Fitch Affirms PMI's Ratings; Changes Rating Outlook on Debt to Negative.Business Editors NEW YORK--(BUSINESS WIRE)--May 13, 2003 Fitch affirms PMI See Private Mortgage Insurance. Mortgage Insurance Co.'s (PMI Mortgage Ins) 'AA+' insurer financial strength (IFS) rating. The Rating Outlook on the IFS rating remains Stable. Fitch also affirms The PMI Group The PMI Group (NYSE: PMI) is a provider of credit enhancement products that promote homeownership and the provision of services essential to the building of strong communities. , Inc.'s (PMI) debt ratings (see below for a complete rating listing). The Rating Outlook on the debt ratings is changed to Negative from Stable. PMI is a California-based holding company whose primary operating company operating company A business that engages in transactions with outsiders. is PMI Mortgage Ins, an Arizona-domiciled mortgage insurance operating company. Although PMI derives revenues from subsidiaries other than PMI Mortgage Ins and businesses other than US mortgage insurance, the organization's ratings are based predominantly on the financial position of PMI Mortgage. At year-end 2002, PMI reported $3.5 billion of GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). assets and $2.2 billion of GAAP shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. . For the same period, PMI Mortgage Ins, along with its four operating insurance subsidiaries, reported $2.9 billion of statutory assets and $2.4 billion of statutory surplus (including contingency reserves). PMI Mortgage Ins' very strong IFS rating reflects its top competitive position in the mortgage insurance industry, strong earnings performance and subsequent capital generation capabilities, and solid overall risk-adjusted capitalization. Partially offsetting these positives are a slow but steady decrease in the quality of its insured loan portfolio over the past few years, including growth in higher loan-to-value (LTV LTV See: Loan-to-value ratio ) and less-than-A-quality loans, and the continued proliferation proliferation /pro·lif·er·a·tion/ (pro-lif?er-a´shun) the reproduction or multiplication of similar forms, especially of cells.prolif´erativeprolif´erous pro·lif·er·a·tion n. of captive reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. and other business-sharing arrangements. The change in Rating Outlook, to Negative from Stable, on PMI's debt ratings is primarily indicative of a trend towards more active management of the holding company's capital structure, including an expanded debt leverage appetite, coupled with Fitch's revised guidelines on the notching between insurance organizations' IFS and debt ratings. Also considered is the continuation, and even growth, of PMI's expansion into new business lines and the execution and deal risk associated with this behavior. However, Fitch's latest rating actions do not take into consideration any unannounced merger or related transactions. Entity: Rating Type Issue Rating PMI Mortgage Ins Co IFS 'AA+'. The PMI Group, Inc Long-term issuer 'AA-'; The PMI Group, Inc Senior debt 6.75% Notes due 2006 'AA-'; The PMI Group, Inc Senior Debt 2.50% Debentures due 2021 'AA-'. PMI Capital I Capital Securities 8.31% Securities due 2027 'A+'. |
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