Greensboro story: From three guys, to $3.4 billion business
Famed New York investor Maurice Greenberg, longtime CEO of American International Group, made his investors billions of dollars in North Carolina without a whole lot of notice. He bought Greensboro-based United Guaranty Group Inc. in 1981 and helped build it into one of the largest U.S. mortgage insurers – the company that pays off a mortgage in case the homeowner defaults.
United Guaranty’s roots date to 1963 when Sidney Stern Jr., Marvin Legare and Bill Hemphill co-founded First Mortgage in downtown Greensboro. Early investors included Skipper Bowles, Stanley Frank and other prominent Gate City businessmen. Stern died in 1991, not long after donating $1.2 million for a new building for the city’s United Way.
Hemphill, who was CEO from 1972 through 1983, was one of the city’s most prominent civic leaders for many years. He chaired the Greensboro Chamber and the Moses H. Cone Hospital board, among other posts. He died in 2012.
United Guaranty never changed its name but remained a national leader in private mortgage insurance. It was a can’t-miss business for decades as U.S. home prices steadily increased and foreclosures were rare.
That all changed in the housing depression in 2007, causing a stunning $2.8 billion loss at United Guaranty in 2008, when lower home values prompted millions to stop paying their mortgages and put the ball in the insurer’s court. Greenberg had been forced out of the company in 2005 because of a controversial accounting scandal.
With more than $180 billion in federal assistance, AIG was controlled by the federal government from 2008-12. It wound up paying back the U.S. Treasury, which realized a gain of more than $20 billion from selling the company’s common shares. AIG now has a stock market capitalization of $63 billion.
United Guaranty helped make that rebound possible. It now has more than 1,050 employees, including an estimated 400 workers in downtown Greensboro. For the first half of this year, United Guaranty reported pretax income of $350 million, a 16% gain from a year earlier. The company is now much stricter about the quality of loans it insures – something Stern, Legare and Hemphill would no doubt applaud.