Private Mortgage Insurers Transferred Over $55B in Risk on Nearly $2.8 Trillion of Active Coverage at Year-End 2021
The industry's use of MI credit risk transfer (MI-CRT) reduced volatility in the business and brought more sources of private capital to the housing finance market.
MI-CRT, combined with enhanced capital standards required by the government-sponsored enterprises (GSEs) and the
"While some housing market participants either paused or reduced their CRT activities during the past two challenging years, the private MI industry continued to execute CRT transactions," said USMI President
From 2015 through 2021, the private MI industry issued 49 insurance-linked notes (ILNs), transferring
Johnson recently discussed MI-CRT with National MI President and CEO
"MI-CRT is central to how the private MI industry manages credit risk. The tools we use--insurance-linked notes offerings, excess of loss reinsurance treaties, and quota share reinsurance agreements--each serve to absorb risk and loss in stress scenarios," said Pollitzer. "CRT enhances our counterparties' strength, bolsters and diversifies our funding profile beyond entity-based equity capital, and allows us to write more business and support more borrowers with greater efficiency. Every dollar of risk transferred through CRT opens another dollar of mortgage volume that we can support for new borrowers."
The private MI industry complies with a set of operational and capital standards known as the Private Mortgage Insurance Eligibility Requirements (PMIERs), which were developed and are periodically updated by the GSEs and FHFA. At the end of 2021, the private MI industry held a collective
"The private MI industry is better positioned today than ever before to support borrowers in need and provide private capital solutions that insulate lenders, the GSEs, and ultimately taxpayers from risk and loss in the event of an economic downturn," said Pollitzer. "Over the last 10 years, the terms of our coverage, the regulatory framework governing our actions, our funding requirements and capital position, our underwriting standards, and the way we approach evaluating risk, pricing policies, and managing our tail exposure have all fundamentally changed. And the performance of the private MI industry through the arc of the pandemic serves as a highlight."
The MI industry has enabled more than 37 million families to access affordable, low down payment mortgages in its 65-year history. In 2021, the industry enabled nearly 2 million borrowers to access mortgage finance credit and supported
USMI worked closely with federal policymakers, industry groups, and consumer organizations to support and advocate for low down payment homebuyers and homeowners throughout the year. The organization sent letters and released statements in support of bipartisan and bicameral legislative initiatives to make permanent the ability of homeowners to deduct MI premiums from federal income; submitted a comment letter on the
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View links showing in text here: https://www.usmi.org/press-release-private-mortgage-insurers-transferred-over-55-billion-in-risk-on-nearly-2-8-trillion-of-active-coverage-at-year-end-2021/
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