Mortgage insurer Radian posts steep loss
NEW YORK (Reuters) - Mortgage insurer Radian Group (RDN.N) on Friday reported its second-ever quarterly loss, hurt by securities losses, costly write-downs and the need to boost its loss reserves as more U.S. homeowners fell behind on payments.
The company, which sells policies to cover partial payment of mortgages in the event of a default, said its fourth-quarter net loss was $618 million, or $7.74 per share, compared with a profit of $158.4 million, or $1.96 a share, a year ago.
Analysts had on average expected Radian, which posted its first-ever losses in the third quarter, to record a loss of $2.53 a share, according to Reuters Estimates.
"We have come through a difficult year and the environment continues to be very challenging," Chief Executive S.A. Ibrahim said in a statement. "These challenges will remain with us for the near term and may intensify, so we are looking at various scenarios and responses."
Like many insurers, Philadelphia-based Radian has been battered as borrowers missed more payments and investors stopped buying a wide variety of debt perceived to carry too much credit risk.
The insurer said its provision for losses rose to $687.8 million from $84.4 million a year earlier, and added a $40.5 million provision for second-lien premium deficiency, which it had not recorded before.
The company recorded a $33 million after-tax write-down
of its investment in subprime venture Credit-Based Asset Servicing and Securitization LLC, or C-Bass, and a $298 million after-tax write-down related to a decline in the value of derivatives.
More than a year ago, MGIC Investment Corp (MTG.N) had agreed to a $5 billion merger with Radian. The merger collapsed in September after both companies saw their shares plunge and wrote off much of their $1.03 billion investment in C-Bass.
Radian shares have fallen 89 percent in the past year, closing at $6.92 on Thursday.
(Reporting by Lilla Zuill, editing by Mark Porter/Dave Zimmerman)
