Rating agencies are watching mortgage insurers closely as players like The PMI Group (PMI) grapple with tough economic headwinds, regulatory issues and an ongoing need to recapitalize their businesses. Moody's Investors Service downgraded PMI Mortgage Insurance's rating to Caa1 from B3 after the insurer said it would no longer accept new business. That revelation accompanied news that PMI is under the regulatory supervision of its primary regulator, the Arizona State Insurance Department. While PMI faces a great deal of uncertainty, Fitch Ratings withdrew Old Republic International's (ORI) issuer default rating and its insurer financial strength rating from negative watch. Despite this positive shift, Fitch's overall outlook for Old Republic remains negative given the uncertainty in the mortgage insurance space. Analysts said Old Republic's stronger position is tied to the operating performance of its property and casualty business, and its title insurance operations. Moody's also lowered The PMI Group's senior debt rating to C from Caa3. Analysts said PMI's "statutory capital position has deteriorated significantly in the last few quarters as a result of high loss reserve charges." Moody's analysis arrives one day after Standard & Poor's lowered PMI's credit and financial strength ratings to R from CCC-, while also placing the mortgage insurer on negative watch. The R designation falls at the lower end of S&P's ratings scale. Write to: Kerri Panchuk.