Mortgage Insurers Taking Different Paths to Profitability
The time to have made large gains in market share was when PMI and RMIC had to stop writing new business. Even Essent got its traction during this period, Ibrahim notes.
Companies always gain customers each year and lose customers. But, "net-net, we've been able to add more customers than we lost. We have continued to do that and we believe we will be able to continue to that because there is an opportunity with about one-third of the market with whom we don't do business," Ibrahim continues.
Because of the nature of the business, it is difficult to target specific market share in terms of NIW. But at the same time Radian wants to keep adding new customers while writing a good book of business.
It will be difficult to gain market share in the newly competitive environment, but keeping it at the current level will allow Radian to grow its insurance in force, write a respectable amount of new policies and keep the company as an industry leader, Ibrahim says.
But keeping market share will be just as difficult for the other mortgage insurers as well, he adds.
The new entrants' original selling point was they had no legacy risk. But now capital is not a discussion point anymore for any of the legacy MIs, Zimmerman says.
So competition is now based on product, services and execution. Being the lowest cost provider (the company has an expense ratio about 25% lower than the other MIs) is MGIC's competitive advantage from now on, he says.