Freddie Mac has approved a new subsidiary of PMI Group Inc. as an eligible mortgage insurer, the company said Tuesday.

The subsidiary, PMI Mortgage Assurance Co., was established to write mortgage insurance if capital levels at the company's main operating unit, PMI Mortgage Insurance Co., fell below regulatory requirements.

Fannie Mae granted the subsidiary similar approval last month.

PMI Mortgage Assurance, which has about $28 million of capital, is to insure new mortgage loans under the same policy terms as PMI Mortgage Insurance, the Walnut Creek, Calif., parent company said.

Sixteen states require that private mortgage insurers' risk-to-capital ratios be less than 25 to 1 to write new business, and in some other states the insurance regulator decides whether to let a mortgage insurance company write new business at levels beyond that.

As losses have accumulated from burgeoning claims, some companies are nearing that threshold.

At the end of 2009, the risk-to-capital ratio at PMI's main operating subsidiary was 22.1 to 1.

The company has said that, unless it raises "substantial additional capital" during the first quarter, its risk-to-capital ratio will exceed the regulatory ceiling.

Another mortgage insurer, MGIC Investment Corp., has also formed a subsidiary to write new business in case its main unit — whose risk-to-capital ratio was 19.4 to 1 at yearend — were disqualified.

Both Fannie and Freddie have approved the subsidiary, MGIC Indemnity Corp., as a mortgage insurer.

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