On a day when the stock market soared upwards, the three stand-alone mortgage insurers all saw their stock price drop. This is in apparent reaction to an article that appeared over the weekend in another publication.
By percentage the biggest loser was PMI Group, down 4.92% or off $0.06 to close at $1.16. MGIC Investment Corp. was down 4.8% or $0.29 to close at $5.75, while Radian Group was off 2.81% or $0.11 to close at $3.81.
Representatives of both PMI and MGIC declined to comment and instead referred reporters to a statement put out by the Mortgage Insurance Cos. of America (MICA).
The MICA statement said, "The private MI industry is well-capitalized and as such, is committed to and will continue to pay all valid claims as it works in tandem with the government to stabilize the GSEs and the overall residential housing market.
Recent media reporting has inaccurately misstated the financial health and status of industry companies by making assertions that do not reflect the realities of the private mortgage insurance industry’s role in today’s housing market. Since the housing market entered into the current crisis, the private MI industry has raised over $8 billion in new private capital, which is a testament of investor confidence in the industry’s ongoing role in the marketplace."
Furthermore, the trade group said the new, better quality business the MIs are underwriting is "absorbing an increasing percentage of the declining losses on older business."
Radian's chief financial officer, Bob Quint, said there are plenty of third parties, including regulators and auditors who believe the company is adequately reserved. Furthermore, the company has capital available at the holding company level and is in "a relatively decent capital position."
A fourth company in this space, Old Republic, had its mortgage insurance units ratings cut by Standard & Poor's, but its price actually improved on the day, by $0.03 to $11.65 per share.