Radian Group reports $215.2M 1Q loss

Continuing weakness in housing and credit markets pushed Radian Group Inc. to a first-quarter operating loss of $215.2 million from a profit of $106.9 million last year, the company said today.

The Philadelphia mortgage and bond insurer's reported net income of $195.6 million, however, benefited from a $410.9 million noncash gain related to certain complicated financial instruments.

Reflecting the sharp increase in mortgage defaults, Radian paid $190.19 million in claims in the first quarter, nearly double the $95.82 million it paid in the same period a year ago.

"While there is little Radian can do about the current state of the market, we can certainly do and are doing out best to mitigate the effect to the housing downturn," Sanford A. Ibrahim, Radian's chief executive, said during a conference call with analysts.

For example, Radian hired the Consumer Credit Counselling Service of the Delaware Valley to call borrowers in danger of defaulting on mortgages insured by Radian to help them get back on track.

David Applegate, president of Radian's mortgage insurance business, said the nonprofit is 25 times more likely to reach the borrower than its own employees.

Even so, Radian official said the company still expected to pay about $1 billion to lenders to cover mortgage defaults. The company has reserves of $1.74 billion to pay lenders when borrows default. Radian's shares were up 18 cents, or 3.3 percent, to $5.61 on the New York Stock Exchange.

A larger competitor in mortgage insurance, PMI Group Inc. of Walnut Creek, Calif., reported a net loss of $273.96 million in the first quarter. Last year, the company earned $102.03 million. A big chunk of this year's loss came from the complete write-down of PMI's investment in the bond insurer Financial Guaranty Insurance Co.

Another bond insurer, MBIA Inc., or Armonk, N.Y., recorded a $2.41 billion loss in the quarter because of a $3.58 billion write down of deriviatives. Nevertheless, MBIA's shares climbed 6.8 percent, or 64 cents, to $10.07 on the New York Stock Exchange.