As it has since PMI MI  first began to suffer significant financial losses as part of the housing downturn, CMG MI has stressed its financial strength and independence from its struggling co-owner.

"The bankruptcy filing affects only the holding company for PMI," said Kim Shaul, CMG MI senior vice president and general manager. "CMG Mortgage Insurance Co. is a joint venture between the subsidiary and CUNA Mutual. The filing will have no impact on the day-to-day operations or claims-paying activities of CMG MI."

CMG MI listed several aspects of its financial condition and management that, it said, would prevent it from being adversely affected.

These included a risk-to-capital ratio of approximately 20 to 1 and the industry's lowest portfolio delinquency ratio at 5.5% as well as a strong liquidity-to-reserves ratio, one of the highest in the industry, the firm said, with claims-paying resources backed by cash and readily marketable securities of $330 million. "This liquidity compares favorably to the company's $168 million in loss reserves for claims as of the end of third-quarter 2011," the firm reported.

It also pointed to its financial strength ratings–BBB from Standard & Poor's and BBB from Fitch Ratings. The firm observed these are based primarily on CMG MI's own capital, operations performance and loss mitigation, as well as capital support, staffing and operational arrangements with its parents, CUNA Mutual Insurance Society and PMI. CMG MI's S&P rating was affirmed in September 2011, while the Fitch rating was affirmed in July of this year, the firm said.

But where skeptics might note that "capital support, staffing and operational arrangements" with PMI might be one of the things most at risk after the PMI Group bankruptcy, a CMG MI executive explained that the nature of insurance regulation in the U.S. effectively shielded PMI MI from the collapse of its parent firm.

The fact that the Arizona Department of Insurance stepped in to take control of PMI MI effectively meant that the firm is protected from being impacted by a federal bankruptcy, according to Sean Dilweg, a vice president with CUNA Mutual over CMG MI.

Dilweg explained that the 150 years of state preeminence in insurance regulation meant that it was very unlikely that the Arizona Insurance Departmen would defer to a federal bankruptcy court and that this meant PMI Mortgage Insurance was effectively isolated from what might face the PMI Group.

Instead of being an asset owned by the now bankrupt holding company, Dilweg explained, PMI was now effectively owned by the State of Arizona which had a proprietary interest in making sure that its assets were protected and its liabilities gradually released.

Dilweg said CMG MI executives were working with the Arizona Department of Insurance to make sure the firm's interests and perspectives were understood and added that the insurance regulator interests aligned with those of CMG MI.

"We're the most valuable asset that PMI has right now," Dilweg observed. "Our interest and those of the Department of Insurance are definitely aligned."

Dilweg estimated that resolving PMI's balance sheet could take between five to seven years, at which time state regulators would decide what to do next with the firm, he said.