The Paragon Report on PMI Group and Radian Group found major mortgage insurers are grappling with high delinquency rates and slow economic recovery, and many will most likely not survive another increase in delinquencies that could come with a second recession.
Arizona insurance regulators recently seized PMI Group's main subsidiary and will pay 50 percent of the unit's claims due to high delinquency rates hurting the insurer. These seizure follows two PMI units being told to stop writing new business due to their inability to meet capital requirements and pay out their claims.
Another insurance group, MGIC, is struggling under high delinquency rates as well, but continues to avoid going under. The Milwaukee Journal Sentinel reported that MGIC has not had a profitable year since 2006, and recently reported a third quarter loss of $165.2 million. But the company said it is prepared to suffer more losses as it waits for the housing market to recover.
In order to stay afloat, MGIC raised $1 billion in new capital in 2010, with intent to contribute $200 million of that to its insurance component. The company is also extending waivers to loosen capital requirements that will be needed to continue to write new business.
Related posts:
- Rising mortgage rates do not set new 2011 high
- Delinquency improvement continued near end of 2010
- Mortgage rates drop from recent high levels
- March delinquency rate continues downward trend
- Housing affordability hits a new high
