Higher Delinquencies, Mortgage Insurance Provision, Drive Radian Loss

Radian Group Inc., Philadelphia, lost $70.5 million ($0.86 per share) for the third quarter, driven by a mortgage insurance provision of $376.5 million as a result of higher delinquencies. The company said it expects delinquencies to continue to rise in the fourth quarter. It paid claims of $243.2 million, but said this was lower than what the company forecast. In its second-quarter release it predicted paid claims for the third quarter of between $275 million and $300 million. For the fourth quarter, it is now projecting paid claims of $290 million. Primary new mortgage insurance written for the third quarter was $3.4 billion. This total does not include $300 million of insurance for loans originated in the Home Affordable Refinance Program. HARP loans are treated by Radian as a modification of existing coverage, so they are not added into the total. In the same quarter in 2008, Radian wrote $7.5 billion of primary new insurance. The company's risk-to-capital ratio was 16.1-to-1 at the end of the third quarter, up from 15.9-to-1 at the end of the second quarter. This is still well within the 25-to-1 limit some states have to be able to write new policies. Radian added it expects to have sufficient capital to write mortgage insurance business into next year.