Insuring mortgages continues to be more profitable than originating and servicing them.

But as lenders increasingly demand insurance products that let them share premiums, some analysts worry that insurers' big profit margins will shrink.

Four mortgage insurers reported their earnings this week. MGIC Investment Corp., Milwaukee, the largest mortgage insurance company, earned $84.2 million in the third quarter, 28% more than a year earlier.

Earnings per share came to 72 cents, slightly exceeding analysts' estimates.

PMI Group, San Francisco, reported net income of $41.9 million. The rise was only 1%., but earnings per share were up 14%, to $1.25, in line with analysts' expectations.

CMAC Investment Corp.'s net income increased 21%, to $19.3 million.

Earnings per share for the Philadelphia insurer rose 22%, to 79 cents, beating the consensus estimate by a penny.

And net income for the smallest mortgage insurer, Triad Guaranty Inc., soared 64%, to $4.7 million.

Amerin Corp. is scheduled to report its earnings next week. GE Capital Mortgage Insurance, Republic Mortgage Insurance Co., and United Guaranty Residential Insurance are the only other companies in the business.

Some analysts are beginning to doubt the insurers' prosperity can last much longer.

One concern is new competition.

"Things have been so good for so long that lenders want to get a piece of the premiums," said Edwin Ciskowski, an analyst with Equitable Securities, Nashville.

To stay competitive insurers quickly match others' discounts or new products, analysts said.

"There is no reason to suggest pricing will go higher. That is potentially the only blemish on the industry," Mr. Ciskowski said.

Insurers have been heavily marketing products such as captive reinsurance and lender-paid mortgage insurance that are designed to boost lenders' profits.

With captive reinsurance, for example, lenders assume some default risk by reinsuring loans and receive a portion of the premiums for doing so.

Four banks-Chase Manhattan Corp., PNC Bank Corp., Banc One Corp., and Norwest Corp.-have already received approval from the Office of the Comptroller of the Currency to establish mortgage reinsurance subsidiaries.

A fifth bank, First Union Corp., also has a reinsurance subsidiary, but because the unit is headquartered in Bermuda, First Union did not need OCC approval.

Mr. Ciskowski said he expects more banks to apply for mortgage reinsurance powers. And during MGIC's conference call with analysts this week, chief operating officer Curt Culver said MGIC already has some captive reinsurance contracts.

Gary Gordon, an analyst with PaineWebber, said a slowdown in revenue has caused some insurers to cut prices aggressively to grab market share.

But new products aren't the only reason for lower prices, according to Mr. Gordon.

He said mortgage insurers are more efficient than a few years ago and also have used stricter underwriting standards to minimize losses.

"It's important to note that lot of the discounted prices are simply responses to lower costs," Mr. Gordon said.

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