Seeking Alpha

Housing recovery has mortgage insurers looking to raise capital

  • Mortgage insurers Radian (RDN -0.6%) and MGIC Investment (MTG -1.1%) have each been multi-baggers over the past 15 months ( as well as not as pure of a MI play Genworth GNW), partly due to being previously priced at less than liquidation value, but also due to market share gains as the FHA pulls back from the business.
  • These sorts of vacuums don't last for long, and a couple of heavy-hitter-backed mortgage insurance companies are nearing IPOs. NMI Holdings - backed by Carlyle Group (CG), Kyle Bass, and BlueMountain - recently filed a S-1 even as it's yet to be profitable and expects to continue to report losses in the near-term. "In financials, it’s a rare occasion that you see such unseasoned deals,” says Josef Schuster, who tracks IPOs. "It’s really hand-to-hand combat,” says the head CUNA Mutual Group's mortgage insurer Sean Dilweg. “It’s pricing, it’s your service, underwriting, how quickly you can respond to a loan.”
  • Then there's Essent Group (ESNT) - with investors like George Soros and Goldman - currently profitable, and also pitching an IPO.
  • Whoever makes it first will be the first mortgage insurance company to go public in nearly twenty years.
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