UPDATE 2-PMI Group posts narrower-than-expected Q3 loss

* Q3 loss/shr from cont ops $1.06 vs est $1.36 * Revenue up slightly at $226.9 mln * Total expenses down 16 pct * Shares rise 12 pct before the bell (Recasts, adds details, background; updates share movement) Nov 6 (Reuters) - Mortgage insurer PMI Group Inc posted a narrower-than-expected quarterly loss, helped by a decline in losses and loss adjustment expenses and its European operations, sending its shares up 12 percent. Losses and loss-adjustment expenses, which include paid claims, fell to $336.6 million from $382.7 million, the company said. For the third quarter, net loss was $93.2 million, or $1.13 a share, compared with a loss of $229.4 million, or $2.81 a share, a year ago. Loss from continuing operations was $1.06 per share. Analysts on average had expected a loss of $1.36 per share, excluding special items, according to Thomson Reuters I/B/E/S. Total revenue rose marginally to $226.9 million while total losses and expenses fell 16 percent to $384.8 million. PMI Europe recorded a net income from continuing operations of $27.4 million, primarily due to a tax benefit and net gains from credit default transactions, the company said. Net premiums earned were down 4 percent for the quarter, totaling $176.6 million. The company also completed various capital initiatives including restructuring of certain modified pool policies, which boosted its unit PMI Mortgage Insurance Co's statutory capital by about $139 million. Mortgage insurers are hoping for a capital injection from the U.S.

Treasury in face of record home loan defaults that has threatened the stability of these companies. PMI joins larger rival Radian Group Inc, which posted a narrower-than-expected quarterly loss on fewer claims earlier in the week. In October, MGIC Investment Corp, the largest U.S. mortgage insurer, posted a wider-than-expected quarterly loss as more people failed to repay their home loans. Shares of the Walnut Creek, California-based company rose as much as 12 percent to $2.50 in trading before the bell, but pared the gains later and were flat at $2.23. (Reporting by Abhinav Sharma and Brenton Cordeiro in Bangalore; Editing by Gopakumar Warrier) Keywords: PMI/ ([e-mail]; within U.S [phone]; Outside U.S [phone]; Reuters messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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