PMI Group Financials Improve

While The PMI Group Inc., Walnut Creek, Calif., reported improved financial results for the first quarter 2009 over the same period last year, the amount of new insurance written declined while the default rate increased. The company lost $115.3 million ($1.41 per share) for the quarter, compared with a loss of $274 million ($3.37 per share) for the first quarter of 2008. The company said the loss from its continuing operations was primarily driven by continued high losses and loss adjustment expenses in the U.S. mortgage insurance business. The loss in its U.S. mortgage insurance operations was $127.6 million for the first quarter of 2009, an improvement over the $172.5 million recorded for the year ago period. The primary loans in default rate went from 8.78% for first quarter 2008 to 15.29% one year later; during the same time frame total claims paid went from $162.6 million to $202.6 million. PMI has also reached an agreement with the lenders on its revolving credit facility. If certain conditions are met and the agreement goes into effect, the facility will be reduced to $125 million and certain financial covenants and events of default will be eliminated. The conditions need to be met by May 29; otherwise an event of default could occur on May 30. If there is such an event, PMI would have to repay the facility; the company said it currently has sufficient funds to do so. Just before noon on May 11, PMI was trading at $2.72, up $0.86 per share.