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UPDATE 3-Radian posts 4th straight quarterly loss, shares fall
August 3, 2010 / 11:41 AM / 7 years ago

UPDATE 3-Radian posts 4th straight quarterly loss, shares fall

* Q2 loss/shr $4.31 vs EPS $2.82 yr ago

* Q2 provision for mtg losses $427.6 mln

* Stock down 17 pct (Recasts, adds background, updates share movement)

BANGALORE, Aug 3 (Reuters) - Radian Group Inc (RDN.N) posted its fourth straight quarterly loss, as the mortgage insurer took a hit from a drop in the value of derivatives, sending its shares down as much as 17 percent.

The company booked a loss of $524.6 million from change in value of derivatives, reversing a year-ago gain of $272.3 million.

“Our second-quarter results include significant fair value impact from the tightening of Radian’s credit spread and continued uncertainty regarding the aged delinquencies in our mortgage insurance book,” Radian Chief Executive S.A. Ibrahim said.

Radian’s quarterly results came in strong contrast to that of its bigger rival MGIC Investment Corp (MTG.N), which recently swung to a surprise quarterly profit after three straight years of losses. [ID:nSGE66I0JP]

Mounting losses from increasing defaults have long plagued the balance sheets of mortgage insurers like MGIC, Radian Group and PMI Group PMI.N, and have forced them to seek capital from investors.

At the end of the first quarter, all the three companies had announced offerings in efforts to raise money to shore up their capital levels.

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

For the second quarter, net loss was $475.1 million or $4.31 a share, compared with net profit of $231.9 million, or $2.82 a share, a year ago.

Analysts expected the company to post a loss of 75 cents a share, according to Thomson Reuters I/B/E/S.

Provision for mortgage insurance loss rose threefold to $427.6 million from $142.8 million.

Total mortgage insurance claims paid was $337.3 million.

For 2010, the company continues to expect mortgage insurance claims paid to be about $1.5 billion.

Radian, however, said the number of primary delinquent loans decreased 4 percent from the first quarter of 2010. New delinquencies continued to decline slightly in July, it said.

Shares of the Philadelphia, Pennsylvania-based company -- which have lost 36 percent of their value in the last 3 months -- were trading down 17 percent at $7.48 on the New York Stock Exchange. (Reporting by Sweta Singh in Bangalore; Editing by Don Sebastian)

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