Mortgage guaranty

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The effects of the recent U.S. subprime mortgage crisis have rippled through the global industry, highlighting the importance of setting appropriate premium levels for mortgage insurance. Milliman consultants are uniquely qualified to assist mortgage insurers properly design and price their products. Our extensive knowledge of advanced modeling methods allows us to offer sophisticated analysis of mortgage guaranty products.

Regulations governing mortgage lending and mortgage insurance vary from country to country. With consultants in the United States and every major European market, Milliman's mortgage banking practice combines in-depth knowledge of local requirements with insight into global practices. We are a trusted source of guidance and unbiased advice on mortgage guaranty issues worldwide.

Our primary mortgage-related services to financial institutions, insurers, reinsurers, and rating agencies include:

  • Credit risk analysis: We determine baseline loan-level default rate and loss severity assumptions. We also forecast the volatility of credit losses in order to assess the myriad of outcomes that define the credit risk spectrum. Our analyses include advanced loss-timing assessments, prepayment rate analysis, geographic market risk, exposure assessment, loss reversing, and portfolio valuations for bulk purchase or sale. We develop stochastic risk models for evaluating pricing structures and economic capital modeling.
  • Reinsurance performance metrics: To help our clients design enterprise-wide risk models, we developed Virtual Metrics™—a reinsurance performance metrics risk management platform. This powerful dashboard product reveals how a client’s risk profile compares to industry benchmarks and to their peers. Virtual Metrics combines client data with industry information and helps lenders to aggregate their portfolio of risk, determine risk characteristics and segmentation, and even drill down to a granular level to identify contributing factors. Virtual Metrics enables our clients to make better-informed strategic decisions and save money by pointing out loans that may be missing from a potential transaction.
  • Captive services: We evaluate all aspects of business strategies and captive insurance business plans. Our rigorous structure analysis includes reinsurance agreements review, pricing, risk transfer quantification, capitalization modeling and financial projections. We also assist captives with reserving, risk management, operations, and financial reporting.

We are a trusted source of guidance and unbiased advice on mortgage guaranty issues worldwide.