Radian Group Inc., the Philadelphia-based parent of municipal bond insurer Radian Asset Assurance Inc., yesterday reported a smaller fourth-quarter 2009 net loss than anticipated, pushing its stock higher.
Radian Asset has not written any new insurance since September 2008 but it “continues to provide capital support” to the mortgage arm, Radian Guaranty Inc., an earnings press release said. In October, it transferred $143 million of contingency reserves to Radian Guaranty, which helped the company’s risk-to-capital ratio decline to 15.4-to-one, compared to the prior quarter’s 16.1-to-one ratio.
Radian Asset had total claims-paying resources of $2.56 billion at the end of 2009, including about $1.1 billion in statutory capital for Radian Guaranty. According to Emily Riley, assistant vice president in financial communications, Radian Asset has no intentions “at this time” of returning to the public finance market.
Speaking to investors, company executives characterized the public finance arena as holding its own despite a stressful environment.
“We’ve seen stress across many sectors of our public finance portfolio — not surprising given the current environment,” said Dave Beidler, president of Radian Asset. He said the sector of most concern was health care and long-term care, but the company declined to offer any loss projections for 2010 or beyond.
Health care and long-term care account for 8.5% of Radian’s public finance portfolio, which was valued at $17.5 billion as of Dec. 31, 2009. The only sector accounting for a bigger share is general obligations at 21.4%.
Radian Group’s net loss for the quarter was $91.9 million, or $1.12 per share. In the fourth quarter of 2008, the company’s net loss was $250.4 million, or $3.11 per share. For all of 2009 the net loss was $147.9 million, compared to $410.6 million in 2008.
Radian Guaranty, the parent’s principal insurer, expects to continue writing insurance, improve liquidity, and reduce risk exposure for the foreseeable future.
“We achieved our most important goals in the quarter by improving Radian’s liquidity position and effectively managing our capital,” chief executive officer S. A. Ibrahim said in a conference call. “We now anticipate having excess liquidity through 2012.”
Company stock yesterday climbed 9.32%, or 80 cents, to $9.38, and is up 28.3% so far this year.