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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Giordano Bruno who wrote (345960)	10/18/2007 10:10:08 PM
From: MythMan	Read Replies (1) \| Respond to of 436258

what do you think that means to the SPX?

To: Giordano Bruno who wrote (345960)	10/18/2007 10:16:19 PM
From: Secret_Agent_Man	Read Replies (1) \| Respond to of 436258

PMI Falls on Expected Loss From Borrower Defaults (Update3) By Erik Holm Oct. 18 (Bloomberg) -- PMI Group Inc., the second-largest U.S. mortgage insurer, fell the most in 12 years in New York trading, after saying it will have a surprise third-quarter loss as borrower defaults ``significantly worsened'' in September. The insurer said today it will lose about $1.05 a share in the period and withdrew earnings forecasts for the year, one day after MGIC Investment Corp., the largest mortgage insurer, said it won't be profitable in the fourth quarter or 2008. MGIC said losses are increasing as housing markets worsen in parts of California and Florida. ``PMI has the largest Florida exposure of the `big three' mortgage insurers,'' said Seth Glasser, a credit analyst at Barclays Capital Inc., in a note to investors. ``Loss severity in that state must be accelerating quickly.'' The cost of paying claims to mortgage lenders is expected to increase fivefold from the same period a year earlier to about $350 million, Walnut Creek, California-based PMI said in a statement today. Stagnant home prices make it harder for banks to recover when loans go bad. PMI dropped $3.44, or 13 percent, to $23.21 in New York Stock Exchange composite trading, the biggest fall since the company went public in 1995. The company has declined 51 percent this year amid the worst U.S. housing slump in 16 years. Credit-Default Swaps MGIC, which posted its first quarterly loss yesterday since it went public in 1991, dropped $2.21, or 8.5 percent, to $23.95. The Milwaukee-based company has lost 62 percent since Dec. 31. Philadelphia-based Radian Group Inc., the third-largest mortgage insurer, fell $1.20, or 6.9 percent, to $16.16 and is down 70 percent this year. Triad Guaranty Inc. is down 83 percent this year. Shares in the Winston-Salem-based insurer fell $3.28, or 26 percent, to $9.29. Credit-default swaps tied to PMI climbed 40 basis points to 197 basis points, a two-month high, according to CMA Datavision in London. The price of the contracts, used to speculate on the company's ability to repay its debt, means it costs $195,000 to protect $10 million in PMI bonds from default for five years. ``September fell off a cliff in terms of defaults and severity of actual losses,'' said Geoffrey Dunn, an analyst at KBW Inc. in Hartford Connecticut, who cut the shares to ``neutral'' last week. ``It's definitely going to hit earnings and all the mortgage insurers are feeling that pressure.'' More to Come Analysts had forecast PMI would report 78 cents a share profit in the third quarter. The company's estimate includes a 32 cent-a-share loss from the value of PMI's stake in FGIC Corp., Financial Guaranty Insurance Co.'s parent. FGIC said today it lost about $65 million in the third quarter after reducing the value of its insured credit derivative portfolio. ``When combined with the downturn in the housing mortgage sector, we believe the volatility at FGIC suggests PMI is in for a prolonged period of stressed financial results,'' Kathleen Shanley, a bond analyst with Gimmie Credit LLC in Chicago, said in a note to investors. Shanley cut her credit rating to ``deteriorating'' today. Transactions tied to credit-default swaps produced an unrealized loss of approximately $206 million before taxes, New York-based FGIC said in a separate statement. PMI spokeswoman Beth Haiken had no comment. The company will release full financial results for the third quarter before markets open on Oct. 30, it said. To contact the reporters on this story: Erik Holm in New York at eholm2@bloomberg.net . Last Updated: October 18, 2007 17:18 EDT