Radian reports first-quarter loss

Posted: May 13, 2008

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 yesterday.

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 our best to mitigate the effect of the housing downturn," Sanford A. Ibrahim, Radian's chief executive, said during a conference call with analysts.

For example, Radian hired the Consumer Credit Counseling 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 group is 25 times more likely than its own employees to reach the borrower.

Even so, Radian officials 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 borrowers default.

Radian's shares were up 12 cents, or 2.2 percent, to $5.55 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., of Armonk, N.Y., recorded a $2.41 billion loss in the quarter because of a $3.58 billion write-down of derivatives. Nevertheless, MBIA's shares climbed 4.4 percent, or 42 cents, to $9.85 on the New York Stock Exchange.


Earnings Glance

For the latest quarter:

Orleans Homebuilders Inc., Bensalem

Revenue: $113.3 million

Loss: $55.7 million

Loss per share: $3.01

"We do have a game plan for our future," chairman and CEO Jeffrey P. Orleans told investors.

Radian Group Inc.,

Philadelphia

Revenue: $964.4 million

Loss: $215.2 million

Loss per share: $2.69

Net income: Due to a noncash gain, Radian reported net income of $195.6 million, or $2.44 per share.

"We can certainly do and are doing our best to mitigate the effect of the housing downturn," CEO Sanford A. Ibrahim told analysts.


Contact staff writer Harold Brubaker at 215-854-4651 or hbrubaker@phillynews.com.

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