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ROLE OF CREDIT/MORTGAGE INSURANCE |
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MORTGAGE GUARANTY INSURANCE
Private mortgage insurance (PMI), known as mortgage guaranty insurance, guarantees that, in the event of a default, the insurer will pay the mortgage lender for any loss resulting from a property foreclosure up to a specific amount. PMI, which is purchased by the borrower but protects the lender, is sometimes confused with mortgage insurance, a life insurance product that pays off the mortgage if the borrower dies before the loan is repaid. Banks generally require PMI for all borrowers with down payments of less than 20 percent.
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MORTGAGE GUARANTY INSURANCE, 2003-2007 (1)
($000)
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2003 |
2004 |
2005 |
2006 |
2007 |
| Net premiums written | $3,482,519 | $3,411,062 | $3,480,174 | $3,541,558 | $4,180,226 |
| Net premiums earned | 3,385,414 | 3,476,019 | 3,454,232 | 3,584,255 | 4,019,423 |
| Losses | 870,861 | 1,336,605 | 1,251,554 | 1,461,243 | 5,412,163 |
| Expenses | 787,649 | 820,268 | 842,483 | 858,599 | 807,643 |
| Underwriting income/loss | 1,375,427 | 1,319,146 | 1,360,195 | 1,264,413 | -2,200,384 |
| Loss ratio | 25.72% | 38.45% | 36.23% | 40.77% | 134.65% |
| Expense ratio | 22.62 | 24.05 | 24.21 | 24.24 | 19.32 |
| Combined ratio | 48.34 | 62.50 | 60.44 | 65.01 | 153.97 |
| (1) As reported by members of the Mortgage Insurance Companies of America, representing six private mortgage insurance companies in 2003-2006 and five in 2007.
Source: Mortgage Insurance Companies of America. |
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