A range of groups have been exploring the possibility of launching a new mortgage insurer for months but have not made much progress, analysts said.

"Over the past several months we've heard about various private-equity firms or strategic-type investors thinking about the space and kind of kicking the tires," James Eck, an analyst with Moody's Investors Service Inc., said last week. "But so far we really haven't seen anything."

James Brender, an analyst at Standard & Poor's Corp., said last month that his rating agency has stiff criteria for new companies.

The government-sponsored enterprises "want double-A, and that definitely isn't going to happen for a start-up," he said, since the process involves an assessment of a company's "competitive position," including "diversification of products, geography, where you are in terms of market share."

For Fannie Mae and Freddie Mac, a new entrant is a "huge risk," Mr. Brender said.

If the GSEs "need to get capital into the MI sector, perhaps, if they did a thorough review of somebody, perhaps they would declare them declare them" eligible to do business. "At this point though … the benefit of that is clearly outweighed by the risk of taking on another counterparty that may behave different than what they tell you."

But in a report published in July, analysts at Fitch Inc. wrote, "Fundamental questions now exist concerning the future composition of the industry, particularly the extent to which new capital will be directed into weaker established participants or into new start-up companies — which are unburdened by underperforming legacy portfolios."

"In order to support their own growth opportunities, the GSEs will have an incentive to channel more demand for mortgage insurance toward healthy, growing mortgage insurance companies," the Fitch analysts wrote.

The Fitch analysts also assessed the possibility that the GSEs would cancel a portion of existing policies underwritten by a weakened provider.

"It is possible that a disqualified mortgage insurance company could end up with an adversely selected book of business in which substantially all losses would be absorbed by the mortgage insurance company while losing a revenue source in higher-quality loans," they wrote. "This is of particular importance given that future premiums on existing business are a major component of a company's overall capital base and claims-paying resources, and that the current stress being experienced by the mortgage insurance industry has increased the probability of a mortgage insurer falling out of compliance."

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