Fitch Places CMG on Watch

Fitch Ratings, New York, has placed CMG Mortgage Insurance Co.'s insurer financial strength rating on Rating Watch Negative status, meaning it is likely to be downgraded. CMG is a joint venture between CUNA Mutual and PMI Mortgage Insurance Co., both of which own 50%. CUNA Mutual's IFS was cut from AA- down to A, which was the triggering action for the change in status. The CUNA Mutual downgrade, Fitch said, means that both owners of CMG have experienced downgrades related to deterioration in their capital levels. The rating agency had viewed the ownership structure as a positive, preventing either parent from extracting capital from CMG to the detriment of the other parent. CMG did not pay any dividends to its owners last year and there are no plans to pay dividends this year. "Fitch views the stress experienced by both parent companies and their respective weakened capital positions as raising the probability that both parents would need to extract capital from CMG MI at some point, and thus weakening the protection provided by the 50/50 ownership structure," the rating agency said, adding that if it does cut CMG's IFS, it would likely be limited to three notches. Currently, CMG's IFS "AA" and the downgrade could bring it to "A".