MORTGAGE INSURANCE INDUSTRY 2010-2011

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MORTGAGE INSURANCE INDUSTRY 2010-2011 Powered By Docstoc
					MICA
Mortgage Insurance coMpanIes of aMerIca
                                          2010–2011
                                          Fact Book & Member
                                          Directory
Mortgage Insurance Companies of America
              2010–2011 Fact Book & MeMBer Directory
    MICA stAff                                         Contents
    Suzanne C. Hutchinson                              introduction                                                                      5
    Executive Vice President                           Mica Leadership                                                                   6
                                                       What is PrivateMi?                                                                14
    Susan B. Ironfield                                 Meeting the affordability challenge                                               14
    Director of Legislative and Regulatory Relations   a Financial industry Success Story                                                16
                                                       How Mortgage insurance Works                                                      22
    Douglas C. Byrne                                   Managing risk in a Volatile environment                                           24
    Assistant Director of Analytical Services
                                                       the expanding Market for Mortgage insurance                                       27
    Sandra L. Mason                                    cancellation and the Law: the Homeowners Protection act                           28
    Office Manager                                     Mortgage Pool insurance explained                                                 29
                                                       overview of industry Performance                                                  30
    Patricia Reynolds Anderson                         Financial Strength of the System                                                  32
    Administrative Assistant                           industry outlook: enhancing Homeownership opportunities                           35
                                                       Mica Member Directory                                                             39
                                                       Mica Standing committees                                                          48


                                                       exhIbIts
                                                       1. Homeownership rates by income                                                  15
                                                       2. Geographic Distribution of New insurance Written in 2009                       25
                                                       3. 2009 Mica Member Primary insurance activity                                    27
                                                       4. Mortgage Pool insurance—risk Written                                           29
                                                       5. key industry ratios, 1980–2009                                                 30
                                                       6. Mica Underwriting experience                                                   31
                                                       7. Mica Member Pre-tax Profit (Loss)                                              31
                                                       8. industry assets and reserves                                                   33
                                                       9. Mica Member risk/capital                                                       35




2   MICA Mortgage Insurance Companies of America                                                      2010–2011 Fact Book & Member Directory   3
                                                   IntRODuCtIOn
                                                   Founded in 1973, Mortgage insurance companies of america is
                                                   the trade association representing the private mortgage insurance
                                                   (PrivateMi) industry. Mica’s members expand homeownership
                                                   opportunities by enabling home buyers to purchase homes with low
                                                   down payment mortgages.

                                                   Mica acts as an educator and conduit of information on legislative and
                                                   regulatory changes and represents the industry’s positions on capitol
                                                   Hill. the association also serves as a liaison to other housing trade
                                                   organizations and the federal secondary mortgage market agencies.
                                                   Mica strives to enhance the general public’s understanding of the vital
                                                   role PrivateMi plays in housing americans.

                                                   the PrivateMi industry’s mission is to help put as many people as
                                                   possible into homes they can afford and to ensure that they stay in
                                                   those homes. By insuring conventional low down payment home
                                                   mortgages, Mica’s members have made homeownership a reality for
                                                   more than 25 million families.

                                                   Mica’s 2010–2011 Fact Book and Member Directory explains the
                                                   PrivateMi industry and introduces its participants. the following sections
                                                   detail what PrivateMi is and how it works, the nature of mortgage default
                                                   risk, the market for PrivateMi, the industry’s financial performance and
                                                   the challenges that lie ahead for housing.




4   MICA Mortgage Insurance Companies of America                                               2010–2011 Fact Book & Member Directory   5
    MICA LeADeRshIP / Officers & Executive Committee




                            MICA PResIDent
                            Kevin D. Schneider
                            President & CEO, u.S. Mortgage Insurance
                                                                                                                        MICA exeCutIve vICe PResIDent
                            Genworth Financial                                                                          Suzanne C. Hutchinson


    Kevin Schneider is President and ceo           in 2007, he was elected President of          Suzanne C. Hutchinson was named             agency relations for the Mortgage
    of Genworth Financial’s U.S. Mortgage          Mica (Mortgage insurance companies            executive Vice President of Mica in         Bankers association. She also worked
    insurance business. He assumed this role       of america), the trade association            1990 after joining the association in       for Golembe associates, a Washington,
    in May 2004 after serving as executive         representing the private mortgage             1986 as Staff Vice President and General    D.c., financial services consulting firm.
    Vice President and chief commercial            insurance industry.                           counsel. She represents the mortgage        Hutchinson holds a law degree from
    officer of Ge Mortgage insurance.                                                            insurance industry on capitol Hill and      Western New england college, and
                                                   Schneider has a Bachelor’s in industrial
                                                                                                 before regulatory agencies, participating   bachelor’s degrees in political science
    Prior to joining Mortgage insurance in         and Labor relations from cornell
                                                                                                 in the development of public policy on      and history from Boston college. She is
    april 2003, Schneider was chief Quality        University, and received his Master’s in
                                                                                                 housing, financial services and related     a member of the District of columbia Bar
    officer for Ge commercial Finance,             1998 from Northwestern University’s
                                                                                                 issues. Before joining Mica, Hutchinson     and the american Bar association, and
    headquartered in Stamford, ct. He was          J.L. kellogg Graduate School of
                                                                                                 was Director and regulatory counsel         is a past president of Women in Housing
    responsible for leading the company’s          Management.
                                                                                                 of residential Finance/Government           and Finance.
    Six Sigma efforts to drive growth and
                                                   Genworth is a leading financial security
    productivity across the business.
                                                   company meeting the retirement,
    Schneider began his career with Ge in
                                                   longevity, lifestyle protection, investment
    1998 as eVP Sales and commercial
                                                   and mortgage insurance needs of more
    Services for Ge capital rail Services.
                                                   than 15 million customers. it has a
    Before Ge, Schneider held various Sales        presence in more than 25 countries.
    and P&L roles with General american
    transportation, a subsidiary of GatX
    corporation and ryder System.




6   MICA Mortgage Insurance Companies of America                                                                                                   2010–2011 Fact Book & Member Directory   7
    MICA LeADeRshIP / Officers & Executive Committee




                            MICA vICe PResIDent & seCRetARy/
                            tReAsuReR
                            Christopher S. Nard                                                                    Curt S. Culver
                            President and Chief Executive Officer                                                  Chairman and Chief Executive Officer
                            Republic Mortgage Insurance Company                                                    Mortgage Guaranty Insurance Corporation




    Christopher S. Nard joined the rMic            from 1993 to 1995. Nard had previously   Curt S. Culver is chairman and chief         Prior to MGic, culver worked for six
    team in 1995 and is the chairman,              worked in the roles of account           executive officer of MGic investment         years at private mortgage insurer Verex.
    President, and ceo. He also serves as          representative, account executive, and   corporation and its principal subsidiary,    He is a graduate of the University of
    the President and chief operating officer      Product Development Manager for PMi      Mortgage Guaranty insurance                  Wisconsin—Madison, earning both a
    at rMic’s parent company, old republic         Mortgage insurance company from          corporation (MGic). MGic investment          B.B.a. and M.S. in real estate Finance
    international (ori), based in chicago.         1987 to 1993.                            corporation is a publicly held corporation   and Urban Land economics.
                                                                                            traded under “MtG” on the New york
    Nard came to rMic from Strategic               Nard received a bachelor’s degree
                                                                                            Stock exchange.
    Mortgage Services (SMS) where he               in Business administration from the
    served as Vice President of Marketing          University of richmond in 1985.          culver began his career in the mortgage
                                                                                            insurance business in 1976, joining
                                                                                            MGic in 1982. He has been chairman
                                                                                            of the Board since January, 2000. He
                                                                                            served as President from January 1999
                                                                                            to January 2006.




8   MICA Mortgage Insurance Companies of America                                                                                               2010–2011 Fact Book & Member Directory   9
     MICA LeADeRshIP / Officers & Executive Committee




                             Teresa Bryce                                                                               William A. Simpson
                             President                                                                                  Chairman
                             Radian Guaranty Inc.                                                                       Republic Mortgage Insurance Company




     as president of radian Guaranty inc.,           she was general counsel for Bank of          William A. Simpson is chairman of          Simpson is a past president of Mica.
     Teresa Bryce oversees strategic                 america Mortgage and held other senior       republic Mortgage insurance company,       He holds a master’s degree in business
     planning and administrative activities          legal leadership roles for PNc Mortgage      which he helped found in 1972 in           administration from the University of
     designed to best position the company           corporation and Prudential Home              Winston-Salem, North carolina.             North carolina, a master’s degree in
     to achieve its long-term goals and              Mortgage company.                                                                       civil engineering from carnegie Mellon
                                                                                                  in 1980, rMic was acquired by old
     objectives. Most recently, Bryce held                                                                                                   University, and a bachelor’s degree in
                                                     Bryce holds a bachelor’s degree from         republic international corp. of chicago,
     the position of executive vice president,                                                                                               civil engineering from Duke University.
                                                     the University of Virginia and a J.D. from   illinois. earlier in his career, Simpson
     general counsel, corporate secretary
                                                     columbia University. She has served on       was a vice president of Wachovia Bank
     and chief risk officer.
                                                     the Board of Directors of the Mortgage       & trust co. in Winston-Salem.
     Before joining radian in october 2006,          Bankers association, on the consumer
     Bryce served as general counsel, senior         advisory council of the Federal reserve
     vice president and secretary for Nexstar        and on the Fannie Mae National
     Financial corporation. Prior to that,           advisory council.




10    MICA Mortgage Insurance Companies of America                                                                                                2010–2011 Fact Book & Member Directory   11
     MICA LeADeRshIP / Officers & Executive Committee




                             L. Stephen Smith
                             Chairman and Chief Executive Officer                                                     Eric Martinez
                             the PMI Group, Inc.                                                                      Chief Executive Officer
                             PMI Mortgage Insurance Co.                                                               united Guaranty Corporation




     L. Stephen Smith is chairman of the             officer in 1998. He became ceo of PMi      as ceo of United Guaranty corporation,     Vice President responsible for claims,
     Board and chief executive officer of the        Mortgage insurance co. in 2004 and         Eric Martinez manages operations           customer care and procurement
     PMi Group, inc. and of PMi Mortgage             chairman and ceo of the PMi Group          for the company’s domestic and             at Safeco insurance. He also was
     insurance co., the largest subsidiary of        in 2006.                                   international operating groups including   executive Vice President of utility
     the PMi Group, inc.                                                                        its flagship subsidiary, United Guaranty   operations for atlanta-based aGL
                                                     Prior to joining PMi, Smith spent eight
                                                                                                residential insurance company. Since       resources. Born and raised in
     Smith has more than 35 years of                 years as a Vice President with citizens
                                                                                                joining the company in 2009, he has        connecticut, he holds a bachelor’s
     experience in mortgage insurance,               Southern National Bank in atlanta.
                                                                                                introduced a number of initiatives         degree in Mechanical engineering from
     housing finance, and banking. He began
                                                     Smith has served as President of the       focusing on underwriting, claims           clemson University and master’s in
     his career with PMi in 1979 and has held
                                                     Mortgage insurance companies of            operations and capital management.         Business administration from Valdosta
     a variety of positions, including account
                                                     america, the industry trade group, and     Martinez previously was executive          State University.
     executive, secondary market executive,
                                                     as a member of the Board of Directors
     and area sales director before being
                                                     of National association of Hispanic real
     promoted to Vice President of PMi’s
                                                     estate Professionals. He is an active
     eastern Zone. Smith was later promoted
                                                     participant in a variety of industry and
     to Senior Vice President of Marketing,
                                                     community organizations.
     where he oversaw the implementation
     of corporate strategic growth initiatives.      a graduate of Georgia tech, Smith
     He was later promoted to executive              has a B.S. in industrial management.
     Vice President of Field operations, and         Smith is also a graduate of the Stanford
     then to President and chief operating           executive Program.




12    MICA Mortgage Insurance Companies of America                                                                                              2010–2011 Fact Book & Member Directory   13
     MeetIng the AffoRDAbILIty ChALLenge




     WhAt Is PRIvAteMI?                              PrivateMi is the private sector alternative   homeowners. Mortgage insurance aids             of U.S. households and most people in
                                                     to non-conventional, government-insured       affordability because it allows families        these categories already own homes.
     traditionally, lenders have required a
                                                     home loans. Mortgages backed by the           to buy homes with less cash. a home             according to the most recent national
     down payment of at least 20 percent
                                                     government are insured by the Federal         purchase can be made years sooner               figures available from the american
     of a home’s value. For most first-time
                                                     Housing administration or guaranteed by       with PrivateMi, typically with as little as 5   Housing Survey, 13 percent of U.S.
     home buyers, saving money for such a
                                                     the Department of Veterans affairs or the     percent down for qualified borrowers.           households had annual incomes
     sizeable down payment is the greatest
                                                     U.S. Department of agriculture’s rural                                                        above $120,000, and 92 percent of
     barrier to homeownership. Lenders will                                                        over two-thirds of the families in the
                                                     Housing Service.                                                                              them owned homes. Fifteen percent
     approve a mortgage with a smaller down                                                        United States own their own homes,
     payment, however, if the mortgage is            Generally, home buyers must make a                                                            of households earned $80,000 to
                                                                                                   but a look at the rate of homeownership
     covered by PrivateMi.                           down payment of at least 5 percent of                                                         $120,000, and 85 percent owned
                                                                                                   broken down by income levels reveals an
                                                     a home’s value to be considered for                                                           homes. twenty percent had incomes
     PrivateMi, also known as mortgage                                                             interesting picture. as Exhibit 1 shows,
                                                     PrivateMi. PrivateMi is available on a                                                        between $50,000 and $80,000, and
     guaranty insurance, protects a lender if a                                                    homeownership in america is skewed
                                                     wide variety of conventional mortgages,                                                       75 percent owned homes. in contrast,
     homeowner defaults on a loan. Lenders                                                         toward those with household incomes of
                                                     including most fixed and adjustable rate                                                      52 percent of households had annual
     generally require mortgage insurance                                                          more than $50,000.
                                                     home loans, giving borrowers the freedom                                                      incomes below $50,000, but only 55
     on low down payment loans because                                                             Statistics show that high-income                percent owned homes.
                                                     to choose the type of loan that best suits
     studies show that a borrower with less                                                        households constitute a clear minority
                                                     their needs. Both private and government
     than 20 percent invested in a house is
                                                     mortgage insurance premiums are tax
     more likely to default on a mortgage. in
                                                     deductible for many borrowers who
     effect, the mortgage insurance company
                                                     purchase or refinance a home between             exhIbIt 1:      Homeownership Rates by Income
     shares the risk of foreclosure with the
                                                     January 1, 2007 and December 31, 2010.           Total Household Income in Thousands
     lender. Low down payment loans also are
     referred to as high-ratio loans (loan-to-       PrivateMi should not be confused with
     value ratio), indicating the relationship       mortgage life insurance, which pays an
                                                                                                      100%
     between the amount of the mortgage              outstanding mortgage debt if the borrower
     loan and the value of the property.             holding the insurance policy dies.
                                                                                                                                                                                 over $120k
     the home buyer and the mortgage                                                                   80%                                                  $80k–$120k
     insurer share a common interest in the
                                                     MeetIng the                                                                          $50k–$80k
     mortgage financing transaction because
     they each stand to lose in the event of
                                                     AffoRDAbILIty
                                                                                                       60%
     default. the borrower will lose the home
                                                     ChALLenge
                                                                                                                       Under $50k
     and the equity invested in it, and the          even with home prices declining,
     mortgage insurer will have to pay the           affordability continues to be a problem for       40%
     lender’s claim on the defaulted loan.           many prospective home buyers, especially
     thus, both the insurer and the borrower         those seeking to purchase a home for
     are concerned that the home is affordable       the first time. the mortgage insurance            20%
     not only at the time of purchase, but           industry plays a vital role in helping low
     throughout the years of homeownership.          and moderate income families become
                                                                                                   Source: 2009 American Housing Survey


14    MICA Mortgage Insurance Companies of America                                                                                                      2010–2011 Fact Book & Member Directory   15
     A fInAnCIAL InDustRy suCCess stoRy




     Private Insurers Step In to Help                companies offered guarantees
     For years, members of the Mortgage              of payment as well as title, thus
     insurance companies of america have             establishing the business of mortgage
     worked with the secondary market                insurance. in addition to insuring
     agencies, mortgage lenders and local            mortgages, companies began offering
     consumer groups across the country              participations, or mortgage bonds.
     to identify ways to better serve low-           these bonds allowed multiple investors
     and moderate-income home buyers.                to hold a mortgage or group
     these partnerships have increased               of mortgages.
     the mortgage insurance industry’s               During the 1920s, rising real estate
     awareness of the unique needs of                prices allowed most foreclosed
     borrowers at the local level. they have         properties to be sold at a profit, and
     also aided mortgage insurers in the             more than 50 mortgage insurance
     development of special offerings to             companies flourished in New york.
     help low and moderate income families           Since mortgage insurance was
     qualify for financing. these programs           considered a low-risk business, the firms
     demonstrate that by working together,           were virtually unregulated and thinly
     communities, lenders, insurers and              capitalized. Most had little experience
     investors can expand homeownership              with sound credit underwriting. this
     opportunities for low and moderate              situation went relatively unnoticed until
     income families.                                the Great Depression.
                                                     With the catastrophic collapse of real
                                                     estate values in the 1930s, New york’s
     A fInAnCIAL InDustRy
                                                     entire mortgage insurance industry
     suCCess stoRy                                   folded. as a result, the governor
     the modern PrivateMi industry was               commissioned a study to examine
     born in the 1950s, but the industry’s           the problems that had developed in
     roots go back to the late 1800s and the         mortgage lending and insurance. the
     founding of title insurance companies           study—known as the alger report—-
     in New york. the state passed the first         recommended prohibiting conflicts of
     legislation authorizing the insuring of         interest; setting stringent capital and
     mortgages in 1904.                              reserve requirements; and adopting
                                                     sound appraisal, investment and
     in 1911, the law was expanded to
                                                     accounting procedures. the report
     allow title insurance companies to buy
                                                     became a blueprint for a strong post-
     and resell mortgages—comparable to
                                                     World War ii mortgage insurance
     today’s secondary mortgage market.
                                                     industry built on new regulations and
     to make loans more marketable,


16    MICA Mortgage Insurance Companies of America                                               2010–2011 Fact Book & Member Directory   17
                                                    A fInAnCIAL InDustRy suCCess stoRy




                                                    financial structures. the industry’s sound       companies do not insure the total loan
                                                    regulatory and financial foundation              balance. the mortgage insurance industry
                                                    has ensured that even during difficult           shares the risk of default with the financial
                                                    economic times, lenders are able to              institution, secondary market investor and
                                                    continue making low down payment                 the homeowner. Sharing the risk provides
                                                    loans backed by mortgage insurance.              incentive for all parties to keep the loan
                                                                                                     payments current. in addition, there are
                                                    FHA Lends A Hand
                                                                                                     specific loan amount limits for FHa-
                                                    During the Depression, the need to               insured mortgages and Va home loans.
                                                    stimulate housing construction by
                                                    encouraging mortgage investment                  the Private Sector Emerges
                                                    became evident. the federal government           in 1957, a Milwaukee lawyer named
                                                    entered the mortgage insurance business          Max karl founded the first modern
                                                    in 1934 with the creation of the Federal         PrivateMi company, Mortgage Guaranty
                                                    Housing administration. With its promise         insurance corporation, making the
                                                    of full repayment to lenders if borrowers        conventional low down payment
                                                    defaulted on their home loans, the FHa           mortgage a viable product for mortgage
                                                    home loan insurance program created              lenders. a regulatory framework for
                                                    new confidence in mortgage instruments           PrivateMi was established that included
                                                    and stimulated investment in housing.            strong conflict of interest provisions
                                                                                                     and a one-line-of-business structure to
                                                    to direct government assistance to
                                                                                                     ensure that mortgage insurers’ reserves
                                                    those most in need, the FHa imposed
                                                                                                     would not be mixed with reserves for
                                                    ceilings on the insurable loan amount for
                                                                                                     other lines of insurance. in addition, a
                                                    single-family homes. after World War ii,
                                                                                                     unique contingency reserve system and
                                                    the government’s mortgage insurance
                                                                                                     capital requirements were established
                                                    role expanded with a Veterans affairs
                                                                                                     to recognize the catastrophic nature
                                                    mortgage guarantee program to help
                                                                                                     of mortgage default risk and prevent
                                                    veterans in their transition to civilian life.
                                                                                                     companies from entering the mortgage
                                                    the FHa and Va insurance programs have
                                                                                                     insurance business without long-term
                                                    helped stimulate the housing market for
                                                                                                     commitments. this regulatory framework
                                                    several decades.
                                                                                                     provided a foundation for establishing
                                                    FHa, Va and private mortgage insurers            additional PrivateMi companies.
                                                    play similar roles in making housing
                                                    more affordable. PrivateMi is basically          Housing’s Heyday
                                                    the private sector alternative to FHa            the 1960s saw expansion of the modern
                                                    insurance, but there are several differences     PrivateMi industry, followed by dramatic
                                                    between the two. Unlike FHa, PrivateMi           growth in the early 1970s in conjunction



18   MICA Mortgage Insurance Companies of America                                                          2010–2011 Fact Book & Member Directory    19
     A fInAnCIAL InDustRy suCCess stoRy




     with the emerging dominance of                  payment conventional loans. as a result,
     the secondary mortgage market. all              loans secured with low down payments
     mortgages originate in the primary              steadily increased as a percentage of
     mortgage market. in the secondary               total mortgage originations. Secondary
     mortgage market, existing mortgages are         market purchases of low down payment
     bought, sold and traded to other lenders,       loans helped fuel the tremendous
     government agencies or investors.               expansion in home construction and
                                                     sales during the 1970s and ’80s, aiding
     the federal government chartered
                                                     many first-time and other home buyers.
     two special-purpose organizations
                                                     Privately insured mortgage loans
     to enhance the availability and
                                                     became an increasingly important part
     uniformity of mortgage credit across
                                                     of the mortgage finance system.
     the nation. those organizations, the
     Federal National Mortgage association           Put to the test
     (Fannie Mae) and the Federal Home
                                                     the 1980s wrote a new chapter in the
     Loan Mortgage corp. (Freddie Mac),
                                                     history of mortgage insurance. the first
     provide direct links between the
                                                     challenge of the early ’80s was helping
     primary mortgage markets and the
                                                     homeowners, lenders, real estate agents
     nation’s capital markets. Fannie Mae,
                                                     and builders cope with double-digit
     a government-sponsored but privately
                                                     interest rates and inflation in a period
     owned corporation established in 1938,
                                                     of severe recession. to help qualify
     creates mortgage-backed securities
                                                     more borrowers, conventional low
     backed by FHa, Va and conventional
                                                     down payment loans were paired with
     loans. Freddie Mac, created in 1970,
                                                     experimental adjustable-rate mortgages
     is structured and operates in a manner
                                                     and features such as initially discounted
     similar to Fannie Mae.
                                                     “teaser rates,” negative amortization and
     the demand by mortgage investors                graduated payment increases. By 1984,
     for investment-quality mortgage loans           more than half of all insured mortgage
     expanded the need for mortgage credit           loans had down payments of less than
     enhancement. indeed, the Fannie Mae             10 percent, and many of these were
     and Freddie Mac charters require that           adjustable-rate mortgages.
     they carry one of three forms of credit
                                                     as economic conditions deteriorated—
     enhancement on low down payment
                                                     particularly in energy-oriented regions
     loans they purchase, one of which is
                                                     of the country—defaults began to rise,
     PrivateMi. the PrivateMi industry has
                                                     resulting in numerous foreclosures.
     helped fill this credit enhancement
                                                     the mortgage insurance industry
     role, enabling Fannie Mae and Freddie
                                                     paid more than $6 billion in claims to
     Mac to buy and securitize low down
                                                     its policyholders during the 1980s.


20    MICA Mortgage Insurance Companies of America                                               2010–2011 Fact Book & Member Directory   21
     hoW MoRtgAge InsuRAnCe WoRKs




     Policyholders included commercial               of severe economic stress during the        Many expenses accompany a default.            the Claims Process
     banks, savings institutions, institutional      1980s. the high level of claim payments     interest charges accumulate during the        the type and amount of coverage
     mortgage investors, mortgage bankers,           made by the PrivateMi industry during       delinquent period, as well as during          selected by the lender determine how
     Federal Deposit insurance corp.,                that period, coupled with its continued     foreclosure, a period that can total a        much the private mortgage insurer will
     Federal Savings and Loan insurance              financial health, proved that lenders       year or more. other costs include legal       pay if the borrower defaults and the
     corp., Fannie Mae and Freddie Mac.              and investors can rely on mortgage          fees, home maintenance and repair             lender must foreclose. the claim amount
     Mortgage insurance protected all these          insurance for credit enhancement and        expenses, real estate brokers’ fees and       filed with the mortgage insurer generally
     mortgage and capital providers from             default protection.                         closing costs. these costs generally          includes principal and delinquent
     extensive losses on high-ratio loans.                                                       total 15 percent or more of the loan          interest due on the loan, legal expenses
                                                     in today’s declining market environment,
     even in the prosperous economic times                                                       amount. another frequent loss occurs          incurred during foreclosure, the expense
                                                     mortgage insurers continue to pay valid
     of the 1990s, the mortgage insurance                                                        when the foreclosed property is resold        of maintaining the home and any
                                                     claims as they come due, precisely the
     industry paid more than $8 billion in                                                       for less than its original sales price.       advances the lender made to pay taxes
                                                     role they were designed to play. While
     claims, once again demonstrating its                                                                                                      or insurance.
                                                     mortgage insurers were circumvented         PrivateMi companies insure against the
     ability to function as designed in both
                                                     in recent years as exotic and risky loan    losses associated with defaulted loans        Private mortgage insurers have
     good and bad economic climates.
                                                     structures flooded the market, there        by guaranteeing payment to the lender         increasingly sought to intervene and
     More recently, as the housing market
                                                     is now a return to quality for lenders,     of the top 20 to 30 percent of the claim      help counsel borrowers if they happen
     contracted severely in 2007–2009,
                                                     borrowers and investors which will ensure   amount, and in some circumstances,            to hit a rough patch in their financial
     mortgage insurers have paid
                                                     a prominent role for private mortgage       even more. one of the mortgage                life and are seeking solutions to avoid
     approximately $20 billion in claims and
                                                     insurance in the years ahead. the claims-   insurer’s key roles is to act as a review     foreclosure. over the years, thousands
     continue to significantly support the
                                                     paying ability of the industry remains      underwriter for credit and collateral risks   of homeowners have benefited from this
     holders of insured mortgages.
                                                     solid, reflecting the strong position of    related to individual loans, as well as for   kind of assistance and protected their
     the Critical Role of the                        mortgage insurers to handle current and     local, regional and national economic         credit rating.
     third-Party Insurer                             anticipated claims, for which they have     risks that could increase the loss from
                                                     built up ample reserves over time.          mortgage defaults.                            Generally, after a lender has instituted
     Mortgage insurers were designed to                                                                                                        foreclosure and acquired title to the
     be review underwriters. Because they                                                        recognizing the near certainty of losses      property, it can submit a claim to the
     are in the first loss position on insured                                                   on most foreclosures, the major investors
                                                     hoW MoRtgAge                                                                              insurance company. the insurer has two
     mortgages, they are the second set of                                                       who supply liquidity to the mortgage          options to satisfy the claim:
     eyes looking at potential loans to check        InsuRAnCe WoRKs                             market—such as Fannie Mae and Freddie
                                                                                                                                               	      P
                                                                                                                                                   •			 ay	the	lender	the	entire	claim	
     and see if it is safe for both the investor     the purpose of mortgage insurance is        Mac—-require credit enhancements
                                                                                                                                                      amount and take title to the property.
     and the borrower. only third-party              to protect lenders from default-related     such as mortgage insurance on all low
     insurers can effectively disperse risk                                                      down payment loans. the two agencies          	      P
                                                                                                                                                   •			 ay	the	percentage	of	coverage	of	the	
                                                     losses on conventional first mortgages
                                                                                                                                                      total claim amount stated in the policy
     nationally, collecting premiums in strong       made to home buyers who make down           generally require that mortgages with
                                                                                                                                                      (generally 20 to 30 percent) and let
     markets while supporting policyholders          payments of less than 20 percent of         loan-to-value ratios higher than 80                  the lender retain title to the property.
     in weaker markets. the unique and               the purchase price. Without mortgage        percent have insurance coverage on
     stringent capital and catastrophic loss                                                     the amount of the loan greater than           Before making a decision, an insurer
                                                     insurance, lenders would suffer
     reserve requirements that mortgage                                                          70 percent of value.                          generally will try to determine the
                                                     significant losses on defaulting loans
     insurers must maintain passed the test                                                                                                    potential resale price of the property
                                                     with high loan-to-value ratios.



22    MICA Mortgage Insurance Companies of America                                                                                                  2010–2011 Fact Book & Member Directory       23
     MAnAgIng RIsK In A voLAtILe envIRonMent




     and the expenses resulting from the             	   •	 Size	of	the	down	payment.                 investor and at the renewal rate quoted      individual mortgage lenders or investors
     resale, including the real estate agent’s       	      P
                                                         •	 	 otential	for	property	appreciation	     when the policy commitment was issued.       could accomplish on their own.
     commission and other settlement costs.                 or depreciation.                          Mortgage insurers cannot raise premiums
                                                                                                                                                   Geographic Distribution: Mortgage
     a more detailed description of how              	   •	 Borrower’s	credit	history.                or cancel policies if risk increases over
                                                                                                                                                   insurers operate on a national basis,
     mortgage insurance operates is                                                                   time. Because mortgage insurers make
                                                     other risk factors include:                                                                   which provides the geographic dispersion
     contained in the master policies of                                                              a long-term commitment on each loan
                                                                                                                                                   necessary to protect policyholders during
     individual companies. Master policies,
                                                     	   •	 Purpose	of	the	loan.                      they insure, a long-term risk management
                                                                                                                                                   regional economic cycles. Exhibit 2
     which differ from company to company,           	   •	 Type	of	mortgage	instrument.              perspective is essential to protect
                                                                                                                                                   illustrates the geographic distribution of
     are contracts issued to lenders that                                                             policyholders’ interests.
                                                     	   •		 	 hether	the	borrower	will	occupy	
                                                             W                                                                                     new mortgage insurance written in 2009.
     formally set out the conditions of the                  the home.                                Risk Dispersion                              Temporal Distribution: Mortgage
     insurance. they define the procedures
                                                     	   •	 Interest	rate.                            Mortgage insurance helps lenders and         insurance also provides a reserve system
     lenders must follow to insure a loan, what
                                                                                                      investors balance the short-term need        that accumulates policyholders’ reserves
     to do if borrowers become delinquent            the most unpredictable risk factor, by
                                                                                                      for increased mortgage originations with     over time. Under today’s business
     on their payments, and how to make a            far, is the stability of the property’s value.
                                                                                                      the long-term need for investment-quality    conditions, it is not possible for individual
     claim. they also define how the lender          Mortgage insurers constantly monitor
                                                                                                      business. Mortgage insurers offer the risk   lenders and investors to accumulate
     and insurer must manage mortgage                local, regional and national economic
                                                                                                      dispersion and pooling of risk that few      similar reserves.
     default risk. Master policies are tailored      conditions. By studying population
     to individual state regulations and             growth, employment growth, the supply of
     incorporate the rights and responsibilities     existing housing, housing starts and other
     of the policyholder and the insurer. they       economic factors, insurers can better            exhIbIt 2:      Geographic	Distribution	of	New	Insurance	Written	in	2009
     are enforced in the same manner as other        evaluate the sensitivity of local economies
     business contracts.                             to downturns as well as upturns.                 $ in Billions

                                                     Long-term Protection
     MAnAgIng RIsK                                   risk management is vital to the long-
     In A voLAtILe                                   term protection of policy holders’
     envIRonMent                                     reserves because of the unique nature                                                   MIDWEST                        NORTHEAST
                                                     of mortgage default risk. the risk cycle                                                $20.18 / 26%
     the business environment changes                                                                                                                                       $13.81 / 18%
                                                     for mortgage insurance is significantly
     constantly, and mortgage insurance is                                                                           WEST
                                                     longer than for other property-casualty
     no exception. Deregulation of financial         insurance products. although lenders                            $17.36 / 23%
     services, globalization of the economy,         may decide to cancel insurance when
     increased securitization of mortgage            the default risk has been sufficiently                                                  SOUTH
     products and various legislative initiatives    reduced, coverage and risk can run for                                                  $25.31 / 33%
     have increased the risk of mortgage             many years.
     lending for lenders, insurers and investors.
                                                     Mortgage insurance remains renewable
     the major factors on which mortgage             at the option of the insured lender or
     default risk is based include:

                                                                                                      Source: MICA
24    MICA Mortgage Insurance Companies of America                                                                                                       2010–2011 Fact Book & Member Directory    25
     the exPAnDIng MARKet foR MoRtgAge
     InsuRAnCe / CAnCeLLAtIon AnD the LAW: the
     hoMeoWneRs PRoteCtIon ACt




     Loan-to-Value Distribution: Because                	      E
                                                            •	 	 nhanced	marketing	efforts	by	           exhIbIt 3: 2009	MICA	Member	Primary	Insurance	Activity*	
     risk increases as the loan-to-value ratio                 individual companies and the
                                                                                                         $ in Millions
                                                               industry as a whole.
     increases, mortgage insurers seek to
     balance their mix of 95 percent, 90                	      S
                                                            •	 	 ingle-digit	interest	rates	drawing	
     percent and lower loan-to-value                           first-time home buyers into the
                                                                                                                         Number of        Number of           New Insurance        Insurance
                                                               market.
     ratio loans.                                                                                        Quarter         Applications     Certificates        Written              In Force
                                                        	      G
                                                            •	 	 reater	public	awareness	of	the	
     the mortgage insurance industry’s                         availability of PrivateMI.                1st             217,349          165,261             $25,456.6            $937,056.9
     sound underwriting and risk dispersion
                                                        	      G
                                                            •	 	 reater	emphasis	on	the	use	of	          2nd             172,682          129,326             $22,454.0            $915,051.8
     practices serve to produce higher quality
                                                               mortgage insurance as a credit
     originations for mortgage lenders and                     enhancement to meet risk-based            3   rd
                                                                                                                         110,111          81,432              $18,263.0            $892,731.0
     higher quality investments for investors.                 capital requirements for banks and
                                                               savings institutions.                     4th             86,304           66,205              $14,739.3            $863,447.9
                                                        	      I
                                                            •	 	 ncreased	use	of	mortgage	
     the exPAnDIng                                             insurance by first-time and move-up.
                                                                                                         2009            586,446          442,224             $80,912.7            $863,447.9
     MARKet foR                                                                                          2008            1,368,727        1,111,792           $193,230.6           $952,196.2
     MoRtgAge InsuRAnCe                                 the 2006–2009 volume of insurance
                                                        for Mica’s members is shown in                   2007            2,367,432        2,241,087           $352,228.8           $962,711.9
     the market for mortgage insurance
                                                        Exhibit 3, with 2009 statistics broken
     changed dramatically during the 1980s,                                                              2006            1,725,885        1,660,424           $265,770.2           $823,474.7
                                                        down by quarter. the numbers include
     resulting in a much stronger, healthier
                                                        primary traditional and bulk, but not
     mortgage insurance industry in the
                                                        pool, insurance activity. From 1988 to
     1990s. the industry overcame many                                                                 Source: MICA
                                                        1991, new insurance written remained
     problems that hampered it in the ’80s,
                                                        relatively constant at around $40 billion.
     including increased self-insurance,
     restructuring within the industry and
                                                        New insurance written topped the $100          total new insurance written of over $300       CAnCeLLAtIon
     uncertain economic conditions.
                                                        billion mark in 1992 and remained above        billion for the first time. additionally,      AnD the LAW: the
                                                        it through 2008. in 1993, it jumped            insurance in force rose to over $800           hoMeoWneRs
     the industry’s volume of new business              to nearly $137 billion and remained            billion at year end 2007 reflecting a          PRoteCtIon ACt
     continued to grow through the 1990s                between $121 billion and $131 billion          22.7% increase over the previous year’s
     and into the new millennium but has                until 1998 when new insurance written          total. in 2008, during a severe economic       PrivateMi makes it possible for
     contracted with the beginning of the               was more than $187 billion. Between            downturn, new insurance written fell           potential home buyers to become
     current housing crisis.                            1998 and 2007 new insurance written by         46% from 2007 to $162 billion, while           homeowners sooner, for less money
     a number of factors contributed to the             Mica’s member firms exceeded $200              insurance in force rose to over $950           down. Federal law assures consumers
     industry’s growth, including:                      billion a year.                                billion, an increase of 16.1% compared         that they can enjoy the benefits of
                                                        the PrivateMi industry had a record
                                                                                                       with 2007. in 2009, new insurance              PrivateMi knowing that lenders will
     	        I
           •	 	 ncreased	industry	presence	in	the	                                                     written declined 50% from 2008 to $81          cancel it when it is no longer needed.
                                                        year for new insurance volume in 2007.
              low—and moderate-income market.                                                          billion, while insurance in force fell to
                                                        Mica’s members issued nearly 2 million                                                        the law includes two basic consumer
     	     •	 	 ncreased	lending	in	inner	cities.
              I                                                                                        $863 billion, a decrease of 9.4%.
                                                        new certificates in 2007 resulting in                                                         protections:

26       MICA Mortgage Insurance Companies of America                                                                                                      2010–2011 Fact Book & Member Directory   27
     CAnCeLLAtIon AnD the LAW: the hoMeoWneRs
     PRotReCtIon ACt / MoRtgAge PooL InsuRAnCe
     exPLAIneD




     the law includes two basic consumer                that they have PrivateMi and have          MoRtgAge PooL                                   Pools can be formed with loans that
     protections:                                       the right to request cancellation once     InsuRAnCe exPLAIneD                             may or may not have primary insurance.
     	     •	 	 t	requires	lenders	to	inform	
              I                                         they’ve met cancellation requirements.                                                     in most cases, pool insurance includes
                                                                                                   in addition to insuring individual
              home buyers — both at closing             this requirement applies to all loans                                                      a liability limit for the mortgage insurer of
                                                                                                   mortgage loans, mortgage insurers
              and annually — about their right          with cancelable PrivateMi, not just                                                        5 to 25 percent of the original principal
              to request mortgage insurance                                                        insure pools of mortgages. Mortgages
                                                        those obtained after July 29, 1999.                                                        balance of the mortgage pool. For
              cancellation and how to do it.                                                       are pooled so they can be sold in the
                                                                                                                                                   example, a $10 million pool could incur
     	        I
           •	 	 t	requires	lenders	to	automatically	    Borrower-initiated cancellation —          secondary market and can receive an
                                                                                                                                                   default losses of $500,000 to $2.5 million
              cancel insurance for those                For most loans originated on or            investment grade rating. Securities
                                                                                                                                                   without loss to the investor.
              who qualify but do not request            after July 29, 1999, a lender must         backed by mortgages are a significant
              cancellation.                             cancel PrivateMi at the request of a       tool for attracting capital to home             Pool insurance activity is reflected in
     even without the law, PrivateMi                    borrower whose mortgage balance            financing, especially for the riskier loans.    Exhibit 4.
     generally is cancelable once the                   is 80 percent of the original value of
     homeowner builds up enough equity                  the house. the borrower must be up
     in the home. in fact, historically 90              to date on mortgage payments and
     percent of borrowers have canceled                 have no other loans on the house.
                                                                                                     exhIbIt 4:	Mortgage	Pool	Insurance	—	Risk	Written*
     their PrivateMi within 60 months.                  the lender must be satisfied that the
                                                        property value has not declined.             $ in Millions
     investors set their own cancellation                                                                                                                                        Q1      Q3
     requirements. the mortgage insurance               Automatic termination — For most                                                                                         Q2      Q4
     company does not make the decision                 insured loans originated on or                 $800
     to cancel insurance.                               after July 29,1999, PrivateMi will
     How	the	Law	Works	                                 be canceled automatically when
                                                        the mortgage balance is at 78
     the law is designed to demystify the               percent of the original value of the           $600
     PrivateMi cancellation process in the              house. the borrower must be up
     following ways:                                    to date on mortgage payments.
     Initial disclosure — For loans                     otherwise, insurance will be canceled          $400
     originated on or after July 29, 1999,              automatically once the borrower
     lenders must give borrowers a written              becomes current.
     notice at closing that explains they               Exception: For mortgages defined as
     have PrivateMi on their mortgage                                                                  $200
                                                        high risk, the lender will automatically
     and that they have the right to have it            cancel the PrivateMi at the mid-point
     canceled at a certain point.                       of the loan. on a 30-year mortgage,
     Annual disclosure — Lenders must                   for example, insurance will be
     send borrowers an annual reminder                  canceled after 15 years.                                       2006                 2007                2008                  2009

                                                                                                   Source: MICA



28       MICA Mortgage Insurance Companies of America                                                                                                   2010–2011 Fact Book & Member Directory     29
     oveRvIeW of InDustRy PeRfoRMAnCe




     oveRvIeW                                        increase reflects the challenging         the underwriting experience for Mica’s          in the industry’s history. the increased
     of InDustRy                                     market conditions that the mortgage       members over the past four years is             premium revenue helps to offset future
     PeRfoRMAnCe                                     industry experienced. Despite the         detailed in Exhibit 6. Premiums climbed         losses, increase reserves, and enhances
                                                     recent up tick in losses, the PrivateMi   to over $5 billion in 2008 for the first time   an insurer’s ability to pay claims.
     one indicator of the mortgage insurance
                                                     industry continues to promote sound
     industry’s financial capacity is the
                                                     underwriting and risk dispersion, as
     combined ratio, which is the percentage                                                     exhIbIt 6:	MICA	Member	Underwriting	Experience*
                                                     well as advanced market analysis,
     of a company’s premium income that it                                                       $ in Thousands
                                                     risk monitoring programs and
     pays out in claims and expenses.
                                                     management reports. in addition, the                                         2006          2007         2008          2009
     as Exhibit 5 illustrates, Mica’s                industry’s expense ratio has remained
                                                                                                 Net Premiums Written             $4,390,234    $5,134,747   $5,034,188 $4,364,359
     members have recently seen a sharp              steady for two decades, reflecting the
     increase in the combined ratio. this            industry’s ability to limit expenses.       Net Premiums Earned              $4,395,754    $4,871,530   $4,952,113 $4,609,077

                                                                                                 Losses                           $1,811,464    $6,850,845   $10,815,723 $9,616,976

                                                                                                 Expenses                         $1,106,874    $1,284,293   $977,959      $774,516
       exhIbIt 5:     Key	Industry	Ratios,	1980–2009*
                                                                          Loss ratio             Underwriting Income/(Loss) $1,477,416          ($3,338,773) ($6,841,570) ($4,064,754)
                                                                          expense ratio
                                                                          combined ratio         Loss Ratio                       41.21%        140.63%      218.41%       208.65%

                                                                                                 Expense Ratio                    25.21%        25.01%       19.43%        17.75%
      2.5
                                                                                                 Combined Ratio                   66.42%        165.64%      237.83%       226.40%

      2.0
                                                                                               Source: MICA


      1.5                                                                                      the industry’s operating income is detailed in Exhibit 7.

      1.0                                                                                        exhIbIt 7:	Industry	Pre-Tax	Profit	(Loss)*
                                                                                                 $ in Thousands
      0.5                                                                                                                         2006          2007         2008          2009

                                                                                                 Underwriting Income/(Loss) $1,477,416          ($3,338,773) ($6,841,570) ($4,064,754)

            1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008           Investment Income**              $1,194,173    $1,224,694   $1,020,944 $1,187,548

                                                                                                 Other Income                     $12,988       $14,484      $5,909        ($97)
     Source: MICA
                                                                                                 Operating Income/(Loss)          $2,684,575    ($2,099,596) ($5,814,717) ($2,877,303)


                                                                                               Source: MICA
30    MICA Mortgage Insurance Companies of America                                                                                                  2010–2011 Fact Book & Member Directory   31
     fInAnCIAL stRength of the systeM




     it is important to note that industry           period. Half of each premium dollar          exhIbIt 8:	Industry	Assets	and	Reserves*
     trends are aggregate numbers and                earned goes into the contingency             $ in Thousands
     that individual company results will            reserve and cannot be touched by
                                                                                                                                2006          2007         2008          2009
     vary. the claims-paying ability ratings         the mortgage insurance company for
     of individual mortgage insurance                a 10-year period unless losses in a          Admitted Assets               $25,684,396 $27,159,422 $27,313,994 $28,065,002
     companies are available from bond               calendar year exceed 35 percent of
                                                                                                  Unearned Reserve Premium $681,695           $954,881     $913,979      $777,104
     rating agencies.                                earned premiums, depending on the
                                                     state. contingency reserves allow            Loss Reserve                  $2,967,455    $7,495,503   $13,400,525 $17,880,608
                                                     insurers to build reserves during the
     fInAnCIAL stRength                                                                           Contingency Reserve           $16,881,916 $13,478,152 $7,127,809       $2,781,905
                                                     valley of the risk cycle to cover claims
     of the systeM                                   during peak years.
     recent trends in industry profitability         case-basis loss reserves are               Source: MICA

     provide a graphic picture of the                established for losses on individual
     cyclical risks of mortgage lending. it          policies when the insurer is notified of
     is against this pattern of peaks and            defaults and foreclosures. this reserve
                                                                                                A Solid Capital Base                         commitments and deducts ceded
     valleys that mortgage insurance was                                                        Mortgage insurers operate within a           insurance risk that companies outside
                                                     account also includes a reserve for
     designed to protect lenders.                                                               conservative risk-to-capital ratio, with     the industry have assumed. this
                                                     losses incurred but not reported.
                                                                                                capital guidelines established by state      measure resembles that used by the
     the backbone of the industry’s                  Premiums received for the term                                                          financial rating agencies. exhibit 9
     financial strength is its unique reserve                                                   insurance departments. Mortgage
                                                     of a policy are placed in unearned                                                      still provides only a partial measure,
     system. this system is designed to                                                         insurers operate within a 25-to-1 ratio
                                                     premium reserves. each state                                                            however, for evaluating the industry’s
     enable the industry to withstand a                                                         of risk to capital, which means they set
                                                     establishes the method by which                                                         capacity to write mortgage insurance.
     sustained period of heavy defaults                                                         aside $1 of capital for every $25 of risk
                                                     premiums are earned to match
     arising from serious regional or                                                           they insure. insured risk is defined as      Reinsurance—insuring the risk of one
                                                     premiums with loss and exposure.
     national economic downturns, as well                                                       the percentage of each loan covered          insurance company (the reinsured)
                                                     Fannie Mae, Freddie Mac and Wall           by an insurance policy. By adhering          by another company (the reinsurer)-
     as routine defaults and claims that
                                                     Street analysts closely monitor the        to such strict criteria, mortgage            —helps a company reduce its loss
     occur normally throughout the cycle.
                                                     industry’s financial strength and          insurers have been able to guarantee         exposure. Under a reinsurance
     Under the system, mortgage insurers             have a keen financial interest in the      a continued source of capital for home       agreement, the reinsurer participates
     are required to maintain three                  industry’s long-term health.               buying, even in difficult times.             proportionally in the reinsured’s
     separate reserves to ensure adequate                                                                                                    premium and potential losses. State
                                                     assets and reserves are important          the industry’s capital position, shown
     resources to pay claims:                                                                                                                regulations normally do not allow
                                                     elements in measuring the industry’s       in Exhibit 9 (next page), is another
     contingency reserves, required by               claims-paying ability. the industry’s      measure of its ability to pay claims.        mortgage insurers to write insurance
     law, protect policyholders against              financial standing for the past four       the exhibit displays risk in force for       coverage of more than 25 percent
     the type of catastrophic loss that can          years is detailed in Exhibit 8.            Mica’s members, which includes both          on any individual loan amount. if
     occur during a depressed economic                                                          primary insurance and reinsurance            an insurer wishes to offer coverage



32    MICA Mortgage Insurance Companies of America                                                                                                2010–2011 Fact Book & Member Directory   33
                                                    InDustRy outLooK: enhAnCIng hoMeoWneRshIP
                                                    oPPoRtunItIes




                                                      exhIbIt 9:	MICA	Member	Risk/Capital*
                                                      $ in Thousands
                                                                                            2006                 2007                 2008                2009

                                                      Primary Risk in Force                 $174,506,674 $216,981,987 $219,015,800 $200,719,886

                                                      Pool Risk in Force                    $11,813,209          $11,421,159          $8,713,900          $7,663,938

                                                      Total Risk in Force                   $186,321,889         $228,403,146 $227,729,700 $208,385,833


                                                      Policyholders Surplus                 $4,452,265           $3,661,312           $4,848,589          $5,647,037

                                                      Contingency Reserve                   $16,881,916          $13,478,152          $7,127,809          $2,781,905

                                                      Total Capital                         $21,334,181          $17,139,464          $11,976,399         $8,428,941


                                                      Risk-to-Capital Ratio**               8.02                 11.87                15.59               18.55


                                                    ** Adjusted Risk-to-Capital primarily removes delinquent risk and risk ceded to third party reinsurance entities.
                                                    Source: MICA



                                                    above 25 percent, it must reinsure the                           support agreement and reinsurance
                                                    additional portion so another company                            relationships.
                                                    holds the risk.
                                                    rating agencies use financial models
                                                                                                                     InDustRy outLooK:
                                                    that specify a level of loss tolerance
                                                                                                                     enhAnCIng
                                                    for a mortgage insurance company
                                                                                                                     hoMeoWneRshIP
                                                    to ensure that adequate funds will be
                                                    available over time to cover claims.
                                                                                                                     oPPoRtunItIes
                                                    the evaluation of capital adequacy                               the housing market in the United
                                                    for individual mortgage insurers is                              States is in the midst of a serious
                                                    typically conducted on the basis of                              downturn. the proliferation of exotic
                                                    depression-level projected losses.                               and risky mortgages left many
                                                    in most cases, the rating process                                borrowers with no financial stake
                                                    takes into consideration capital made                            in their home. that lack of equity
                                                    available from a parent company                                  has been a significant contributing



34   MICA Mortgage Insurance Companies of America                                                                            2010–2011 Fact Book & Member Directory     35
     InDustRy outLooK: enhAnCIng
     hoMeoWneRshIP oPPoRtunItIes




     factor to the massive foreclosures              Private mortgage insurers helped
     we are seeing today. Still, there are           around half a million families finance
     encouraging signs that the U.S.                 their own homes in 2009, many
     housing market is returning to the              of them first-time home buyers.
     fundamental practices that have                 Mortgage insurers are continually
     been its hallmark. interest rates               creating new ways to reach out
     remain in the single digits, many               to low-income borrowers, helping
     properties are available and safe               families access the mortgage market
     and secure financing options exist              and providing more opportunities
     for qualified borrowers. combined,              for homeownership. the Mortgage
     these factors make it an opportune              insurance companies of america
     time for first-time home buyers to              will continue its role of helping the
     enter the market and trade-up buyers            industry anticipate opportunities to
     to make their move. as more people              enhance homeownership and explain
     become homeowners, many will take               the benefits of low down payment
     advantage of PrivateMi to buy a home            financing to the public.
     with a low down payment.


     *Data represents the following private mortgage insurers: Genworth Mortgage Insurance
     Corporation, Mortgage Guaranty Insurance Corporation, PMI Mortgage Insurance Co.,
     Radian Guaranty Inc., Republic Mortgage Insurance Company, Triad Guaranty Insurance
     Corporation and United Guaranty Corporation. Exhibit data has been updated to include
     new member data for prior years (2006 and 2007).




36    MICA Mortgage Insurance Companies of America                                            2010–2011 Fact Book & Member Directory   37
                                                    MICA 2010–2011 MeMbeR DIReCtoRy




                                                    genWoRth MoRtgAge InsuRAnCe CoRPoRAtIon
                                                    Officers                                  Main Office
                                                    Kevin D. Schneider                        8325 Six Forks road
                                                    President and chief executive officer     raleigh, Nc 27615-2959
                                                    U.S. Mortgage insurance                   (919) 846-4100 / (800) 334-9270
                                                    Chris Antonello
                                                                                              (919) 846-4343 (fax)
                                                    Senior Vice President, Marketing          www.smartermi.com

                                                    James Bennison                            Regional underwriting Offices
                                                    Senior Vice President, Strategy &         Charlotte, NC
                                                    capital Markets                           10925 David taylor Drive, Suite 240
                                                    Elizabeth Cole                            charlotte, Nc 28262
                                                    Senior Vice President, Human              800-289-4364 / 800-937-2968 (fax)
                                                    resources                                 Chicago, IL
                                                    Mark Goldhaber                            1 tower Lane, Suite 2225
                                                    Senior Vice President, industry affairs   oakbrook terrace, iL 60181
                                                                                              800-873-4314 / 800-944-2042 (fax)
                                                    Rohit Gupta
                                                    Senior Vice President, chief              Philadelphia, PA
                                                    commercial officer                        640 Freedom Business center
                                                                                              king of Prussia, Pa 19406
                                                    Debbie Johnson                            800-288-4364 / 800-272-1235 (fax)
                                                    Senior Vice President, compliance
                                                                                              International Offices
                                                    Thomas F. Kleissler
                                                    Senior Vice President, Legal counsel      toronto, canada
                                                                                              London, england
                                                    Deb S. Lely                               Frankfurt, Germany
                                                    Senior Vice President and                 Hong kong
                                                    chief information officer                 Dublin, ireland
                                                    Georgette C. Nicholas                     Milan, italy
                                                    Senior Vice President, chief Financial    New Delhi, india
                                                    officer                                   tokyo, Japan
                                                                                              Seoul, South korea
                                                    Thomas K. Parrent
                                                                                              Mexico city, Mexico
                                                    Senior Vice President, risk
                                                                                              Lisbon, Portugal
                                                                                              Madrid, Spain
                                                                                              Stockholm, Sweden



38   MICA Mortgage Insurance Companies of America                                                 2010–2011 Fact Book & Member Directory   39
     MICA 2010–2011 MeMbeR DIReCtoRy




     MoRtgAge guARAnty InsuRAnCe CoRPoRAtIon
     Officers                                        Field Offices, Service Centers
     Curt S. Culver                                  and International Offices
     chairman and chief executive officer            S. California Sales Office              Columbus Underwriting Office
     Patrick Sinks                                   Highpointe 1                            MGic – corporate Hill iV
     President and chief operating officer           25910 acero Suite 150                   250 old Wilson Bridge road, Suite 350
                                                     Mission Viejo, ca 92691                 Worthington, oH 43085
     J. Michael Lauer                                800-533-0056 / 800-235-8944 (fax)       800-443-6431 / 800-437-1348 (fax)
     executive Vice President and
     chief Financial officer                         Global Team Regional Processing         Philadelphia Underwriting Office
                                                     Center                                  MGic
     Lawrence J. Pierzchalski                        12650 ingenuity Drive                   14 campus Blvd., Suite 110
     executive Vice President, risk                  orlando, FL 32826                       Newtown Square, Pa 19073
     Management                                                                              800-835-2394 (fax)
                                                     Tampa Underwriting Office
     Cheryl Webb                                     MGic                                    Puerto Rico Underwriting Office
     Senior Vice President, Field operations         4200 West cypress Street, Suite 640     MGic
     Jeffrey H. Lane                                 tampa, FL 33607                         at&t Wireless, Suite 1833
     executive Vice President, General               800-282-3814 / 800-437-8875 (fax)       654 Munoz rivera avenue
     counsel and Secretary                           MGIC Eastern Regional
                                                                                             Hato rey, Pr 00918
                                                     Processing center                       787-765-6545 / 787-765-6555 (fax)
     Timothy J. Mattke
     Vice President and controller                   6151 Powers Ferry road, NW, Suite 440   Seattle Underwriting Office
                                                     atlanta, Ga 30339                       MGic
     Michael G. Meade
                                                     Main Phone: 866-315-8077                3500 188th Street, SW, Suite 200
     Senior Vice President and
                                                     Main Fax: 866-722-9340                  Lynnwood, Wa 98037
     chief information officer
                                                     Kansas City Underwriting Office
                                                                                             800-792-2292 / 800-572-6102 (fax)
     Steven T. Snodgrass
                                                     MGic
     Senior Vice President, capital Markets
                                                     Highlands corporate, campus 1           International Office
     Home Office                                     10740 Nall avenue, Suite 320            Sydney, australia
                                                     overland Park, kS 66211
     270 east kilbourn avenue
                                                     800-255-4122 / 800-437-1350 (fax)
     Milwaukee, Wi 53202
     (800) 558-9900 / (414) 347-6696 (fax)           MGIC Central Regional Processing
     www.mgic.com                                    Center
                                                     901 tower Drive, Suite 300
                                                     troy, Mi 48098
                                                     866-874-9800 / 866-618-5792 (fax)




40    MICA Mortgage Insurance Companies of America                                                                                   2010–2011 Fact Book & Member Directory   41
     MICA 2010–2011 MeMbeR DIReCtoRy




     PMI MoRtgAge InsuRAnCe Co.
     Officers
     L. Stephen Smith                                Charles F. Broom                         PMI Mortgage Insurance Co.
     chairman and ceo                                Senior Vice President, Human resources   Headquarters
     the PMi Group, inc.                             and organizational Development
                                                                                              3003 oak road                           Government Relations
     chairman and ceo                                the PMi Group, inc.
                                                                                              Walnut creek, ca 94596                  816 connecticut avenue, NW, Suite 1000
     PMi Mortgage insurance co.                      Ray D. Chang                             (925) 658-7878 / (800) 288-1970         Washington, Dc 20006
     David H. Katkov                                 Senior Vice President and                www.pmi-us.com                          (202) 223-4640 / (202) 223-4845 (fax)
     executive Vice President and                    corporate treasurer
     chief Business officer                          the PMi Group, inc.                      Regional underwriting Centers           International Offices
     the PMi Group, inc.                             Patrick L. Mathis                        1400 opus Place                         Dublin, ireland
     President and chief operating officer           Senior Vice President,                   Suite 550
     PMi Mortgage insurance co.                      credit risk Management                   Downers Grove, iL 60515
     Donald P. Lofe, Jr.                             PMi capital corporation                  (630) 719-7500 / (800) 726-4764 (fax)
     executive Vice President, chief Financial       Stanley M. Pachura                       e-Business Unit
     officer and chief administrative officer        Senior Vice President,                   North central Plaza three
     the PMi Group, inc.                             chief information officer                12801 North central expressway
     Andrew D. Cameron                               PMi Mortgage insurance co.               Suite 1025
     executive Vice President,                                                                Dallas, tX 75243
                                                     Pete Pannes                              (972) 774-1472 / (800) 723-4764 (fax)
     General counsel and Secretary                   Senior Vice President,
     the PMi Group, inc.                             Field Sales and National accounts
     Lloyd A. Porter                                 PMi Mortgage insurance co.
     executive Vice President, chief risk            Angela A. Karanas
     Thomas H. Jeter                                 Senior Vice President,
     Group Senior Vice President,                    National Underwriting and risk
     chief accounting officer                        operations
     and corporate controller                        PMi Mortgage insurance co.
     the PMi Group, inc.                             Jan Walker
     David Berson                                    Senior Vice President, Product
     Senior Vice President, chief economist          Development and Marketing
     and Strategist                                  PMi Mortgage insurance co.
     the PMi Group, inc.                             Jill Showell
                                                     Vice President, Government relations
                                                     the PMi Group, inc.



42    MICA Mortgage Insurance Companies of America                                                                                         2010–2011 Fact Book & Member Directory   43
     MICA 2010–2011 MeMbeR DIReCtoRy




     RADIAn guARAnty InC.
     Officers
     Sanford A. Ibrahim                              H. Scott Theobald                           Corporate Headquarters
     chief executive officer                         executive Vice President and
                                                                                                 1601 Market Street
     radian Group inc.                               chief risk officer
                                                                                                 Philadelphia, Pennsylvania 19103
                                                     radian Guaranty inc.
     Teresa Bryce                                                                                (215) 231.1000 / (800) 523.1988
     President                                       Catherine M. Jackson                        www.radian.biz
     radian Guaranty inc.                            Senior Vice President and corporate
                                                                                                 Service Centers
                                                     controller
     Robert Griffith
                                                     radian Group inc.                           (800) 926.1621 / (866) 496.8764 (fax)
     chief operating officer
                                                                                                 customer.help@radian.biz
                                                     Richard A. Gillespie
     C. Robert Quint
                                                     Senior Vice President, corporate            Worthington Service Center
     executive Vice President and
                                                     communications and Marketing                250 east Wilson Bridge road
     chief Financial officer
                                                     radian Group inc.                           Suite 175
     radian Group inc.
                                                                                                 Worthington, ohio 43085
                                                     Paul F. Fischer
     Rick Altman
                                                     executive Vice President, Loss              Phoenix Service Center
     executive Vice President and
                                                     Management                                  5080 North 40th Street
     chief administrative officer
                                                     radian Guaranty inc.                        Suite 104
     radian Group inc.
                                                                                                 Phoenix, arizona 85018
                                                     Christopher G. Curran
     Lawrence DelGatto
     executive Vice President and
                                                     Senior Vice President, Pricing and          International Office
                                                     centralized operations
     chief information officer                                                                   Hong kong
                                                     radian Guaranty inc.
     radian Guaranty inc./radian Group inc.
                                                     Lisa D. Dickson
     Edward J. Hoffman
                                                     Senior Vice President, Financial Planning
     Senior Vice President, General counsel
                                                     and analysis
     and corporate Secretary
                                                     radian Guaranty inc.
     radian Group inc.
                                                     Timothy W. Hunter
                                                     Senior Vice President, General counsel
                                                     radian Guaranty inc.




44    MICA Mortgage Insurance Companies of America                                                                                       2010–2011 Fact Book & Member Directory   45
     MICA 2010–2011 MeMbeR DIReCtoRy




     RePubLIC MoRtgAge InsuRAnCe CoMPAny                                                 unIteD guARAnty CoRPoRAtIon
     Officers                                        Main Office                         Officers
     Christopher S. Nard                             P.o. Box 2514                       Eric Martinez
                                                                                                                                United Guaranty Data Center
     chairman, President and chief executive         Winston-Salem, Nc 27102-9954        chief executive officer
                                                                                                                                4041 Business Park court
     officer                                         101 N. cherry Street
                                                                                         H.G. (Tripp) Waddell III               Winston-Salem, Nc 27107
                                                     Winston-Salem, Nc 27101
     John V. Britti                                                                      executive Vice President and           (336) 778-7100
                                                     (336) 661-0015 / (800) 999-7642
     chief operating officer                                                             chief Financial officer
                                                     (336) 661-3275 (fax)                                                       International Offices
     Ronald W. Buck                                  www.rmic.com                        Sheryl Medeiros
     chief administrative officer                                                        executive Vice President and General   Sydney, australia
                                                     Regional underwriting Offices       counsel                                copenhagen, Denmark
     D. Christopher Cash                                                                                                        Hong kong
                                                     1825 Barrett Lakes Boulevard, NW
     chief Financial officer and treasurer                                               Kim Garland                            Budapest, Hungary
                                                     Suite 540
                                                                                         chief operating officer                Dublin, ireland
     Michael P. Derstine                             kennesaw, Ga 30144
     capital Deployment Group Manager                (770) 424-4347 / (877) 550-7642     Main Office                            Milan, italy
                                                     (800) 455-7642 (fax)                                                       tokyo, Japan
     Lou Garner                                                                          230 North elm Street                   Mexico city, Mexico
     risk Policy Group Manager                                                           Suite 700
                                                     1777 Sentry Parkway West                                                   Seoul, South korea
     Kevin J. Henry                                                                      Greensboro, Nc 27401                   Madrid, Spain
                                                     Gwynedd Hall, Suite 203             (336) 373-0232 / (800) 334-8966
     claims Group Manager                            Blue Bell, Pa 19422-2208                                                   London, United kingdom
                                                                                         (336) 230-1946 (fax)
     Crystal E. Martin                               (215) 654-9634 / (877) 550-7642     www.ugcorp.com
     compliance Manager and                          (800) 833-3370 (fax)
     assistant Secretary                                                                 Regional Centers
                                                     7915 FM 1960 road West, Suite 120   NorthPark Town Center
     Joel H. Pasternak
                                                     Houston, tX 77070-5726              Building 600, Suite 400
     Vice President and House counsel
                                                     (281) 970-6046 / (877) 550-7642     1200 abernathy road
     Deron J. Streitenberger                         (800) 436-6367 (fax)                atlanta, Ga 30328
     chief information officer                                                           (770) 392-1980 / (800) 344-7681
                                                                                         (800) 262-8432 (fax)
                                                                                         1515 W. 22nd Street, Suite 800-W
                                                                                         oak Brook, iL 60523
                                                                                         (630) 472-1749 / (800) 323-7324
                                                                                         (800) 258-8432 (fax)




46    MICA Mortgage Insurance Companies of America                                                                                  2010–2011 Fact Book & Member Directory   47
     MICA stAnDIng CoMMIttees




     Accounting and Finance                          House Counsel Committee                     Loss Management Committee             Research Committee
     Committee
                                                     Timothy W. Hunter, Chair                    Paul Fischer, Chair                   Ted Durant, Chair
     Thomas H. Jeter, Chair                          Senior Vice President and General counsel   executive Vice President, Loss        Vice President, analytic Services
     Group Senior Vice President,                    Radian Guaranty Inc.                        Management and Mitigation             Mortgage Guaranty Insurance
     chief accounting officer and                    Jason Hanflink                              Radian Guaranty Inc.                  Corporation
     corporate controller                            assistant Vice President,                   Brian Gould                           Mark Beardsell
     PMI Mortgage Insurance Co.                      assistant General counsel                   Senior Vice President, Loss           Senior Vice President, risk analytics
     William B. Allen                                United Guaranty Corporation                 Management                            Radian Guaranty Inc.
     Senior Vice President and controller            Christopher Brunetti                        United Guaranty Corporation
                                                                                                                                       David S. Hamilton, FCAS, MAAA
     United Guaranty Corporation                     Vice President and                          Kevin J. Henry                        assistant Vice President & actuary,
     D. Chris Cash                                   assistant General counsel                   claims Group Manager                  capital and catastrophe Management
     Chief Financial Officer and Treasurer           PMI Mortgage Insurance Co.                  Republic Mortgage Insurance Company   United Guaranty Corporation
     Republic Mortgage Insurance Company             Joel H. Pasternak                           Chris Hovey                           Dennis M. Lisac, II
     Lisa Dickson                                    Vice President and House counsel            Senior Vice President                 Director Business intelligence
     Senior Vice President, Financial                Republic Mortgage Insurance Company         Servicing operations and Loss         Genworth Mortgage Insurance
     Planning and analysis                           John Taggart                                Management                            Corporation
     Radian Guaranty Inc.                            Vice President and                          PMI Mortgage Insurance Co.
                                                                                                                                       Frank V. Meyer, Ph.D.
     Timothy J. Mattke                               associate General counsel                   Joe Hullinger                         Manager, Modeling r&D, Pricing team
     Vice President and controller                   Genworth Mortgage Insurance                 Vice President Homeowner assistance   Republic Mortgage Insurance Company
     Mortgage Guaranty Insurance                     Corporation                                 Servicer Support operations
                                                                                                                                       Leonard J. Wijewardene
     Corporation                                     Heidi A. Heyrman                            Genworth Mortgage Insurance
                                                                                                                                       Vice President, Portfolio Management
     Edward D. Miles                                 Vice President, regulatory relations,       Corporation
                                                                                                                                       & Pricing
     Vice President and controller                   assistant General counsel, and              Kathleen E. Valenti                   PMI Mortgage Insurance Co.
     Genworth Mortgage Insurance                     assistant Secretary                         Vice President, Loss Mitigation
     Corporation                                     Mortgage Guaranty Insurance                 Mortgage Guaranty Insurance
                                                     Corporation                                 Corporation




48    MICA Mortgage Insurance Companies of America                                                                                         2010–2011 Fact Book & Member Directory   49
     MICA stAnDIng CoMMIttees




     Risk Management Committee                       State Government Relations              technology Committee
                                                     Committee
     Lou Garner, Chair                                                                       Stan Pachura, Chair
     risk Policy Group Manager                       Jeannie Green, Chair                    Senior Vice President,
     Republic Mortgage Insurance Company             Vice President, Government relations    chief information officer
                                                     Genworth Mortgage Insurance             PMI Mortgage Insurance Co.
     John Gaines
     Senior Vice President, risk                     Corporation                             Keith Bendt
     Management                                      Christopher Brunetti                    chief information officer
     United Guaranty Corporation                     Vice President and                      United Guaranty Corporation
     Chris Hovey                                     assistant General counsel               Lawrence DelGatto
     Senior Vice President                           PMI Mortgage Insurance Co.              executive Vice President and
     Servicing operations and Loss                   Theresa M. Cameron                      chief information officer
     Management                                      assistant Vice President and            Radian Guaranty Inc./Radian Group Inc.
     PMI Mortgage Insurance Co.                      assistant General counsel               Deb S. Lely
     Thomas Parrent                                  United Guaranty Corporation             Senior Vice President and
     Senior Vice President, risk                     Kathleen T. Egan                        chief information officer
     Management                                      Vice President and associate General    Genworth Mortgage Insurance
     Genworth Mortgage Insurance                     counsel                                 Corporation
     Corporation                                     Radian Guaranty Inc.                    Michael G. Meade
     Lawrence J. Pierzchalski                        Crystal E. Martin                       Senior Vice President and
     executive Vice President, risk                  compliance Manager and                  chief information officer
     Management                                      assistant Secretary                     Mortgage Guaranty Insurance
     Mortgage Guaranty Insurance                     Republic Mortgage Insurance Company     Corporation
     Corporation
                                                     Heidi A. Heyrman                        Deron J. Streitenberger
     H. Scott Theobald                               Vice President, regulatory relations,   chief information officer
     executive Vice President and                    assistant General counsel, and          Republic Mortgage Insurance Company
     chief risk officer                              assistant Secretary
     Radian Guaranty Inc.                            Mortgage Guaranty Insurance
                                                     Corporation




50    MICA Mortgage Insurance Companies of America                                                                                    2010–2011 Fact Book & Member Directory   51
             Mortgage Insurance coMpanIes of aMerIca
             1425 k Street, NW, Suite 210 | Washington, Dc 20005
             p 202.682.2683 | f 202.842.9252




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