Standard & Poor’s Ratings Services is requesting comments on proposed benchmarks for rating mortgage insurers, including criteria for analyzing their capital adequacy.
The criteria would apply to all global-scale foreign and local currency, long-term issuer credit, financial strength and financial enhancement ratings on mortgage insurers and insurers for which mortgage insurance is a material part of the business, the company said in a statement.
S&P believes the following factors warrant specific consideration when it comes to mortgage insurers:
- Insurance industry and country risk assessment (IICRA), reflecting the structural aspects of the mortgage sector, the regulatory environment and the types of products available.
- Competitive position, taking into account the monoline nature of the industry and the limited number of writers.
- Capital and earnings.
S&P credit analyst Hardeep Manku said that “regional considerations—such as market structural features, legal regime, borrower recourse and funding—generally play a role in determining mortgage performance and, by extension, have a bearing on the capitalization of a mortgage insurer.”
S&P expects the proposed criteria to result in few, if any, rating changes.
Interested market participants may submit their written comments on the proposed criteria to http://www.standardandpoors.com/criteriaRFC/en/us. The deadline is Sept. 30, 2014.