Genworth Financial earned $82 million in the first quarter, a 54% drop from the year ago, as continued losses at its mortgage insurance unit held back the company’s financial recovery. Although its MI business is still suffering, the Richmond, Va.-based firm saw an improvement in that line of business, thanks to slowing flow delinquencies, and the addition of what it calls “high margin new business.” The MI unit lost $81 million in the first quarter compared to a $36 million loss in the same period a year earlier.
“Loss mitigation activities, including workouts, presales, policy rescissions and targeted settlements, net of reinstatements, resulted in $122 million of savings in the quarter,” Genworth said of its MI business.
Among the nation’s eight MI firms, Genworth ranks fifth in terms of policies-in-force, according to figures compiled by Origination News and the Quarterly Data Report.
Fannie Mae has approved a second subsidiary of Genworth Mortgage Insurance Corp. as an eligible mortgage insurance writer, according to a report last month.
Several of the private mortgage insurers have established subsidiaries to keep on writing new business in the event their main operation breaches the 25-to-1 risk-to-capital ratio or minimum policy position required by 16 states.
A spokesman for Genworth said the subsidiary, Genworth Residential Mortgage Assurance Corp., was not yet writing any business at press time last month.
The lender letter from Fannie Mae says GRMAC is approved to write coverage “in a limited number of states, which may change over time.” However, the Genworth spokesman noted, “The entity is approved by regulators to write business in all 50 states, but we intend to use it only in states where our existing entities are unable to write business.” The approval was effective as of April 18, although the lender letter was not issued until May 17.
Freddie Mac has not approved GRMAC as of now, the Genworth spokesman said.
This is the third underwriting entity from Genworth that Fannie Mae has approved. Besides GMICO, also approved to write business is Genworth Residential Mortgage Insurance Corp. of North Carolina. As of now, all three entities have the same Fannie Mae MI code. In the letter, Fannie Mae said it was evaluating whether to assign separate MI codes for each entity.
The private mortgage insurers’ cure/default ratio for March was at an all-time high, at 143.9%, according to the latest monthly data from the Mortgage Insurance Cos. of America. This is an improvement over February’s 112.2% and March 2010’s 123.4%. MICA changed its data gathering methods in August 2001 so any information prior to that is not comparable. Additionally, for a period of time, Radian pulled out of the group (although it is currently a member) and more recently, United Guaranty discontinued its membership.
There were 56,934 cures and 39,557 defaults in March. Primary insurance written was $4.4 billion (with $40 million of that through the bulk channel), up from $4.2 billion in February. In March 2010, there was $4.5 billion written; this total includes data from UGC. Primary insurance-in-force declined to $621 billion from February’s $625 billion. There was $3.4 million of new pool risk written in March.
