PMI Posts Another Loss, but Sees Improvement

Driven by charges and adjustment expenses in its domestic mortgage insurance business, The PMI Group Inc., Walnut Creek, Calif., posted a net loss of $93 million for the third quarter, a marked improvement over the same period last year when it lost $229 million. The MI suffered $337 million of consolidated losses and loss-adjusted expenses in the quarter, compared to $383 million one year prior. Net premiums written came in at $167 million for the third quarter, down from $176 million during the same quarter last year. The decrease was from a lower volume of new insurance written and higher refunded premiums from rescissions of insurance previously written. PMI disclosed it is in negotiations with one state — which it did not name — over an interpretation it is in violation of that state's financially hazardous condition regulation. If the state prevails the company indicated it could be forced to stop underwriting policies in that state. PMI has a risk to capital ratio of 18.5-to-1. It took steps which resulted in an additional $139 million in surplus capital for the company. There are 14 states that have some form of risk-to-capital standard. In California and Arizona (where PMI is domiciled), as well as North Carolina, steps have been taken to relax the risk to capital ratio requirement of 25-to-1. Meanwhile, PMI is in discussions to write new insurance policies should it fail the risk to capital standard through a recapitalized existing subsidiary.