Genworth’s U.S. MI Bleeds More Red Ink but New Business Spikes

The U.S. mortgage insurance division of Genworth Financial lost $38 million in the third quarter, a worse showing over the prior period, but an improvement from the $79 million it dropped a year ago.

Still, there was some good news in the earnings release: flow new insurance written (NIW) increased 31% from 2Q to $4.7 billion, “reflecting an increase in overall private mortgage insurance penetration, a larger origination market and an increase in market share,” the company said in a statement.

The firm claims to have a market share of 13%. Its combined U.S. MI statutory risk-to-capital ratio is estimated at 29.8:1 “with the risk-to-capital ratio for Genworth Mortgage Insurance Corporation (GEMICO), the company's primary mortgage insurance company, estimated at 35.1:1.”

GEMICO has received waivers or other authorizations from 45 states that permit the company to continue writing new business while its risk-to-capital ratio exceeds 25.0:1. The GSEs have granted waivers as well. 

Genworth owns separately capitalized and licensed legal entities to write new business for states where waivers are not in place.

Although the MI division lost money, the entire firm posted net earnings of   $34 million in 3Q, compared to a net loss of $16 million in 3Q 2011.

Over the past year Genworth has contemplated spinning-off or selling its MI business but for now is holding onto it.

Since the housing bust at least three MI firms (out of eight) have filed for bankruptcy protection.

According to figures compiled by National Mortgage News and the Quarterly Data Report, Genworth is the nation’s fourth largest MI with just over $101 billion of policies-in-force.