The ""PMI Group, Inc."":http://www.pmi-us.com/ says it has filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code.
[IMAGE]According to PMI, the move is a direct result of the seizure of its subsidiaries PMI Mortgage Insurance Co. and PMI Insurance Co. by their primary regulator in Arizona on October 20, 2011.
""The company intends to use the protections of the Bankruptcy Code to assess its strategic and other options for preserving stakeholder value in light of the actions taken by the"" Arizona Department of Insurance, PMI said in a statement.
According to the _Phoenix Business Journal_, PMI sought to overturn the regulator’s seizure of its mortgage insurance operations, but that motion was denied on Friday.
[COLUMN_BREAK]PMI said it had been in talks with the Arizona Department of Insurance about raising additional capital from new investors in order to allow a third subsidiary, PMI Mortgage Assurance Company, to serve as a platform to write new mortgage insurance nationwide.
According to PMI, such a transaction would allow it to maximize claims payments and protect policyholder interests, but the company says actions taken by the Arizona Insurance Department “make it impractical†for the company to pursue such a resolution without bankruptcy protection.
The director of the Arizona Department of Insurance said in October that the agency will be making claim payments at 50 percent. The other half of the claim will be deferred as a policy holder claim.
None of the company's subsidiaries themselves commenced chapter 11 proceedings. PMI says it will continue to operate in the ordinary course of business as debtor-in-possession under the jurisdiction of the Bankruptcy Court.
PMI is headquartered in Walnut Creek, California, although its primary insurance regulator is out of Arizona.
In connection with the bankruptcy filing, PMI’s $685 million of senior unsecured notes and approximately $51.5 million of junior subordinated unsecured notes have become due and payable. Noteholders' ability to seek remedies and enforce their rights has been stayed as a result of the bankruptcy filing.