Two mortgage insurance companies recently updated their distressed markets lists. And as huge losses continue to plague insurers — addressing capital deficiencies appears to be the biggest issue facing the mortgage insurance sector.
PMI Mortgage Insurance Co. yesterday said in a news release that PMI Mortgage Assurance Co. has been approved by Fannie Mae as a direct issuer of mortgage guaranty insurance. However, the maximum volume of new policies is limited until Dec. 31, 2011.
PMI Mortgage Assurance — or PMAC — is an existing subsidiary that can write new mortgage insurance business in 16 states if PMI loses its ability to write new policies because of its financial condition or inability to meet regulatory capital requirements. PMAC will maintain capital of approximately $28 million and, if necessary, will insure new loans under the same policy terms and conditions as PMI.
PMAC is in the process of negotiating approval from Freddie Mac.
Walnut Creek, Calif.-based PMI issued a separate statement yesterday indicating that the Arizona Department of Insurance had granted a waiver to allow it to continue writing new business if its capital falls below state requirements. The waiver will remain in effect until the end of next year.
A similar announcement was made in December by MGIC Investment Corp., which said that the Office of the Commissioner of Insurance for the State of Wisconsin has waived regulatory capital requirements for new business until Dec. 31, 2011. In addition, MGIC obtained Fannie Mae approval for MGIC Indemnity Corp. to insure loans through the end of next year
Also in December, PMI said it restructured certain modified pool policies which resulted in positive statutory capital benefits. The insurer said paid the counterparty aggregate accelerated discounted claim payments of roughly $264 million.
PMI’s parent, the PMI Group, reported today a $228 million fourth-quarter 2009 loss, worse than $181 million a year ago. The increase was blamed on higher losses and loss adjustment expenses. Full-year losses were $654 million, improving from an $887 million loss in 2008.
Last month, MGIC Investment Corp. reported a $280 million fourth-quarter loss, about the same as the $276 million loss a year earlier. During all of 2009, losses totaled $1.322 billion — much worse the $525 million loss in 2008.
MGIC Chairman and Chief Executive Officer Curt Culver blamed the poor results on a weak economy, higher unemployment and lower home prices that have pushed up the delinquent inventory and losses.
United Guaranty said in bulletin CA-2010-01 that its declining markets list was updated on Jan. 26. While two markets were added to the list, 45 were removed.
And PMI reported that effective this month, 11 metropolitan statistical areas were removed from the distressed markets list, while another 12 were added.
