Business profile: United Guaranty survives, thrives [News & Record, Greensboro, N.C.]

Aug. 16--GREENSBORO -- Fifty years ago, tiny First Mortgage Insurance quietly set its sights on becoming one of the city's corporate giants.

In those days, that was saying something.

Such homegrown companies as Dillard Paper, Boren Brick, Carolina Steel, Pilot Life, Jefferson Standard, Cone Mills, Guilford Mills and Burlington Industries -- the world's biggest textile company -- made Greensboro the envy of the state.

"We were king of the mountain," said Jim Melvin, the president of the Joseph M. Bryan Foundation of Greater Greensboro and a longtime civic leader and banking executive who was the city's mayor for 10 years beginning in 1971.

But the quiet little First Mortgage, whose trade was to pay mortgage lenders if their borrowers defaulted, had a little corporate muscle of its own.

One of its investors would run for governor.

Another would build a United Way headquarters and local shopping centers.

Yet another would take Piedmont Triad International Airport into the modern era.

Those were good times for the city back then.

Today, Burlington Industries is gone. Cone is owned by another company. Guilford Mills is out of business, and Dillard Paper disappeared after it was acquired.

First Mortgage almost went under, too.

This is the story of how it became a success.

-- -- --

First Mortgage is now called United Guaranty.

It's no longer independent. AIG purchased it in 1981.

The company employs 600 people who work in a modern-looking tower on North Elm Street overlooking Center City Park.

And it's the nation's top mortgage insurance company.

The company exists only to serve the home-mortgage industry.

But it nearly went down with the housing crisis beginning in 2007.

Accustomed to solid profits in the hundreds of millions, United Guaranty lost a staggering $2.5 billion in 2008 as parent company AIG foundered.

The financial world speculated that United Guaranty might fold or that AIG might sell it.

Tough times, for sure.

"Obviously, there was a lot of uncertainty in 2009," current Chief Operating Officer Brian Gould said. "There's things you can control, and there's things you can't."

So, the company focused on what it could control.

The company stopped writing new policies on products it had once sold -- insurance for lenders of second loans on houses, for example.

It added more people to handle the claims that were flooding in from banks swamped with foreclosures.

And then United Guaranty did something novel -- it went past banks and straight to homeowners.

United Guaranty wrote letters, sent brochures and made calls to homeowners headed toward foreclosure.

Because they were an insurance company, United Guaranty didn't intimidate homeowners as their lender might. So, many borrowers cooperated and learned ways to restructure payments, talk to banks and exhaust every option to avoid foreclosure.

"We reach out to borrowers," CEO Donna DeMaio said. "If you're a consumer, the last person you want to talk to is your bank."

After more up-and-down years, the company's financial picture appears steady.

United Guaranty made $9 million in 2012.

And this year, it's off to a very strong start with a year-to-date profit of $114 million.

But DeMaio vows never to forget the dark times.

"It's constantly top of mind," she said. "We have to remember not to repeat the mistakes of the past."

-- -- --

Now, banks are tight with mortgage lending.

Consumers with money are still cautious about buying houses.

And United Guaranty is putting the microscope on loans that banks have already approved.

It's called a "full-file underwrite" -- essentially re-qualifying a loan before it will write insurance for the lender.

About 60 percent of United Guaranty's mortgage policies get that level of inspection.

"I think you'll see the whole industry moving that way," DeMaio said.

She knows her financial checks and balances, but DeMaio wants to add a new dimension to United Guaranty: customer service.

Until May 2012, DeMaio was the CEO of MetLife Bank. She came to United Guaranty as chief operating officer.

DeMaio knows what an insurance customer wants -- MetLife Bank dealt with a lot of mortgage insurers.

"To me, it comes very naturally. That's my job," DeMaio said. "That's why I actually left financing. Even when I was in financing, my favorite part was interacting with customers."

So she is doing more than building a stronger company against the shaky mortgage world. DeMaio is infusing the company with the personal touch from the top down.

"Customer service: That has not been a priority for anybody in this company," she said.

-- -- --

Bill Ridenour remembers when small-town customer service was the only way to build the business.

Ridenour has been with the company since 1975 and is now its vice president and assistant treasurer.

He worked in the office with Bill Hemphill, the founding CEO, and Mavin Legare, another founder.

The company was based in a little brick building on North Elm Street, Ridenour said. Community involvement started the company, he remembers.

"Mr. Legare was very gregarious -- a big-time tennis player," Ridenour said. "I remember hearing stories about how he went around to his friends' houses, door-to-door, trying to sell them stock when he was trying to form the company."

Hemphill managed the company through its early years of growth. He became a civic leader whose passion for the local economy led to the foundation of Action Greensboro -- the first group to raise millions of dollars to recruit jobs to fight the pending manufacturing crisis more than 10 years ago.

He is known for the prophetic words he said to the city's business leaders in a 1999 presentation: "There are forces working on Greensboro that are going to make this a terrible place to live in five, 10 or 20 years from now. The problems are huge."

He was hoping to preserve the legacy of other civic leaders who had helped create United Guaranty.

One investor, Stanley Frank, became the chairman of the Piedmont Triad Airport Authority. He pushed the airport to build a new, modern terminal that opened in 1982.

Hargrove "Skipper" Bowles was a state legislator, candidate for governor and a major force behind the private fundraising for the Dean E. Smith Center at UNC-Chapel Hill.

Bill Stern, another investor, was a successful shopping center developer who gave $1.2 million to build the United Way headquarters on Yanceyville Street.

Hemphill was a dedicated fundraiser for local libraries. The city named a branch library after him in 2004.

The legacy he and the others left behind today stands in granite.

It's the building occupied by United Guaranty.

Contact Richard M. Barron at (336) 373-7371, and follow @rmbarronnr on Twitter.

___

(c)2013 the News & Record (Greensboro, N.C.)

Visit the News & Record (Greensboro, N.C.) at www.news-record.com

Distributed by MCT Information Services