Moody's Investors Service last week placed the A3 insurer financial strength rating of bond insurer Radian Asset Assurance Inc. on review for downgrade along with other ratings within the Radian Group.

Radian Group's exposure to the U.S. housing market through its mortgage insurer subsidiaries continues to put pressure on the company's risk-adjusted capital position, Moody's said. The rating agency increased its loss expectations for certain residential mortgage-backed securities in September.

Radian Group recently transferred its ownership interest in Radian Asset Assurance to Radian Guaranty as part of a capitalization plan. Radian Asset has $960 million of statutory surplus and should release substantial capital to Radian Guaranty over time, Radian says.

Moody's said it will take that into consideration when evaluating Radian's rating. It will also consider how government intervention might help stem rising default rates on mortgages.

"Moody's will consider updated estimates of capital adequacy in the context of potential capital strengthening measures or other strategies that may be under consideration at the company, including the benefit of capital resources available from Radian Asset," Moody's senior vice president Arlene Isaacs-Lowe said in a statement.

Like all other downgraded bond insurers, Radian has written limited new business this year. It has wrapped 53 issues with a par value of $330.4 million this year, with none coming in the third quarter, according to Thomson Reuters. Radian provided insurance on 208 issues with a par value of $2.38 billion through all of last year.

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