Genworth Financial Releases Statement in Response to Final PMIERs
April 23, 2015 by Proquest LLC
Genworth Financial responded to the final Private Mortgage Insurer Eligibility Requirements (PMIERs), which were published by the Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, in conjunction with the Federal Housing Finance Agency.
PMIERs will be used by the GSEs to approve private mortgage insurers that provide mortgage insurance on loans acquired by them.
Based on its interpretation of the final PMIERs, the company said it still estimates $500 to $700 million of additional capital will be required to be fully compliant by the effective date. This estimate is based on a number of factors including the company’s view of market size and dynamics, planned internal restructuring within U.S. Mortgage Insurance (U.S. MI) and current affiliate asset valuation. The estimate does not reflect today’s announcement of changes to GSE fees (loan level pricing adjustments and adverse market fees), the impact of which the company is still evaluating. The final PMIERs lowered the level of required capital from that contained in the draft requirements, primarily benefiting legacy books of business, and also lowering the benefit from captive reinsurance treaties. Additionally, this estimate reflects reductions in affiliate asset valuation due to changes in market value, currency fluctuations and the finalization of the PMIERs.
The company reported that it still intends to comply with the final PMIERs by the effective date, which is now December 31. Although the company continues to pursue reinsurance transactions, the lower capital requirements on legacy books of business impact the evaluation of the mix of appropriate sources of capital, which include both reinsurance and holding company cash. As previously disclosed, the company is reviewing a broad range of strategic options that it believes will improve its ability to reduce debt levels, increase capital buffers and improve/grow earnings.
“The finalization of the eligibility standards is a significant step toward increasing the financial strength of the U.S. housing finance system and reinforces the vital role of private mortgage insurance,” said Tom McInerney, President and CEO. “Our U.S. Mortgage Insurance business is well positioned to not only build upon its already strong presence in the private mortgage insurance market but also to expand the role that private mortgage insurance plays in the housing finance system.”
Genworth Financial is an insurance holding company committed to helping families become more financially secure, self-reliant and prepared for the future.
More information:
www.genworth.com