SOURCE: The Bedford Report

The Bedford Report

February 04, 2011 11:25 ET

MBIA & Radian Group Face Significant Downside Pressure

The Bedford Report Provides Analyst Research on Radian Group & MBIA

NEW YORK, NY--(Marketwire - February 4, 2011) - The Surety & Title Insurance sector has struggled early in 2011. Insurers hold as much as two-thirds of their assets in bonds, and as such are highly sensitive to credit market conditions. Analysts expect that weak investment portfolios and reduced income from the variable annuities, in addition to weak underwriting, will make for downside pressure on these companies in the coming months. The Bedford Report examines the outlook for companies in the Surety & Title Insurance Industry and provides research reports on Radian Group, Inc. (NYSE: RDN) and MBIA, Inc. (NYSE: MBI). Access to the full company reports can be found at:

Yesterday shares of Radian Group fell close to 4 percent after the mortgage insurer said that it lost $1.1 billion last quarter. Though the company says that its core business continued to improve, Radian does not see its mortgage insurance operations being profitable this year. The company expects mortgage insurance claims paid to rise to $1.7 billion in 2011. Its total claims payout in 2010 was $1.26 billion.

The Bedford Report releases regular market updates on the Surety & Title Insurance Industry so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at and get exclusive access to our numerous analyst reports and industry newsletters.

Maintaining a high credit rating is critical to the success of a bond insurer as these companies rely on a high credit rating to allow themselves to guarantee lower rated debt. After experiencing catastrophic losses following the 2007 subprime mortgage crisis, bond insurers began to lose their AAA ratings and were forced to stop selling new guarantees. S&P announced that there are nine new categories and that companies will likely have to raise additional capital and lower risk if they want to achieve high investment grades. This change comes in response to the bout of companies that lost AAA investment grades during the financial crisis. In fact, MBIA was forced into pursuing a restructuring of their business when the crisis took place. S&P also changed its criteria for mortgage-backed bonds and other securities after assigning top ratings to financial instruments that later collapsed in value during the credit crisis.

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