NEW YORK (Bloomberg) - Essent Group Ltd., an insurer whose investors include Bermuda reinsurers PartnerRe and RenaissanceRe, said it will become the first firm to enter the mortgage guaranty business since the US housing collapse.

Essent won approval to sell coverage in Pennsylvania, where its mortgage unit is based, the company said today in a statement. The insurer is enrolled in an expedited licensing program of the National Association of Insurance Commissioners and must seek approval from mortgage financers Fannie Mae and Freddie Mac before it can underwrite policies across the US, said Janice Walker, a spokeswoman for Essent.

The insurer is seeking a foothold in the market after the industry's biggest firms suffered two years of losses on costs tied to home borrower defaults.

Mortgage insurers pay lenders when homeowners fail to meet their obligations and foreclosure doesn't cover costs. Borrowers are often required to purchase the coverage if they pay less than 20 percent of a home's value when they obtain a mortgage.

"Our entry into the market re-affirms the valuable role mortgage insurance can play in helping home buyers who cannot afford large down payments," Mark Casale, chief executive officer of Essent and a former senior executive at mortgage guarantor Radian Group Inc., said in the statement.

The insurer has secured $500 million in equity financing from investors including banks Goldman Sachs and JPMorgan, both based in New York, private equity firm Pine Brook Road Partners, as well as PartnerRe Ltd. and RenaissanceRe Holdings Ltd., the statement said.

The company may have 100 employees at its Radnor headquarters by year end, Walker said.

"They're making progress, and we're working with them," Brad German, a spokesman for McLean, Virginia-based Freddie Mac said of Essent.

The association of commissioners is seeking to help qualified insurers by "facilitating their swift foray into the marketplace during this critical time of need", said Roger Sevigny, president of the organisation, in a statement.

Brian Marchiony, a spokesman for JPMorgan, Alex Stanton of Pine Brook and Pennsylvania Insurance Commissioner Joel Ario did not immediately return calls seeking comment.

Jane Simmons, a spokeswoman for PartnerRe, and Dawn Dover, a RenaissanceRe spokeswoman, had no immediate comment.