PMI Group Inc. plunged the most in
six months, leading a slump of U.S. mortgage insurers after
posting a second-quarter loss that missed analysts’ estimates on
increased paid claims.
The loss narrowed to $150.6 million, or $1.11 a share, from
$222.6 million, or $2.71, in the year-earlier period, the Walnut
Creek, California-based company said today in a statement. The
loss was wider than the 66-cent average estimate of five
analysts surveyed by Bloomberg. PMI hasn’t been profitable since
2007.
PMI, the third-largest U.S. mortgage guarantor, slid 56
cents, or 15 percent, to $3.23 at 4:01 p.m. in New York Stock
Exchange composite trading, the biggest drop since Jan. 12. MGIC
Investment Corp., the largest U.S. mortgage insurer, fell 1.2
percent to $8.77, while No. 2 Radian Group Inc. slumped 1.1
percent.
“Not only did they report a loss, but they also saw a huge
increase in paid claims,” said Jim Ryan, a Chicago-based
analyst with Morningstar Inc. “With all three insurers, there’s
extreme uncertainty.”
Mortgage insurers, which pay lenders when homeowners
default and foreclosure fails to cover costs, faced higher
claims because of the housing crisis. PMI’s U.S. mortgage claims
paid in the three months ended June 30 more than doubled to
$444.3 million from $199.1 million in the same period last year.
Lenders repossessed or delivered a default or auction
notice to 1.65 million homes in the first six months of 2010.
That compares with almost 350,000 mortgages whose payment
burdens to homeowners have been eased through the federal
government’s Home Affordable Modification program.
Book Value
Premiums earned declined to $149.7 million from $181.6
million in the year-earlier period.
Net investment income fell to $23.9 million from $29.1
million in the second quarter of last year. Net realized
investment gains dropped to $397,000 from $23.4 million a year
earlier.
Book value per share, the measure of assets minus
liabilities, declined to $5.94 from $6.96 in the first quarter.
PMI sold $739 million of shares and convertible debt in April as
it sought to boost capital and repay debt. The stock sold for
$6.15 at the April offering.
MGIC posted its first profit in 12 quarters last week as
claims costs fell on a decline in delinquencies in home loans.
Industrywide, borrowers caught up on overdue mortgages
faster than new delinquencies were reported on insured home
loans in February for the first time in almost four years as the
U.S. economy improved, a trend that continued in March, April
and May. The ratio of these cures, or improved situations, to
defaults on guaranteed loans was 1.08 in May, compared with 0.6
a year earlier, according to data from the Mortgage Insurance
Companies of America.
To contact the reporter on this story:
Inyoung Hwang in New York at
ihwang7@bloomberg.net.
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