Arizona judge upholds state seizure of The PMI Group
Arizona Judge Richard Gama refuses to vacate an order which permits the Arizona Department of Insurance to maintain control of the struggling mortgage insurance firm. In Arizona's Maricopa County, Judge Gama rejected a motion by The PMI Group (PMI) in which the insurer said the order to assume control of the company by the insurance department should be vacated "because the director did not establish exigency or irreparable harm." PMI argues that the seizure was unnecessary because the insurer had over $2 billion in cash and enough liquid investments to pay claims through December 2013. Judge Gama responded to PMI's argument: "although it might have $2 billion in liquid assets available for payment of claims until Dec. 2013, PMI is currently insolvent, with a negative policyholder surplus as of Sept. 30, 2011 of approximately $1 billion." The judge said PMI losses have been off at least 35% every year for the past three years, creating even more uncertainty about the company's financial forecasts. After evaluating the situation, Judge Gama refused to overturn the department of insurance's hold over PMI. The regulator took over PMI in October two months after the company lost 50% of its stock value in one day, before rebounding, and was forced to stop writing new business in August. Write to Kerri Panchuk.