28 February 2014 Insurance

S&P upgrades four US mortgage insurers

Improved operating earnings and a positive economy has led to the upgrade of several mortgage insurance companies in the US.

"The rating actions reflect these mortgage insurers' improved recent and prospective operating earnings arising from the overall positive macroeconomic trends in the US," said Standard & Poor's (S&P) credit analyst Ron Joas.

The rating agency raised its financial strength (FSR) and issuer credit ratings (ICR) on Mortgage Guaranty Insurance (MGIC) and MGIC Indemnity (MIC) to 'BB' from 'B', as well as its unsolicited issue-level rating and ICR on MGIC Investment to 'B' from 'B-'. It also revised the outlook on MGIC Investment to positive from stable, while MGIC and MIC remain positive.

Radian Guaranty and its related mortgage insurance subsidiaries also received an improved FSR and ICR to 'BB-' from 'B'. The group’s ICR remained at 'B-', while the outlook was increased to positive from stable.

“We also raised our FSR on Genworth Mortgage Insurance and Genworth Residential Mortgage Insurance of North Carolina to 'BB-' from 'B' and ICR on Genworth Mortgage Insurance to 'BB-' from 'B'. We revised the outlook to positive from stable,” said S&P.

In addition, FSRs on United Guaranty Residential Insurance and United Guaranty Mortgage Indemnity (collectively UGC MI) increased to 'A-' from 'BBB+' and ICR on United Guaranty Residential Insurance went to 'A-' from 'BBB+'. The outlook remains stable.

Arch Mortgage Insurance received an increase in FSR and ICR to 'BBB+' from 'BBB-', and went to stable from positive.

The statement concluded: “Our view stems largely from the continued reduction of incurred losses that are based on the decline in the number of new notices of delinquencies (NODs) and rate of development of delinquencies to claim. The current ratings incorporate the potential for adverse business, financial, economic, and regulatory conditions, including potentially higher capital requirements, from government-sponsored entities (GSEs) that we expect to see later in 2014.”

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