Done Deals: PMI Mortgage Insurance Rating Lowered To 'AA-', Stays On Watch Neg, After Downgrade On Parent

Thursday, April 10, 2008

PMI Mortgage Insurance Rating Lowered To 'AA-', Stays On Watch Neg, After Downgrade On Parent

(Skyline photo of Melbourne, Australia)

MELBOURNE , Australia—Standard & Poor's Ratings Services has lowered its insurer financial strength rating on the Australian mortgage insurer PMI Mortgage Insurance Ltd. (PMI Australia) by one notch to 'AA-' from 'AA'. The rating remains on CreditWatch with negative implications, where they were initially placed on Feb. 13, 2008.

The rating action follows the downgrade of PMI Australia's U.S.-based parent PMI Mortgage Insurance Co. (PMI Co.) on April 8, 2008 (please refer to research update titled, "Ratings on Four U.S. Mortgage Insurers Lowered To Reflect Greater-Than-Expected Housing Slump") to 'A+' with a negative outlook

Standard & Poor's lowered its ratings on PMI Co. by two notches because of the challenges confronting the mortgage and housing sectors in the U.S. PMI Co. also has above-average concentrations of risk-in-force from adjustable-rate mortgages and loans with reduced documentation.

"The 'AA-' rating on PMI Australia reflects the company's current stan

d-alone credit profile, which has superior business and operating characteristics relative to the rest of its U.S.-based parent," Standard & Poor's credit analyst Maryanne Galea said.

"We consider that PMI Australia h

as a strong business and financial position, including a substantial domestic market presence that is not much reliant on the parent, and benefits from the strong Australian prudential regulatory regime. The PMI Australia rating is also underpinned by the company's present corporate governance, including the number and expertise of its independent board directors, and the track record of the supportive parent-subsidiary relationship."