B&P Launches Coverage of MI Industry

Equity analysts at Blaylock & Partners, New York, have initiated coverage of the mortgage insurance industry with a Buy rating on Radian Group and Hold ratings on MGIC Investment Corp. and PMI Group.In an overview of the sector, B&P analysts Joshua Shanker and Harry Fong characterize the industry as straddling the fence between a growth sector and a mature industry. Regarding Radian, the analysts said its transition into a diversified enhancement company may lead to reduced cyclicality in earnings. "Though mortgage defaults and weakening claims are likely to continue, Radian Group has the strongest geographic focus in its peer group, and Radian is currently reaping the benefit of high new business premiums," B&P said. The Hold rating on MGIC is based on an expectation that its losses will exceed the industry average due to its expansion into higher-yielding subprime mortgage loans and higher-default markets, B&P said. In the case of PMI, the analysts said they want to see how it handles its pending acquisition of Financial Guaranty Insurance Co., a bond insurer. B&P can be found online at http://www.blaylocklp.com.