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PMI MORTGAGE 'AAA' RATING AFFIRMED, REMOVED FROM FITCHALERT -- FITCH FINANCIAL WIRE --

 NEW YORK, April 8 /PRNewswire/ -- PMI Mortgage Insurance Co.'s "AAA" claims-paying ability rating is affirmed and removed from FitchAlert where it was placed on Oct. 8, 1992. The rating affirmation follows PMI's execution of a new $400 million reinsurance agreement with AXA Re France and Capital Reinsurance Co. superseding the previous agreement with the two reinsurers.
 The rating had been on alert due to PMI's decision last fall to terminate the prior $300 million joint and several reinsurance contract June 30, 1993. The reinsurance agreement is an important component of Fitch's evaluation of PMI's capital adequacy, as the agreement provides capital support directly to PMI, supplementing the committed capital support of PMI's parent, Allstate Insurance Company.
 PMI's decision to terminate the old agreement was motivated by a concern that under certain conditions, not contingent on PMI's financial performance, the cost of the reinsurance coverage would increase dramatically, putting in question the economic benefits of the agreement. Fitch believes the new reinsurance agreement addresses this issue, as pricing and the conditions under which the agreement could be put in run-off are tied more directly to PMI's financial performance. The increase in the amount of reinsurance coverage from $300 million to $400 million is also a positive, as it reflects management's commitment to maintain sufficient loss protection in place in the event of a catastrophic economic downturn.
 As a result of the large mortgage origination and refinancing volume experienced by the mortgage insurance industry in 1992, PMI's net insurance in force rose 38 percent to $53.2 billion. Profitability also increased as PMI's statutory net income grew to a company record $99.1 million, continuing a four-year trend of solid earnings. Underwriting results continue to reflect favorable loss experience despite an increase in delinquencies in certain markets. This is supported by a favorable combined ratio of 71.9 percent.
 The company's financial condition continues to be strong, with total statutory capital of $456 million at year end 1992, up 22.6 percent from the prior year. Risk to capital of 18.6x is low relative to historical levels, and conservative compared to the maximum statutory limit of 25:1. PMI's investment portfolio continues to be conservatively managed with 98.6 percent of the fixed income portfolio of investment grade quality. Equity investments increased as a percentage of invested assets from 9.4 percent to 13.4 percent, representing 21.5 percent of surplus, but the risk is mitigated by issuer and industry diversity.
 -0- 4/8/93
 /CONTACT: Lygia X. Campbell of Fitch, 212-908-0695/


CO: PMI Mortgage Insurance Co. ST: IN: INS SU: RTG

GK -- NY047 -- 4271 04/08/93 13:14 EDT
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Publication:PR Newswire
Date:Apr 8, 1993
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