Major Mortgage Insurer PMI Group (PMI) Seized
Tweet
Share
E-mail
Get Alerts PMI Hot Sheet
Join SI Premium – FREE
PMI Group's (NYSE: PMI) main insurance subsidiary has has been placed under the supervision of Arizona Department of Insurance.
The Order requires the company and its insurance subsidiary to cease writing new mortgage commitments in all states effective the close of business, August 19, 2011.
The company will begin paying claims at 50 percent, with the remaining amount deferred as a policyholder claim.
The agency noted that in the company's June 30 statement it reported a net loss of $329 million. Additionally, PMI reported net incurred losses of $574 million and net earned premiums of $227 million resulting in a loss ratio of 253%. The net loss and loss ratio constitute adverse findings under Arizona Administrative Code.
The law requires a mortgage guaranty insurer's policyholder position to equal or exceed its minimum policyholder position (MPP). PMl's June 30 Statement reports that PMI has a policyholder position of $258 million and an MPP of $578 million, resulting in a policyholder position deficit of $320 million. As of June 30, 2011, PMI's insurance subsidiary policyholder position was also deficient by approximately $45 million. These deficiencies constitute violations the law.
Shares of PMI were halted for trading Friday afternoon on the NYSE.
The news could have major market implications for other mortgage insurers, both positively and negatively, when trading resumes on Monday. Others in the sector include: Radian Group Inc. (NYSE: RDN), MBIA (NYSE: MBI), Assured Guaranty Ltd. (NYSE: AGO), MGIC Investment Corp. (NYSE: MTG).
The Order requires the company and its insurance subsidiary to cease writing new mortgage commitments in all states effective the close of business, August 19, 2011.
The company will begin paying claims at 50 percent, with the remaining amount deferred as a policyholder claim.
The agency noted that in the company's June 30 statement it reported a net loss of $329 million. Additionally, PMI reported net incurred losses of $574 million and net earned premiums of $227 million resulting in a loss ratio of 253%. The net loss and loss ratio constitute adverse findings under Arizona Administrative Code.
The law requires a mortgage guaranty insurer's policyholder position to equal or exceed its minimum policyholder position (MPP). PMl's June 30 Statement reports that PMI has a policyholder position of $258 million and an MPP of $578 million, resulting in a policyholder position deficit of $320 million. As of June 30, 2011, PMI's insurance subsidiary policyholder position was also deficient by approximately $45 million. These deficiencies constitute violations the law.
Shares of PMI were halted for trading Friday afternoon on the NYSE.
The news could have major market implications for other mortgage insurers, both positively and negatively, when trading resumes on Monday. Others in the sector include: Radian Group Inc. (NYSE: RDN), MBIA (NYSE: MBI), Assured Guaranty Ltd. (NYSE: AGO), MGIC Investment Corp. (NYSE: MTG).
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Goldman flags 2 Japanese tech stocks to buy
- Morgan Stanley sees a buying opportunity in this data center stock
- Lazard Global Total Return fund declares $0.1534 monthly distribution
Create E-mail Alert Related Categories
Corporate News, Hot ListSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
