Mortgage insurers face an uphill battle in the next couple of years due to legacy business on their books, which continues to generate losses, Standard & Poor’s said in a report Thursday.
The firm said overall it maintains a negative outlook on the sector.
S&P noted insurers logged newer, higher-credit quality business since the second half of 2008, but it’s likely not enough to offset losses on existing business.
“We expect the mortgage insurance sector to continue to report operating losses well into 2013,” wrote Ron Joas, credit analyst with Standard & Poor’s.
The Mortgage Insurance Companies of America, which represents mortgage insurers, said this week that insurers in its group wrote $4.9 billion in new business in January, which is down from $6.4 billion a year earlier.
That’s also down from the $5.8 billion in new business written in December.
MICA’s member companies include Genworth, Mortgage Guaranty Insurance Corp., Radian Guaranty and Republic Mortgage Insurance Co.
S&P warns that the sector is currently facing weakened capital, a condition that could be negatively impacted by the possibility of more claims in the future.