Mortgage Guaranty Report

1978-2007 Experience
2007 Premium Earned

Mortgage guaranty insurance provides protection to lenders against default by borrowers who initially have less than 20 percent equity interest in the mortgaged property. This form of insurance is designed to stimulate home ownership by giving consumers, with a down payment of less than 20 percent, access to credit markets.

Because mortgage guaranty insurance can have large loss fluctuations, over the years and from state to state, the Missouri Department of Insurance, Financial Institutions & Professional Registration (DIFP) has been collecting data on this business for more than 30 years to monitor this market. Each year, the DIFP directs mortgage guaranty writers in Missouri to file loss ratios of their residential and commercial business for both Missouri and countrywide. This report compares the performance of these insurers in Missouri and countrywide for years 1978 to 2007.

In 2007, insurers writing residential guaranty insurance in Missouri reported a premium earned of $104 million and losses totaling $54.7 million. The true loss ratio (losses paid + change in outstanding reserve + change in IBNR reserve divided by premium earned) is 114.4 percent, which is the highest in the last 30 years of reporting. For the 30 years combined, the loss ratio is 41.1 percent in Missouri, but 52.8 percent countrywide.

For the year ending 2007, 13 companies wrote residential mortgage guaranty insurance in Missouri. Commercial mortgage guaranty activity has ceased in Missouri with no premiums and/or losses reported since 1999.

This report was compiled using information submitted by the insurance companies. While every effort is made to ensure accurate data, the accuracy of this report is dependent upon each company's data. The charts and graphs in Section I utilize data submitted by all mortgage guaranty insurers writing in Missouri for 1978 through 2007. Section II is based on companies actively writing in Missouri for calendar year 2007. Section III ranks mortgage guaranty insurers on their 2007 data by premium earned.

Any questions regarding this report should be addressed to the Statistics Section, Department of Insurance, Financial Institutions & Professional Registration, P.O. Box 690, Jefferson City, Missouri 65102-0690.  Also, additional copies of this report can be received by sending a written request, along with payment of $35 per copy, to this same address.