Arizona’s Department of Insurance has seized PMI Mortgage Insurance Co., the main subsidiary of PMI Group (PMI). The company will also commence paying claims at just 50%. The Department of Insurance has full possession, management and control of the PMI Mortgage Insurance Co.
Two months ago, Arizona Department of Insurance has brought under its supervision PMI Mortgage Insurance Co. and PMI Insurance Co. by issuing an order. The order requires PMI Mortgage Insurance Co. and PMI Insurance Co., the company’s subsidiaries, not to issue any new mortgage insurance commitments unless approved by the Department of Insurance.
Arizona-based PMI Mortgage Insurance Co., was short of funds required to meet regulatory requirements in Arizona. The State insurance department barred it from selling new policies and pay interest on $285 million in aggregate principal amount of surplus notes.
PMI Group was also notified by the New York Stock Exchange (NYSE) that it has fallen below the NYSE's continued listing standard of having a minimum average closing price of $1.00 per share over 30 consecutive trading days.
The shares have been trading at a price below $1.00 per share since August 1, 2011. Shares of PMI Group plummeted 69% from $1.00 per share (share price as on July 29, the last time PMI group traded at $1.00 per share) to close at 31 cents on Friday.
California based PMI Group provides insurance coverage to mortgage lenders, commercial banks and other financial institutions. The operations of PMI Group received a severe blow with the economic downturn in the second half of 2008. Since then, the company has continued to incur losses till date. The company posted a loss of $1.76 per share in the last quarter as it continues to suffer from mortgage losses.
The Zacks Consensus Estimate for third-quarter 2011 is a loss of 83 cents per share. For full years 2011 and 2012, the Zacks Consensus Estimates losses are, respectively, $2.50 per share and $1.09 per share. The company is yet to report its third quarter results.
The quantitative Zacks #3 Rank (short term Hold rating) for PMI indicates no clear directional pressure on the stock over the near term. The company nearest peer is MGIC Investment Corp. (MTG).
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