PMI Group Inc. said Thursday that its second-quarter net loss narrowed 10.1% from the first quarter, to $246.3 million.
The mortgage insurer also said it continued to suffer heavy claims costs, which climbed 4.3%, to $605 million.
In the second quarter of last year, PMI made a profit of $83.8 million.
The Walnut Creek, Calif., company said it completed a transaction in which Assured Guaranty Ltd., a Bermuda bond insurer, took over reinsurance of business originated by FGIC Corp., a PMI joint venture, from PMI Guaranty Co., a unit of the insurer.
PMI Guaranty then transferred $144 million of excess capital to PMI Group, which said it plans to infuse at least 80% of those funds into its U.S. mortgage insurance business this quarter.
The insurer said it plans to close its Canadian mortgage insurance business, which began writing policies last year, and transfer about $60 million of capital to its U.S. mortgage insurance business this year. It also said its European mortgage insurance business "will be reconfigured to conserve and enhance capital and reduce expenses while maintaining a presence" on the continent.
Foreign mortgage insurance businesses, which include operations in Australia, New Zealand, and Asia, generated $31.1 million of net income for PMI. It said the businesses "provide financial flexibility" that will play a big role in its "plan to navigate through turbulent U.S. market conditions."
PMI wrote down its investment in FGIC to nothing in the first quarter and did the same for another bond insurance venture last quarter. Its bond insurance businesses posted a net loss of $46.1 million. But with the writedowns and the reinsurance transfer, PMI said it "does not foresee any further losses of significance" from the businesses.
