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Action vs. PMI Mortgage wont affect CMG MIs business
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SAN FRANCISCO (8/22/11)--The decision by Arizona's Department of Insurance to place PMI Mortgage Insurance Co. (MIC) under supervision will not impact CMG Mortgage Insurance Co.'s. (CMG MI) new business originations or serving of existing policies with credit unions, CMG MI said Friday. There will be no interruption in daily operations, with CMG MI continuing to write business in all 50 states. "In addition to the company's solid operating performance and strong financial footing, CMG MI continues to enjoy the strong support of its joint venture partner CUNA Mutual Group," said CUNA Mutual Group Vice President Sean Dilweg. "CMG MI will continue to benefit tremendously from CUNA Mutual's management and financial strength as well as PMI's ongoing operational services." He pointed out that CMG MI is a stand-alone, incorporated entity with its own capital and has dedicated staffing from its shareholders. "CMG MI is strong and committed to the credit unions it serves," Dilweg added. Key factors in CMG MI's solid financial position:
* CUNA Mutual Group's statutory capital grew to $1.45 billion through June, up $30 million from year-end 2010. Its financial strength rating from A.M. Best rating agency is "A" (excellent) with a Stable outlook. * As of June 30, CMG MI had among the industry's strongest financial and operating ratios. * As a separate legal entity, CMG MI's investment grade ratings--BBB from both Standard & Poor's and Fitch--are based primarily on CMG MI's own capital, operations performance and loss mitigation, independent of its shareholders. The Fitch rating was affirmed in July and S&P's has been stable since February 2010. *CMG MI has the industry's lowest portfolio delinquency ratio at 5.3% as of June 30, an improvement from 5.6% on March 31. This compares with an industry average in the 16% range. * As of June 30, the company held a strong liquidity position with claims-paying resources, backed by cash and readily marketable securities of $328 million. * The liquidity compares favorably with its $171 million in loss reserves for claims as of the end of second quarter 2011. * The 2-to-1 ratio of liquidity to reserves is one of the highest in the mortgage insurance industry. CMG MI's delinquency inventory improved in second quarter, resulting in a favorable release of more than $8 million in previously established loss reserves.
PMI Group said Friday the regulator also placed PMI Insurance Co. (PIC) under supervision and had appointed a supervisor. The order requires the PIC and MIC to cease issuing new mortgage insurance commitments, effective at the end of the business day Friday, unless otherwise approved by the director of the department or the supervisor. They may issue mortgage insurance policies under pending commitments through Sept. 16, at which time the regulators will determine whether they would go into conservatorship. Government-sponsored enterprises (GSEs)Fannie Mae and Freddie Mac previously approved the use of PMI Mortgage Assurance Company (PMAC), a subsidiary of MIC, as a limited, direct issuer of mortgage guaranty insurance in certain states where MIC is unable to continue to write new business. As a result of the order, pursuant to restrictions contained in Fannie Mae's approval, PMAC is no longer eligible to offer mortgage insurance in any states. It is exploring opportunities to further capitalize PMAC to get the GSEs' approval back.


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