Arch MI Releases Summer 2015 Edition of Its Housing and Mortgage Market Review and the Latest Arch MI Risk Index℠

Arch MI Risk Index℠ Continues To Forecast Low Probability Of Home Price Declines Nationally, But Indicates Highest Risk Remains In Top Oil- and Gas-Producing States

WALNUT CREEK, Calif.--(BUSINESS WIRE)-- Arch Mortgage Insurance Company (“Arch MI”), a leading provider of private mortgage insurance and a wholly owned subsidiary of Arch Capital Group Ltd., today released the Summer 2015 edition of its Housing and Mortgage Market Review, which contains the latest Arch MI Risk Index model results. The state- and metro-level risk indices predict the likelihood that home prices in a region will decrease over the next two years, based on recent economic and housing market data.

“The Summer 2015 edition of Arch MI’s Housing and Mortgage Market Review shows that, while the national average risk of price declines remains unchanged at only 8%, North Dakota and Texas continue to have elevated risks due to exposure to the oil and gas sector and higher home prices relative to incomes than in the past,” said Dr. Ralph G. DeFranco, Senior Director of Risk Analytics and Pricing at Arch MI. “North Dakota and Texas are the two top oil-producing states in the nation and remain the most at risk – with roughly a 1 in 3 chance of home price declines, on the outside chance that energy prices fall materially from here.”

North Dakota and Texas remain in the moderate risk category, with respective risks of price declines of 38% and 32%. In North Dakota, total nonfarm employment fell by 1.8% in the past three months, the worst in the nation, and the state has experienced unusually rapid home price appreciation and population growth in recent years. As a result, North Dakota home prices have risen 15% above the historical trend relative to incomes. Texas’ risk score remains elevated due to home prices that are the second most overvalued (by 13%) nationally relative to incomes but the state is in vastly better economic and financial shape than in the early 1980s.

Within the Arch MI Risk Index for the 50 most populous Metropolitan Statistical Areas (“MSAs”), Texas dominates the moderate-risk category with four MSAs: San Antonio-New Braunfels (39%), Houston-The Woodlands-Sugarland (36%), Austin-Round Rock (34%) and Dallas-Plano-Irving (32%). Home prices in these Texas MSAs are well above their historic long-term trends, so affordability remains a concern. Also, Houston may currently be over-building office space, which could hurt the area in the future if construction slows.

Dr. DeFranco will be hosting two webinars to discuss the implications of the latest data during the week of July 20, 2015. Registration is available at archmi.com, under the Resources tab.

More details are available in the Housing & Mortgage Market Review – Summer 2015 edition, available at archmi.com. *The affordability index comes from the National Association of Realtors®.

About Arch MI’s Housing & Mortgage Market Review and Risk Index

The Housing & Mortgage Market Review, which presents Arch MI Risk Index results, is published quarterly by Arch Mortgage Insurance Company. The Risk Index is a proprietary statistical model that measures home price risk by estimating the probability that home prices in a state or one of the nation’s 384 largest metropolitan statistical areas (MSAs) will be lower in two years, times 100 (for example, a score of 25 indicates a 25 percent chance that home prices will be lower in two years.) The Arch MI Risk Index weights various local economic and housing market factors, such as affordability, unemployment rates, economic growth rates, net migration, housing starts, etc. based on a statistical model built on data going back to the early 1980s. It is updated after each quarterly release of the FHFA All-Transactions Regional Housing Price Index (HPI).

ABOUT ARCH MORTGAGE INSURANCE COMPANY

Arch Capital Group Ltd.’s U.S. mortgage insurance operation, Arch MI, is a leading provider of private insurance covering mortgage credit risk. Headquartered in Walnut Creek, CA, Arch MI's mission is to protect lenders against credit risk, while extending the possibility of responsible homeownership to qualified borrowers. Arch MI’s flagship mortgage insurer, Arch Mortgage Insurance Company, is licensed to write mortgage insurance in all 50 states, the District of Columbia, and Puerto Rico. For more information, please visit archmi.com.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward−looking statements. This release or any other written or oral statements made by or on behalf of Arch Capital Group Ltd. and its subsidiaries may include forward−looking statements, which reflect our current views with respect to future events and financial performance. All statements other than statements of historical fact included in or incorporated by reference in this release are forward−looking statements.

Forward−looking statements can generally be identified by the use of forward−looking terminology such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe" or "continue" or their negative or variations or similar terminology. Forward−looking statements involve our current assessment of risks and uncertainties. Actual events and results may differ materially from those expressed or implied in these statements. A non-exclusive list of the important factors that could cause actual results to differ materially from those in such forward-looking statements includes the following: adverse general economic and market conditions; increased competition; pricing and policy term trends; fluctuations in the actions of rating agencies and our ability to maintain and improve our ratings; investment performance; the loss of key personnel; the adequacy of our loss reserves, severity and/or frequency of losses, greater than expected loss ratios and adverse development on claim and/or claim expense liabilities; greater frequency or severity of unpredictable natural and man-made catastrophic events; the impact of acts of terrorism and acts of war; changes in regulations and/or tax laws in the United States or elsewhere; our ability to successfully integrate, establish and maintain operating procedures as well as integrate the businesses we have acquired or may acquire into the existing operations; changes in accounting principles or policies; material differences between actual and expected assessments for guaranty funds and mandatory pooling arrangements; availability and cost to us of reinsurance to manage our gross and net exposures; the failure of others to meet their obligations to us; and other factors identified in our filings with the U.S. Securities and Exchange Commission.

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included herein or elsewhere. All subsequent written and oral forward−looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. We undertake no obligation to publicly update or revise any forward−looking statement, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150708005183/en/

Arch Mortgage Insurance Company
Bill Horning, 925-658-6193
or
Weber Shandwick
Sarah Payne, 212-445-8414

Source: Arch Mortgage Insurance Company

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