Fannie Mae 2009 Annual Report Download - page 174

Table 52 presents our maximum potential loss recovery for the primary and pool mortgage insurance coverage
on single-family loans in our guaranty book of business by mortgage insurer for our top eight mortgage
insurer counterparties as of December 31, 2009. These mortgage insurers provided over 99% of our total
mortgage insurance coverage on single-family loans in our guaranty book of business as of December 31,
2009.
Table 52: Mortgage Insurance Coverage
Counterparty:
(1)
Primary Pool Total
Maximum Coverage
(2)
As of December 31, 2009
(Dollars in millions)
Mortgage Guaranty Insurance Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $23,580 $2,230 $25,810
Radian Guaranty, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,802 514 16,316
Genworth Mortgage Insurance Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,574 377 15,951
United Guaranty Residential Insurance Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,733 260 14,993
PMI Mortgage Insurance Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,375 872 14,247
Republic Mortgage Insurance Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,856 1,501 12,357
Triad Guaranty Insurance Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,520 1,108 4,628
CMG Mortgage Insurance Company
(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,967 — 1,967
(1)
Insurance coverage amounts provided for each counterparty may include coverage provided by consolidated affiliates
and subsidiaries of the counterparty.
(2)
Maximum coverage refers to the aggregate dollar amount of insurance coverage (i.e., “risk in force”) on single-family
loans in our guaranty book of business and represents our maximum potential loss recovery under the applicable
mortgage insurance policies.
(3)
CMG Mortgage Insurance Company is a joint venture owned by PMI Mortgage Insurance Co. and CUNA Mutual
Insurance Society.
The current weakened financial condition of our mortgage insurer counterparties creates an increased risk that
these counterparties will fail to fulfill their obligations to reimburse us for claims under insurance policies. A
number of our mortgage insurers have publicly disclosed that they may exceed the state-imposed risk-to-
capital limits under which they operate some time during 2010 and they may not have access to sufficient
capital to continue to write new business in accordance with state regulatory requirements. Several mortgage
insurers have approached us with various proposed corporate restructurings that would require our approval of
affiliated mortgage insurance writing entities. The restructurings are intended to provide relief from risk-to-
capital limits in certain states. We have engaged in discussions with these mortgage insurers to determine if,
and how, any restructuring may provide the intended relief and permit a mortgage insurer to continue to serve
the market by writing mortgage insurance and fulfill existing obligations to us with respect to risk in force. In
those cases where a restructuring provides the intended relief and we have received assurances from the
mortgage insurer and/or the relevant state regulatory authority that the restructuring will not materially affect
existing claims paying abilities, we may conditionally approve these affiliated mortgage writing entities, as we
did with Mortgage Guaranty Insurance Corporation’s affiliated mortgage insurance writing entity, MGIC
Indemnity Corporation.
In addition, many mortgage insurers have been exploring and continue to explore capital raising options, most
with little success. If mortgage insurers are not able to raise capital and exceed their risk-to-capital limits, they
will likely be forced into run-off or receivership unless they can secure a waiver from their state regulator. A
mortgage insurer that is in run-off continues to collect premiums and pay claims on its existing insurance
business, but no longer writes new insurance. This would increase the risk that the mortgage insurer will fail
to pay our claims under insurance policies, and could also cause the quality and speed of their claims
processing to deteriorate. In addition, if we are no longer willing or able to conduct business with one or more
of our mortgage insurer counterparties, and we are unable to replace them with another mortgage insurer, it is
likely we would further increase our concentration risk with the remaining mortgage insurers in the industry.
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