Mortgage insurer market shares shift again in 2Q
August 7, 2023 6:30 AM
Another round of market share shifts took place in the private mortgage insurance business as Radian, MGIC and National MI grabbed business from the competition during the second quarter.
All six active underwriters wrote more policies compared with the first quarter, as the industry produced $81.7 billion, versus $64.6 billion. However, when looked atagainst the second quarter of 2022 , new insurance written fell nearly 33% from $120.9 billion.
Radian's NIW rose by more than $5 billion compared with the first quarter, while MGIC — which as a corporate policy was the first quarter laggard — did over $4 billion more.
Net income at four of the five whose primary line of business is mortgage insurance companies (and sector operating income at Arch) declined compared with the second quarter of 2022. Only National MI's parent NMI Holdings improved on a year-over-year basis.
Here is how each of the six underwriters performed during the second quarter:
All six active underwriters wrote more policies compared with the first quarter, as the industry produced $81.7 billion, versus $64.6 billion. However, when looked at
Net income at four of the five whose primary line of business is mortgage insurance companies (and sector operating income at Arch) declined compared with the second quarter of 2022. Only National MI's parent NMI Holdings improved on a year-over-year basis.
Here is how each of the six underwriters performed during the second quarter:
Radian returns to No. 1
"We were able to achieve this growth quarter-over-quarter while continuing to increase pricing for recent originations," Sumita Pandit, chief financial officer, declared during the earnings call.
A year ago, Radian's NIW was $18.9 billion.
The gain in NIW was broad based, added Derek Brummer, president of mortgage.
"When we see shifts in terms of volume, it's really going to be focused on where we find relative value and where we find kind of the highest economic value," Brummer explained. "If you saw any movement with respect to credit mix, it was probably a little bit on the higher FICO, where we saw relative value as kind of the driver."
Radian earned $146 million in the second quarter, down from $158 million in the first quarter and $201 million one year prior.
Its real estate services business, branded as homegenius, includes its title insurance underwriter. This segment remains in the red, with an adjusted pretax loss of $24.4 million, compared with $23 million in the first quarter and $17.7 million for the second quarter of 2022.
"We maintain a realistic view of the current state and opportunity for homegenius, and we will continue to adjust our cost structure and align our strategy and investments to place homegenius on a path to profitability," CEO Rick Thornberry said.
Enact's market share retrenchment
Enact also increased its price during the quarter, but its market share slipped to 18.5% from 20.4% as of March 31. It wrote $15.2 billion for the second quarter, up from $13.2 billion in the first quarter but down from $17.4 billion a year ago.
A consequence of all six companies adopting "black-box" pricing methodologies is that market share volatility is higher, Rohit Gupta, president and CEO, said during the earnings call.
"That could be driven by just the timing of pricing moves by different companies," Gupta said. "It could also be driven by specific lenders that MI companies do business with and who is growing and who is shrinking in the origination market."
Its net income fell to $168 million from $176 million in the first quarter and $205 million for the second quarter of 2022.
During the quarter, parent company EMICO launched a reinsurer, Enact Re, that will primarily be active ingovernment-sponsored enterprise credit risk transfer transactions ; it already has participated in two Fannie Mae deals and one Freddie Mac offering.
A consequence of all six companies adopting "black-box" pricing methodologies is that market share volatility is higher, Rohit Gupta, president and CEO, said during the earnings call.
"That could be driven by just the timing of pricing moves by different companies," Gupta said. "It could also be driven by specific lenders that MI companies do business with and who is growing and who is shrinking in the origination market."
Its net income fell to $168 million from $176 million in the first quarter and $205 million for the second quarter of 2022.
During the quarter, parent company EMICO launched a reinsurer, Enact Re, that will primarily be active in
Essent completes title insurance acquisition
The day after the quarter ended, Essent closed on its purchase of the Finance of America/Incenter title insurance underwriting and agency businesses.
On the earnings call, Mark Casale, chairman, CEO and president, compared this transaction withthe purchase of the Triad Guaranty mortgage insurance platform in its startup days in 2009.
"The title business that we acquired is not quite a start-up, but it's more start-up-like, so we're going to approach it that way," Casale said. "We're going to build out the infrastructure improvements to be made around the system."
That is not going to be overnight. The company estimated it will take between 12 and 18 months to get to the point where it can foresee future growth from Agents Title and Boston National.
Essent earned $172.2 million in the second quarter, slightly higher than the $170.8 million for the previous quarter and down from $231.8 million a year prior.
NIW share fell to 16.5% from 19.9% in the first quarter. Dollar volume was $13.5 billion, up from $12.9 billion over that time span. For the same quarter last year, NIW was $20.1 billion.
On the earnings call, Mark Casale, chairman, CEO and president, compared this transaction with
"The title business that we acquired is not quite a start-up, but it's more start-up-like, so we're going to approach it that way," Casale said. "We're going to build out the infrastructure improvements to be made around the system."
That is not going to be overnight. The company estimated it will take between 12 and 18 months to get to the point where it can foresee future growth from Agents Title and Boston National.
Essent earned $172.2 million in the second quarter, slightly higher than the $170.8 million for the previous quarter and down from $231.8 million a year prior.
NIW share fell to 16.5% from 19.9% in the first quarter. Dollar volume was $13.5 billion, up from $12.9 billion over that time span. For the same quarter last year, NIW was $20.1 billion.
MGIC jumps back in
Last quarter, MGIC had the lowest market share — a policy it pursued deliberately — at just $8.2 billion. This quarter it produced $12.4 billion.
"Even though our recent pricing was still meaningfully higher than the pricing we had in the market during the second quarter of last year, this improvement will still be reflected in our third quarter NIW," CEO Tim Mattke said on the company's earnings call. "While pricing is an important component of market position, it's just one component, and we believe that we have advantages that allow us to outperform our price position."
That includes its history, he said, with company founderMax Karl considered to be the creator of the modern private mortgage insurance business. MGIC ranks second by insurance-in-force.
"We view the increase in NIW quarter-to-quarter as a sign management is more comfortable with the current risk dynamic, which we think is positive," Keefe, Bruyette & Woods analyst Bose George said in a report.
But the NIW is still almost one half of what the company did a year ago, when its volume was $24.3 billion.
Net income of $191.1 million compared with the previous quarter's $154.5 million and the second quarter 2022's $249.3 million.
"Even though our recent pricing was still meaningfully higher than the pricing we had in the market during the second quarter of last year, this improvement will still be reflected in our third quarter NIW," CEO Tim Mattke said on the company's earnings call. "While pricing is an important component of market position, it's just one component, and we believe that we have advantages that allow us to outperform our price position."
That includes its history, he said, with company founder
"We view the increase in NIW quarter-to-quarter as a sign management is more comfortable with the current risk dynamic, which we think is positive," Keefe, Bruyette & Woods analyst Bose George said in a report.
But the NIW is still almost one half of what the company did a year ago, when its volume was $24.3 billion.
Net income of $191.1 million compared with the previous quarter's $154.5 million and the second quarter 2022's $249.3 million.
Arch still leads by insurance-in-force as market share slips
Arch MI, a unit of Arch Capital Group, reported underwriting income of $253 million in the second quarter, compared with $243 million in the first quarter and $299 million one year ago.
This segment also includes Arch's Australian MI unit as well as mortgage reinsurance.
Gross premiums written year-over-year fell 6.7% to $347 million from $372, which Arch attributed to less business in Australia and the U.S., partially offset by a higher volume of CRT transactions.
Arch remains the leader by insurance-in-force.
But NIW of $12.3 billion compared with $10.4 billion in the first quarter and $23.5 billion one year ago. That second quarter 2022 number trailed only MGIC.
This segment also includes Arch's Australian MI unit as well as mortgage reinsurance.
Gross premiums written year-over-year fell 6.7% to $347 million from $372, which Arch attributed to less business in Australia and the U.S., partially offset by a higher volume of CRT transactions.
Arch remains the leader by insurance-in-force.
But NIW of $12.3 billion compared with $10.4 billion in the first quarter and $23.5 billion one year ago. That second quarter 2022 number trailed only MGIC.
NMI Holdings profits rise year-over-year
NMI Holdings, the parent company of National MI, reported second quarter net income of $80.3 million. That compares with $74.5 million in the first quarter and $75.4 million for the second quarter of 2023.
"We can control how conservatively and appropriately we're managing our business, how we're managing our capital position, our risk mix, our pricing decisions," Adam Pollitzer, president and CEO, said on the earnings call. "But what happens around us is of consequence, and so when we look at those items in balance, we do still see the potential for volatility on the horizon from a macroeconomic standpoint, and that's what we're concerned about."
It slipped to sixth in terms of NIW, although its portion of the market increased by 0.5% to 14% compared with the first quarter.
In dollar terms, National MI did $11.5 billion, up from $8.7 billion in the first quarter but down from $16.6 billion a year ago.
"We can control how conservatively and appropriately we're managing our business, how we're managing our capital position, our risk mix, our pricing decisions," Adam Pollitzer, president and CEO, said on the earnings call. "But what happens around us is of consequence, and so when we look at those items in balance, we do still see the potential for volatility on the horizon from a macroeconomic standpoint, and that's what we're concerned about."
It slipped to sixth in terms of NIW, although its portion of the market increased by 0.5% to 14% compared with the first quarter.
In dollar terms, National MI did $11.5 billion, up from $8.7 billion in the first quarter but down from $16.6 billion a year ago.
