Fitch Ratings downgraded MGIC Investment Corp and PMI Group on Thursday, citing the stressful mortgage environment, and has become more pessimistic on its outlook for the mortgage insurance sector.
Fitch lowered Mortgage Guaranty Insurance Corp.'s insurer financial strength to A+ from AA and MGIC Investment's long-term issuer rating to BBB+ from A.
Fitch said it believes MGIC's capital position is commensurate with its reduced rating level, even though MGIC raised $826 million of capital this year through the sale of common equity and hybrid capital.
In addition to its recently demonstrated ability to access the capital markets, MGIC maintains a strong position in the U.S. mortgage insurance market, Fitch said.
Further, the company has tightened its underwriting guidelines in 2008 and has discontinued its poorly performing Wall Street bulk line of business. However, these changes do not impact the performance of the 2007 vintages of insurance written.