This should not surprise anyone. But definitely not good news for the MIs. Any loan over 80LTV that the agencies bought had to have some form of credit protection, most likely MI. So if the GSE losses are that large for whatever residual risk they hold, the MI losses have to be substantial since they are sitting in front of them. I guess the question is, how substantial, when will it end, and will the MIs have enough capital to get through it.
I listened to the Genworth call the other day, and they sounded very negative on the propects of their domestic MI company for the next couple years. And I would tend to believe them a bit more, since they are less "tied" to the industry since they have other lines of business. The management of the pure play MI companies tend to drink the Kool Aid a bit too much.