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Mortgage Insurers’ Profits to Return on Housing Surge, S&P Says

June 14, 2013

Mortgage insurers, a group that includes Radian Group Inc. (RDN:US) and MGIC Investment Corp. (MTG:US), can expect profits to reappear as the firms gain capital during an improving housing market, Standard & Poor’s said.

“A sector some had written off seems to be making a comeback,” Ron Joas, an S&P analyst, said today in a report. “Mortgage insurers seem poised to return to profitability in 2014.”

Joas said a surge of capital into the mortgage-insurance sector amid a rebounding economy has eased concerns that insurers may become insolvent. Private guarantors wrote new policies on $175 billion in mortgages in 2012, more than double the year before, according to data from newsletter Inside Mortgage Finance.

MGIC, based in Milwaukee, hasn’t posted an annual profit (MTG:US) since 2006, while Philadelphia-based Radian reported one profitable year in that span. The U.S. Treasury Department said in a report this week that mortgage insurers, hobbled by the financial crisis, are beginning to see a turnaround.

“There are signs of increased capacity,” Treasury’s Federal Insurance Office said. “The industry has attracted new capital since 2010.”

MGIC has surged 130 percent this year, the best performance in the 24-company KBW Insurance Index. It was unchanged $6.13 at 2:44 p.m in New York. Radian, which has also more than doubled since December, declined less than 1 percent to $12.78.

To contact the reporter on this story: Kathleen Chaykowski in San Francisco at

To contact the editor responsible for this story: Dan Kraut at

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