MILWAUKEE , Sept. 27, 2018 /PRNewswire/ -- Today the Federal Housing Finance Agency (FHFA) released revised private mortgage insurer eligibility requirements (PMIERs 2.0) that private mortgage insurers must meet to be eligible to provide mortgage insurance on loans delivered to or purchased by Fannie Mae and Freddie Mac (GSEs). The effective date of PMIERs 2.0 is March 31, 2019.
The financial requirements of PMIERs 2.0 require a mortgage insurer's "Available Assets" (generally only the most liquid assets of an insurer) to equal or exceed its "Minimum Required Assets" (which are based on an insurer's book of insurance in force, calculated from tables of factors with several risk dimensions and subject to a floor amount).
If PMIERs 2.0 had been effective as of June 30, 2018 , MGIC estimates that its pro forma excess of Available Assets over Minimum Required Assets would have been approximately $600 million , compared to its reported excess of approximately $1 .0 billion as of June 30, 2018 . The difference is primarily due to the elimination of any credit for future premiums that had previously been allowed for certain insurance policies. Although MGIC's excess Minimum Required Assets will decrease when PMIERs 2.0 becomes effective, MGIC does not expect PMIERs 2.0 to impact its current plans to pay quarterly dividends to its holding company, subject to any necessary approvals by its Board of Directors and the Wisconsin Office of the Commissioner of Insurance.
Patrick Sinks , CEO of MGIC and MTG, said, "I am pleased that the revised eligibility requirements have been finalized so we can now turn our full attention to providing increased access to credit for consumers and reducing GSE credit risk while generating good returns for shareholders."
The foregoing description of the PMIERs 2.0 is only a summary and is subject to and qualified by the text of the actual requirements, which are available on the FHFA's website ( www.fhfa.gov ).
MGIC ( www.mgic.com ), the principal subsidiary of MGIC Investment Corporation ( MTG ), serves lenders throughout the United States , Puerto Rico , and other locations helping families achieve homeownership sooner by making affordable low-down-payment mortgages a reality. At August 31, 2018 , MGIC had $204.5 billion of primary insurance in force covering approximately one million mortgages.
From time to time MGIC Investment Corporation releases important information via postings on its corporate website, and via postings on MGIC's website for information related to underwriting and pricing, and intends to continue to do so in the future. Such postings include corrections of previous disclosures, and may be made without any other disclosure. Investors and other interested parties are encouraged to enroll to receive automatic email alerts and Really Simple Syndication (RSS) feeds regarding new postings. Enrollment information for MGIC Investment Corporation alerts can be found at https://mtg.mgic.com/shareholder-services/email-alerts . Enrollment information for MGIC alerts can be found https://www.mgic.com/ClearRates/index.html .
Safe Harbor Statement
Forward Looking Statements and Risk Factors:
Statements regarding the potential impact of PMIERs 2.0 and MGIC's continued ability to pay dividends to its holding company are forward looking statements. We are not undertaking any obligation to update any forward looking statements or other statements we may make even though these statements may be affected by events or circumstances occurring after the forward looking statements or other statements were made. No investor should rely on the fact that such statements are current at any time other than the time at which this press release was issued. Below is a brief summary of some of the risk factors that could cause our results to differ materially from those expressed in, or implied by, the forward looking statements included in this press release. Before investing in the issuer's securities, investors should read and carefully consider the risks described in Exhibit 99 to its Quarterly Report on Form 10-Q filed on August 3, 2018 .
- Competition or changes in our relationships with our customers could reduce our revenues, reduce our premium yields and / or increase our losses.
- The amount of insurance we write could be adversely affected if lenders and investors select alternatives to private mortgage insurance.
- Changes in the business practices of the GSEs, federal legislation that changes their charters or a restructuring of the GSEs could reduce our revenues or increase our losses.
- We may not continue to meet the GSEs' private mortgage insurer eligibility requirements and our returns may decrease as we are required to maintain more capital in order to maintain our eligibility.