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Radian Posts $1.8 Billion 2010 Loss, Sees Encouragement in Declining MI Delinquencies and Strong Market Share

NationalMortgageProfessional.com
Feb 03, 2011

Radian Group Inc. has reported a net loss for the fourth quarter of 2010, ended Dec. 31, 2010, of $1.1 billion. This compares to a net loss of $91.9 million, or $1.12 per diluted share, for the prior-year's fourth quarter in 2009. The net loss for the full year 2010 was $1.8 billion. This compares to a net loss of $147.9 million for all of 2009. “We were encouraged by the fourth straight quarter of declining mortgage insurance delinquencies, continued signs of credit trend stabilization in our businesses, and a steady 21 percent market share in an environment where private mortgage insurance continues to regain business from the FHA,” said Chief Executive Officer S.A. Ibrahim.  Radian's mortgage insurance (MI) provision for losses was $426.3 million in the fourth quarter of 2010, compared to $459.9 million in 2009. MI loss reserves were approximately $3.5 billion as of Dec. 31, 2010, which was flat to the third quarter of 2010, and up slightly from 2009. As of Dec. 31, 2010, total first-lien reserves increased to $23,467 per primary default, compared to $20,921 for the prior year-end, and increased to $24,911 per pool default, compared to $16,118 for the prior year-end. The reserve per default totals exclude defaults for which reserves have not been established due to the presence of a deductible. The risk-to-capital ratio for Radian Guaranty Inc., the company’s primary mortgage insurance subsidiary, was 16.8:1 at Dec. 31, 2010, compared to 17.2:1 at Sept. 30, 2010, and 15.4:1 at Dec. 31, 2009. Radian Group contributed $200 million to Radian Guaranty during the fourth quarter and the company has sufficient liquidity to contribute additional capital to its MI subsidiaries in 2011, if needed. “It is important to note that the establishment of a valuation allowance in the quarter does not have any impact on statutory capital, risk-to-capital ratio, liquidity or business operations, and it does not reflect a change in our view of Radian’s long-term financial outlook," said Ibrahim. We are confident that our capital, financial flexibility and solid customer base position Radian for future success." New mortgage insurance written (NIW) increased for the fourth consecutive quarter  to $3.8 billion, compared to $3.2 billion in the third quarter. NIW continued to consist of loans with excellent risk characteristics, and the company maintained a market share of 21 percent. The total number of primary delinquent loans decreased by four percent in the fourth quarter, which represented the fourth consecutive quarterly decline. In addition, the number of primary delinquencies declined slightly in January. MI claims paid were $392.9 million, which consisted of $389.3 million of first-liens and $3.6 million of second-liens. Net claims paid of $69.2 million were net of recoveries received from captive terminations of $323.7 million. For the full-year 2010, MI claims paid were $1.3 billion. The company continues to expect MI claims paid of approximately $1.7 billion for the full-year 2011. For more information, visit www.radian.biz.      
Published
Feb 03, 2011