AIG: United Guaranty Still Providing MI

Despite the woes of its insurance conglomerate parent, United Guaranty Inc., the nation's fourth-largest mortgage insurance company, is still writing new policies. "I can't say anything right now," said a spokeswoman for American International Group, "but UGI is open for business." She declined to elaborate, and company president William Nutt did not return a telephone call about the matter. A subsidiary of AIG, UGI is the nation's fourth-largest MI in terms of new policies written ($7.7 billion in the second quarter) and the fifth-largest as measured by policies-in-force ($135.2 billion). United Guaranty lost $440 million in the second quarter. (Its earnings were disclosed as part of AIG's results.) AIG's share price plunged Tuesday after its credit ratings were cut, fueling concerns that the $1 trillion-asset company might be forced into bankruptcy. AIG has suffered massive losses because of credit default swaps (insurance policies) it wrote on collateralized debt obligations backed by subprime mortgages. When subprime bonds go bad, AIG must make good on the insurance policies it wrote.