PMI Group Inc.'s (NYSE: PMI - News) second-quarter operating loss was worse than the Zacks Consensus Estimate and widened year over year as the company continued to suffer mortgage losses. We expect losses and loss adjustment expenses from mortgage insurance operations, increased valuation allowances, lower premiums earned and shrunken investment income will continue to pressure PMI's earnings.
While increasing persistency levels will drive domestic growth, it will put additional pressure on capital. PMI Group is not able to sell new policies.
To add to its woes, Arizona-based PMI Mortgage Insurance Co., the main subsidiary, is short of funds, which is required to meet regulatory requirements in Arizona. As such, the State Insurance Department will likely bar it from selling new policies, which might result in either rehabilitation or liquidation of the unit.PMI GROUP (PMI): Free Stock Analysis ReportZacks Investment Research