Comment Detail

Comment

First, in the interest of full disclosure, I am an individual investor in Genworth Financial and MGIC. I am writing to give some commentary on the draft PMIERS. I would like to make a general comment and than conclude with one more specific comment.
I feel that the draft PMIERS are unfair to the Legacy Insurers (Genworth, MGIC and Radian) and, if left in their current form, will give a competitive edge to the newer players in the field. I don't believe this is the intended consequence of these regulations. The Legacy Insurers have worked hard over the past 6 years to continue to operate their business. And because they have remained viable companies, they have played their part in the housing recovery, as well as the economic recovery. And now, just as they are becoming profitable again, they are going to be hit with overtly aggressive regulation. This comment leads to a more specific, potential solution. And there are much smarter people at the MIs and at FHFA, but I feel that if I am going to complain about the draft PMIERS, I should try to offer a possible solution. I know there has been a lot of discussion, and pushback from the GSEs, regarding using future premiums towards available assets. However, what if these future premiums were permitted to be used for a set period of time, say 5 years. And than, after the initial period, they were phased out or reduced over the next 5 years. This idea would have no affect on the newer entrants ability to meet the standards, but it would greatly help the Legacy Insurers. First, they would have more time to continue to build their business as the housing market continues to rebound. They would also have more time to produce profitable quarters and build their capital. And finally they would have more time to work through their current delinquent inventory and their pre-2009 books.
Thanks for your time. Being an investor in these firms, I will be greatly interested in seeing the final PMIERS when released.
Jeff Raines