Private mortgage insurance firms are willing to offer "deep coverage" of the government-sponsored enterprises' risk-sharing deals, but only after the premiums that this higher coverage will generate are negotiated between insurers and lenders and the GSEs, according to executives from MGIC Investment Corp.
Here are some additional highlights from CEO Patrick Sinks and senior vice president of investor relations Michael Zimmerman's presentation at Tuesday's Keefe, Bruyette & Woods Mortgage Finance Conference in New York:
- Now that the GSE capital requirements are finalized, MGIC is working on how to position its balance sheet for growth. But it wants to retain a capital cushion in case of another downturn.
- MGIC's market share grew three percentage points in 2014 to between 20% and 21%. Long-term, the opportunity is to grow it 21%-22%.
- The company said it will not compete against the other MIs on price. Rather, the company wants to use customer service as its competitive differentiator.
- MGIC will likely rely on its reinsurance coverage to put the company over the top of the new GSE capital requirements.
- Private MI is likely to become 50% of the market from its current 40% (and down from the precrisis norm of 67%). It will take market share from FHA, which is also at 40%. VA is likely to remain at its current 20% share.
- The challenge in competing with FHA going forward is that if the customer demands the lowest rate no matter the total cost, FHA will win. The key will be educating consumers about other benefits of private MI.