It has been about a month since the last earnings report for Radian (RDN Quick QuoteRDN - Free Report) . Shares have lost about 6.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Radian due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Radian Group Q3 Earnings Beat, Revenues Decrease Y/Y

Radian Group reported third-quarter 2022 adjusted operating income of $1.31 per share, which beat the Zacks Consensus Estimate by 54.1%. The bottom line increased 95.5% year over year.

The results reflected higher monthly premium policy insurance in force, higher investment income and lower expenses, offset by lower premiums earned.

Quarter in Details   

Operating revenues decreased 3.5% year over year to $312.4 million on lower net premiums earned, services revenues and other income.

Net premiums earned were $240.2 million, down 3.6% year over year. Net investment income increased 42.9% year over year to $51.4 million. MI New Insurance Written decreased 33.7% year over year to $17.6 billion.

Primary mortgage insurance in force was $259.1 billion as of Sep 30, 2022, up 7.3% year over year. The increase reflects an 11.8% increase in monthly premium policy insurance in force and a 13.2% decline in single premium policy insurance in force.

Persistency — the percentage of mortgage insurance in force that remains in the company’s books after a 12-month period — was 75.9% as of Sep 30, 2022, up 1510 basis points (bps) year over year.

Primary delinquent loans were 21,077 as of Sep 30, 2022, compared with 33,795 in the year-ago quarter.

Total expenses decreased 75.2% year over year to $40.7 million on account of lower policy acquisition costs and cost of services. The expense ratio was 26.1, down 250 bps from the year-ago quarter.

Segmental Update

The Mortgage segment reported a year-over-year increase of 2.3% in total revenues to $281 million. Net premiums earned by the segment were $235.2 million, down 0.7% year over year. Claims paid were $4.5 million, down 55.9% year over year. The loss ratio was (41.5) against 7.1 in the year-ago quarter.

The homegenius segment’s revenues of $25.1 million decreased 44.3% year over year. Adjusted pre-tax operating loss was $25.5 million, wider than the prior-year quarter’s loss of $5.6 million.

Financial Update

As of Sep 30, 2022, Radian Group had a solid cash balance of $54.7 million, down 63.8% from the 2021-end level. The debt-to-capital ratio deteriorated 250 bps to 27.4 from the 2021-end level.

Book value per share, a measure of net worth, climbed 1.4% year over year to $23.80 as of Sep 30, 2022. Adjusted net operating return on equity was 22.5%, compared with 11.8% in the year-ago quarter.

The risk-to-capital ratio of Radian Guaranty as of third-quarter end was 11.1:1, unchanged from the 2021-end level. Excess available resources to support PMIERs of $5.4 billion were 44% higher than Radian Guaranty's minimum required assets.

Share Repurchase and Dividend Update

Radian bought back 9.5 million shares worth $194.1 million in the third quarter of 2022. This represented 5.7% in aggregate of total shares outstanding as of the end of the second quarter.

In October 2022, Radian purchased an additional share for nearly $1 million. At present, no purchase authority is available under the most recent repurchase authorization.

On Aug 10, 2022, Radian Group’s board of directors authorized a regular quarterly dividend of 20 cents per share and the dividend was paid out on Sep 1, 2022.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.