PMI Pmi Grp. (The) Common Stock

After experiencing catastrophic losses in 2008, and being rescued by massive capital injections from the government, the insurance industry has been taking steps forward on the path to recovery. In 2009, the arrest of activity in credit markets caused bond prices to drop. Insurers have been hit especially hard by the poor bond market. They hold as much as two-thirds of their assets in bonds, and as such are highly sensitive to credit market conditions. It is expected that weak investment portfolios and reduced income from the variable annuities, in addition to weak underwriting, will make for downside pressure on these companies in the coming months. The Bedford Report examines the outlook for companies in the Surety & Title Insurance Industry and provides research reports on PMI Group, Inc. (NYSE: PMI) and Assured Guaranty Ltd (NYSE: AGO). Access to the full company reports can be found at:

www.bedfordreport.com/2010-11-PMI

www.bedfordreport.com/2010-11-AGO

Maintaining a high credit rating is critical to the success of a bond insurer as these companies rely on a high credit rating to allow themselves to guarantee lower rated debt. Following the 2007 subprime mortgage crisis, bond insurers began to lose their AAA ratings and were forced to stop selling new guarantees. Then in late October of this year, Assured Guaranty lost its AAA rating, leaving the bond insurance industry with a grand total of zero companies holding the coveted highest score. S&P said that the downgrade reflected diminished demand for bond insurance due, in part, because only one organization is issuing new policies. Only Assured writes new insurance in the $2.8 trillion municipal-bond market after leaders MBIA and Ambac faltered because of guarantees on securities connected to home loans that soured.

The Bedford Report releases regular market updates on the Surety & Title Insurance industry so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us for free at www.bedfordreport.com and get exclusive access to our numerous analyst reports and industry newsletters.

Earlier this month Assured posted third quarter net income of $180.9 million, or 96 cents per share, which compared favorably to a loss of $35 million, or 22 cents per share, a year earlier. During the earnings call, the company's CEO Dominic Frederico said S&P's rating action hurts municipalities that need to issue bonds.

Mortgage Insurer PMI Group recently reported a third-quarter loss from continuing operations of $281.1 million, or $1.74 a share. The housing market is likely to remain depressed until employment numbers remain to respectability. PMI's costs have surged in recent quarters as the company must reimburse lenders when borrowers fail to pay -- a corollary of employment numbers.

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