Kroll Bond Rating Agency Releases Private Mortgage Insurer Rating Methodology

NEW YORK--()--Kroll Bond Rating Agency (KBRA) releases its Private Mortgage Insurer Rating Methodology. The methodology describes the major quantitative and qualitative factors KBRA considers when rating the financial strength of a company that provides private mortgage insurance.

KBRA’s general approach for analyzing private mortgage insurers (PMIs) includes a comprehensive evaluation of key qualitative and quantitative determinants, which include an evaluation of three rating determinants:

  • In Determinant 1: KBRA examines the company’s operations and focuses on qualitative factors such as the company’s management, competitive position, business and risk management strategy, operations, and internal systems and controls;
  • In Determinant 2: KBRA assesses the company’s insured portfolio by utilizing its Residential Mortgage Default and Loss Model;
  • In Determinant 3: KBRA assesses the company’s claims paying resources.

KBRA assumes the PMI immediately goes into run-off, and the claims-paying resources available, as determined by KBRA in Determinant 3, need to be sufficient to pay stressed operating expenses and modeled claims determined by KBRA’s analysis in Determinant 2. The most onerous rating stress from Determinant 2 which is covered by claims-paying resources will determine the highest potential financial strength rating of the PMI. To determine the final rating, KBRA may then make a downward adjustment based on our assessment of Determinant 1.

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About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

Contacts

Kroll Bond Rating Agency
Analytical:
Christopher Whalen, 646-731-2366
Senior Managing Director
cwhalen@kbra.com
or
Steve McCarthy, 646-731-2343
Director
smccarthy@kbra.com

Contacts

Kroll Bond Rating Agency
Analytical:
Christopher Whalen, 646-731-2366
Senior Managing Director
cwhalen@kbra.com
or
Steve McCarthy, 646-731-2343
Director
smccarthy@kbra.com