"One potential concern is the risk that current MI business, which is apparently very good, could come back to haunt them if housing prices plummet substantially from here. I know that the company said the new business was more solid, but I would like to hear more about the potential downside of writing new business at this juncture. "
Yes, but what choice do they have? What do you expect them to do? Stop writing new insurance? No can do. This is the smartest thing to do - push it out as far as possible and pray for a recovery. lol. Seriously though, this is the best way. New premiums paying for old claims.
When you look at the NIW, in some ways they are being quite a bit more conservative, while in others not so much. Without question, they are getting back to basics. Structured is down to very low amounts. Flow was 90.8% of Q3 NIW. Yet within that flow, 9.7% was still at A- or below (though with higher FICOs). Of the structured they wrote, 78.4% was prime. Good. However a whopping 31% of NIW was >= 95% LTV. Eek! NIW ARMs less than 5 years was only 4%, which brings the total of ARMs < 5 years to 14%. Pretty good.