Mortgage insurer Radian Group (RDN)
reported a net loss of $91.9m, or $1.12 per share, in Q409, bringing the net loss for 2009 to $147.9m, or $1.80 per share.
The Q409 loss was better than the net loss of $250.4m, or $3.11 per share in Q408. In 2008, Radian posted a net loss of $410.6m, or $5.12 per share.
Radian subsidiary Radian Guaranty risk-to-capital ratio was 15.4:1 at the end of 2009, down from 16.1:1 at the end of Q309 and 16.4:1 at the end of 2008. This is below the 25:1 limit imposed by a number of states, and Radian Group said its prepared, subject to final regulatory and GSE approval, its 50-state licensed mortgage insurance subsidiary, Amerin Guaranty to write new business, if needed.
The company’s mortgage insurance provision for losses were $459.9m in Q409 and $1.3bn in 2009, reflecting higher delinquency counts and the continued aging of delinquencies, counteracted by loss mitigation activities, Radian said, adding it expects the delinquency level to at first stabilize and eventually decrease, through the course of 2010.
“As a result of a series of strategic actions and better-than-expected operating results that reduced our estimated inter-company tax obligation for 2010, we now anticipate having excess liquidity through 2012,” said CEO S.A. Ibrahim. “In addition, by actively managing our risk-to-capital ratio to 15.4 to 1, we have improved our foundation to continue writing new, high-quality mortgage insurance business.”
Total mortgage insurance claims paid were $426.8m in Q409 and $970.1m for all of 2009. For 2010, the company expects mortgage insurance claims paid to be approximately $1.5 billion. At the end of 2009, Radian had approximately $1.1bn in statutory surplus with an additional $1.5bn in claims-paying resources.
The results come after credit ratings agency Standard & Poor’s
(S&P) downgraded Radian, along with four other mortgage insurers
in late December, over concerns on losses from lower risk books of business, and the potential for additional increased losses.
Those threat of increased losses come as government-backed mortgage insurance programs continue to take a greater share of the market. Facing increased competition from the Federal Housing Administration
(FHA) and Veterans Administration
(VA) programs, the nation’s largest mortgage insurer, MGIC (MGIC)
announced it will lower rates
for borrowers with a credit score of 720 or greater and raise rates for those with credit scores between 620 and 679.
Write to Austin Kilgore
The author held no relevant investments.