PMI Group narrows 2Q loss, but result misses Wall Street expectations; shares tumble

PMI Group narrows loss, but shares tumble

WALNUT CREEK, Calif. — PMI Group Inc. on Thursday reported a nearly $151 million loss, narrower than a year ago but far wider than Wall Street expected. Shares of the mortgage insurer tumbled nearly 15 percent.

PMI reported a loss of $150.6 million, or $1.11 per share, for the three months ended June 30. That compared with a loss of $222.6 million, or $2.71 per share, in last year’s second quarter.

Excluding one-time items, the latest quarter’s loss was 88 cents per share, worse than consensus forecast of analysts surveyed by Thomson Reuters, who expected a loss of 65 cents per share, on average.

Revenue fell 36 percent to $128.9 million from $202.2 million.

Net premiums written slid to about $144.3 million from $169.7 million, due in part to fewer new policies being written.

The Walnut Creek-based company’s quarterly loss was mainly driven by continued high losses in its U.S. mortgage insurance operations, as well as a $31 million charge related to certain debt holdings. Loss reserves totaled $3.1 billion at June 30, down from $3.3 billion at March 30.

Mortgage insurers have been facing mounting losses since the middle of 2007 as mortgage defaults have skyrocketed, leading to a spike in claims. As more mortgages default, insurers are forced to pay out claims to cover interest and principal payments to cover those losses.

As defaults and subsequent claims have increased, however, new business has declined as mortgage lenders have severely restricted the ability of customers to get new loans. That has led to a slowdown in insurers’ ability to generate new premiums.

Shares of PMI fell 56 cents to close at $3.23. The stock has traded in a 52-week range of $1.81 to $7.75.