consolidated financial statements include the accounts of MGIC Investment Corporation and its majority-owned subsidiaries. All intercompany transactions have been eliminated.

Disclosure of accounting policy regarding (1) the principles it follows in consolidating or combining the separate financial statements, including the principles followed in determining the inclusion or exclusion of subsidiaries or other entities in the consolidated or combined financial statements and (2) its treatment of interests (for example, common stock, a partnership interest or other means of exerting influence) in other entities, for example consolidation or use of the equity or cost methods of accounting. The accounting policy may also address the accounting treatment for intercompany accounts and transactions, noncontrolling interest, and the income statement treatment in consolidation for issuances of stock by a subsidiary.

Summary of significant accounting policies [Abstract]

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-Topic 810

-SubTopic 10

-URI http://asc.fasb.org/subtopic&trid=2197480

Reference 10: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 235

-SubTopic 10

-Section 50

-Paragraph 3

-URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18780-107790

Reference 11: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 140

-Paragraph 46

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 12: http://www.xbrl.org/2003/role/presentationRef

-Publisher AICPA

-Name Accounting Research Bulletin (ARB)

-Number 51

-Paragraph 2-6

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 13: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name FASB Interpretation (FIN)

-Number 46R

-Paragraph 14, 15

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 14: http://www.xbrl.org/2003/role/presentationRef

-Publisher AICPA

-Name Accounting Principles Board Opinion (APB)

-Number 18

-Paragraph 5, 6, 16-19

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 15: http://www.xbrl.org/2003/role/presentationRef

-Publisher AICPA

-Name Accounting Principles Board Opinion (APB)

-Number 18

-Paragraph 20

-Subparagraph a(2)

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 16: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Emerging Issues Task Force (EITF)

-Number 96-16

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 17: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Emerging Issues Task Force (EITF)

-Number 97-2

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 18: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Regulation S-X (SX)

-Number 210

-Article 3A

-Section 02, 03

Reference 19: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Regulation S-X (SX)

-Number 210

-Section 02

-Paragraph k

-Article 1

+ Details

Summary of significant accounting policies (Policies)

12 Months Ended

Dec. 31, 2011

Fair Value Measurements

In accordance with fair value guidance, we applied the following fair value hierarchy in order to measure fair value for assets and liabilities:

Assets classified as Level 3 are as follows:

Nominal credit risk as substantially all of the underlying collateral of these securities is ultimately guaranteed by the United States Department of Education;

Liquidity by December 31, 2012 through December 31, 2014;

Continued receipt of contractual interest; and

Discount rates ranging from 2.30% to 4.30%, which include a spread for liquidity risk.

Investments

our intent to sell the security or whether it is more likely than not that we will be required to sell the security before recovery;

extent and duration of the decline;

failure of the issuer to make scheduled interest or principal payments;

change in rating below investment grade; and

adverse conditions specifically related to the security, an industry, or a geographic area.

Home office and equipment

Deferred insurance policy acquisition costs

Loss reserves

Premium deficiency reserves

Premium deficiency reserve

Foreign Currency Translation

Share-Based Compensation

Earnings per share

Cash and cash equivalents

We consider money market funds and investments with original maturities of three months or less to be cash equivalents.

Subsequent events

We have considered subsequent events through the date of this filing.

Summary of significant accounting policies (Tables)

12 Months Ended

Dec. 31, 2011

Summary of significant accounting policies [Abstract]

Schedule of Earnings Per Share

The following is a reconciliation of the weighted average number of shares; however for the years ended December 31, 2011, 2010 and 2009, common stock equivalents of 55.6 million, 47.4 million and 37.6 million, respectively, were not included because they were anti-dilutive.

	Years Ended December 31,

	2011			2010			2009
	(In thousands, except per share data)

Basic loss per share:
Average common shares outstanding		201,019			176,406			124,209
Net loss	$	(485,892	)	$	(363,735	)	$	(1,322,277	)
Basic loss per share	$	(2.42	)	$	(2.06	)	$	(10.65	)

Diluted loss per share:

Weighted-average shares - Basic		201,019			176,406			124,209
Common stock equivalents		-			-			-

Weighted-average shares - Diluted		201,019			176,406			124,209

Net loss	$	(485,892	)	$	(363,735	)	$	(1,322,277	)
Diluted loss per share	$	(2.42	)	$	(2.06	)	$	(10.65	)

Schedule of Comprehensive Income (Loss)

Our total other comprehensive income was as follows:

	Years Ended December 31,

	2011			2010			2009
	(In thousands)

Net loss	$	(485,892	)	$	(363,735	)	$	(1,322,277	)
Other comprehensive income (loss)		7,988			(52,019	)		180,944

Total other comprehensive loss	$	(477,904	)	$	(415,754	)	$	(1,141,333	)

Other comprehensive income (loss) (net of tax):
Change in unrealized gains and losses on investments	$	21,057		$	(69,074	)	$	154,358
Noncredit component of impairment loss		-			-			(1,764	)
Amortization related to benefit plans		(12,862	)		6,390			10,704
Unrealized foreign currency translation adjustment		(207	)		10,665			17,646

Other comprehensive income (loss)	$	7,988		$	(52,019	)	$	180,944

Accumulated Other Comprehensive Income

Our total accumulated other comprehensive income was as follows:

	December 31,

	2011			2010
	(In thousands)

Accumulated other comprehensive income (loss):

Unrealized gains (losses) on investments	$	53,561		$	32,503
Defined benefit plans		(43,642	)		(30,780	)
Foreign currency translation adjustment		20,205			20,413

Total accumulated other comprehensive income	$	30,124		$	22,136

Investments, Debt and Equity Securities [Abstract]

Tabular disclosure of components of comprehensive income (loss) including, but not limited to: (a) foreign currency translation adjustments; (b) gains (losses) on foreign currency transactions that are designated as, and are effective as, economic hedges of a net investment in a foreign entity; (c) gains (losses) on intercompany foreign currency transactions that are of a long-term-investment nature, when the entities to the transaction are consolidated, combined, or accounted for by the equity method in the reporting enterprise's financial statements; (d) change in the market value of a futures contract that qualifies as a hedge of an asset reported at fair value; (e) unrealized holding gains (losses) on available-for-sale securities and that resulting from transfers of debt securities from the held-to-maturity category to the available-for-sale category; (f) a net loss recognized as an additional pension liability not yet recognized as net periodic pension cost; and (g) the net gain (loss) and net prior service cost or credit for pension plans and other postretirement benefit plans.

+ References+ Details

Investments (Tables)

12 Months Ended

Dec. 31, 2011

Amortized cost, gross unrealized gains and losses and fair value of investments

The amortized cost, gross unrealized gains and losses and fair value of the investment portfolio at December 31, 2011 and 2010 are shown below.

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2011:	Cost		Gains		Losses (1)			Value
	(In thousands)
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	592,108	$	4,965	$	(36	)	$	597,037
Obligations of U.S. states and political subdivisions		2,255,192		74,918		(6,639	)		2,323,471
Corporate debt securities		2,007,720		32,750		(7,619	)		2,032,851
Residential mortgage-backed securities		441,589		4,113		(285	)		445,417
Commercial mortgage-backed securities		257,530		7,404		-			264,934
Debt securities issued by foreign sovereign governments		146,755		10,441		(6	)		157,190
Total debt securities		5,700,894		134,591		(14,585	)		5,820,900
Equity securities		2,666		82		(1	)		2,747

Total investment portfolio	$	5,703,560	$	134,673	$	(14,586	)	$	5,823,647

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2010:	Cost		Gains		Losses (1)			Value
	(In thousands)
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	1,092,890	$	16,718	$	(6,822	)	$	1,102,786
Obligations of U.S. states and political subdivisions		3,549,355		85,085		(54,374	)		3,580,066
Corporate debt securities		2,521,275		54,975		(11,291	)		2,564,959
Residential mortgage-backed securities		53,845		3,255		-			57,100
Debt securities issued by foreign sovereign governments		149,443		1,915		(1,031	)		150,327
Total debt securities		7,366,808		161,948		(73,518	)		7,455,238
Equity securities		3,049		40		(45	)		3,044

Total investment portfolio	$	7,369,857	$	161,988	$	(73,563	)	$	7,458,282

(1)

There were no other-than-temporary impairment losses recorded in other comprehensive income at December 31, 2011 and 2010.

Amortized cost and fair values of debt securities by contractual maturity

	Amortized		Fair
December 31, 2011	Cost		Value
	(In thousands)

Due in one year or less	$	1,238,386	$	1,240,917
Due after one year through five years		1,860,588		1,900,400
Due after five years through ten years		897,967		942,561
Due after ten years		828,573		856,774
		4,825,514		4,940,652

Residential mortgage-backed securities		441,589		445,417
Commercial mortgage-backed securities		257,530		264,934
Auction rate securities (1)		176,261		169,897

Total at December 31, 2011	$	5,700,894	$	5,820,900

(1) At December 31, 2011, 100% of auction rate securities had a contractual maturity greater than 10 years.

Aging of the fair values of securities in an unrealized loss position

	Less Than 12 Months						12 Months or Greater						Total
	Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
December 31, 2011	Value			Losses			Value			Losses			Value			Losses
	(In thousands)
U.S. Treasury securities and obligations of U.S. government corporations and agencies		$	78,546		$	36		$	-		$	-		$	78,546		$	36
Obligations of U.S. states and political subdivisions			188,879			837			137,965			5,802			326,844			6,639
Corporate debt securities			689,396			6,709			28,174			910			717,570			7,619
Residential mortgage- backed securities			120,405			285			-			-			120,405			285
Debt securities issued by foreign sovereign governments			484			6			-			-			484			6
Equity securities			-			-			33			1			33			1
Total investment portfolio		$	1,077,710		$	7,873		$	166,172		$	6,713		$	1,243,882		$	14,586

	Less Than 12 Months						12 Months or Greater						Total
	Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
December 31, 2010	Value			Losses			Value			Losses			Value			Losses
	(In thousands)
U.S. Treasury securities and obligations of U.S. government corporations and agencies		$	258,235		$	6,822		$	-		$	-		$	258,235		$	6,822
Obligations of U.S. states and political subdivisions			1,160,877			32,415			359,629			21,959			1,520,506			54,374
Corporate debt securities			817,471			9,921			28,630			1,370			846,101			11,291
Debt securities issued by foreign sovereign governments			105,724			1,031			-			-			105,724			1,031
Equity securities			2,723			45			-			-			2,723			45
Total investment portfolio		$	2,345,030		$	50,234		$	388,259		$	23,329		$	2,733,289		$	73,563

Roll forward of the amount related to credit losses recognized in earnings for which a portion of an OTTI was recognized in accumulated other comprehensive income (loss)

	2011		2010
	(In thousands)

Beginning balance	$	-	$	1,021
Addition for the amount related to the credit loss for which an OTTI was not previously recognized		-		-
Additional increases to the amount related to the credit loss for which an OTTI was previously recognized		-		-
Reductions for securities sold during the period (realized)				(1,021	)
Ending balance	$	-	$	-

Net investment income

Net investment income is comprised of the following:

	2011			2010			2009
	(In thousands)

Fixed maturities	$	202,301		$	236,734		$	291,304
Equity securities		330			315			819
Cash equivalents		496			1,526			3,056
Interest on Sherman note		-			10,796			11,323
Other		926			1,081			1,389

Investment income		204,053			250,452			307,891
Investment expenses		(2,783	)		(3,199	)		(3,213	)

Net investment income	$	201,270		$	247,253		$	304,678

Net realized investment gains (losses), including impairment losses, and change in net unrealized appreciation (depreciation) of investments

The net realized investment gains (losses), including impairment losses, and change in net unrealized appreciation (depreciation) of investments are as follows:

	2011		2010			2009
	(In thousands)
Net realized investment gains (losses) on investments:
Fixed maturities	$	142,284	$	93,017		$	51,109
Equity securities		330		151			116
Joint ventures		-		(466	)		-
Other		101		235			709

	$	142,715	$	92,937		$	51,934

Change in net unrealized appreciation (depreciation):
Fixed maturities	$	31,576	$	(71,304	)	$	237,521
Equity securities		86		(4	)		144
Other		-		-			(2,263	)

	$	31,662	$	(71,308	)	$	235,402

Reclassification adjustment relating to the change in unrealized investment gains and losses

The reclassification adjustment relating to the change in unrealized investment gains and losses is as follows:

	2011		2010			2009
	(In thousands)

Net unrealized holding gains (losses) arising during the period, net of tax, included in accumulated other comprehensive income	$	68,822	$	(7,534	)	$	143,378
Less: net gains (losses) reclassified out of accumulated other comprehensive income into earnings for the period		47,765		61,540			(9,216	)
Change in unrealized investment gains (losses), net of tax	$	21,057	$	(69,074	)	$	152,594

Gross realized gains, gross realized losses and impairment losses

The gross realized gains, gross realized losses and impairment losses are as follows:

	2011			2010			2009
	(In thousands)


Gross realized gains	$	158,659		$	119,325		$	112,148
Gross realized losses		(15,229	)		(16,278	)		(19,274	)
Impairment losses		(715	)		(9,644	)		(40,940	)

Net realized gains on securities	$	142,715		$	93,403		$	51,934

Loss from joint ventures		-			(466	)		-
Total net realized gains	$	142,715		$	92,937		$	51,934

Tabular disclosure of investment income derived from investments in debt and equity securities consisting of interest income earned from investments in debt securities and on cash and cash equivalents, dividend income from investments in equity securities, and income or expense derived from the amortization of investment related discounts or premiums, respectively. This item does not include realized or unrealized gains or losses on the sale or holding of investments in debt and equity securities required to be included in earnings for the period or for other than temporary losses related to investments in debt and equity securities which are included in realized losses in the period recognized.

+ References+ Details

Fair value measurements for items measured at fair value

Tabular disclosure of the amount of other than temporary impairment (OTTI) related to credit losses recognized in earnings including: (a) the beginning balance of the amount related to credit losses on debt securities held by the investor at the beginning of the period for which a portion of an OTTI was recognized in other comprehensive income; (b) additions for the amount related to the credit loss for which an OTTI was not previously recognized; (c) reductions for securities sold during the period (realized); (d) reductions for securities for which the amount previously recognized in other comprehensive income was recognized in earnings because the investor intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis; (e) additional increases to the amount related to the credit loss for which an OTTI was previously recognized when the investor does not intend to sell the security and it is not more likely than not that the investor will be required to sell the security before recovery of its amortized cost basis; (f) reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security; and (g) the ending balance of the amount related to credit losses on debt securities held by the entity at the end of the period for which a portion of an OTTI was recognized in other comprehensive income.

+ References+ Details

Fair value measurements (Tables)

12 Months Ended

Dec. 31, 2011

Fair Value Disclosures [Abstract]

Fair value measurements for items measured at fair value included the following as of December 31, 2011 and 2010:

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
December 31, 2011

U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	597,037	$	597,037	$	-	$	-
Obligations of U.S. states and political subdivisions		2,323,471		-		2,209,245		114,226
Corporate debt securities		2,032,851		1,455		1,971,168		60,228
Residential mortgage-backed securities		445,417		-		445,417		-
Commercial mortgage-backed securities		264,934		-		264,934		-
Debt securities issued by foreign sovereign governments		157,190		147,976		9,214		-
Total debt securities		5,820,900		746,468		4,899,978		174,454
Equity securities		2,747		2,426		-		321
Total investments	$	5,823,647	$	748,894	$	4,899,978	$	174,775
Real estate acquired (1)	$	1,621	$	-	$	-	$	1,621

December 31, 2010

U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	1,102,786	$	1,102,786	$	-	$	-
Obligations of U.S. states and political subdivisions		3,580,066		-		3,284,376		295,690
Corporate debt securities		2,564,959		2,563		2,492,343		70,053
Residential mortgage-backed securities		57,100		-		57,100		-
Debt securities issued by foreign sovereign governments		150,327		135,457		14,870		-
Total debt securities		7,455,238		1,240,806		5,848,689		365,743
Equity securities		3,044		2,723		-		321
Total investments	$	7,458,282	$	1,243,529	$	5,848,689	$	366,064
Real estate acquired (1)	$	6,220	$	-	$	-	$	6,220

(1)

Real estate acquired through claim settlement, which is held for sale, is reported in Other Assets on the consolidated balance sheet.

Reconciliation of beginning and ending balance for assets measured at fair value with significant unobservable inputs (level 3)

	Obligations of U.S. States and Political Subdivisions			Corporate Debt Securities			Equity Securities		Total Investments			Real Estate Acquired
	(In thousands)
Balance at December 31, 2010	$	295,690		$	70,053		$	321	$	366,064		$	6,220
Total realized/unrealized gains (losses):
Included in earnings and reported as realized investment gains (losses), net		(7,883	)		200			-		(7,683	)		-
Included in earnings and reported as net impairment losses recognized in earnings		-			(662	)		-		(662	)		-
Included in earnings and reported as losses incurred, net		-			-			-		-			(371	)
Included in other comprehensive income		6,894			637			-		7,531			-
Purchases		-			-			-		-			5,279
Sales		(180,475	)		(10,000	)		-		(190,475	)		(9,507	)
Transfers into Level 3		-			-			-		-			-
Transfers out of Level 3		-			-			-		-			-
Balance at December 31, 2011	$	114,226		$	60,228		$	321	$	174,775		$	1,621

Amount of total losses included in earnings for the year ended December 31, 2011 attributable to the change in unrealized losses on assets still held at December 31, 2011	$	-		$	-		$	-	$	-		$	-

	Obligations of U.S. States and Political Subdivisions			Corporate Debt Securities			Equity Securities		Total Investments			Real Estate Acquired
	(In thousands)
Balance at December 31, 2009	$	370,341		$	129,338		$	321	$	500,000		$	3,830
Total realized/unrealized gains (losses):
Included in earnings and reported as realized investment gains (losses), net		-			(2,880	)		-		(2,880	)		-
Included in earnings and reported as net impairment losses recognized in earnings		-			(2,677	)		-		(2,677	)		-
Included in earnings and reported as losses incurred, net		-			-			-		-			(1,926	)
Included in other comprehensive income		4,913			5,342			-		10,255			-
Purchases		-			-			-		-			15,606
Sales		(79,564	)		(59,070	)		-		(138,634	)		(11,290	)
Transfers into Level 3		-			-			-		-			-
Transfers out of Level 3		-			-			-		-			-
Balance at December 31, 2010	$	295,690		$	70,053		$	321	$	366,064		$	6,220

Amount of total losses included in earnings for the year ended December 31, 2010 attributable to the change in unrealized losses on assets still held at December 31, 2010	$	-		$	-		$	-	$	-		$	-

Tabular disclosure of assets, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, by class that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

+ References+ Details

Reconciliation of beginning and ending loss reserves

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income, and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issuances, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

+ References+ Details

Loss reserves (Tables)

12 Months Ended

Dec. 31, 2011

Loss reserves [Abstract]

The following table provides a reconciliation of beginning and ending loss reserves for each of the past three years:

	2011			2010			2009
	(In thousands)

Reserve at beginning of year	$	5,884,171		$	6,704,990		$	4,775,552
Less reinsurance recoverable		275,290			332,227			232,988
Net reserve at beginning of year (1)		5,608,881			6,372,763			4,542,564
Adjustment to reserves (2)		-			(92,000	)		-
Adjusted beginning reserves		5,608,881			6,280,763			4,542,564

Losses incurred:
Losses and LAE incurred in respect of default notices received in:
Current year		1,814,035			1,874,449			2,912,679
Prior years (3)		(99,328	)		(266,908	)		466,765
Subtotal (4)		1,714,707			1,607,541			3,379,444

Losses paid:
Losses and LAE paid in respect of default notices received in:
Current year		121,383			60,897			62,491
Prior years		2,838,069			2,256,206			1,605,668
Reinsurance terminations (5)		(38,769	)		(37,680	)		(118,914	)
Subtotal (6)		2,920,683			2,279,423			1,549,245
Net reserve at end of year (7)		4,402,905			5,608,881			6,372,763
Plus reinsurance recoverables		154,607			275,290			332,227

Reserve at end of year	$	4,557,512		$	5,884,171		$	6,704,990

(1)

At December 31, 2010, 2009 and 2008 the estimated reduction in loss reserves related to rescissions approximated $1.3 billion, $2.1 billion and $0.5 billion, respectively.

(2)

(3)

(4)

Rescissions did not have a significant impact on incurred losses in 2011. Rescissions mitigated our incurred losses by an estimated $0.2 billion and $2.5 billion in 2010 and 2009, respectively.

(5)

(6)

(7)

At December 31, 2011, 2010 and 2009 the estimated reduction in loss reserves related to rescissions approximated $0.7 billion, $1.3 billion and $2.1 billion, respectively.

Aging of the primary default inventory

Aging of the Primary Default Inventory

	December 31,				December 31,				December 31,
	2011				2010				2009

Consecutive months in default
3 months or less		31,456	18	%		37,640	18	%		48,252	19	%
4 - 11 months		46,352	26	%		58,701	27	%		98,210	39	%
12 months or more		97,831	56	%		118,383	55	%		103,978	42	%


Total primary default inventory		175,639	100	%		214,724	100	%		250,440	100	%

Primary claims received inventory included in ending default inventory		12,610	7	%		20,898	10	%		16,389	7	%

Number of payments delinquent

Number of Payments Delinquent

	December 31,				December 31,				December 31,
	2011				2010				2009


3 payments or less		42,804	24	%		51,003	24	%		60,970	24	%
4 - 11 payments		47,864	27	%		65,797	31	%		105,208	42	%
12 payments or more		84,971	49	%		97,924	45	%		84,262	34	%


Total primary default inventory		175,639	100	%		214,724	100	%		250,440	100	%

Estimate of impact of rescissions on loss reserves, paid and incurred losses

The table below represents our estimate of the impact rescissions have had on reducing our loss reserves, paid losses and losses incurred.

	2011		2010			2009
	(In billions)

Estimated rescission reduction - beginning reserve	$	1.3	$	2.1		$	0.5

Estimated rescission reduction - losses incurred		-		0.2			2.5

Rescission reduction - paid claims		0.6		1.2			1.2
Amounts that may have been applied to a deductible		-		(0.2	)		(0.3	)
Net rescission reduction - paid claims		0.6		1.0			0.9

Estimated rescission reduction - ending reserve	$	0.7	$	1.3		$	2.1

Rollforward of primary default inventory

	2011			2010			2009


Default inventory at beginning of period		214,724			250,440			182,188
Plus: New Notices		169,305			205,069			259,876
Less: Cures		(149,643	)		(183,017	)		(149,251	)
Less: Paids (including those charged to a deductible or captive)		(51,138	)		(43,826	)		(29,732	)
Less: Rescissions and denials		(7,609	)		(13,942	)		(12,641	)
Default inventory at end of period		175,639			214,724			250,440

Premium Deficiency Reserve [Abstract]

Tabular disclosure of the activity in the reserve for settling insured claims and expenses incurred in the claims settlement process for the period. The estimated liability includes the amount of money that will be required for future payments of (a) claims that have been reported to the insurer, (b) claims related to insured events that have occurred but that have not been reported to the insurer as of the date the liability is estimated, and (c) claim adjustment expenses. Claim adjustment expenses include costs incurred in the claim settlement process such as legal fees; outside adjuster fees; and costs to record, process, and adjust claims.

+ References+ Details

Premium deficiency reserves (Tables)

12 Months Ended

Dec. 31, 2011

Components of the premium deficiency reserve

The components of the premium deficiency reserve at December 31, 2011, 2010 and 2009 appear in the table below.

	December 31,
	2011			2010			2009
	(In millions)
Present value of expected future premium	$	494		$	506		$	427

Present value of expected future paid losses
and expenses		(1,455	)		(1,760	)		(2,157	)

Net present value of future cash flows		(961	)		(1,254	)		(1,730	)

Established loss reserves		826			1,075			1,537

Net deficiency	$	(135	)	$	(179	)	$	(193	)

Reconciliation of beginning and ending balances in the premium deficiency reserve

	Year ended December 31,
	2011						2010						2009
	(In millions)

Premium Deficiency Reserve at beginning of period				$	(179	)				$	(193	)				$	(454	)
Adjustment to premium deficiency reserve (1)					-						(37	)					-
Adjusted premium deficiency reserve at beginning of period					(179	)					(230	)					(454	)

Paid claims and loss adjustment expenses	$	334					$	426					$	584
Decrease in loss reserves		(249	)					(425	)					(360	)
Premium earned		(120	)					(128	)					(156	)
Effects of present valuing on future premiums, losses and expenses		(8	)					(25	)					21

Change in premium deficiency reserve to reflect actual premium, losses and expenses recognized					(43	)					(152	)					89

Change in premium deficiency reserve to reflect change in assumptions relating to future premiums, losses expenses and discount rate (2)					87						203						172

Premium Deficiency Reserve at end of period				$	(135	)				$	(179	)				$	(193	)

(2) A positive number for changes in assumptions relating to premiums, losses, expenses and discount rate indicates a redundancy of prior premium deficiency reserves.

Benefit plans (Tables)

12 Months Ended

Dec. 31, 2011

Benefit plans [Abstract]

Components of net periodic benefit cost

The following tables provide the components of aggregate annual net periodic benefit cost, changes in the benefit obligation and the funded status of the pension, supplemental executive retirement and other postretirement benefit plans as recognized in the consolidated balance sheet:

	Pension and Supplemental									Other Postretirement
	Executive Retirement Plans									Benefits
Components of Net Periodic Benefit Cost for fiscal year ending
	12/31/2011			12/31/2010			12/31/2009			12/31/2011			12/31/2010			12/31/2009
	(In thousands)
1. Company Service Cost	$	8,917		$	8,531		$	8,154		$	1,090		$	1,126		$	1,280
2. Interest Cost		16,098			15,535			14,300			1,350			1,183			1,463
3. Expected Return on Assets		(17,373	)		(14,502	)		(15,340	)		(3,299	)		(2,891	)		(2,229	)
4. Other Adjustments		-			-			-			-			-			-
Subtotal		7,642			9,564			7,114			(859	)		(582	)		514
5. Amortization of :
a. Net Transition Obligation/(Asset)		-			-			-			-			-			-
b. Net Prior Service Cost/(Credit)		661			650			716			(6,217	)		(6,138	)		(6,059	)
c. Net Losses/(Gains)		4,010			5,924			6,330			632			764			1,704
Total Amortization		4,671			6,574			7,046			(5,585	)		(5,374	)		(4,355	)
6. Net Periodic Benefit Cost		12,313			16,138			14,160			(6,445	)		(5,956	)		(3,841	)
7. Cost of settlements or curtailments		-			-			-			-			-			-
8. Total Expense for Year	$	12,313		$	16,138		$	14,160		$	(6,445	)	$	(5,956	)	$	(3,841	)

Development of funded status

Development of Funded Status
	Pension and Supplemental						Other Postretirement
	Executive Retirement Plans						Benefits
	12/31/2011			12/31/2010			12/31/2011			12/31/2010
	(In thousands)

Actuarial Value of Benefit Obligations
1. Measurement Date	12/31/2011			12/31/2010			12/31/2011			12/31/2010
2. Accumulated Benefit Obligation	$	297,145		$	270,684		$	25,007		$	26,200

Funded Status/Asset (Liability) on the Consolidated Balance Sheet
1. Projected Benefit Obligation	$	(318,048	)	$	(291,456	)	$	(25,007	)	$	(26,200	)
2. Plan Assets at Fair Value		305,748			284,080			42,578			44,362
3. Funded Status - Overfunded/Asset		N/A			N/A		$	17,571		$	18,162
4. Funded Status - Underfunded/Liability	$	(12,300	)	$	(7,376	)		N/A			N/A

Accumulated Other Comprehensive Income
	12/31/2011		12/31/2010		12/31/2011			12/31/2010
	(In thousands)
1. Net Actuarial (Gain)/Loss	$	95,298	$	81,802	$	14,109		$	13,463
2. Net Prior Service Cost/(Credit)		2,278		2,847		(41,072	)		(47,290	)
3. Net Transition Obligation/(Asset)		-		-		-			-
4. Total at Year End	$	97,576	$	84,649	$	(26,964	)	$	(33,827	)

Change in projected benefit obligation

	Pension and Supplemental						Other Postretirement
	Executive Retirement Plans						Benefits
Change in Projected Benefit Obligation
	12/31/2011			12/31/2010			12/31/2011			12/31/2010
	(In thousands)
1. Benefit Obligation at Beginning of Year	$	291,456		$	258,592		$	26,200		$	24,144
2. Company Service Cost		8,917			8,531			1,090			1,126
3. Interest Cost		16,098			15,535			1,350			1,183
4. Plan Participants' Contributions		-			-			261			327
5. Net Actuarial (Gain)/Loss due to Assumption Changes		23,037			10,425			397			(2,925	)
6. Net Actuarial (Gain)/Loss due to Plan Experience		(6,544	)		3,624			(3,643	)		3,695
7. Benefit Payments from Fund (1)		(14,692	)		(5,769	)		(560	)		(510	)
8. Benefit Payments Directly by Company		(316	)		(231	)		(87	)		(120	)
9. Plan Amendments		92			749			-			(720	)
10. Other Adjustment		-			-			-			-
11. Benefit Obligation at End of Year	$	318,048		$	291,456		$	25,007		$	26,200

Change in plan assets

The changes in the fair value of the net assets available for plan benefits are as follows:

Change in Plan Assets
	12/31/2011			12/31/2010			12/31/2011			12/31/2010
	(In thousands)
1. Fair Value of Plan Assets at Beginning of Year	$	284,080		$	243,369		$	44,362		$	38,920
2. Company Contributions		20,316			15,231			-			-
3. Plan Participants' Contributions		-			-			261			327
4. Benefit Payments from Fund		(14,692	)		(5,769	)		(560	)		(510	)
5. Benefit Payments paid directly by Company		(316	)		(231	)		(87	)		(120	)
6. Actual Return on Assets		16,360			31,480			(1,224	)		5,951
7. Other Adjustment		-			-			(173	)		(207	)
8. Fair Value of Plan Assets at End of Year	$	305,748		$	284,080		$	42,578		$	44,361

Change in accumulated other comprehensive income (AOCI)

	Pension and Supplemental						Other Postretirement
	Executive Retirement Plans						Benefits
Change in Accumulated Other Comprehensive Income (AOCI)
	12/31/2011			12/31/2010			12/31/2011			12/31/2010
	(In thousands)
1. AOCI in Prior Year	$	84,649		$	93,403		$	(33,827	)	$	(36,190	)
2. Increase/(Decrease) in AOCI
a. Recognized during year - Prior Service (Cost)/Credit		(661	)		(650	)		6,217			6,138
b. Recognized during year - Net Actuarial (Losses)/Gains		(4,010	)		(5,924	)		(632	)		(764	)
c. Occurring during year - Prior Service Cost		92			749			-			(720	)
d. Occurring during year - Net Actuarial Losses/(Gains)		17,507			(2,929	)		1,278			(2,291	)
3. AOCI in Current Year	$	97,576		$	84,649		$	(26,964	)	$	(33,827	)

Amortizations expected to be recognized during next fiscal year

Amortizations Expected to be Recognized During Next Fiscal Year Ending
	12/31/2012		12/31/2012
	(In thousands)
1. Amortization of Net Transition
Obligation/(Asset)	$	-	$	-
2. Amortization of Prior Service Cost/(Credit)		643		(6,217	)
3. Amortization of Net Losses/(Gains)		5,911		842

Actuarial assumptions

The projected benefit obligations, net periodic benefit costs and accumulated postretirement benefit obligation for the plans were determined using the following weighted average assumptions.

	Pension and Supplemental						Other Postretirement
	Executive Retirement Plans						Benefits
Actuarial Assumptions
	12/31/2011			12/31/2010			12/31/2011			12/31/2010
Weighted-Average Assumptions Used to Determine Benefit Obligations at year end
1. Discount Rate		5.25	%		5.75	%		4.75	%		5.50	%
2. Rate of Compensation Increase		3.00	%		3.00	%		N/A			N/A

Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost for Year
1. Discount Rate		5.75	%		6.00	%		5.50	%		5.75	%
2. Expected Long-term Return on Plan Assets		6.00	%		6.00	%		7.50	%		7.50	%
3. Rate of Compensation Increase		3.00	%		3.00	%		N/A			N/A

Assumed Health Care Cost Trend Rates at year end
1. Health Care Cost Trend Rate Assumed for Next Year		N/A			N/A			8.00	%		8.50	%
2. Rate to Which the Cost Trend Rate is Assumed to Decline (Ultimate Trend Rate)		N/A			N/A			5.00	%		5.00	%
3. Year That the Rate Reaches the Ultimate Trend Rate		N/A			N/A			2018			2018

Weighted-average asset allocations

The weighted-average asset allocations of the plans are as follows:

							Other Postretirement
	Pension Plan						Benefits
Plan Assets
	12/31/2011			12/31/2010			12/31/2011			12/31/2010
Allocation of Assets at year end
1. Equity Securities		38	%		38	%		100	%		100	%
2. Debt Securities		62	%		62	%		0	%		0	%
3. Other		0	%		0	%		0	%		0	%
4. Total		100	%		100	%		100	%		100	%

Fair value of plan assets

The following table sets forth by level, within the fair value hierarchy, the pension plan assets at fair value as of December 31, 2011.

Assets at Fair Value as of December 31, 2011

Pension Plan	Level 1		Level 2		Level 3		Total
	(In thousands)
Domestic Mutual Funds	$	58,699	$	-	$	-	$	58,699
International Mutual Funds		32,664		-		-		32,664
Common Stocks		45,770		-		-		45,770
Corporate Bonds		-		118,575		-		118,575
U.S. Government Securities		13,137		-		-		13,137
Municipals		-		18,362		-		18,362
Foreign Bonds		-		15,411		-		15,411
Foreign Stocks		3,130		-		-		3,130
Total Assets at fair value	$	153,400	$	152,348	$	-	$	305,748

The following tables show the estimated future contributions and estimated future benefit payments.

	Pension and Supplemental		Other Postretirement
	Executive Retirement Plans		Benefits
Company Contributions
	12/31/2011		12/31/2011
	(In thousands)
Company Contributions for the Year Ending:
1. Current	$	20,316	$	-
2. Current + 1		984		-

Minimum and maximum allocation ranges for fixed income securities and equity securities

	Minimum			Maximum
Fixed income		40	%		100	%
Equity		0	%		60	%
Cash equivalents		0	%		10	%

	Minimum			Maximum
Fixed income		0	%		10	%
Equity		90	%		100	%

Actual and estimated future contributions and actual and estimated future benefit payments

The following tables show the estimated future contributions and estimated future benefit payments.

	Pension and Supplemental		Other Postretirement
	Executive Retirement Plans		Benefits
Company Contributions
	12/31/2011		12/31/2011
	(In thousands)
Company Contributions for the Year Ending:
1. Current	$	20,316	$	-
2. Current + 1		984		-

Benefit Payments (Total)
	12/31/2011		12/31/2011
	(In thousands)
Actual Benefit Payments for the Year Ending:
1. Current	$	15,008	$	387
Expected Benefit Payments for the Year Ending:
2. Current + 1		10,377		907
3. Current + 2		11,383		1,033
4. Current + 3		14,051		1,227
5. Current + 4		14,194		1,318
6. Current + 5		15,098		1,472
7. Current + 6 - 10		95,553		10,686

Effect of a 1% change in the health care trend rate assumption

	1-Percentage		1-Percentage
	Point Increase		Point Decrease
	(In thousands)

Effect on total service and interest cost components	$	573	$	(408	)
Effect on postretirement benefit obligation		4,463		(3,490	)

Income taxes (Tables)

12 Months Ended

Dec. 31, 2011

Income taxes [Abstract]

Net deferred tax assets and liabilities

Net deferred tax assets and liabilities as of December 31, 2011 and 2010 are as follows:

	2011			2010
	(In thousands)

Total deferred tax assets	$	683,645		$	651,568
Total deferred tax liabilities		(86,490	)		(249,989	)

Net deferred tax asset before valuation allowance		597,155			401,579
Valuation allowance		(608,761	)		(410,333	)
Net deferred tax liability	$	(11,606	)	$	(8,754	)

Components of the net deferred tax liability

The components of the net deferred tax liability as of December 31, 2011 and 2010 are as follows:

	2011			2010
	(In thousands)

Convertible debentures	$	(15,785	)	$	(25,864	)
Net operating loss		506,614			432,827
Loss reserves		60,478			85,425
Unrealized (appreciation) depreciation in investments		(42,009	)		(31,379	)
Mortgage investments		18,944			17,934
Deferred compensation		17,447			19,080
Investments in joint ventures		(3,018	)		(165,598	)
Premium deficiency reserves		47,186			62,638
Loss due to "other than temporary" impairments		11,068			14,160
Other, net		(3,770	)		(7,644	)

Net deferred tax asset before valuation allowance		597,155			401,579
Valuation allowance		(608,761	)		(410,333	)
Net deferred tax liability	$	(11,606	)	$	(8,754	)

Tax provision (benefit)

The effect of the change in valuation allowance on the benefit from income taxes was as follows:

	2011			2010			2009
	(In thousands)

Benefit from income taxes	$	(196,835	)	$	(145,334	)	$	(681,266	)
Change in valuation allowance		198,428			149,669			238,490

Tax provision (benefit)	$	1,593		$	4,335		$	(442,776	)

Components of the provision for (benefit from) income taxes

The following summarizes the components of the provision for (benefit from) income taxes:

	2011			2010			2009
	(In thousands)

Current	$	598		$	1,618		$	(621,170	)
Deferred		(945	)		(19	)		175,194
Other		1,940			2,736			3,200

Provision for (benefit from) income taxes	$	1,593		$	4,335		$	(442,776	)

Reconciliation of federal statutory income tax rate

The reconciliation of the federal statutory income tax benefit rate to the effective income tax (benefit) rate is as follows:

	2011			2010			2009


Federal statutory income tax benefit rate		(35.0	) %		(35.0	) %		(35.0	) %
Valuation allowance		41.0			41.6			13.5
Tax exempt municipal bond interest		(5.4	)		(10.5	)		(3.6	)
Other, net		(0.3	)		5.1			-

Effective income tax (benefit) rate		0.3	%		1.2	%		(25.1	) %

Reconciliation of unrecognized tax benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	Unrecognized tax benefits
	2011		2010		2009
	(In thousands)

Balance at beginning of year	$	109,282	$	91,117	$	87,965
Additions based on tax positions related to the current year		-		-		258
Additions for tax positions of prior years		798		18,165		2,894
Reductions for tax positions of prior years		-		-		-
Settlements		-		-		-
Balance at end of year	$	110,080	$	109,282	$	91,117

Summary of amounts disclosed under statutory accounting practices

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

+ References+ Details

Statutory capital (Tables)

12 Months Ended

Dec. 31, 2011

Statutory capital [Abstract]

Year Ended	Net (loss)					Contingency
December 31,	Income			Surplus		Reserve
	(In thousands)

2011	$	(436,277	)	$	1,657,349	$	4,104
2010		113,651			1,692,392		5,480
2009		(44,669	)		1,442,407		417,587

Year Ended December 31,	Additions to the surplus of MGIC from parent company funds		Additions to the surplus of other insurance subsidiaries from parent company funds		Dividends paid by MGIC to the parent company
	(In thousands)

2011	$	200,000	$	-	$	-
2010		200,000		-		-
2009		-		-		-

Tabular disclosure of how the entity's reporting under GAAP as of the balance sheet date differs from the results based on prescribed and permitted accounting practices of the state or country of domicile in which a relevant statutory filing is made, or differences in results based on the National Association of Insurance Commissioners (NAIC) prescribed practices, or a combination thereof. Describes the accounting practices used and the related monetary effect on statutory surplus, net income, and risk-based capital. If an insurance enterprise's risk-based capital would have triggered a regulatory event had it not used a permitted practice, that fact is disclosed in the financial statements. Permitted statutory accounting practices include practices not prescribed but allowed by the domiciliary state insurance department regulatory authority.

Share-based compensation plans [Abstract]

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 60

-Paragraph 60

-Subparagraph h

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher AICPA

-Name Statement of Position (SOP)

-Number 94-5

-Paragraph 8, 9

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 944

-SubTopic 505

-Section 50

-Paragraph 1

-URI http://asc.fasb.org/extlink&oid=6486098&loc=d3e24708-158529

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 944

-SubTopic 505

-Section 50

-Paragraph 6

-URI http://asc.fasb.org/extlink&oid=6486098&loc=d3e24790-158529

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 944

-SubTopic 505

-Section 55

-Paragraph 2

-URI http://asc.fasb.org/extlink&oid=6588579&loc=d3e24959-158530

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 944

-SubTopic 210

-Section S99

-Paragraph 1

-Subparagraph (SX 210.7-03.23(c))

-URI http://asc.fasb.org/extlink&oid=6879938&loc=d3e572229-122910

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 944

-SubTopic 505

-Section 55

-Paragraph 1

-URI http://asc.fasb.org/extlink&oid=6588579&loc=d3e24938-158530

Reference 8: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 944

-SubTopic 505

-Section 50

-Paragraph 3

-URI http://asc.fasb.org/extlink&oid=6486098&loc=d3e24746-158529

+ Details

Share-based compensation plans (Tables)

12 Months Ended

Dec. 31, 2011

Summary of option activity in the stock incentive plans

A summary of option activity in the stock incentive plans during 2011 is as follows:

	Weighted
	Average		Shares
	Exercise		Subject
	Price		to Option

Outstanding, December 31, 2010	$	60.08		1,749,700

Granted		-		-
Exercised		-		-
Forfeited or expired		58.28		(329,200	)

Outstanding, December 31, 2011	$	60.50		1,420,500

Summary of stock options outstanding and exercisable

The following is a summary of stock options outstanding, all of which are exercisable, at December 31, 2011:

	Options Outstanding and Exercisable
					Weighted
Exercise			Remaining		Average
Price			Average		Exercise
Range	Shares		Life (years)		Price

$43.70 - 43.70		349,500		1.1	$	43.70

$63.80 - 68.20		1,071,000		1.1	$	65.98

Total		1,420,500		1.1	$	60.50

Summary of restricted stock or restricted stock unit activity

A summary of restricted stock or restricted stock unit activity during 2011 is as follows:

	Weighted Average Grant Date Fair Market Value		Shares

Restricted stock outstanding at December 31, 2010	$	14.69		3,457,266


Granted		8.94		1,368,295
Vested		8.32		(1,698,956	)
Forfeited		60.01		(180,843	)

Restricted stock outstanding at December 31, 2011	$	12.88		2,945,762

Unaudited quarterly financial data [Abstract]

Tabular disclosure of option exercise prices, by grouped ranges, including the upper and lower limits of the price range, the number of shares under option, weighted average exercise price and remaining contractual option terms.

+ References+ Details

Unaudited quarterly financial data (Tables)

12 Months Ended

Dec. 31, 2011

Unaudited quarterly financial data

21.	Unaudited quarterly financial data

	Quarter												2011
2011:	First			Second			Third			Fourth			Year
	(In thousands, except share data)

Net premiums written	$	274,463		$	270,399		$	255,745		$	263,773		$	1,064,380
Net premiums earned		288,546			284,454			275,094			275,741			1,123,835
Investment income, net of expenses		56,543			55,490			48,898			40,339			201,270
Loss incurred, net		310,431			459,552			462,654			482,070			1,714,707
Change in premium deficiency reserves		(9,018	)		(11,035	)		(12,388	)		(11,709	)		(44,150	)
Underwriting and other operating expenses		57,550			54,043			52,477			50,680			214,750
Interest expense		26,042			26,326			25,761			25,142			103,271
Net income (loss)		(33,661	)		(151,732	)		(165,205	)		(135,294	)		(485,892	)
Income (loss) per share (a):
Basic		(0.17	)		(0.75	)		(0.82	)		(0.67	)		(2.42	)
Diluted		(0.17	)		(0.75	)		(0.82	)		(0.67	)		(2.42	)

	Quarter												2010
2010:	First			Second			Third			Fourth (b)			Year
	(In thousands, except share data)

Net premiums written	$	256,058		$	295,346		$	278,982		$	271,409		$	1,101,795
Net premiums earned		271,952			309,174			296,496			291,125			1,168,747
Investment income, net of expenses		68,859			62,868			58,465			57,061			247,253
Loss incurred, net		454,511			320,077			384,578			448,375			1,607,541
Change in premium deficiency reserves		(13,566	)		(10,619	)		(8,887	)		(18,275	)		(51,347	)
Underwriting and other operating expenses		59,945			54,050			57,606			53,541			225,142
Interest expense		21,018			25,099			26,702			25,770			98,589
Net income (loss)		(150,091	)		24,551			(51,528	)		(186,667	)		(363,735	)
Income (loss) per share (a):
Basic		(1.20	)		0.14			(0.26	)		(0.93	)		(2.06	)
Diluted		(1.20	)		0.13			(0.26	)		(0.93	)		(2.06	)

(a)

Due to the use of weighted average shares outstanding when calculating earnings per share, the sum of the quarterly per share data may not equal the per share data for the year.

(b)

Nature of business (Details) (USD $)	12 Months Ended			1 Months Ended	12 Months Ended		1 Months Ended	12 Months Ended		12 Months Ended
Nature of business (Details) (USD $)	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Jan. 31, 2012 Mortgage Guaranty Insurance Corporation [Member]	Dec. 31, 2011 Mortgage Guaranty Insurance Corporation [Member]	Dec. 31, 2009 Mortgage Guaranty Insurance Corporation [Member]	Jan. 31, 2012 MGIC Indemnity Corporation [Member]	Dec. 31, 2009 MGIC Indemnity Corporation [Member]	Dec. 31, 2011 MGIC Indemnity Corporation [Member]	Dec. 31, 2011 MGIC Investment Corporation [Member]
Nature of business [Abstract]
Direct domestic primary insurance in force	$ 172,900,000,000
Direct domestic primary risk in force	44,500,000,000
Direct pool risk in force	1,900,000,000
Direct pool risk in force on pool policies with aggregate loss limits	700,000,000
Direct pool risk in force on pool policies with no aggregate loss limits	1,200,000,000
Risk in force in Australia	900,000,000
Coverage percentage on insurance in force in Australia (in hundredths)	100.00%
Number of jurisdictions with risk-to-capital requirements	16
Maximum permitted risk-to-capital ratio commonly applied	25 to 1
Related Party Transaction [Line Items]
Contribution to subsidiary				200,000,000	200,000,000	200,000,000	200,000,000	200,000,000		200,000,000
Holding company cash and investments										487,000,000
MGIC's risk-to-capital ratio at end of period					20.3 to 1
Excess of policyholders position over required regulatory minimum					185,000,000
Risk-to-capital ratio of combined insurance operations, including reinsurance affiliates, at end of period	22.2 to 1
Statutory deferred tax assets					142,000,000
Minimum amount of liquid assets to be maintained under the New Order					1,000,000,000
Liquid assets					6,400,000,000
Percentage of new insurance written in jurisdictions with risk-to-capital requirements (in hundredths)					50.00%
Statutory capital of subsidiary	1,657,349,000	1,692,392,000	1,442,407,000						234,000,000
Minimum number of jurisdictions that could prevent the entity from continuing to write new insurance		1
Maximum risk-to-capital requirement of a subsidiary under a GSE agreement									20:1
Claim payments to be paid by competitor mortgage insurance companies (in hundredths)	50.00%
Mitigation of paid losses by rescission of policies	600,000,000	1,200,000,000	1,200,000,000
Percentage of claims received in a quarter resolved by rescission, lower range limit (in hundredths)	17.00%
Percentage of claims received in a quarter resolved by rescission, upper range limit (in hundredths)	20.00%		28.00%
Estimated mitigation of incurred losses by impact of rescissions on loss reserving methodology		$ 200,000,000	$ 2,500,000,000
Number of loans in primary delinquency inventory	175,639
Period during which the insured may initiate legal proceedings (in years)	3Y

Summary of significant accounting policies (Details) (USD $)

3 Months Ended

12 Months Ended

Dec. 31, 2011

Sep. 30, 2011

Jun. 30, 2011

Mar. 31, 2011

Dec. 31, 2010

Sep. 30, 2010

Jun. 30, 2010

Mar. 31, 2010

Dec. 31, 2011

Dec. 31, 2010

Dec. 31, 2009

Summary of significant accounting policies [Abstract]

Discount rates used for the DCF model, minimum (in hundredths)

2.30%

Discount rate used for the DCF model, maximum (in hundredths)

4.30%

Accumulated depreciation of home office and equipment

$ 65,200,000

$ 62,900,000

$ 65,200,000

$ 62,900,000

$ 60,100,000

Depreciation expense of home office and equipment

2,300,000

2,900,000

4,300,000

Loss reserves [Abstract]

Minimum period for which an insured loan is past due in order for it to be considered in default (in days)

45D

Income taxes [Abstract]

Net premiums threshold for early withdrawals (in hundredths)

35.00%

Share-Based Compensation [Abstract]

Minimum vesting period for share-based compensation awards (in years)

Maximum vesting period for share-based compensation awards (in years)

Earnings per share [Abstract]

Antidilutive securities excluded from weighted average number of shares (in shares)

55,600,000

47,400,000

37,600,000

Basic (loss) earnings per share [Abstract]

Average common shares outstanding (in shares)

201,019,000

176,406,000

124,209,000

Basic (loss) earnings per share (in dollars per share)

(135,294,000)

(165,205,000)

(151,732,000)

(33,661,000)

(186,667,000)

^[1]

(51,528,000)

24,551,000

(150,091,000)

(485,892,000)

(363,735,000)

(1,322,277,000)

$ (0.67)

^[2]

$ (0.82)

^[2]

$ (0.75)

^[2]

$ (0.17)

^[2]

$ (0.93)

^[1],[2]

$ (0.26)

^[2]

$ 0.14

^[2]

$ (1.20)

^[2]

$ (2.42)

^[2]

$ (2.06)

^[2]

$ (10.65)

Diluted (loss) earnings per share [Abstract]

Weighted-average shares - Basic (in shares)

201,019,000

176,406,000

124,209,000

Common stock equivalents (in shares)

Weighted-average shares - Diluted (in shares)

201,019,000

176,406,000

124,209,000

Diluted (loss) earnings per share (in dollars per share)

(135,294,000)

(165,205,000)

(151,732,000)

(33,661,000)

(186,667,000)

^[1]

(51,528,000)

24,551,000

(150,091,000)

(485,892,000)

(363,735,000)

(1,322,277,000)

$ (0.67)

^[2]

$ (0.82)

^[2]

$ (0.75)

^[2]

$ (0.17)

^[2]

$ (0.93)

^[1],[2]

$ (0.26)

^[2]

$ 0.13

^[2]

$ (1.20)

^[2]

$ (2.42)

^[2]

$ (2.06)

^[2]

$ (10.65)

Total other comprehensive income (loss) [Abstract]

Other comprehensive (loss) income

(135,294,000)

(165,205,000)

(151,732,000)

(33,661,000)

(186,667,000)

^[1]

(51,528,000)

24,551,000

(150,091,000)

(485,892,000)

(363,735,000)

(1,322,277,000)

7,988,000

(52,019,000)

180,944,000

Comprehensive loss

(477,904,000)

(415,754,000)

(1,141,333,000)

Other comprehensive income (loss) (net of tax) [Abstract]

Change in unrealized gains and losses on investments

21,057,000

(69,074,000)

154,358,000

Noncredit component of impairment losses, net (note 6)

(1,764,000)

Amortization related to benefit plans

(12,862,000)

6,390,000

10,704,000

Unrealized foreign currency translation adjustment

(207,000)

10,665,000

17,646,000

Other comprehensive (loss) income

7,988,000

(52,019,000)

180,944,000

Tax expense (benefit) on other comprehensive income

3,600,000

5,900,000

98,100,000

Accumulated other comprehensive income (loss) [Abstract]

Unrealized gains (losses) on investments

53,561,000

32,503,000

53,561,000

32,503,000

Defined benefit plans

(43,642,000)

(30,780,000)

(43,642,000)

(30,780,000)

Foreign currency translation adjustment

20,205,000

20,413,000

20,205,000

20,413,000

Total accumulated other comprehensive income

$ 30,124,000

$ 22,136,000

$ 30,124,000

$ 22,136,000

Participating Securities with Non-forfeitable Rights to Dividends [Member]

Earnings per share [Abstract]

Antidilutive securities excluded from weighted average number of shares (in shares)

1,100,000

1,800,000

1,900,000

Home Office [Member]

Estimated useful life (in years)

Equipment [Member]

Estimated useful life (in years)

Data Processing Hardware [Member]

Estimated useful life (in years)

[1]	In prior periods, the liability associated with premium to be returned on claim payments is included in loss reserves and changes to this estimate affect losses incurred. See Note 3 - Summary of significant accounting policies - Revenue recognition.
[2]	Due to the use of weighted average shares outstanding when calculating earnings per share, the sum of the quarterly per share data may not equal the per share data for the year.

Investments (Details) (USD $)

3 Months Ended

12 Months Ended

Dec. 31, 2011

Sep. 30, 2011

Jun. 30, 2011

Mar. 31, 2011

Dec. 31, 2010

Sep. 30, 2010

Jun. 30, 2010

Mar. 31, 2010

Dec. 31, 2011

Dec. 31, 2010

Dec. 31, 2009

Schedule of Available-for-sale Securities [Line Items]

$ 5,703,560,000

$ 7,369,857,000

$ 5,703,560,000

$ 7,369,857,000

134,673,000

161,988,000

134,673,000

161,988,000

(14,586,000)

^[1]

(73,563,000)

^[1]

(14,586,000)

^[1]

(73,563,000)

^[1]

Percentage of auction rate securities with contractual maturities greater than 10 years (in hundredths)

5,823,647,000

7,458,282,000

5,823,647,000

7,458,282,000

100.00%

Contractual maturity of auction rate securities (in years)

10Y

Net impairment losses recognized in earnings

715,000

9,644,000

40,940,000

5,700,894,000

7,366,808,000

5,700,894,000

7,366,808,000

Continuous Unrealized Loss Portion, Fair Value [Abstract]

5,823,647,000

7,458,282,000

5,823,647,000

7,458,282,000

1,077,710,000

2,345,030,000

1,077,710,000

2,345,030,000

166,172,000

388,259,000

166,172,000

388,259,000

Continuous Unrealized Loss Portion, Unrealized Loses [Abstract]

1,243,882,000

2,733,289,000

1,243,882,000

2,733,289,000

7,873,000

50,234,000

7,873,000

50,234,000

6,713,000

23,329,000

6,713,000

23,329,000

OTTI losses in other comprehensive income

14,586,000

73,563,000

14,586,000

73,563,000

1,800,000

Percentage of foreign investments held in government and semi-government securities (in hundredths)

94.00%

Percentage of foreign investments held in corporate securities (in hundredths)

6.00%

Schedule of Investment Income, Reported Amounts, by Category [Line Items]

204,053,000

250,452,000

307,891,000

Investment expenses

(2,783,000)

(3,199,000)

(3,213,000)

Net investment income

40,339,000

48,898,000

55,490,000

56,543,000

57,061,000

58,465,000

62,868,000

68,859,000

201,270,000

247,253,000

304,678,000

Net realized investment gains (losses) and OTTI on investments

142,715,000

92,937,000

51,934,000

Change in net unrealized appreciation (depreciation)

31,662,000

(71,308,000)

235,402,000

Net unrealized holding gains (losses) arising during the period, net of tax, included in accumulated other comprehensive income

68,822,000

(7,534,000)

143,378,000

Less: net gains (losses) reclassified out of accumulated other comprehensive income into earnings for the period

47,765,000

61,540,000

(9,216,000)

Change in unrealized investment gains (losses), net of tax

21,057,000

(69,074,000)

152,594,000

Tax expense (benefit) related to the changes in net unrealized (depreciation) appreciation

10,600,000

1,000,000

82,800,000

Gross realized gains, gross realized losses and impairment losses [Abstract]

Gross realized gains

158,659,000

119,325,000

112,148,000

Gross realized losses

(15,229,000)

(16,278,000)

(19,274,000)

Impairment losses

(715,000)

(9,644,000)

(40,940,000)

Net realized gains (losses) on securities

142,715,000

93,403,000

51,934,000

Loss from joint ventures

(466,000)

Investments on deposit with various states

142,715,000

92,937,000

51,934,000

22,300,000

21,800,000

22,300,000

21,800,000

Joint Ventures [Member]

Net realized investment gains (losses) and OTTI on investments

(466,000)

Gross realized gains, gross realized losses and impairment losses [Abstract]

(466,000)

Available-for-sale Securities [Member] | Fixed Maturities [Member]

Net realized investment gains (losses) and OTTI on investments

142,284,000

93,017,000

51,109,000

Change in net unrealized appreciation (depreciation)

31,576,000

(71,304,000)

237,521,000

Gross realized gains, gross realized losses and impairment losses [Abstract]

142,284,000

93,017,000

51,109,000

Available-for-sale Securities [Member] | Equity Securities [Member]

Net realized investment gains (losses) and OTTI on investments

330,000

151,000

116,000

Change in net unrealized appreciation (depreciation)

86,000

(4,000)

144,000

Gross realized gains, gross realized losses and impairment losses [Abstract]

330,000

151,000

116,000

Available-for-sale Securities [Member] | Other [Member]

Net realized investment gains (losses) and OTTI on investments

101,000

235,000

709,000

Change in net unrealized appreciation (depreciation)

(2,263,000)

Gross realized gains, gross realized losses and impairment losses [Abstract]

Schedule of Investment Income, Reported Amounts, by Category [Line Items]

101,000

235,000

709,000

Fixed Maturities [Member]

Schedule of Investment Income, Reported Amounts, by Category [Line Items]

202,301,000

236,734,000

291,304,000

Equity Securities [Member]

Schedule of Investment Income, Reported Amounts, by Category [Line Items]

330,000

315,000

819,000

Cash Equivalents [Member]

Schedule of Investment Income, Reported Amounts, by Category [Line Items]

496,000

1,526,000

3,056,000

Interest on Sherman Note [Member]

Schedule of Investment Income, Reported Amounts, by Category [Line Items]

10,796,000

11,323,000

Other [Member]

Credit Losses Recognized in Earnings [Roll Forward]

926,000

1,081,000

1,389,000

Available-for-sale Securities [Member]

Beginning balance

1,021,000

Addition for the amount related to the credit loss for which an OTTI was not previously recognized

Additional increases to the amount related to the credit loss for which an OTTI was previously recognized

Reductions for securities sold during the period (realized)

(1,021,000)

Ending balance

U.S. Treasury Securities and Obligations of U.S. Government Corporations and Agencies [Member]

Schedule of Available-for-sale Securities [Line Items]

592,108,000

1,092,890,000

592,108,000

1,092,890,000

4,965,000

16,718,000

4,965,000

16,718,000

(36,000)

^[1]

(6,822,000)

^[1]

(36,000)

^[1]

(6,822,000)

^[1]

597,037,000

1,102,786,000

597,037,000

1,102,786,000

Continuous Unrealized Loss Portion, Fair Value [Abstract]

597,037,000

1,102,786,000

597,037,000

1,102,786,000

78,546,000

258,235,000

78,546,000

258,235,000

Continuous Unrealized Loss Portion, Unrealized Loses [Abstract]

78,546,000

258,235,000

78,546,000

258,235,000

36,000

6,822,000

36,000

6,822,000

Schedule of Available-for-sale Securities [Line Items]

36,000

6,822,000

36,000

6,822,000

Obligations of U.S. States and Political Subdivisions [Member]

2,255,192,000

3,549,355,000

2,255,192,000

3,549,355,000

74,918,000

85,085,000

74,918,000

85,085,000

(6,639,000)

^[1]

(54,374,000)

^[1]

(6,639,000)

^[1]

(54,374,000)

^[1]

2,323,471,000

3,580,066,000

2,323,471,000

3,580,066,000

Continuous Unrealized Loss Portion, Fair Value [Abstract]

2,323,471,000

3,580,066,000

2,323,471,000

3,580,066,000

188,879,000

1,160,877,000

188,879,000

1,160,877,000

137,965,000

359,629,000

137,965,000

359,629,000

Continuous Unrealized Loss Portion, Unrealized Loses [Abstract]

326,844,000

1,520,506,000

326,844,000

1,520,506,000

837,000

32,415,000

837,000

32,415,000

5,802,000

21,959,000

5,802,000

21,959,000

Schedule of Available-for-sale Securities [Line Items]

6,639,000

54,374,000

6,639,000

54,374,000

Corporate Debt Securities [Member]

2,007,720,000

2,521,275,000

2,007,720,000

2,521,275,000

32,750,000

54,975,000

32,750,000

54,975,000

(7,619,000)

^[1]

(11,291,000)

^[1]

(7,619,000)

^[1]

(11,291,000)

^[1]

2,032,851,000

2,564,959,000

2,032,851,000

2,564,959,000

Continuous Unrealized Loss Portion, Fair Value [Abstract]

2,032,851,000

2,564,959,000

2,032,851,000

2,564,959,000

689,396,000

817,471,000

689,396,000

817,471,000

28,174,000

28,630,000

28,174,000

28,630,000

Continuous Unrealized Loss Portion, Unrealized Loses [Abstract]

717,570,000

846,101,000

717,570,000

846,101,000

6,709,000

9,921,000

6,709,000

9,921,000

910,000

1,370,000

910,000

1,370,000

Schedule of Available-for-sale Securities [Line Items]

7,619,000

11,291,000

7,619,000

11,291,000

Residential Mortgage-Backed Securities [Member]

441,589,000

53,845,000

441,589,000

53,845,000

4,113,000

3,255,000

4,113,000

3,255,000

(285,000)

^[1]

(285,000)

^[1]

445,417,000

57,100,000

445,417,000

57,100,000

441,589,000

445,417,000

Continuous Unrealized Loss Portion, Fair Value [Abstract]

445,417,000

57,100,000

445,417,000

57,100,000

120,405,000

Continuous Unrealized Loss Portion, Unrealized Loses [Abstract]

120,405,000

285,000

Schedule of Available-for-sale Securities [Line Items]

285,000

Debt Securities Issued by Foreign Sovereign Governments [Member]

146,755,000

149,443,000

146,755,000

149,443,000

10,441,000

1,915,000

10,441,000

1,915,000

(6,000)

^[1]

(1,031,000)

^[1]

(6,000)

^[1]

(1,031,000)

^[1]

157,190,000

150,327,000

157,190,000

150,327,000

Continuous Unrealized Loss Portion, Fair Value [Abstract]

157,190,000

150,327,000

157,190,000

150,327,000

484,000

105,724,000

484,000

105,724,000

Continuous Unrealized Loss Portion, Unrealized Loses [Abstract]

484,000

105,724,000

484,000

105,724,000

6,000

1,031,000

6,000

1,031,000

Schedule of Available-for-sale Securities [Line Items]

6,000

1,031,000

6,000

1,031,000

Total Debt Securities [Member]

5,700,894,000

7,366,808,000

5,700,894,000

7,366,808,000

134,591,000

161,948,000

134,591,000

161,948,000

(14,585,000)

^[1]

(73,518,000)

^[1]

(14,585,000)

^[1]

(73,518,000)

^[1]

5,820,900,000

7,455,238,000

5,820,900,000

7,455,238,000

Due after one year through five years

Due in one year or less

1,238,386,000

1,860,588,000

Due after five years through ten years

897,967,000

Due after ten years

828,573,000

Total debt securities with single maturity date

4,825,514,000

5,700,894,000

Due after one year through five years

Due in one year or less

1,240,917,000

1,900,400,000

Due after five years through ten years

942,561,000

Due after ten years

856,774,000

Total debt securities with single maturity date

4,940,652,000

Schedule of Available-for-sale Securities [Line Items]

5,820,900,000

7,455,238,000

5,820,900,000

7,455,238,000

Equity Securities [Member]

2,666,000

3,049,000

2,666,000

3,049,000

82,000

40,000

82,000

40,000

(1,000)

^[1]

(45,000)

^[1]

(1,000)

^[1]

(45,000)

^[1]

2,747,000

3,044,000

2,747,000

3,044,000

Continuous Unrealized Loss Portion, Fair Value [Abstract]

2,747,000

3,044,000

2,747,000

3,044,000

2,723,000

33,000

Continuous Unrealized Loss Portion, Unrealized Loses [Abstract]

33,000

2,723,000

33,000

2,723,000

45,000

1,000

1,000

45,000

1,000

45,000

Auction Rate Securities [Member]

176,261,000

^[2]

176,261,000

^[2]

Continuous Unrealized Loss Portion, Unrealized Loses [Abstract]

169,897,000

^[2]

169,897,000

^[2]

Fair value of ARS backed by student loans

170,000,000

358,000,000

170,000,000

358,000,000

Auction process, interest rate reset interval, low (in days)

Auction process, interest rate reset interval, mid (in days)

Auction process, interest rate reset interval, high (in days)

Percentage of ARS held guaranteed by U.S. Department of Education (in hundredths)

97.00%

Percentage of ARS portfolio rated AAA/Aaa by one or more of the major rating agencies (in hundredths)

83.00%

Number of investments in ARS portfolio

The par value of ARS sold or called

361,000,000

Percentage of par value received in sale or call of ARS (in hundredths)

97.00%

Commercial Mortgage-Backed Securities [Member]

Schedule of Available-for-sale Securities [Line Items]

257,530,000

7,404,000

^[1]

264,934,000

257,530,000

264,934,000

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

$ 264,934,000

[1]	There were no other-than-temporary impairment losses recorded in other comprehensive income at December 31, 2011 and 2010.
[2]	At December 31, 2011, 100% of auction rate securities had a contractual maturity greater than 10 years.

Fair value measurements (Details) (USD $)
In Thousands, unless otherwise specified

12 Months Ended

Dec. 31, 2011

Dec. 31, 2010

$ 5,823,647

$ 7,458,282

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]

1,621

^[1]

6,220

^[1]

Obligations of U.S. States and Political Subdivisions [Member]

Amount of total losses included in earnings for the period attributable to the change in unrealized losses on assets still held at period end

295,690

370,341

Included in earnings and reported as realized investment gains (losses), net

(7,883)

Included in earnings and reported as net impairment losses recognized in earnings

Included in earnings and reported as losses incurred, net

6,894

4,913

(180,475)

(79,564)

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]

114,226

295,690

Corporate Debt Securities [Member]

Amount of total losses included in earnings for the period attributable to the change in unrealized losses on assets still held at period end

70,053

129,338

Included in earnings and reported as realized investment gains (losses), net

200

(2,880)

Included in earnings and reported as net impairment losses recognized in earnings

(662)

(2,677)

Included in earnings and reported as losses incurred, net

637

5,342

(10,000)

(59,070)

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]

60,228

70,053

Equity Securities [Member]

Amount of total losses included in earnings for the period attributable to the change in unrealized losses on assets still held at period end

321

Included in earnings and reported as realized investment gains (losses), net

Included in earnings and reported as net impairment losses recognized in earnings

Included in earnings and reported as losses incurred, net

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]

321

Total Investments [Member]

Amount of total losses included in earnings for the period attributable to the change in unrealized losses on assets still held at period end

366,064

500,000

Included in earnings and reported as realized investment gains (losses), net

(7,683)

(2,880)

Included in earnings and reported as net impairment losses recognized in earnings

(662)

(2,677)

Included in earnings and reported as losses incurred, net

7,531

10,255

(190,475)

(138,634)

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]

174,775

366,064

Real Estate Acquired [Member]

Amount of total losses included in earnings for the period attributable to the change in unrealized losses on assets still held at period end

6,220

3,830

Included in earnings and reported as realized investment gains (losses), net

Included in earnings and reported as net impairment losses recognized in earnings

Included in earnings and reported as losses incurred, net

(371)

(1,926)

5,279

15,606

(9,507)

(11,290)

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

1,621

6,220

Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]

748,894

1,243,529

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

^[1]

Significant Other Observable Inputs (Level 2) [Member]

4,899,978

5,848,689

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

^[1]

Significant Unobservable Inputs (Level 3) [Member]

174,775

366,064

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

1,621

^[1]

6,220

^[1]

U.S. Treasury Securities and Obligations of U.S. Government Corporations and Agencies [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

597,037

1,102,786

U.S. Treasury Securities and Obligations of U.S. Government Corporations and Agencies [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

597,037

1,102,786

U.S. Treasury Securities and Obligations of U.S. Government Corporations and Agencies [Member] | Significant Other Observable Inputs (Level 2) [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

U.S. Treasury Securities and Obligations of U.S. Government Corporations and Agencies [Member] | Significant Unobservable Inputs (Level 3) [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Obligations of U.S. States and Political Subdivisions [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

2,323,471

3,580,066

Obligations of U.S. States and Political Subdivisions [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Obligations of U.S. States and Political Subdivisions [Member] | Significant Other Observable Inputs (Level 2) [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

2,209,245

3,284,376

Obligations of U.S. States and Political Subdivisions [Member] | Significant Unobservable Inputs (Level 3) [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

114,226

295,690

Corporate Debt Securities [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

2,032,851

2,564,959

Corporate Debt Securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

1,455

2,563

Corporate Debt Securities [Member] | Significant Other Observable Inputs (Level 2) [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

1,971,168

2,492,343

Corporate Debt Securities [Member] | Significant Unobservable Inputs (Level 3) [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

60,228

70,053

Residential Mortgage-Backed Securities [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

445,417

57,100

Residential Mortgage-Backed Securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Residential Mortgage-Backed Securities [Member] | Significant Other Observable Inputs (Level 2) [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

445,417

57,100

Residential Mortgage-Backed Securities [Member] | Significant Unobservable Inputs (Level 3) [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Debt Securities Issued by Foreign Sovereign Governments [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

157,190

150,327

Debt Securities Issued by Foreign Sovereign Governments [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

147,976

135,457

Debt Securities Issued by Foreign Sovereign Governments [Member] | Significant Other Observable Inputs (Level 2) [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

9,214

14,870

Debt Securities Issued by Foreign Sovereign Governments [Member] | Significant Unobservable Inputs (Level 3) [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Total Debt Securities [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

5,820,900

7,455,238

Total Debt Securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

746,468

1,240,806

Total Debt Securities [Member] | Significant Other Observable Inputs (Level 2) [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

4,899,978

5,848,689

Total Debt Securities [Member] | Significant Unobservable Inputs (Level 3) [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

174,454

365,743

Equity Securities [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

2,747

3,044

Equity Securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

2,426

2,723

Equity Securities [Member] | Significant Other Observable Inputs (Level 2) [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Equity Securities [Member] | Significant Unobservable Inputs (Level 3) [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

321

Commercial Mortgage-Backed Securities [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

264,934

Commercial Mortgage-Backed Securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Commercial Mortgage-Backed Securities [Member] | Significant Other Observable Inputs (Level 2) [Member]

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

264,934

Commercial Mortgage-Backed Securities [Member] | Significant Unobservable Inputs (Level 3) [Member]

Reserve at beginning of period

$ 0

[1]	Real estate acquired through claim settlement, which is held for sale, is reported in Other Assets on the consolidated balance sheet.

Debt (Details) (USD $)	12 Months Ended
Debt (Details) (USD $)	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Debt Instrument [Line Items]
Repayment of principal amount	$ 0	$ 0	$ 200,000,000
Gain on repurchase of debt	27,688,000	0	27,238,000
Amortized value of notes recorded as a liability on the consolidated balance sheet	344,422,000	315,626,000
Senior Notes [Member]
Debt Instrument [Line Items]
Minimum percentage of consolidated shareholders' equity that determines designated subsidiary status (in hundredths)	15.00%
Restriction on acceleration of other debt	40,000,000
Default period (in days)	30D
Minimum percentage of aggregate notes held to grant acceleration rights to note holders (in hundredths)	25.00%
Fair value of the amount outstanding	116,700,000	355,600,000
Interest payments made	19,300,000	20,500,000	25,800,000
Senior Notes [Member] \| Senior Notes Due 2011 [Member]
Debt Instrument [Line Items]
Outstanding principal amount		77,400,000
Stated interest rate (in hundredths)		5.625%
Maturity date	September 2011
Outstanding principal amount repaid/repurchased	77,400,000
Senior Notes [Member] \| Senior Notes Due 2015 [Member]
Debt Instrument [Line Items]
Outstanding principal amount	171,000,000	300,000,000
Stated interest rate (in hundredths)	5.375%	5.375%
Maturity date	November 2015	November 2015
Outstanding principal amount repaid/repurchased	129,000,000
Convertible Senior Notes Due 2017 [Member]
Debt Instrument [Line Items]
Outstanding principal amount	345,000,000	345,000,000
Stated interest rate (in hundredths)	5.00%	5.00%
Maturity date	May 1, 2017	May 1, 2017
Restriction on acceleration of other debt		40,000,000
Default period (in days)		30D
Minimum percentage of aggregate notes held to grant acceleration rights to note holders (in hundredths)		25.00%
Fair value of the amount outstanding	202,300,000	400,500,000
Interest payments made	17,300,000	8,900,000
Conversion rate (in shares per $1,000 note)	74.4186
Principal amount of notes used in determining conversion rate	1,000
Initial conversion price (in dollars per share)	$ 13.44
Convertible Junior Subordinated Debentures Due 2063 [Member]
Debt Instrument [Line Items]
Outstanding principal amount	389,500,000	389,500,000
Stated interest rate (in hundredths)	9.00%	9.00%
Maturity date	2063	2063
Fair value of the amount outstanding	189,600,000	432,400,000
Interest payments made	35,100,000	75,000,000
Conversion rate (in shares per $1,000 note)	74.0741
Principal amount of notes used in determining conversion rate	1,000
Initial conversion price (in dollars per share)	$ 13.50
Effective interest rate (in hundredths)	19.00%	19.00%
Amortized value of notes recorded as a liability on the consolidated balance sheet	344,400,000	315,600,000
Minimum number of consecutive interest periods for which interest payments may be deferred	1
Maximum period for which interest payments may be deferred without giving rise to an event of default (in years)	10Y
Deferred interest payments made		57,500,000
Notice period requirement for deferral of interest payment (in days)	15D
Period in which reasonable commercial efforts must begin, maximum (in business days)	1D
Period in which reasonable commercial efforts must begin, minimum	fifth anniversary of the scheduled interest payment
Anniversary payment release of the start of the interest deferral to the Alternative Payment Mechanism in lieu of the final maturity of the debentures	tenth
Net proceeds cap (in hundredths)	2.00%	2.00%	2.00%
Maximum number of shares of common stock issuable under the Alternative Payment Mechanism (in shares)	10,000,000
Maximum percentage of aggregate principal amount of the debentures (in hundredths)	25.00%
Redemption price, percentage (in hundredths)	100.00%
Percentage of conversion price (in hundredths)	130.00%
Minimum number of trading days (in days)	20D
Maximum number of trading days (in days)	30D
Period preceding election to convert (in days)	5D
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Repayment of principal amount			200,000,000
Interest payments made			$ 6,400,000

Loss reserves (Details) (USD $)

12 Months Ended

Dec. 31, 2011

Dec. 31, 2010

Dec. 31, 2009

Loss Reserve [Roll Forward]

$ 5,884,171,000

$ 6,704,990,000

$ 4,775,552,000

Less reinsurance recoverable

275,290,000

332,227,000

232,988,000

Net reserve at beginning of year

5,608,881,000

^[1],[2]

6,372,763,000

^[1],[2]

4,542,564,000

^[1]

Adjustment to reserves

^[3]

(92,000,000)

^[3]

Adjusted beginning reserves

5,608,881,000

6,280,763,000

4,542,564,000

Losses and LAE incurred in respect of default notices received in [Abstract]

Current year

1,814,035,000

1,874,449,000

2,912,679,000

Prior years

(99,328,000)

^[4]

(266,908,000)

^[4]

466,765,000

^[4]

Subtotal

1,714,707,000

^[5]

1,607,541,000

^[5]

3,379,444,000

^[5]

Losses and LAE paid in respect of default notices received in [Abstract]

Current year

121,383,000

60,897,000

62,491,000

Prior years

2,838,069,000

2,256,206,000

1,605,668,000

Reinsurance terminations

(38,769,000)

^[6]

(37,680,000)

^[6]

(118,914,000)

^[6]

Subtotal

2,920,683,000

^[7]

2,279,423,000

^[7]

1,549,245,000

^[7]

Net reserve at end of period

4,402,905,000

^[2]

5,608,881,000

^[1],[2]

6,372,763,000

^[1],[2]

Plus reinsurance recoverables

154,607,000

275,290,000

332,227,000

Reserve at end of period

4,557,512,000

5,884,171,000

6,704,990,000

Number of new default notices received, net of cures

86,592

108,701

161,081

Losses paid [Abstract]

Historical average period for uncured default to develop into paid claim (in months)

12M

Premium refund liability, expected claim payments

114,000,000

113,000,000

Premium refund liability, expected future rescissions

58,000,000

101,000,000

Aging of the Primary Default Inventory [Abstract]

3 months or less

31,456

37,640

48,252

3 months or less (in hundredths)

18.00%

19.00%

4 - 11 months

46,352

58,701

98,210

4 - 11 months (in hundredths)

26.00%

27.00%

39.00%

12 months or more

97,831

118,383

103,978

12 months or more (in hundredths)

56.00%

55.00%

42.00%

Total primary default inventory

175,639

214,724

250,440

Total primary default inventory (in hundredths)

100.00%

Primary claims received inventory included in ending default inventory

12,610

20,898

16,389

Primary claims received inventory included in ending default inventory (in hundredths)

7.00%

10.00%

7.00%

Number of payments delinquent [Abstract]

3 payments or less

42,804

51,003

60,970

3 payments or less (in hundredths)

24.00%

4 - 11 payments

47,864

65,797

105,208

4 - 11 payments (in hundredths)

27.00%

31.00%

42.00%

12 payments or more

84,971

97,924

84,262

12 payments or more (in hundredths)

49.00%

45.00%

34.00%

Total primary default inventory

175,639

214,724

250,440

Total primary default inventory (in hundredths)

100.00%

Claims resolved by rescissions [Abstract]

Percentage of claims received in a quarter resolved by rescission, lower range limit (in hundredths)

17.00%

Percentage of claims received in a quarter resolved by rescission, upper range limit (in hundredths)

20.00%

28.00%

Estimated Rescission Reduction - Loss Reserve [Roll Forward]

Estimated rescission reduction - beginning reserve

1,300,000,000

2,100,000,000

500,000,000

Estimated rescission reduction - losses incurred

200,000,000

2,500,000,000

Rescission reduction - paid claims

600,000,000

1,200,000,000

Amounts that may have been applied to a deductible

(200,000,000)

(300,000,000)

Net rescission reduction - paid claims

600,000,000

1,000,000,000

900,000,000

Estimated rescission reduction - ending reserve

700,000,000

1,300,000,000

2,100,000,000

Statute of limitations to bring legal proceedings disputing right to rescind coverage (in years)

Primary Default Inventory [Roll Forward]

Default inventory at beginning of period

214,724

250,440

182,188

Plus: New Notices

169,305

205,069

259,876

Less: Cures

(149,643)

(183,017)

(149,251)

Less: Paids (including those charged to a deductible or captive)

(51,138)

(43,826)

(29,732)

Less: Rescissions and denials

(7,609)

(13,942)

(12,641)

Default inventory at end of period

175,639

214,724

250,440

Pool insurance notice inventory [Abstract]

Pool insurance notice inventory (in number of loans)

32,971

43,329

44,231

Increase (Decrease) in Severity, Primary Defaults [Member]

Percentage of prior year default inventory resolved (in hundredths)

(165,000,000)

57.00%

Decrease in Estimated Loss Adjustment Expenses [Member]

(114,000,000)

Increase (Decrease) in Expected Claim Rate [Member]

Percentage of prior year default inventory resolved (in hundredths)

200,000,000

(432,000,000)

337,000,000

55.00%

50.00%

Decrease in Severity and Claim Rates, Pool Defaults [Member]

(20,000,000)

Increase (Decrease) in Severity, Pool Defaults [Member]

185,000,000

Decrease Related to LAE Reserves and Reinsurance [Member]

(20,000,000)

(7,000,000)

Increase in Severity [Member]

Premium Deficiency Reserve [Abstract]

$ 137,000,000

[1]	At December 31, 2010, 2009 and 2008 the estimated reduction in loss reserves related to rescissions approximated $1.3 billion, $2.1 billion and $0.5 billion, respectively.
[2]	At December 31, 2011, 2010 and 2009 the estimated reduction in loss reserves related to rescissions approximated $0.7 billion, $1.3 billion and $2.1 billion, respectively.
[3]	In periods prior to 2010 an estimate of premium to be refunded in conjunction with claim payments was included in Loss Reserves. In 2010, we separately stated portions of this liability in Other liabilities and Premium deficiency reserve on the consolidated balance sheet.
[4]	A negative number for prior year losses incurred indicates a redundancy of prior year loss reserves, and a positive number for prior year losses incurred indicates a deficiency of prior year loss reserves.
[5]	Rescissions did not have a significant impact on incurred losses in 2011. Rescissions mitigated our incurred losses by an estimated $0.2 billion and $2.5 billion in 2010 and 2009, respectively.
[6]	In a termination, the reinsurance agreement is cancelled, with no future premium ceded and funds for any incurred but unpaid losses transferred to us. The transferred funds result in an increase in our investment portfolio (including cash and cash equivalents) and a decrease in net losses paid (reduction to losses incurred). In addition, there is an offsetting decrease in the reinsurance recoverable (increase in losses incurred), and thus there is no net impact to losses incurred. (See Note 11 - "Reinsurance")
[7]	Rescissions mitigated our paid losses by an estimated $0.6 billion, $1.0 billion and $0.9 billion in 2011, 2010 and 2009, respectively, which excludes amounts that may have been applied to a deductible.

Premium deficiency reserves (Details) (USD $)

12 Months Ended

Dec. 31, 2011

Dec. 31, 2010

Dec. 31, 2009

Premium deficiency reserve, discount rate (in hundredths)

2.30%

2.50%

Present value of expected future premium

$ 494,000,000

$ 506,000,000

$ 427,000,000

Present value of expected future paid losses and expenses

(1,455,000,000)

(1,760,000,000)

(2,157,000,000)

Net present value of future cash flows

(961,000,000)

(1,254,000,000)

(1,730,000,000)

Established loss reserves

826,000,000

1,075,000,000

1,537,000,000

Net deficiency

(134,817,000)

(178,967,000)

(193,186,000)

Change in premium deficiency reserve, excluding prior period adjustments

(44,000,000)

(14,000,000)

(261,000,000)

Premium Deficiency Reserve [Roll Forward]

Premium Deficiency Reserve at beginning of period

(178,967,000)

(193,186,000)

(454,000,000)

Adjustment to premium deficiency reserve

^[1]

(37,000,000)

^[1]

Adjusted premium deficiency reserve at beginning of period

(179,000,000)

(230,000,000)

(454,000,000)

Paid claims and loss adjustment expenses

334,000,000

426,000,000

584,000,000

Decrease in loss reserves

(249,000,000)

(425,000,000)

(360,000,000)

Premium earned

(120,000,000)

(128,000,000)

(156,000,000)

Effects of present valuing on future premiums, losses and expenses

(8,000,000)

(25,000,000)

21,000,000

Change in premium deficiency reserve to reflect actual premium, losses and expenses recognized

(43,000,000)

(152,000,000)

89,000,000

Change in premium deficiency reserve to reflect change in assumptions relating to future premiums, losses expenses and discount rate

87,000,000

^[2]

203,000,000

^[2]

172,000,000

^[2]

Premium Deficiency Reserve at end of period

$ (134,817,000)

$ (178,967,000)

$ (193,186,000)

[1]	In periods prior to 2010 an estimate of premium to be refunded in conjunction with claim payments was included in Loss Reserves. In 2010, we separately stated this liability in Premium deficency reserve on the consolidated balance sheet. (See Note 3 - "Summary of significant accounting policies - Revenue recognition")
[2]	A positive number for changes in assumptions relating to premiums, losses, expenses and discount rate indicates a redundancy of prior premium deficiency reserves.

Reinsurance (Details) (USD $)

3 Months Ended

12 Months Ended

Dec. 31, 2011

Sep. 30, 2011

Jun. 30, 2011

Mar. 31, 2011

Dec. 31, 2010

Sep. 30, 2010

Jun. 30, 2010

Mar. 31, 2010

Dec. 31, 2011

Dec. 31, 2010

Dec. 31, 2009

Dec. 31, 2008

Reinsurance [Abstract]

First aggregate layer of loss under aggregate excess of loss agreements, minimum (in hundredths)

4.00%

First aggregate layer of loss under aggregate excess of loss agreements, maximum (in hundredths)

5.00%

Second aggregate layer of loss under aggregate excess of loss agreements, captives, minimum (in hundredths)

5.00%

Second aggregate layer of loss under aggregate excess of loss agreements, captives, maximum (in hundredths)

10.00%

Premium cessions as a percentage of the direct premium, minimum (in hundredths)

25.00%

Premium cessions as a percentage of the direct premium, maximum (in hundredths)

40.00%

Captive's portion of both premiums and losses under quota share arrangement, minimum (in hundredths)

25.00%

Captive's portion of both premiums and losses under quota share arrangement, maximum (in hundredths)

50.00%

New business cede rate, maximum (in hundredths)

25.00%

Reinsurance recoverable on loss reserves

$ 154,607,000

$ 275,290,000

$ 154,607,000

$ 275,290,000

$ 332,227,000

$ 232,988,000

Reinsurance recoverable on loss reserves related to captive agreements

142,000,000

248,000,000

142,000,000

248,000,000

Fair value of trust fund assets under our captive agreements

359,000,000

484,000,000

359,000,000

484,000,000

Fair value of trust fund assets under captive agreements, no reinsurance recoverable on loss reserves

27,000,000

26,000,000

27,000,000

26,000,000

Trust fund assets transferred to us as a result of captive terminations

39,000,000

38,000,000

Number of aggregate excess of loss agreements with special purpose reinsurance companies

Risk in force amount ceded to date under aggregate excess of loss reinsurance agreements

130,000,000

Number of special purpose reinsurance companies to which risk in force has been ceded

Number of aggregate excess of loss reinsurance agreements terminated with special purpose reinsurance companies

Risk in force amount ceded under remaining aggregate excess of loss reinsurance agreements

23,800,000

Number of domestic reinsurers

Premiums earned [Abstract]

Direct

1,170,868,000

1,236,949,000

1,406,977,000

Assumed

3,891,000

3,091,000

3,339,000

Ceded

(50,924,000)

(71,293,000)

(107,975,000)

Net premiums earned

275,741,000

275,094,000

284,454,000

288,546,000

291,125,000

^[1]

296,496,000

309,174,000

271,952,000

1,123,835,000

1,168,747,000

1,302,341,000