Strong fourth-quarter earnings among sector participants in
the private mortgage insurance industry signal a solid entry into
2014. The industry is poised to directly benefit from home price
appreciation as well as improvements in the employment scenario.
In the fourth-quarter earnings conference call, Curt Culver, CEO
and Chairman of
MGIC Investment Corp.
) said, "I also remain optimistic that the demand for home
purchases will continue to recover as household formations return
to their historic levels. And as the economy continues to
improve, consumers will have more confidence in their future
employment and their desire to purchase a home will continue to
increase. And since the majority of purchasers that needs a
mortgage do not have a 20% down payment, we have a wonderful
opportunity in front of us."
Genworth Financial Inc.
), produced stellar results at its U.S. Mortgage Insurance
(MI) business, which returned to full-year profitability for the
first time since 2007. Management at Genworth expects
significantly higher earnings at the U.S. MI segment in 2014 over
the previous year, as the 2005 to 2008 blocks continue to burn
out and high-quality earned premiums from the 2009 to 2013 blocks
account for a higher percentage of the overall U.S. mortgage
The mortgage players earn premiums by insuring new mortgage
originations and refinanced loans. The recent rise in 30-year
mortgage rates has induced a significant decline in refinance
volume - a trend which is expected to continue in 2014. This
year, the industry will see a growing share among new home
purchases as housing still remains affordable and national home
prices are halfway back to their peak from 2007.
Moreover, the pent-up demand for housing will drive top-line
growth in the industry. According to housing experts, much of
this growth will be driven by minority groups seeking to fulfill
their dream of becoming homeowners. The Harvard Joint Center for
Housing Studies reports that minorities will constitute 70% of
the 17 million new households projected to be formed from 2010 to
The players in the mortgage insurance will also benefit from the
government's retreat from the market that in turn will transfer a
considerable share to the hands of private mortgage insurers.
With regulators working at crafting mortgage insurance
eligibility standards, including new capital requirements, the
industry is set to gain solidarity going forward.
Improving industry fundamentals are attracting new and potential
players such as
Arch Capital Group Ltd.
), which, of late, completed the acquisition of CMG Mortgage
Insurance Company (CMG MI) from CUNA Mutual Group and
PMI Mortgage Insurance Co.
ARCH CAP GP LTD (ACGL): Free Stock Analysis
GENWORTH FINL (GNW): Free Stock Analysis
MGIC INVSTMT CP (MTG): Free Stock Analysis
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