Essent has relationships with about 800 customers, including 20 of the 25 largest U.S. mortgage originators, according to a regulatory filing. Wells Fargo & Co., the biggest U.S. home lender, accounted for 17% of Essent’s sales in the first six months of this year.
NMI says it’s “made meaningful strides establishing relationships” with 36 of the biggest mortgage lenders. Half have agreed to use the company as an insurer.
The firm may be able to persuade lenders to buy its policies by highlighting the quality of its balance sheet and customer service. Disputes over coverage between insurers and investors might help NMI win business, said Brian O’Reilly, president of Collingwood Group LLC and a former mortgage industry executive.
“You’re probably not going to ever accuse your competitor of denying claims unduly,” he said “What you might say is that your customer service exceeds theirs.”
MGIC and Radian were unprofitable for most of the past six years. MGIC, based in Milwaukee, has reported two straight quarterly profits this year, its first since 2010, while Radian had a loss tied to investments in the second quarter and hasn’t yet reported third quarter results. Genworth’s U.S. mortgage insurer was profitable in the six months ended June 30, its first half-year profit since 2007.
Mortgage insurance written since the crisis has proven more profitable as banks and insurers tightened their standards. That’s driven return on equity to at least 20% on new policies, Micenko said.
“The good news is the new business is 20s ROE,” he said. “The bad news is NMI has got to go get some of it.”