Fitch Cuts Ratings on Two Largest MI Firms

Fitch Ratings has cut the insurer financial strength ratings at MGIC Investment Corp. and The PMI Group to 'BBB' and 'BB,' respectively. For Milwaukee-based MGIC, the cut "reflects the loss expectations and capital constraints facing MGIC as an independent mortgage insurance company," Fitch said. "In addition to limited capital markets access, MGIC has few remaining assets that could be monetized to increase its capital resources (as the company did in 2008 with the sale of its interest in Sherman Financial LLC) and will largely have to rely on current capital resources to satisfy ongoing MI claims." Fitch said PMI requested that the rating agency withdraw its ratings and will no longer provide it with non-public data. "PMI has extremely limited access to the capital markets and, as a result, will largely have to rely on current capital resources to satisfy ongoing MI claims," Fitch said. Both MIs have posted large losses in the past year and their shares trade for $1 or less.