CMG MI Comments on Chapter 11 Filing by The PMI Group, Inc.

Posted: 2011-11-30 00:00:00

SAN FRANCISCO – November 30, 2011 – CMG Mortgage Insurance Company’s executive leadership said today the company’s operations remain strong, and the company’s focus on credit unions’ mortgage insurance needs is unaffected by the Nov. 23, announcement that The PMI Group, Inc. (TPG), had filed for Chapter 11 federal bankruptcy protection.

PMI Mortgage Insurance Co. (PMI), a subsidiary of TPG, currently owns a 50 percent stake in CMG MI, the other 50 percent being owned by Madison, Wisconsin-based CUNA Mutual Group. As stated in earlier communications, CMG MI is a stand-alone, incorporated entity with its own capital and dedicated staffing from its shareholders.

“The bankruptcy filing affects only the holding company for PMI,” said Kim Shaul, CMG MI senior vice president and general manager.  “CMG Mortgage Insurance Company is a joint venture between the subsidiary and CUNA Mutual.  The filing will have no impact on the day-to-day operations or claims-paying activities of CMG MI."

The following are key factors supporting CMG MI’s solid financial position:

• As of the last available reporting period, Sept. 30, 2011, CMG MI had among the industry’s strongest financial and operating ratios, including a risk-to-capital ratio of approximately 20:1 and the industry’s lowest portfolio delinquency ratio at 5.5 percent.
• As of Sept. 30, 2011, CMG MI enjoyed a strong liquidity-to-reserves ratio, one of the highest in the industry, with claims-paying resources, backed by cash and readily marketable securities of $330 million. This liquidity compares favorably to the company’s $168 million in loss reserves for claims as of the end of third quarter 2011. 
• As a separate legal entity, CMG MI’s financial strength ratings  – BBB from Standard & Poor’s (S&P) and BBB from Fitch Ratings (Fitch) – are based primarily on CMG MI’s own capital, operations performance and loss mitigation,  as well as capital support, staffing, and operational arrangements with its parents, CUNA Mutual Insurance Society and PMI.  CMG MI’s S&P rating was reaffirmed in September 2011, while the Fitch rating was affirmed in July of this year.

• CUNA Mutual Insurance Society’s statutory capital grew to $1.40 billion through September 2011, up $40.6 million from year-end 2010.  The company holds an “A” (Excellent) A.M. Best financial strength rating with a Stable Outlook.

TPG’s federal bankruptcy filing followed the Nov. 22, state court action by the Superior Court of Arizona to uphold the Arizona Department of Insurance’s interim control over PMI pending a hearing on the appointment of a receiver over PMI.  CMG MI executive management continues to work with the Arizona Department of Insurance to ensure appropriate support for its operations.

ABOUT CMG MI

Licensed in all states, CMG Mortgage Insurance Company (CMG MI) operates as a corporate joint venture between CUNA Mutual Insurance Society and PMI Mortgage Insurance Co.  The company provides private mortgage guaranty insurance to protect credit unions against potential losses in the event of borrower default.   By covering default risk on residential first mortgage loans, CMG MI facilitates the sale of low-down-payment mortgages in the secondary mortgage market and expands homeownership opportunities by enabling credit union members to buy a home with a down payment of less than 20 percent.  For more information, visit www.cmgmi.com.

Statements in this document that are not historical facts, or that relate to future plans, events or performance, are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include our discussion of the environment for mortgage insurance and our risk management practices. Readers are cautioned that forward-looking statements by their nature involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Many factors could cause actual results and developments to differ materially from those expressed or implied by forward-looking statements including, among others, conditions affecting the mortgage insurance industry, general economic conditions, and regulatory and legislative developments. Except as may be required by law, we undertake no obligation to update forward-looking statements.