CUNA Mutual Shrugs Off Arizona Order
CMG Mortgage Insurance Co. said that a recent action by Arizona’s Department of Insurance placing PMI Mortgage Insurance Co. under supervision will not impact the firm’s new business originations or servicing of existing policies.
The PMI Group Inc. said under the order, PMI Mortgage Insurance and PMI Insurance Co. were required to cease issuing new mortgage insurance commitments effective as of close of business Aug. 19 unless otherwise approved by the director of the Arizona Department of Insurance or the supervisor.
CMG Mortgage Insurance operates as a corporate joint venture between CUNA Mutual Insurance Society and PMI Mortgage Insurance Co. CMG Mortgage Insurance said there will be no interruption in daily operations and it will continue to write business in all 50 states.
Under the Arizona order, PMI Mortgage Insurance and PMI Insurance may issue mortgage insurance policies under pending commitments through the close of business on Sept. 16, 2011, according to a statement from PMI Group. PMI Mortgage Insurance is also required to cease making interest payments on the $285 million in aggregate principal amount of surplus notes that it has issued in favor of the company.
Both PMI companies must provide the Arizona insurance department with a plan that cures deficiencies in its financial condition and policyholder position, according to PMI Group. If the companies do not satisfy these requirements within 60 days, the department said it may take appropriate action, including starting conservatorship proceedings.
Fannie Mae and Freddie Mac previously approved the use of PMI Mortgage Assurance Co., which is a subsidiary of PMI Mortgage Insurance, as a limited, direct issuer of mortgage guaranty insurance in certain states, PMI Group said. As a result of the order, PMAC is no longer eligible to offer mortgage insurance.
Several media outlets, including the Wall Street Journal and Reuters, reported that since the starting of the housing downturn, PMI has reported billions in losses.
In an Aug. 19 press statement, CUNA Mutual Group Vice President Sean Dilweg said, “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.”
Dilweg went on to say “CMG MI will continue to benefit tremendously from CUNA Mutual’s management and financial strength as well as PMI’s ongoing operational services.”
According to CUNA Mutual, CMG MI’s investment grade ratings–BBB from Standard & Poor’s and BBB from Fitch Ratings–are based primarily on CMG MI’s own capital, operations performance and loss mitigation, independent of our shareholders. Its Fitch rating was affirmed in July, and S&P’s has been stable since February 2010, the company said.