(Bloomberg) — Essent Group Ltd., the mortgage insurer backed byGeorge Soros and Goldman Sachs Group Inc., is beating older rivalsin the stock market as the U.S. plans to tighten regulation of theindustry.

Essent has rallied 9.1% since July 10, when the Federal HousingFinance Agency laid out a proposal requiring mortgage guarantors tohold more assets. Radian Group Inc. and MGIC Investment Corp., thelargest firms that focus on backing home loans, have slumped.

FHFA called for stiffer requirements tied to insured loans madefrom 2005 to 2008, before Essent and NMI Holdings Inc. beganwriting coverage. The proposal also mandates that insurers holdmore funds on contracts connected to riskier borrowers. The U.S.,which took over Fannie Mae and Freddie Mac in a $187.5 billionrescue after the housing market collapsed, aims to protecttaxpayers from losses in a future crisis.

"For companies like MGIC or Radian, where there's a legacy book,the capital rules are just more onerous," Bose George, an analystat Keefe, Bruyette & Woods, said. "Where there's no legacybook, the rules are less onerous."

MGIC and Radian have said the proposed private mortgage insurereligibility requirements, or PMIERs, are too strict and threaten tomake home loans less affordable. Essent and NMI have praised therules, saying the industry needs the financial strength towithstand another housing crash.

Credit access

"We do not believe that the PMIERs will disrupt access tocredit," Essent Chief Executive Officer Mark Casale said on aconference call this month. "It's important to make sure there'sreally no watering down of the framework."

Soros Fund Management owns an 8.7% stake in Essent valued at$160 million, based on yesterday's $21.26 closing price, andGoldman Sachs controls about 7%, according to data compiled byBloomberg. Essent retreated 0.9% to $21.07 at 12:12 p.m. in NewYork.

Bermuda-based Essent's largest investor is affiliated with PineBrook Road Partners, a private-equity firm. All were investors inEssent before the insurer's initial public offering last year.

Billionaire John Paulson's hedge fund firm is among the top fiveinvestors in MGIC and Radian, with combined stakes valued at about$300 million. Paulson & Co. also controls 1.8 percent ofGenworth Financial Inc., which sells life insurance and long- termcare coverage in addition to mortgage guarantees.

MGIC has fallen 9.3% since the rules were announced while Radianhas slipped 1.4%. The shares of both companies have more thandoubled since the start of last year as the housing marketrebounded.

Genworth dives

Genworth has plunged 18% since July 10, fueled by a disclosurethat it may need to add to reserves in its long-term care business.The Richmond, Virginia-based company counts mortgage insuranceamong its best business opportunities, CEO Tom McInerney said July30.

Rohit Gupta, who runs Genworth's U.S. mortgage insurer, said inan interview that the new rules will help bolster confidence in theindustry. He said that there is room for tweaks and declined todiscuss Genworth's positions before the fourth-largest mortgageinsurer sends in its feedback to FHFA.

Mortgage insurance typically must be purchased by borrowers whentheir down payment is less than 20% of a home's purchase price. Thepolicies cover losses when borrowers default and foreclosure failsto recoup costs. During the housing crisis, the financial turmoilat mortgage buyers Fannie Mae and Freddie Mac was magnified whenabout half of the home-loan guarantors were pushed out ofbusiness.

Companies must submit their comments on the proposal by Sept. 8.The new rules affect firms doing business with Fannie Mae andFreddie Mac, which are overseen by FHFA.

Higher fees

"The draft PMIERs would require insurers to maintain liquidassets far in excess of the amount required to achieve that goaland could potentially have adverse effects on creditworthyborrowers and mute the housing recovery," Curt Culver, CEO ofMilwaukee-based MGIC, said on a conference call with analysts lastmonth.

At a time when lending remains restricted, the proposed rulescould make homeownership more expensive for borrowers without thehighest credit scores or lacking funds for a big down payment. Theinsurers would likely charge higher fees to these riskierborrowers.

Culver also criticized his company's younger rivals for theirstance on the rules.

'Very disappointed'

"I'm very disappointed with some of our newer entrants, on avery shortsighted point of view, lobbying the way they have," hesaid. "This is the long-term interest of all of us to have returnsthat are long-term acceptable."

Casale worked at Philadelphia-based Radian before foundingEssent, which went public in October and is now the No. 5 U.S.mortgage insurer. It wrote coverage on $9.5 billion of loans in thefirst half of this year, according to data compiled by InsideMortgage Finance, a trade publication.

NMI, which also held a public offering in 2013, is off to aslower start, with less than $1 billion of coverage sold in theperiod. The Emeryville, California-based firm, whose biggestinvestors include Carlyle Group LP's Claren Road Asset ManagementLLC, Kyle Bass's Hayman Capital Management LP and Perry Corp.,declined 6.6 percent since July 10 through yesterday. The stockclimbed 2.9% today to $9.90.

"We can do very well in an environment that has rules basicallyas drafted," Brad Shuster, CEO of NMI, said in an interview. "Thecomments we're making I'd characterize as relatively minor."

'Nuance issues'

American International Group Inc.'s mortgage insurer, thelargest by sales in the first half, has been working with FannieMae, Freddie Mac and FHFA and plans to discuss its remainingconcerns in its comment letter, Donna DeMaio, the Greensboro, NorthCarolina-based unit's CEO, said in an e-mail. The mortgage guarantybusiness accounted for less than 10% of AIG's pretax operatingprofit from insurance in the second quarter.

There are a few areas where the companies' comments willprobably align, said Jack Micenko, an analyst at SusquehannaInternational Group. He cited opposition to a provision thatexcludes some premium payments from being counted as availableassets until they are classified as earned for accounting purposes,which can take years.

KBW's George said the companies will request that the amount offunds they have to hold against sets of loans decreases as thebooks age.

"It's reasonable to assume that there will be some meeting ofthe minds on some of these nuance issues" between the companies andthe regulators, Micenko said. "What they're looking to do is, likeeverything else in the financial crisis coming out, is to put inplace some rules and conditions to make it less painful the nexttime around."

With assistance from Clea Benson in Washington.