Last March, I wrote a post which suggested that the mortgage insurance industry would take a hit as a result of the subprime mortgage meltdown. Today's New York Times [registration required] suggests that prediction was correct -- two leading mortgage insurers are writing down the value of their subprime mortgage subsidiary.

Specifically, the Mortgage Guaranty Insurance Corporation (NYSE: MGIC) said last night that it would write down its $516 million investment in Credit-Based Asset Servicing and Securitization (C-Bass) -- possibly to zero. Radian Group Inc. (NYSE: RDN) which has a $518 million stake in C-Bass, also said it might have to write off its investment completely.

Meanwhile, NovaStar Financial Group (NYSE: NFI) whose subprime mortgages MGIC insures, has fallen 91% to $10.83 from the split-adjusted $116 at which it traded in December when I suggested shorting it.

And as I predicted back in March, the subprime meltdown has affected European investors such as IKB Deutsche Industriebank, a bank based in Düsseldorf, Germany, that provides loans to midsize companies. It said that investments in American mortgage securities that it had pronounced healthy just 10 days ago had fallen sharply and would be taken over by a German state bank, KfW, which owns 37% of IKB.

I suspect there will be more negative surprises in this area in the future.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.