Standard & Poor's Corp. put the mortgage insurance operations of seven companies on watch Tuesday for downgrade as claims appear to be coming in worse than the company expected.

Analyst Ron Joas said S&P's move reflects "our view that macroeconomic conditions may have become more difficult for the mortgage insurers since we last conducted an extensive review of the sector in April."

Then, the rating agency expected mortgage insurers were likely to report losses through 2010 and possibly into 2011, but that some mitigation of losses was expected to start in the second half of this year.

However, S&P said recent third-quarter results from MGIC Investment Corp. and Old Republic International Corp. "may be indicative of an elongation of the loss cycle, and that mortgage insurers are experiencing a sharper and more rapid transition of delinquencies into prime books of business than we expected."

Those at risk for downgrade are the mortgage insurers of Old Republic, Radian Group Inc., Genworth Financial Inc., PMI Group Inc., CMG Mortgage Insurance Co., United Guaranty Residential Insurance Co. and the California Housing Loan Insurance Fund.

Not included was MGIC, whose mortgage insurer was downgraded last week.

Mortgage insurers have seen claims continue to rise along with home delinquencies and defaults. S&P said its review will look at the insurers' portfolios and focus on trends of increased delinquencies among prime-rated borrowers and how company efforts might mitigate losses.

Downgrades of at least one notch would be possible if S&P determines projected losses won't return to expected levels "in the near future."

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