WALNUT CREEK, Calif., June 17 CA-PMI-Approval-Trans
WALNUT CREEK, Calif., June 17 /PRNewswire-FirstCall/ -- The PMI Group,
Inc. (NYSE: PMI) today announced that PMI Guaranty Co. (PGC) has received all
regulatory approvals and entered into an agreement to transfer its entire
Financial Guaranty Insurance Company (FGIC) related reinsurance portfolio to
Assured Guaranty Re Ltd. (AG Re), a third party financial guarantor.
As a result of receiving regulatory approval, PGC, FGIC and AG Re entered
into an agreement that provides for all of the direct FGIC obligations
currently reinsured by PGC to be recaptured by FGIC and then ceded by FGIC to
AG Re. PGC paid approximately $9 million (net of unearned premium reserves
assumed by AG Re) to AG Re as part of the transaction. In addition, with
respect to two of the exposures ceded to AG Re, PGC has agreed to reimburse AG
Re for any losses it pays, subject to an aggregate limit of $22.9 million.
PGC has also agreed to secure its obligations by depositing $22.9 million into
a trust account for the benefit of AG Re and, to the extent AIG Re's
obligations are less than $22.9 million, the remaining funds will be returned
to PGC. PMI estimates that it will incur expenses of approximately
$18 million (net of tax savings) in the second quarter of 2008 as a result of
the agreement.
PGC has also filed an application with the Arizona Department of Insurance
to redomesticate PGC from New Jersey to Arizona and for approval to dividend
excess capital, estimated to be approximately $150 million, from PGC to PMI.
The Company has advised the Arizona Department of Insurance that, if the
dividend is approved, PMI intends to reinvest at least 80% of the dividend
into PMI Mortgage Insurance Co., PMI's primary U.S. mortgage insurance
company.
The PMI Group, Inc.
The PMI Group, Inc. (NYSE: PMI), headquartered in Walnut Creek, CA,
provides innovative credit, capital, and risk transfer solutions that expand
homeownership and fund essential services for our customers and the
communities they serve around the world. Through its wholly and partially
owned subsidiaries, PMI offers residential mortgage insurance and credit
enhancement products, financial guaranty insurance, and financial guaranty
reinsurance. PMI has operations in Asia, Australia and New Zealand, Canada,
Europe, and the United States. For more information: http://www.pmigroup.com.
Cautionary Statement: Statements in this press release 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
estimate with respect to PMI's expenses in the second quarter of 2008 as a
result of the PGC Agreement and our estimate of PGC's current excess capital
that may be distributed to The PMI Group. 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. In
addition, there can be no assurance that we will be permitted to distribute
the estimated excess capital or any lesser amount from PGC to The PMI Group in
the near future or otherwise. Other risks and uncertainties are discussed in
our SEC filings, including our Annual Report Form 10-K for the year ended
December 31, 2007 (in Item 1A) and our quarterly filing on Form 10-Q for the
quarter ended March 31, 2008. We undertake no obligation to update forward-
looking statements.
SOURCE The PMI Group, Inc.
