Fitch Downgrades Mortgage Insurers

Fitch Ratings has reduced the insurer financial strength ratings of PMI Mortgage Insurance Co., Walnut Creek, Calif., and Republic Mortgage Insurance Co., Winston-Salem, N.C. PMI's IFS rating was downgraded from AA to A-plus, a drop of two notches, while RMIC's was cut from AA to AA-minus. The changes echo downgrades made by Standard & Poor's in April. At that time, Freddie Mac ordered PMI to come up with a remediation plan, but did not require one of RMIC or its parent, Old Republic Corp., Chicago. The changes were announced in a Fitch news release about the whole mortgage insurance industry. Since late February, Fitch said it "has grown considerably more pessimistic on the outlook for the sector." It added that 2007 will likely turn out to be one of the worst underwriting years in MI history, with that year's book of business turning delinquent significantly faster than the 2005 or 2006 vintages. In addition, Fitch placed the IFS rating of Genworth Mortgage Insurance Co., Raleigh, N.C., on Rating Watch Negative and cut the long-term issuer rating for MGIC Investment Corp., Milwaukee, from A to BBB-plus.