Mortgage Guaranty Insurance Corp., Milwaukee, captured the top spot in new insurance written in the first half of this year, with policies on $15.8 billion of mortgages. It is believed to be the first time in several years that the company has held the top rank.
Mortgage Guaranty, or MGIC, surged past GE Capital-Mortgage Corp. ($14.5 billion) by posting a 36% increase over volume in the period in 1992. GE, which held the top spot in 1992, had a 12% increase, to $14.5 billion.
PMI Mortgage Insurance., of San Francisco, saw its volume of new insurance shoot up to $11.2 billion, a 36% increase. United Guaranty Corp., the Greensboro, N.C.-based mortgage insurer, enjoyed an even steeper ascent, registering $6.8 billion, a whopping 41.7%.
Refinancings, Low Rates
Most observers attribute the strong volume largely to low interest rates and the resulting high level of refinancings.
"A lot of these numbers are coming off the high level of originations," said James S. Mac-Leod, senior vice president of Mortgage Guaranty. While Mr. MacLeod believes that market share is a "nice measure, the ultimate measure is the quality of business on the books."
One reason for Mortgage Guaranty's increased market share. according to Mr. Mac-Leod, is its increasing efforts to share risk management information with mortgage lenders,
Regional Slumps Hurt GE
Why the loss of market share by GE? Martin Heck, president of GE Mortgage, said, "You need to look at the distribution of where we're strong geographically. We're strong in the Northeast and West Coast, areas which are currently having severe recessions."
Both PMI and United Guaranty pointed to an increased amount of pool insurance business.
Though pool insurance volume is not counted as part of mortgage insurance volume, it has the effect of bringing in business. "If you're doing a lot of pool insurance for a customer, they are more likely to give you their other business," said Claude Seaman, senior vice president of PMI. Mr. Heck has high hopes for GE Mortgage's monthly payment plan, an innovation GE pioneered earlier this summer.
Whether monthly payments will provide GE with a competitive advantage is unknown.
Others Follow Suit
Mortgage Guaranty launched a similar product last week. And United Guaranty Corp. president Charles M. Reld and Mr. Seaman of PMI both indicated that their companies are hard at work at developing their own versions.
Monthly billing is expected to generate new business, especially among first-time homebuyers, by cutting the amount of money needed to close.
One issue mentioned by officials at all four mortgage insurers is that the unprecedented volume is placing stress on operations. "It's volume like we have never seen, and we've had real pressure to keep turnaround time low and service up."
