S&P Downgrades MIs on Higher Claims and Loss Estimates

Standard & Poor's on Thursday downgraded the entire mortgage insurance industry, saying it will continue to post operating losses through 2010.S&P based the downgrade on falling home prices, rising unemployment and increasing loan delinquencies. Despite the downgrades, the rating agency said it is "comfortable" that insurers have the resources to pay their claims and other obligations — even though the industry ultimately will have to absorb $34 billion to $54 billion in losses. "We expect most of these companies will continue to report operating losses at least through 2010," said S&P senior analyst Rodney Clark. Genworth Mortgage Insurance Corp., Republic Mortgage Insurance Corp. and United Guaranty Residential Insurance Corp. retained their investment grade ratings, mainly because they have lower risk profiles and stronger diversified parent companies. But S&P dropped the ratings of the monoline insurers — Mortgage Guaranty Insurance Corp., PMI Mortgage Insurance Co. and Radian Guaranty Inc. — to slightly below investment grade.