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Capital Raises Provide A Cushion As Mortgage Insurers Struggle To Regain Profitability
Standard & Poors, April 2011
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
Abstract
Capitalization is one of the many factors Standard & Poor's Ratings Services takes into account when rating insurers, but it is especially important for mortgage insurers. This is because of these companies' exposure to the mortgage and housing markets, which makes their operating results more volatile than those of most lines of business. The downturn in the housing market has-to varying degrees-significantly hurt mortgage insurers' operating performance and capital strength. The ratings in the mortgage insurance sector are notable for their divergence. Whereas the insurers with investment-grade ratings are typically subsidiaries of diversified parent organizations and benefit from group support, the entities with speculative-grade ratings are monoline insurers. The exception is Genworth Mortgage Insurance Co. (GMICO), which we downgraded by...
Companies mentioned in this report are: Mortgage Guaranty Insurance Corp.,Radian Guaranty Inc.,Genworth Mortgage Insurance Corp.,CMG Mortgage Insurance Co.,PMI Mortgage Insurance Co.,Republic Mortgage Insurance Co.,United Guaranty Residential Insurance Co.
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