U.S. mortgage insurance (MI) operations for The PMI Group Inc. had a net loss of $338.4 million for the second quarter of 2011, compared to a net loss of $115.6 million for the second quarter of 2010. The loss in the second quarter of 2011 was driven by elevated losses and loss adjustment expenses, the lack of any material tax benefits and, to a lesser extent, lower premiums earned.
Lower premiums earned and lower investment income caused PMI's total revenues to decline to $143 million in the second quarter of 2011 from $165.5 million in the second quarter of 2010. New insurance written in the second quarter of 2011 was $1.4 billion compared to $1.5 billion in the first quarter of 2011 and $1.6 billion in the second quarter of 2010. As of June 30, 2011, primary insurance in force was $96.9 billion compared to $99.3 billion at March 31, 2011 and $107.6 billion at June 30, 2010.
PMI's Homeownership Preservation Initiatives (HPI) assisted 6,842 borrowers, representing approximately $295 million of risk-in-force, to retain their homes through loan modifications and payment plans in the second quarter of 2011. This compares to 5,644 borrowers and approximately $258 million of risk-in-force in the first quarter of 2011 and 11,408 borrowers and approximately $542 million of risk-in-force in the second quarter of 2010.
U.S. Mortgage Insurance Operations' losses and loss adjustment expense (LAE) increased to $429.6 million in the second quarter of 2011 from $239 million in the first quarter of 2011 and $318.6 million in the second quarter of 2010. Of the $429.6 million of losses and LAE in the second quarter of 2011, approximately $187 million related to reserves on new loan delinquencies. The remaining approximately $242.6 million of losses and LAE in the second quarter related to increases in reserve estimates on previously reported defaults. These changes in estimates were driven by decreases in expected future claim denials (net of reinstatements) and, to a lesser extent, claim rate and claim size re-estimations.
PMI decreased its expected future claim denials in the second quarter as a result of significant recent increases in the frequency with which servicers have produced documents for previously denied claims. During the second quarter of 2011, the Company paid total claims including LAE of $282.4 million compared to $204.6 million in the first quarter of 2011 and $444.3 million in the second quarter of 2010. As of June 30, 2011, reserves for losses and LAE, gross of reinsurance recoverables, were $3 billion compared to $2.9 billion at March 31, 2011 and $3 billion at June 30, 2010.
The number of primary loans in default decreased to 115,742 as of June 30, 2011 from 119,748 as of March 31, 2011 and 138,431 as of June 30, 2010. New notices of default received in the second quarter of 2011 totaled 22,796 compared to 24,754 in the first quarter of 2011 and 28,597 in the second quarter of 2010.
The total number of pool loans in default decreased to 13,163 as of June 30, 2011 compared to 13,769 as of March 31, 2011 and 17,640 as of June 30, 2010. The significant decline in pool loans in default from the prior year was due primarily to the restructuring of modified pool policies.
