Financial Guaranty
PMI’s strategic investments in the financial guaranty sector support homeownership through direct engagement in mortgage finance transactions. They also indirectly facilitate homeownership by supporting financing for schools, hospitals, roads, and other community infrastructure projects. PMI’s success in this sector is driven by a balanced risk management strategy, broad product array, and management expertise.
PMI Guaranty, a wholly owned subsidiary of The PMI Group, Inc., provides credit enhancement at the mezzanine through remote loss level. Building upon PMI’s expert underwriting, financial strength, and market leadership, PMI Guaranty provides customized solutions to meet the credit enhancement and insurance needs of customers in mortgages and other asset types. PMI Guaranty expands PMI’s strategic position by enabling the company to insure a broader array of assets at various risk levels, including first lien mortgages, second lien mortgages including Home Equity Lines of Credit (HELOCs), and Net Interest Margin Securities (NIMS), and products with loan-to-value (LTV) ratios from 103 percent to 125 percent. PMI Guaranty will also allow PMI to offer balance sheet protection and economic capital relief through portfolio credit enhancement, reinsurance of non-mortgage exposures, and credit default swap capabilities.
PMI is the lead investor in FGIC, a AAA-rated financial guarantor providing bond insurance for public finance and structured finance obligations, both domestically and internationally. In the public finance sector, FGIC insures municipal general obligation bonds and other state and local government obligations in areas such as transportation, utilities, and health care. In the structured finance sector, FGIC provides credit enhancement on mortgage-backed securities, as well as a variety of consumer and commercial asset-backed securities. FGIC maintains the lowest risk portfolio in the financial guaranty industry, and its balanced approach to underwriting and broadened product capabilities provide a strong platform for profitability.
