a boon to mortgage insurers.

Mortgage Guaranty Insurance Corp., the largest private mortgage insurer, and Triad Guaranty Inc., the smallest, last week reported third-quarter earnings that beat Wall Street's expectations.

MGIC earned $122.9 million, or $1.11 a share, up 29% from the year-earlier period. Triad earned $7.9 million, or 58 cents a share, up 23%.

This year's rise in rates has precluded many homeowners from refinancing. For lenders, that has meant a sharp drop-off in volume. But for insurers it means fewer policies have been canceled.

"I'd rather have this kind of market than one where every other transaction is a refinance," said Darryl W. Thompson, president and chief executive officer of Triad, Winston-Salem, N.C.

Persistency -- the percentage of insurance remaining in force from the previous year -- in MGIC's portfolio was 69.1% at the end of the third quarter.

That was down from 71.5% at the end of last year's third quarter (just before the autumn Treasury market rally spurred a major wave of refinancings), but up from 68.1% at the end of last year.

Milwaukee-based MGIC's insurance in force grew 5.29% to $145 billion in the last year; Triad's has increased 12% since this year began.

To be sure, higher interest rates were not the only factor that lifted insurers' results.

For one thing, the strength of the overall economy has led to fewer defaults. The percentage of delinquent loans in MGIC's book of business fell to 1.99% from 2.21% in the third quarter of last year.

Thanks to a hot housing market, there has been plenty of demand for loans to buy homes -- and when borrowers do default, their homes can be sold at a profit. MGIC's losses fell 62%, to $19.5 million, and Triad's fell 11%, to $1.5 million.

Gary Gordon, an analyst at PaineWebber, said another benefit of rising rates is that insurers have to spend less on contract underwriting -- processing loans for lenders in exchange for a fee and the opportunity to supply insurance for any loan that needs it. It is an expensive service, but with lenders' volumes falling, there has been less demand for it.

Higher rates also mean that mortgage insurers have higher-yielding vehicles in which they can invest their premiums, Mr. Gordon added.

Of course, if rates were to rise so much that they caused a recession, mortgage insurers would be in trouble. But for now they can join mortgage servicers in celebrating the demise of the refinancing boom. "Their economics are clearly more associated with those of servicers than with the title insurers," said Steven Schwartz, an analyst at ABN Amro Chicago Corp.

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