Fitch Downgrades PMI Mortgage

Citing changes to its mortgage insurance capital model and the declining residential real estate market, Fitch Ratings has downgraded the insurer financial strength ratings of PMI Mortgage Insurance Co. and PMI Guaranty Co. from AA-plus to AA.In addition, Fitch has affirmed the A-plus senior debt and long-term issuer ratings of The PMI Group Inc., the Walnut Creek, Calif.-based parent company, as well as various other ratings of PMI affiliates. Fitch recently enhanced its proprietary MI capital model in light of the changing U.S. mortgage environment and corresponding changes to Fitch's residential mortgage-backed securities model. "Among the most significant changes to Fitch's MI model were a 20% increase to the frequency-of-foreclosure factors and an increase in the capital charge for illiquid assets to 100%," the rating agency said. In response to the rating actions, PMI chief executive officer Steve Smith said: "It is important to recognize that the ratings changes made by Fitch were primarily driven by a change in their ratings methodology and capital model, not by a deterioration in the financial position or results of The PMI Group Inc. or our subsidiaries." Fitch can be found online at http://www.fitchratings.com.