Moody's Downgrades Radian MI Subs

Moody's Investors Service has downgraded the insurance financial strength ratings of Radian Group's mortgage insurance subsidiaries. Radian Guaranty and Amerin Guaranty were downgraded from Aa3 to A2, and Radian Insurance was downgraded from Aa3 to Baa1. Moody's also downgraded the IFS ratings of Radian Asset Assurance and Radian Asset Assurance Ltd. from Aa3 to A3, and the senior debt rating of the holding company, Radian Group, from A2 to Ba1. The outlook is negative. As a result of the actions, Moody's-rated securities guaranteed by Radian Asset were also downgraded to A3 (except those with higher public underlying ratings), the rating agency said. The actions reflect "the deterioration in Radian's capital adequacy and medium-term profitability prospects, as well as the firm's limited financial flexibility," Moody's said, adding that the performance of Radian's exposures originated before 2008 has eroded capitalization and the exposures "remain vulnerable to further economic deterioration." The downgrade of Radian Asset reflects deterioration in the company's franchise value and the prospect that its capital adequacy may be hurt given the announcement that it will likely cease writing new business and will serve as a potential source of capital for Radian's mortgage insurance platform.