UPDATE 3-Radian shares rise on results, delinquency forecast

Tue Feb 23, 2010 1:00pm EST

* Q4 loss/shr $1.12 vs est loss/shr $1.69

* Expects excess liquidity through 2012

* Sees delinquency level to stabilize throughout 2010

* Shares up as much 21 pct (Adds CEO's comments, updates share movement)

By Sweta Singh

BANGALORE, Feb 23 (Reuters) - Mortgage insurer Radian Group Inc (RDN.N) reported a narrower-than-expected quarterly loss, as the rate of new delinquencies slowed, and said it expects excess liquidity through 2012.

The company also sees delinquency level stabilizing throughout 2010 and decreasing by the end of 2010.

Rivals MGIC Investment Corp (MTG.N) and PMI Group Inc PMI.N had earlier said delinquencies could be moderate in the year to come, signalling that the worst may be over for the mortgage industry that has been plagued by defaults.

Shares of Radian rose as much a 21 percent to $10.38 in early session on the New York Stock Exchange.

Radian's results spurred a rally in other mortgage insurers' stocks. Shares of the largest U.S. mortgage insurer MGIC rose about 11 percent, while PMI shares rose 19 percent.

"At the beginning of 2009, the big issues that we were dealing with were liquidity and risk-to-capital ratio. We feel very positive about having addressed those issues significantly. We essentially eliminated near-term liquidity as an issue," Chief Executive S.A. Ibrahim told Reuters.

Radian has suffered huge losses in the recent past from backing subprime bonds and mortgages that saw a surge in defaults as credit and housing markets in the United States worsened, impacting economies globally.

Apart from rising defaults, Radian, PMI and MGIC have had their credit ratings put at risk due to expected losses in mortgage-backed debt.

Along with improving delinquency trends, these companies are also expected to benefit from the Obama administration's push to reduce defaults and let homeowners keep their homes, as fewer foreclosures will reduce claims that these companies will have to pay out.

Mortgage insurers assist home buyers who cannot offer a 20 percent down payment.

Q4 LOSS NARROWS

Net loss for the fourth quarter was $91.9 million, or $1.12 a share, compared with a net loss of $250.4 million, or $3.11 a share, in the year-ago period.

Analysts on average had expected the company to post a loss of $1.69 a share, according to Thomson Reuters I/B/E/S.

Mortgage insurance provision for losses for the quarter was $459.9 million.

Total mortgage insurance claims paid was $426.8 million, significantly up from $239.7 million in the year-ago period.

For 2010, the Philadelphia-based company expects paid claims to be about $1.5 billion.

Commenting on MGIC's move to lower rates to fight competition from the Federal Housing Administration, the CEO told Reuters, "We in the mortgage insurance industry have to find a way to get more share back from the FHA."

Earlier in the day, MGIC said it will lower premium rates in an effort to fight loss of market share to FHA [ID:nSGE61M0II].

Radian shares were trading up 11 percent at $9.51 in afternoon trade. (Reporting by Sweta Singh in Bangalore; Editing by Gopakumar Warrier, Vinu Pilakkott and Anil D'Silva)