Oct. 21 (Reuters)—MGIC Investment Corp , the largest publiclylisted U.S. mortgage insurer, said reinsurers were interested inentering the mortgage reinsurance business, attracted by the highreturns that could be earned from underwriting new mortgages.
|While the mortgage insurers are struggling under the weight ofdefaults from loans underwritten during the housing boom, stricterunderwriting standards by banks and insurers mean the current cropof mortgages are of a much higher quality.
|“I think in discussions that we've had, there are people thatare interested, as the quality of the (new) business is very good,”MGIC Executives said on their post-earnings conference call.
|Reinsurers, which sell insurance to the primary insurers, havespare capacity and capital that could be used to enter the mortgagespace.
|On the call, MGIC Investment executives said any entry byreinsurers would help serve as “back-door capital” and reduce thestrain on the private mortgage insurers.
|Mortgage insurers like MGIC and its rivals PMI Group and RadianGroup have so far had to create and capitalize reinsurancesubsidiaries to spread the risk on their books.
|MGIC Investment is close to breaching the maximum risk limit,PMI's sky-high risk led regulators to stop its from writing newinsurance and life insurer Genworth's U.S. mortgage unit is alreadyat the limit.
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