UPDATE 1-MGIC Investment capital position deteriorates sharply
* 4th-qtr loss/share $1.91 vs loss/share $0.67 year earlier
* Dec-end prelim combined ops risk-to-capital ratio at 47.8 to 1
* Policyholder position deficit increases to $640 mln below minimum requirement of $1.2 bln
* Expects risk ratio to rise further
* Shares down 5 pct in premarket trading
Feb 28 (Reuters) - Mortgage insurer MGIC Investment Corp reported a sharp deterioration in its capital position in the fourth quarter and posted its tenth straight quarterly loss as it continues to lose money on loans insured during the housing boom.
Shares of the company were down 5 percent in premarket trading.
MGIC and rivals Radian Group Inc and life insurer Genworth Financial Inc's mortgage unit protect lenders in cases where homebuyers make down payments below a certain threshold.
They have been struggling to recoup their losses after the housing bubble burst and foreclosures soared, saddling them with large claims on unpaid home loans and thin capital cushions.
As of Dec. 31, the preliminary risk-to-capital ratio at MGIC's combined insurance operations was 47.8 to 1. Mortgage insurance regulators commonly allow for a maximum risk-to-capital ratio of 25 to 1.
The mortgage insurer said it expects its risk to rise above the Dec. 31 level in 2013.
MGIC's primary regulator uses the minimum policyholder position to gauge an insurer's strength. MGIC came up short on that measure as well.
Its minimum policyholder position (MPP) was $640 million below the required amount of $1.2 billion at the end of the year.
The policyholder position deficit was $344 million below the minimum requirement at the end of September.
The MPP is the minimum amount of money an insurer would need to meet claims.
MGIC has received waivers to allow it to continue to write insurance despite its high risk levels.
Its fourth-quarter loss almost tripled to $386.7 million, or $1.91 per share, from $135.3 million, or 67 cents per share, a year earlier.
The loss included a $267.5 million settlement with Freddie Mac.
MGIC agreed in November to make the payout to its primary counterparty to settle a dispute that threatened its future.
The company's shares, which traded at as much as $70 before the housing bubble burst in 2007, closed at $2.80 on Wednesday on the New York Stock Exchange.