MI Industry Posts Nearly $4 Billion in 2Q08 Losses, Expenses

The private mortgage insurance industry continued to take the heat – and losses – for growing problems in the so-called prime mortgage market during the second quarter. According to numbers compiled by Inside Mortgage Finance, the private MI industry posted $3.9 billion in losses and loss expenses in the most recent quarter. That was up from $3.1 billion in losses/expenses in the first quarter but down from the record $5.2 billion in losses/expenses recorded in the fourth quarter of 2007.

The continuing high losses at the MIs resulted in the industry posting a $1.7 billion loss in terms of net income for the second quarter of 2008. This was up from a loss of $1.1 billion in the first quarter of the year.

Big Shake-Up in Ranking of MIs by Volume in 2008

Amidst an ongoing mortgage performance downturn that has hammered private mortgage insurance companies, there has been a significant shake-up in the rankings of MIs as measured by new business in 2008.

According to numbers compiled by Inside Mortgage Finance, Genworth Financial, last year’s fourth most active MI in terms of volume jumped to second place in the first quarter thanks to a huge 104 percent increase in business. Meanwhile, PMI Mortgage Insurance, 2007’s second place finisher, tumbled all the way to sixth place in the first three months of this year due to a precipitous 55 percent fall in new business.

Overall, private MI business in the first quarter was down just slightly – less than 1 percent – from year ago levels. But traditional flow business is way up while bulk coverage is way down due to the collapse of the non-agency mortgage securities market.