paid, that is a very good point about the MIC shares supporting USMI. However, USMI book is about $1b. in contrast, RFIG (from ORI) has a NEGATIVE book value of $17m and is expecting more losses for at least a couple of years. and it is still being spunoff. so MIC dropping some does not really change things too much.
well, as disclosed, usmi capital is roughly 800m (see the usmi supplement they put out in early may), and they are at roughly 29:1 on all usmi companies combined, so a loss of 50m is a big deal in terms of capital and risk-to-capital, especially given they are going to have a few more losses coming through in the next few quarters, without additional capital the regulators will be forced to shut them down, rmic may be at negative capital now, but they weren't when they were shut down, they were at 45:1 risk to capital, if/when gemico gets there (probably by the end of Q3), how will NCDOI justify leaving them to write new business?, i don't think they can, which would be a real blessing for shareholders.
those are good points. sounds like it would shake out to winning either way. if they get shut down then the worry is lifted they are going to keep throwing good money after bad. usmi can be separated and the recapitalized after a spinoff just like ori/rfig. if they don't get shut down, then they are writing huge margin business and mgmt will still separate usmi or more likely all of global mi. so that works too. either way it's a win.
Is the capital contribution of MIC (GNW Canada} shares valued by the regulators at market, or at book value? Here's a comment from the 2Q11 CC that may shed some light:
"So why did we use MIC shares? There were three considerations here: • First, we had no intent to monetize these shares • Next, we could receive full statutory credit for the shares transferred, and.."
So does "full statutory credit" mean book value? If so, this book value (and hence capital) continues to increase as MIC continues to earn money at a steady pace.