GEMICO Gives Up Triple-A Rating.

GE Capital Mortgage Insurance Corp. here has decided voluntarily to move from being an "AAA" rated mortgage insurer to an "AA" rated one.

Most of its competitors have an "AA" rating. Only United Guaranty Residential Insurance Corp., Greensboro, N.C., is now "AAA" rated.

As for UGRIC, a statement from its executive vice president and chief financial officer H.G. Waddell III, says the company "plans to maintain its 'AAA' rating status at this time. Although the GSEs place no particular value on the 'AAA' rating, both we and our mortgage lending customers see great benefits in United Guaranty's 'AAA' rating including lower cost for certain mortgage-backed securities transactions."

Also downgraded to "AA" was GEMICO's Australian affiliate, GE Mortgage Insurance Pty. Ltd.

A pair of reports from the rating agencies, issued at different times during the year hinted at the possibility of a ratings cut.

The one issued by Fitch on the entire private mortgage insurance industry issued at the end of January, commented the potential existed for some companies to "re-evaluate the cost-benefit relationship of maintaining an insurer financial strength rating in excess of 'AA.'

"This largely relates to the significantly higher stress-model capital charges that rating agencies impose for the higher rating categories and the increased difficulty in meeting shareholder return expectations at these higher capital levels vs. the limited benefit in the marketplace for insurers that maintain IFS ratings above 'AA.'"