Insurance Industry Looks to Benefit as U.S. Housing Market Continues to Improve
The Paragon Report Provides Stock Research on Genworth Financial and MGIC Investment
NEW YORK, NY--(Marketwire - Oct 2, 2012) - The housing bubble burst dealt a major blow to mortgage insurers as foreclosures soared leaving companies' balance sheets filled with large unpaid loans. Conditions have improved drastically for the industry in 2012 as recent rises in homebuilder's confidence and new and existing home sales have supported the notion that the U.S. housing market is steadily improving. The Paragon Report examines investing opportunities in the Property & Casualty Insurance Industry and provides equity research on Genworth Financial Inc. (NYSE: GNW) and MGIC Investment Corp. (NYSE: MTG).
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U.S. mortgage rates fell to record lows after the Federal Reserve announced stimulus measures focused on purchases of mortgage-backed securities. Rates for 30-year fixed mortgages fell to a record low of 3.4 percent, while the average 15-year rate declined to 2.73 percent. While new home sales fell slightly in August, 0.3 percent to an annual rate of 373,000, they still are roughly 30 percent higher than a year ago.
"We've already seen low mortgage rates even before the Fed action," said Wells Fargo & Co. senior economist Anika Khan. "We'll continue to see mortgage rates come down. That means affordability will continue to be high."
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Genworth Financial recently had its rating review extended by Moody's Investors Service. "The company is pursuing various plans to manage the U.S. mortgage insurance business and its linkages and dependencies to the holding company," Genworth said in a statement. "The company does not believe run-off, a sale or spin-off of that business are the most beneficial options for shareholders at this time."
Shares of MGIC Investment surged earlier this week after reporting the amount they were required to contribute to their main mortgage-insurance unit was reduced to $100 million from $200 million. "While there can be no guarantee that the open matters that remain can be successfully resolved, I am hopeful we will continue to make progress," MGIC Chief Executive Officer Curt Culver said in the statement.
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