The PMI Group's second quarter loss of $150.6 million, while improved over the same period in 2009, was still a surprise as analysts predicted the company should be able to pare those losses further. The company had a $222 million loss one year ago.
Approximately $31 million of the quarter's loss is due to an increase in the fair value of certain corporate debt obligations due to improving credit spreads, a statement from the company said.
On the good news side, the U. S. mortgage insurance business' inventory of delinquent loans declined from 147,248 at the end of the first quarter to 138,431, as there were fewer new notices of default, combined with an increase in the number of primary claims paid and continued high levels of cures.
Furthermore, because of capital raising completed in April, PMI Mortgage Insurance Co., ended the quarter with an excess minimum policyholders' position of approximately $415.5 million and a risk to capital ratio of approximately 15.8:1, well below the 25:1 standard mandated in 17 states.
The U.S. mortgage insurance business had a net loss of $115.6 million in the second quarter due primarily to lower premiums earned and losses and loss adjustment expenses. One year ago, this segment lost over $175 million.
PMI said rescission and claim denial of delinquent risk in force totaled $150 million. However, due to lower than expected rescission and claim denial activity in the first half of 2010, it has reduced the estimate of future rescissions during the second quarter of 2010 which resulted in higher losses and loss adjustment expenses.
