Mortgage Insurer Essent Files For IPO

Mortgage insurer Essent Group Ltd. on Monday filed for an initial public offering, backed by investors including Goldman Sachs Group Inc. and George Soros.

Goldman Sachs, JPMorgan Chase & Co. and Barclays PLC are managing the share sale, according to a Bloomberg News report, citing the firm's regulatory filing. Initially, Essent will put up about $287.5 million; however, this amount serves as a ‘placeholder’ used to calculate registration fees.

It remains to be seen how much stock the company plans to sell or what the share price will be. In addition, the company's prospectus does not list its market value.

Mortgage insurers have been benefiting from the housing recovery: Home values have been rising steadily, while delinquencies and foreclosures have been falling precipitously. Most are using the increased revenue to build up their capital reserves, in anticipation of when government-sponsored enterprises Fannie Mae and Freddie Mac are liquidated and private capital returns to the secondary market.

Essent is sitting pretty in the mortgage insurance market, as some of its competitors have recently gone out of business. It currently has about 9.2% of the market, according to the report.

In 2009, Essent acquired software and other assets from Triad Guaranty Inc., a mortgage insurer hurt by losses from pre-crisis subprime mortgages. Meanwhile, competitor PMI Group Inc. filed for bankruptcy in 2011.


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