Question-and-Answer Session
Operator
Thank you. (Operator Instructions) Your first question comes from David Katz - JPMorgan.
David Katz - JPMorgan
I had a couple of questions. First, I was hoping you could talk about if you anticipate any access to TARP?
L. Stephen Smith
Obviously there's been a lot written in the press over the last several weeks about that potential, and you probably know that our industry trade association filed a response, an RFI, that was due to the Treasury on October 28. So I think there is potential for that and probably a good basis for that, but there's no certainty that would come to pass.
David Katz - JPMorgan
And then with the actions that some banks are taking we were curious if a loan has its principal reduced, what is the impact to PMI? Does PMI suffer a loss or instead is that entirely borne by the mortgage servicer?
David Kacko
At this point the way our policy reads - and we don't really anticipate a change in this regard is if the loan is written down, the coverage is applied to the new loan amount and we do not suffer that loss. It is absorbed by the investor.
David Katz - JPMorgan
Just for clarification, if the loan were for - well, if the loan were written down 20% and then defaulted, would your coverage amount be 20% less or would you still be liable for their original coverage amount?
David Kacko
No, it would really be your former explanation. Let's use a simple example. Let's assume that we had a $100,000 note balance. It was written down to $80,000. We had 20% coverage initially. It'd still be the same 20% on the $80,000 now.
David Katz - JPMorgan
Okay, so it would take your liability to $16,000?
David Kacko
That's right.
David Katz - JPMorgan
And then what was the risk-to-capital ratio after the sale of PMI Australia?
Donald P. Lofe, Jr.
We haven't given that number after the sale, but as of 9/30 that was 15.75 to 1.
David Katz - JPMorgan
And you're not going to release a number after the sale or even a pro forma?
Donald P. Lofe, Jr.
Well, the 9/30 balance in essence incorporates respect to the sale because of the discontinued operations treatment. In essence, you have the number.
David Katz - JPMorgan
And then finally the delinquencies - and you talked about this a little before with the claims, but I was hoping you go into a little more detail - the delinquency rate went up a fair amount quarter-over-quarter, yet claims were relatively flat. Is that due to a delay in payment?
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