Mortgage Insurer PMI Posts $157m Q1 Loss as Revenue Falls
The PMI Group (PMI) over the weekend reported a $157m loss in Q110, despite a 21% decline in default notices received in the mortgage insurance segment, which guarantees lenders against default-related losses. The quarterly results include a $40.8m reduction in net revenue related to the increase in fair value of certain corporate debt obligations following improved credit spreads. The fair value of debt obligations fell in the same time last year, causing revenue to rise by $18.5m in Q109. PMI's quarterly loss narrowed from $228m in Q409 but is higher than the $115m lost in the year-ago quarter, according to a press release. Losses narrowed in the US mortgage insurance operations, falling slightly to $121.8m this quarter, from $127.6m in the year-ago quarter. New notices of default in the company's mortgage insurance business fell by 21% in Q110 over the same time last year. It's the first yearly decline since Q407, PMI said. At the same time, loan modification activity increased and primary loans in default declined over the last quarter -- the first quarterly fall in nearly four years, since Q206. The volume of loan loss reserves fell by $6.7m due in part to the decline in mortgage defaults. PMI bolstered capital at PMI Mortgage Insurance by $115m during the quarter, as a result of certain modified pool restructurings. The negative results mirror Q110 results at other mortgage insurance companies. MGIC Investment Corp. (MTG), for example, reported a $150.1m net loss in the quarter as defaulted loans continue to exert financial pressure on the mortgage insurance business. Write to Diana Golobay. Disclosure: the author holds no relevant investments.