Genworth Mortgage Insurance, part of Genworth Financial, has completed an excess of loss reinsurance transaction covering a portion of the loss tier on subject loans written between 2009 and 2019 book years, effective April 1, 2020.
The transaction provides reinsurance coverage in excess of the Private Mortgage Insurer Eligibility Requirements (PMIERs) capital requirements as of March 31, 2020 in response to an anticipated higher level of delinquencies as a result of COVID-19.
As such, the company expects up to $300 million of additional PMIERs capital credit when required assets are in the covered tier, subject to GSE approval as part of their evaluation.
Genworth also commented on the release of amendments to the PMIERs by Fannie Mae and Freddie Mac under the guidance of the Federal Housing Finance Agency (FHFA) on June 29, 2020, in light of the impact of the COVID-19 pandemic on the US housing market.
As of March 31, Genworth’s US mortgage insurance business had available assets of approximately 142% of the required assets under the current set of PMIERs requirements, or more than $1.1 billion above the required levels.
If these amended requirements had been effective as of March 31, Genworth estimates that its sufficiency ratio would not have been materially impacted by the revised capital treatment.
Any difference would be primarily due to the application of the capital relief multiplier for non-performing loans during the COVID-19 crisis. The effective date of the amended requirements was June 30, 2020.
“We appreciate Fannie Mae, Freddie Mac and the FHFA’s responsiveness in providing clarity to the mortgage insurance industry on the PMIERs treatment of delinquencies in forbearance—and I’m pleased that the strength of Genworth MI’s balance sheet and our business performance will allow us to continue helping more families get into and stay in their homes,” said Rohit Gupta, CEO of Genworth’s U.S. mortgage insurance business.
“I’m proud of the work we’ve done to not only build a strong financial foundation, but also enhance our flexibility during this uncertain time.”