PMI Group Inc.'s sale of common stock and senior notes has contributed enough proceeds to bring its primary mortgage insurance underwriter back into compliance with the risk-to-capital ratio and minimum policyholders' position requirements some states have.
The transactions netted $706 million, of which $586 million went to PMI Mortgage Insurance Co. This had the effect of reducing the unit's risk-to-capital ratio on a pro forma basis at March 31 to 13.4:1.
In its first-quarter earnings release Monday, PMI Group gave a preliminary risk-to-capital ratio figure of 26.6:1 for PMI Mortgage, above the 25:1 requirement a number of states have. However, because the capital raise took place after March 31, this is not being reflected in PMI Mortgage's balance sheet, policyholders' position or risk-to-capital ratio for the first-quarter statutory filing.
Steve Smith, PMI Group's chairman and chief executive, said this means PMI Mortgage can continue writing new policies in all 50 states and PMI Group will not have to turn to a reactivated subsidiary to write policies.