PMI Projects 3Q Loss

The PMI Group Inc., Walnut Creek, Calif., has issued a preliminary estimate that it will take a third-quarter loss of approximately $1.05 per share.The company cited incurred losses in its U.S. mortgage insurance operations and a mark-to-market adjustment at its unconsolidated subsidiary, FGIC, as the cause. Defaults significantly worsened in September. As a result, PMI said it expects approximately $350 million in paid claims, loss adjustment expenses, and additions to the reserve for losses for its U.S. mortgage insurance operations in the third quarter. It is withdrawing its full-year total incurred loss guidance and other financial guidance. Regarding FGIC, in which it holds a 42% stake, mark-to-market adjustments on the insured credit derivative will result in an unrealized loss of approximately $206 million. FGIC anticipates that as a result of this adjustment it will report a net loss of approximately $65 million for the third quarter. PMI's share of that loss is $0.32 per share.