Radian Group Inc., parent of bond insurer Radian Asset Assurance Inc., yesterday reported a 2009 first-quarter net loss of $217.4 million, compared to a net income of $195.6 million a year earlier.

The company attributed its losses to unrealized mark-to-market losses on derivatives and increases in mortgage insurance defaults. The unrealized losses on derivatives represented a $284.4 million pre-tax loss, and the company had provisions for losses on mortgage insurance of $322 million, with an increase in the rate of primary first-lien defaults.

Radian noted that its first-quarter mortgage insurance claims were below expectations, although it expects its claims paid will increase throughout the rest of the year.

"Despite facing difficult operating conditions, we believe that our mortgage insurance franchise remains strong with sufficient capital to continue writing quality new business throughout 2009," Radian chief executive officer S. A. Ibrahim said in a statement.

"The private mortgage insurance industry continues to play a vital role in the recovery of the U.S. housing market," he said. "While we continue to see disruption and uncertainty in the marketplace, Radian is prudently managing through the present downturn and positioning for the future, while working diligently to support homeowners and provide liquidity to the mortgage marketplace."

Radian last year transferred bond insurer Radian Asset to mortgage insurer Radian Guaranty Inc. to provide capital support as Radian Asset's portfolio runs off. As of March 31, 2009, Radian Asset had $1 billion in statutory capital and claims-paying resources of $2.8 billion.

Radian had $18.5 billion of net par outstanding on direct public finance transactions in its financial guaranty portfolio as of March 31, the same as a year earlier. But it has reduced its exposure to reinsurance to $38.6 billion from $50.7 billion, and its exposure to direct structured finance to $45.7 billion from $47.6 billion.

Radian's stock closed at $2.75 yesterday, up $0.55 or 25%.

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