Mortgage Insurer Buys Back Stock
The PMI Group here has inked a deal to buy back $345 million worth of its common stock through Goldman Sachs & Co.
A spokesman for the company said the accelerated buyback commitment will offset a debenture program that will result in a like amount of new stock being issued to bond holders. Between 30 and 40 institutional investors own the debentures, the spokesman said.
The mortgage insurer said the company is trying to avoid a dilution in its share price.
Not only is Goldman serving as broker on the share buybacks, but has arranged for $345 million in financing to fund the program.
According to the Quarterly Data Report, PMI is the nation's second largest mortgage insurance company as measured by new policies written in the second quarter. (Radian Guaranty Inc., Philadelphia, is a close third.)
There are seven mortgage insurance companies operating in the U.S., most of which are publicly traded or are subsidiaries of public companies.
Last week, PMI shares were selling for $43 or so, compared to a 52-week high of $47 and a low of $37. In recent years, the MI industry has been hurt by the rise in piggyback, or "80-10-10" loan structures, which have siphoned away business. (c) 2006 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com