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Special Reports
Mortgage Insurance
MIs See Increase in Policies Written
The cure/default ratio was under 60%
By Brad Finkelstein
After three years of very little change in the amount of insurance written, in
2007 on a pro-forma basis, private mortgage insurers wrote over $100 billion more in business than they did in
2006.
The numbers are calculated by adding together the data the Mortgage Insurance
Cos. of America puts out monthly, along with information supplied in the fourth quarter-earnings release of Radian
Guaranty Inc., which is the only MI that is not a member of the trade group.
Mortgage insurers wrote $357 billion in primary new insurance, with $285.5 billion
coming through the traditional or flow channel and $71.5 billion written in the bulk channel.
In comparison, in 2006, MIs wrote $252.1 billion, with $161.2 billion in traditional
and $91.6 billion in bulk.
The industry did $267.6 billion in primary new insurance in 2005, of which $183.7
billion was traditional and $83.9 billion bulk, and $263.9 billion in 2004, of which $216.2 billion was traditional
and $47.7 billion was bulk.
The falloff in the bulk channel between 2006 and 2007 is not surprising, as many
of these loans come from the subprime channel.
Nor is the rise in the traditional channel surprising either. Because of higher
rates, the 80-10-10 or piggyback loan that competed with mortgage insurance was no longer an attractive option
for consumers.
Higher rates also allowed mortgage insurers to report improved persistency in
their portfolios as well.
The MICA members did $245.2 billion in traditional, with Radian contributing another
$40.3 billion. On the bulk side, MICA members did $54.7 billion in volume, with Radian adding another $16.8 billion.
New pool risk written by the industry (including Radian) was $1.2 billion. This
category as well was a victim of the subprime crisis. Only two months during the year did MICA members write over
$100 million of new pool risk, with June being the high-water mark.
The best month of the year for primary new insurance written by MICA members was
June, with $31.6 billion total written. However the best individual month for the traditional channel was October,
where MICA members wrote $25.4 billion.
The best single month for the bulk channel was March, with $10.8 billion written.
March started a trend for MICA members as that segment of the industry had volume
of over $20 billion per month for the rest of the year.
January was the worst overall month of the year, with $16 billion written. In
the traditional category, February was the worst month, with $12.6 billion written, while in the bulk category,
November was the worst with $793.8 million written. In fact, all three months of the fourth quarter were the lowest
in terms of volume in the bulk category.
But delinquencies were a problem throughout the year for the mortgage insurers
and that is now being reflected in their results.
For the year, MICA members had 411,845 cures and 624,076 defaults for a cure/default
ratio of just under 66%. There were no months in 2007 where there were more cures than defaults. The ration was
highest in February, at 96.4% and was at its lowest in June, at 55.5%.
The cure/default ratio for 2006 was 79.9%, with 415,101 cures and 519,834 defaults.
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