* Q1 loss/shr $3.77 vs $2.69 yr-ago
* Provision for bad loans up 66 pct
* Shares down as much 11 pct
* Rivals MGIC, PMI down in morning trade
(Recasts; adds details from conference call, updates share
By Sweta Singh
BANGALORE, May 4 Radian Group Inc (RDN.N)
reported its third straight quarterly loss on higher provision
for mortgage insurance losses, and said it will sell $550
million in stock to fund capital needs, sending its shares down
11 percent Tuesday morning.
Proceeds from the offering will be used to fund working
capital, provide additional capital for its mortgage insurance
business and buy back debt, the company said.
Radian joins largest rival MGIC Investment (MTG.N) and PMI
Group PMI.N, which both reported quarterly losses in late
April and announced capital-raising plans to increase liquidity
at their principal operating units [ID:nSGE63J0J8].
Radian's capital-raise plan also pulled down shares of MGIC
6 percent and PMI shares 7 percent.
"We continue to believe that private capital is essential
to the recovery of success of the housing finance system,"
Chief Executive Ibrahim said on a post-earnings call.
Mounting losses from increasing defaults have long plagued
the balance sheets of mortgage insurers and have forced them to
seek capital from investors.
Keefe Bruyette & Woods Inc and Morgan Stanley & Co Inc will
act as joint book-running managers for the offering, Radian
The second-largest mortgage insurer, however, reported a
decrease in delinquencies, its first in nearly four years, and
said it expects delinquencies at the end of 2010 to be lower
Radian will have sufficient liquidity to cover all its
needs through 2012, including full repayment of $160 million
debt, finance chief Bob Quint said on the call.
NET LOSS WIDENS
The company reported net loss for the first quarter of
$310.4 million, or $3.77 a share, compared with $217.4 million,
or $2.69 a share, in the year-ago period.
The company posted a loss of $3.56, significantly more than
analysts' estimates of 90 cents a share, according to Thomson
Mortgage insurance provision for losses rose 64 percent to
Total mortgage insurance claims paid rose to $357.3 million
from $240.1 million. For 2010, the company continues to expect
mortgage insurance claims paid to be about $1.5 billion.
Radian sold its remaining stake in consumer asset and
servicing firm Sherman Financial and expects to record a
pre-tax gain of about $70 million in the second quarter.
Shares of the Philadelphia, Pennsylvania-based Radian were
trading down $1.47 at $13.15 in morning trade on the New York
Stock Exchange. The stock has doubled in value since the
beginning of the year. (Reporting by Sweta Singh in Bangalore;
Editing by Unnikrishnan Nair)