05:43
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(Reuters) – The main subsidiary of mortgage insurer PMI Group Inc (PMI.N) has been seized by Arizona insurance regulators, and will begin paying only 50 percent of claims starting on Monday, PMI Group said on Saturday.
The remaining amount of each claim will be deferred, the company said on its website.
Under a court order obtained by Arizona regulators, "the Arizona Department of Insurance now has full possession, management and control of PMI," the company said in a brief statement.
The seizure of Arizona-based PMI Mortgage Insurance Co comes two months after two PMI units were ordered to stop writing new business due to their failure to meet capital requirements.
PMI, like other U.S. mortgage insurers, has suffered throughout the housing downturn and has extremely high risk-to-capital ratios, causing many to question its survival.
PMI stock, which had traded at nearly $50 a share before the housing meltdown in 2007, closed at 31 cents a share on Friday.
PMI rivals include MGIC Investment Corp (MTG.N), Genworth Financial (GNW.N) and Radian Group. (RDN.N)
MGIC, which is close to breaching its risk limit, said on Friday it would pump about $200 million into its loss-laden units to allow it to continue writing new insurance.
Most U.S. states allow a maximum risk-to-capital ratio of 25 to 1. At the end of September, MGIC Investment's combined insurance operations' risk-to-capital ratio rose to 24 to 1.
MGIC Investment said the $200 million infusion would lower its consolidated risk ratio to 21.3 to 1.
(Reporting by Matthew Lewis in Chicago; Editing by Vicki Allen)
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