Higher corona virus outages resulted in lower second quarter earnings for Arch Capital and Genworth Financial's mortgage insurance units. However, the new insurance policies concluded for both benefited from the low interest rate environment in the quarter.
Arch's underwriting income from the mortgage insurance segment was $ 7.4 million in the second quarter, compared to $ 197.6 million in the first quarter and $ 258.4 million in the same period last year. Arch's segment results also include mortgage reinsurance.
As of June 30, arrears accounted for 5.14% of the US MI portfolio, compared to 1.42% at the end of the first quarter. This was exactly how the spread of the pandemic led to protective orders being issued.
Arch reported losses and loss-adjusted expenses of $ 224.1 million for the MI business in the second quarter, compared to nearly $ 26 million in the same period in 2019.
The U.S. Mortgage Insurance Unit's NAV increased to $ 24.6 billion in the second quarter, from $ 16.8 billion in the first quarter and $ 17.2 billion in the second quarter of 2019.
Genworth's US mortgage insurance business recorded an adjusted operating loss of $ 3 million in the second quarter as increased arrears due to the corona virus resulted in a loss of $ 228 million in the period.
The company adjusted its operating income of $ 138 million in the first quarter, compared with a $ 147 million operating income a year ago.
New arrears contributed to loss expense of $ 170 million in the second quarter. Genworth had 48,249 new late payment notifications in the period under review, which amounted to 53,372 as of June 30. As a result, Genworth increased its loss reserves by $ 28 million.
Genarch, like Arch, saw a strong improvement in the NAV of $ 28.4 billion in the second quarter, compared to $ 17.9 billion in the first quarter and $ 15.8 billion a year ago.
The earnings release confirmed Genworth Financial's previously announced plans to outsource 19.9% of its US MI business should the merger agreement with China Oceanwide be terminated.