Mortgage insurer PMI Group Inc (PMI.N) reported a much wider-than-expected quarterly loss, as its U.S. unit continued to post disappointing results, sending its shares down 5 percent before the bell.The company posted a loss of $228.2 million, or $2.76 a share from continuing operations for the latest fourth quarter, compared with a loss of $181.0 million, or $2.22 a share, a year back.

Analysts on average were looking for a loss of $1.67 a share, according to Thomson Reuters I/B/E/S.

PMI's U.S. mortgage insurance operations posted a net loss of $242 million. This is up sharply from a loss of $174.1 million the unit posted in the same period last year.

Mortgage insurance is bought by homebuyers securing loans with down payments of less than 20 percent to repay the lender if there is a default.

PMI's principal operating subsidiary said on Monday that Fannie Mae (FNM.N) has approved it as a direct issuer of mortgage guaranty insurance. The unit also obtained a waiver to continue writing new mortgage insurance business, even if it falls below the capital requirements of the Arizona state regulator.

PMI also said it is currently in discussions with Freddie Mac (FRE.N) regarding approval of PMI Mortgage Assurance Co (PMAC) to transact new mortgage insurance business. PMAC is a subsidiary of PMI Mortgage Insurance Co, PMI's main mortgage insurance company.

Mortgage insurers like PMI and rivals Radian Group Inc (RDN.N) and MGIC Investment Corp (MTG.N) have suffered huge losses from backing subprime bonds and mortgages that saw a surge in defaults as U.S. credit and housing markets worsened.

MGIC, the No.1 U.S. mortgage insurer, posted its tenth straight quarterly loss last month as a rising number of homeowners failed to pay their mortgages. However, Genworth Financial Inc (GNW.N), which also runs a big mortgage insurance business, posted a better-than-expected profit.

Shares of the Walnut Creek, California-based company were down 5 percent at $2.30 before the bell.

The shares closed at $2.41 Friday on the New York Stock Exchange. The stock traded as low as 26 cents last March.