Mortgage Insurer PMI Warns of Shutdown
Mortgage insurer PMI Group Inc. warned Thursday that it could be forced to stop selling new coverage, sending shares plunging.
PMI, which has reported about $3 billion in losses since the fourth quarter of 2007, said a backup plan intended to allow the company to stay open for business if its primary subsidiary falters had “no assurance” of continuing to work.
That backup plan gained importance when PMI reported Thursday that its primary subsidiary had missed key capital-adequacy targets in the second quarter. The subsidiary is likely to be shut down by its primary regulator in Arizona if it is unable to “obtain significant capital,” or at least outline a credible plan for doing so, Chief Executive L. Stephen Smith said on a conference call with investors.
Obtaining such capital will be “very challenging to achieve,” Mr. Smith said.