PMI Group Stops Trading on NYSE
by Zacks Equity ResearchNovember 25, 2011 | Comments : 0 Recommended this article: (0)
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On November 23, 2011, mortgage insurer PMI Group filed for bankruptcy protection under Chapter 11 Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.
End August, PMI Group announced that NYSE notified the company that it has fallen below the NYSE's continued listing standard of maintaining a minimum average closing price of $1.00 per share over 30 consecutive trading days. The shares have been trading at a price below $1.00 since August 1, 2011.
Bad news continues to plague PMI Group. The stock is now de-listed from the New York Stock Exchange (“NYSE”). PMI Group has been removed from NYSE and will be trading on the pink sheet under the ticker symbol PPMIQ.PK.
PMI tried its best to revive its financial condition. The company was exploring alternatives to protect shareholders value. The company was trying to raise additional capital from new investors in a transaction (the "PMAC Transaction"). It would have helped PMI Mortgage Assurance Company ("PMAC"), a wholly-owned subsidiary of PMI Mortgage Insurance Co., to write new mortgage insurance.
However, on October 20, Arizona’s Department of Insurance seized PMI Mortgage Insurance Co., the main subsidiary of PMI Group. The Insurance Department also gained control over PMI Insurance Co., another subsidiary of PMI Group.
On the same day, the Arizona’s Department of Insurance brought under supervision PMI Reinsurance Co., PMI Mortgage Guaranty Co., and Residential Insurance Co., PMI Group’s principal regulated reinsurance subsidiaries.
The operations of PMI Group received a severe blow with the economic downturn that took place in the second half of 2008. Since then, the company failed to pull of its earnings and continued to incur losses till date. PMI Group did not report its third quarter results.
PMI Group follows the same fate as Ambac Financial Group Inc., a bond insurer, which also filed for bankruptcy protection under Chapter 11 Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York last year. Ambac also has been neck deep in trouble for quite some time following the collapse of the U.S. housing market and eventually succumbed to the prepackaged bankruptcy route and was eventually de-listed.
California based PMI Group provides insurance coverage to mortgage lenders, commercial banks and other financial institutions. The company's nearest peer is MGIC Investment Corp. ( MTG - Analyst Report ) .
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