Arizona regulators said the primary mortgage insurance subsidiary of The PMI Group, Walnut Creek, Calif., had a $320 million deficit in its policyholder position and that was one of the factors which led to the decision to appoint a supervisor over the company's operations.
Christina Urias, the director of Arizona DOI, appointed Truitte D. Todd, of the firm of Tharp and Associates, as supervisor of PMI Mortgage Insurance Co. and PMI Insurance Co., last Friday afternoon.
PMI Mortgage Insurance Co., lost $328 million in the second quarter and had a loss ratio of 253%, both of which constituted an "adverse finding" under state law, the order from the Arizona Department of Insurance read.
The deficit in the unit's policyholder position, plus a deficit of $45 million in the policyholder position of PMI Insurance Co., which is a reinsurer, was the second adverse finding.
Finally, the third finding is from an Aug. 4 request from PMI Mortgage Insurance to be allowed to make a capital contribution to PMI Insurance.
But Arizona DOI said, "The likelihood that PMI Insurance Co. may require additional capital contributions in the future raises concerns with respect to the viability of the reinsurance relationship and ultimate collectability of amounts due from PMI Insurance Co."
