Credit-risk management company Radian Group Inc., the parent company of bond insurer Radian Asset Assurance Inc., continues to be hurt by delinquencies in the housing market, according to its third quarter 10Q filing.
The bond-insurer unit has not written any new insurance since September 2008, and according to Emily Riley, assistant vice president in financial communications, the company has no intentions of returning to the market “in the near term.”
Radian has been using incoming capital from previous insured deals to provide support to Radian Guaranty, the company’s mortgage-insurance unit, according to the 10Q filing.
As of Sept. 30, Radian Asset held a statutory surplus of $935 million, plus additional claims-paying resources of $1.6 billion.
In July, Radian Asset paid fellow bond insurer Ambac Assurance Corp. a $100 million settlement to commute, or cancel, $9.8 billion of its reinsurance portfolio assumed from Ambac. The freed-up capital was also used for the mortgage insurance unit.
Since being hit by multiple delinquencies for loans written in 2006 and since, Radian Guaranty has made efforts to write higher-quality new insurance. The company wrote $3.4 billion of new, prime credit-quality mortgage insurance in the third quarter.
Troubled loans on the balance sheet continue to hurt current performance though. An $83 million loss in the mortgage insurance business was primarily responsible for the parent company’s net loss of $70.5 million in the third quarter, or $0.86 per share. Those figures compare unfavorably to net income of $36.7 million in the same quarter of last year, or $0.46 per share.
“While claims paid were lower than our forecast, delinquencies continued to rise and we expect that trend to continue in the fourth quarter, despite the significantly lower defaults we are experiencing on our second half of 2008 and 2009 books,” Sanford A. Ibrahim, chief executive officer, said in a conference call last week.
In a 10Q filing from Monday, the company concedes there remains “a great deal of uncertainty regarding our ultimate loss performance.”