With housing near the epicenter of the financial crisis, it is not surprising that mortgage insurers took a greater hit than other sectors of the insurance industry.
A new report from
S&P credit analyst Ron Joas says he does not expect most of the mortgage insurers to become profitable again until at least 2012 and that S&P will maintain a negative outlook on the sector until greater stability is seen around operating results and the industry's legal and regulatory environment.
"Our expectation that MIs could report operating profits in 2012--some in late 2011 at the earliest--hinges on the idea that the fragile U.S. economy and housing markets won't suffer significant setbacks," he says. "If unemployment were to increase, new notices of delinquencies could rise once again, and mortgage insurers would likely continue to lose money through 2012."
Nonetheless, Joas says ratings on specific insurers could diverge further in 2011 as greater clarity emerges on the ultimate performance of insured loan portfolios and the risk tolerances and underwriting strategies of each company.