The mortgage insurance industry has had its share of controversy lately. In the last month, automatic cancellation of mortgage insurance has been a hot topic of debate in Congress and the New York State Insurance Department has questioned the legality of captive reinsurance.

But the news isn't all bad. Three mortgage insurers reported their first-quarter earnings last week, and their results show the industry is continuing to post healthy gains.

Net income increased 20% for CMAC Investment Corp., 33% for PMI Group, and 35% for Triad Guaranty Inc. CMAC earned 71 cents per share, also an increase of 20%, slightly exceeding Wall Street analysts' consensus estimate of 70 cents.

Delinquency rates rose slightly in the first quarter from the fourth quarter of last year for PMI and Triad, but fell for CMAC. CMAC's delinquency rate was 2.3%, down from 2.38%.

"We are very pleased with the improvement in our default results for the quarter, which have begun to reflect positive signs in California," said Frank P. Filipps, president and chief executive of Philadelphia-based CMAC.

Analysts added that the increase in PMI's default rate was less than expected because of the improving conditions in California.

San Francisco-based PMI, the nation's third-largest mortgage insurer, reported earnings per share of $1.09, a 16% increase from last year's first quarter. Analysts were expecting $1.11.

PMI's new insurance written in the first quarter was $3.1 billion, down from $3.9 billion in the first quarter of 1996. The company attributed the decline to a decrease in the size of the market resulting from lower mortgage origination volume.

PMI chief executive officer W. Roger Haughton added that the company's decision not to offer GSE pool insurance, the practice of underwriting pools of loans and offering to absorb the loss for the lenders, will "result in continued near-term pressure" on PMI's market share.

Some lenders are purchasing this type of product because they are able to negotiate for lower guarantee fees with Fannie Mae and Freddie Mac. PMI does not write pool insurance because it is uncomfortable with the risks.

Steven Schwartz, an analyst for ABN Amro Chicago Corp. pointed out that CMAC, a company that is writing GSE pool insurance, had a gain in market share that was nearly equivalent to PMI's loss.

Winston-Salem, N.C.- based Triad Guaranty, the smallest mortgage insurer, reported earnings per share of 50 cents, up 31% from the first quarter of 1996 and beating the consensus estimate of 46 cents.

New insurance written also increased dramatically in the first quarter, gaining 30% to reach $596 million. Mr. Schwartz said Triad's market share increase was a result of geographic expansion. He said the company had been particularly successful in writing new business in California.

CMAC's shares closed up 62.5 cents on Thursday to finish at $36.125. PMI's stock fell 75 cents and closed at $47.75. Triad rose $1.25 to close at $31.

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