* Looks to enhance capital
* Says has sufficient liquidity to repay credit facility
* Q4 loss $2.22/shr from cont ops
* Q4 consolidated premiums earned $184.1 mln
* Shares jump 43 percent (Recasts; adds details from filing, analysts’ comments, background, share movement)
By Anurag Kotoky
BANGALORE, March 16 (Reuters) - Mortgage insurer PMI Group Inc PMI.N said it is exploring alternatives to enhance liquidity and capital, including potentially obtaining capital or other relief under U.S. Treasury’s Financial Stability Plan, sending its shares up as much as 43 percent.
In its latest filing with the U.S. Securities and Exchange Commission, the company said it is actively engaged in discussions with its lenders to amend the financial covenants and events of default. [ID:nWNAB4289]
“We currently have sufficient liquidity at our holding company to repay the credit facility in the event we no longer comply with its terms or in the event of a potential cross-default under our senior notes,” PMI said in the filing.
However, the overall number of delinquent loans at the company continues to rise faster than projections and options for raising new capital remain limited at the present time, Keefe Bruyette & Woods analyst Nathaniel Otis said in a note.
Although total domestic paid claims for the fourth quarter were below estimates, it does not represent an improvement in market conditions, instead, it is more an issue of timing given payments from servicing delays, court delays, foreclosure moratoriums and fraud investigation, Otis said.
Piper Jaffray analyst Michael Grasher removed his price target on the company given the “tremendous lack of transparency created by loan modifications, regulatory measures, capital concerns and share price volatility.”
Earlier in the day, PMI posted its fifth straight quarterly loss, much wider than analysts’ estimates, hurt in part by soaring investment losses.
The company posted a loss of $178.8 million, or $2.19 a share, compared with a loss of $1.01 billion, or $12.51 a share, a year earlier.
From continuing operations, the company had a loss of $2.22 a share.
Analysts, on average, had expected a loss of $1.61 a share, excluding items, according to Reuters Estimates.
Mortgage insurers like PMI and bigger rivals MGIC Investment Corp (MTG.N) and Radian Group (RDN.N) have suffered huge losses from backing subprime bonds and mortgages that saw a surge in defaults as credit and housing markets in the United States worsened, affecting economies globally.
Shares of Radian rose as much as 20 percent, while those of MGIC rose 23 percent. The stock of Genworth Financial (GNW.N) also gained 12 percent. Mortgage insurers are required to pay lenders when defaults arise and the property is foreclosed.
Shares of the Walnut Creek, California-based company were trading up 17 cents at 61 cents Monday on the New York Stock Exchange. They traded as high as $7.30 a year back, and have since lost 94 percent of their value before Monday’s gains. (Editing by Anil D‘Silva)