PMI liquidity unchanged after ratings cuts

On Tuesday, S&P cut PMI Group's counterparty rating to "BBB-" from "BBB+." The counterparty and financial strength ratings of its operating subsidiaries were cut to "A-" from "A+." All the new ratings are still considered investment grade.

Radian Group's ratings were cut as part of broader downgrades of mortgage insurers. S&P cut the ratings after revising lower its forecast for declines in the S&P/Case Shiller Home Price Index, rising unemployment and projected claims payments for 2008 vintage mortgages.

PMI Group said it had $2.3 billion of liquid assets as of June 30, at its U.S. mortgage insurance companies and an additional $252 million in liquidity at the holding company level.

The mortgage insurer has been working to increase its liquidity in recent months as well to handle any further increases in claims. PMI Group sold its Australian operations for about $920 million and sold its Asian operations as well. PMI Group also closed its Canadian operations.

Mortgage insurers have faced a sharp rise in claims over the past year as mortgages have increasingly defaulted.