After dropping off in the fourth quarter of last year, private mortgage insurance has made a resurgence in the first half of 2002. This pace is expected to remain steady or increase slightly in the second half of the year, as insurers, investors, and issuers all become more familiar with each other's preferences in the asset-backed market.

Driven by the market's appetite for both triple-B rated sub tranches and net-interest-margin securitizations that are not available in wrapped transactions, Standard & Poor's estimates that mortgage insurance was backing the collateral on 22% of the subprime home equity securitizations in the first six months of 2002. Going forward, this percentage could increase by 10%, according to some estimates, depending upon how aggressively the insurers want to take on subprime risk.

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