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Radian Group (RDN) Beats Q4 Earnings, Revenue Estimates
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Radian Group Inc.’s (RDN - Free Report) fourth-quarter 2016 operating income of 41 cents per share beat the Zacks Consensus Estimate by a cent. Earnings increased 21% year over year.
The company wrote record volume of high-quality and profitable flow mortgage insurance business in the quarter. Notably, the company had witnessed the highest volume of new flow mortgage insurance business written in the third quarter. Radian Group continues to benefit from positive credit trends, including decline in the total number of delinquent loans and continued outstanding performance from the newest books of mortgage insurance business.
Behind the Headlines
Operating revenues grew 8.7% year over year to $313 million on higher net premiums earned, increased investment income and service revenues. Revenues also outpaced the Zacks Consensus Estimates of $268 million.
New mortgage insurance written (NIW) surged 53% year over year to $13.9 billion in the quarter. Notably, the quarter’s NIW consisted of loans with excellent risk-return characteristics. As of Dec 31, 2016, total primary mortgage insurance in force was $185.3 billion, up 4.5% from $175.6 million as of Dec 31, 2015.
Persistency, which is the percentage of mortgage insurance in force that remains on the company’s books after a 12-month period, was 76.7% as of Dec 31, 2016. The company had reported persistency of 78.8% as of Dec 31, 2015.
Primary delinquent loans decreased 18% year over year in the quarter.
Total expenses were up 3.8% year over year to $176.6 million, primarily due to increase in provision for losses, policy acquisition costs, direct cost of services, and other operating expenses.
Radian Group Inc. Price, Consensus and EPS Surprise
Operating earnings per share were $1.56 per share, up 11% year over year.
Revenues of $1.2 billion improved 3.4% year over year.
Segment Update
Net premiums earned in the company’s Mortgage Insurance segment was $233.6 million, up 3.2% year over year. Claims paid were $116.5 million in the quarter, down 34% year over year. Loss ratio decreased 170 basis points to 23.4%.
In the Mortgage and Real Estate Services segment – formed after the acquisition of Clayton Holdings in Jun 2014 – total revenue grew 33% year over year to $52.6 million. Pre-tax operating loss of $2.6 million was wider than a loss $1.2 million of incurred in the year-ago quarter.
Financial Update
Radian Group ended the quarter with a cash balance of $62 million, up 3.3% year over year.
Long-term debt was $1.1 billion, down 8.3% year over year.
Book value per share, a measure of net worth, grew 11% year over year to $13.39 as of Dec 31, 2016.
Share Repurchase Update
The company exhausted its $100 million buyback program and approved another $125 million buyback program.
Among other players in the insurance industry that have reported their fourth-quarter earnings so far, earnings at Progressive Corp. (PGR - Free Report) , MGIC Investment Corp. (MTG - Free Report) and RLI Corp. (RLI - Free Report) beat their respective Zacks Consensus Estimate,
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Radian Group (RDN) Beats Q4 Earnings, Revenue Estimates
Radian Group Inc.’s (RDN - Free Report) fourth-quarter 2016 operating income of 41 cents per share beat the Zacks Consensus Estimate by a cent. Earnings increased 21% year over year.
The company wrote record volume of high-quality and profitable flow mortgage insurance business in the quarter. Notably, the company had witnessed the highest volume of new flow mortgage insurance business written in the third quarter. Radian Group continues to benefit from positive credit trends, including decline in the total number of delinquent loans and continued outstanding performance from the newest books of mortgage insurance business.
Behind the Headlines
Operating revenues grew 8.7% year over year to $313 million on higher net premiums earned, increased investment income and service revenues. Revenues also outpaced the Zacks Consensus Estimates of $268 million.
New mortgage insurance written (NIW) surged 53% year over year to $13.9 billion in the quarter. Notably, the quarter’s NIW consisted of loans with excellent risk-return characteristics. As of Dec 31, 2016, total primary mortgage insurance in force was $185.3 billion, up 4.5% from $175.6 million as of Dec 31, 2015.
Persistency, which is the percentage of mortgage insurance in force that remains on the company’s books after a 12-month period, was 76.7% as of Dec 31, 2016. The company had reported persistency of 78.8% as of Dec 31, 2015.
Primary delinquent loans decreased 18% year over year in the quarter.
Total expenses were up 3.8% year over year to $176.6 million, primarily due to increase in provision for losses, policy acquisition costs, direct cost of services, and other operating expenses.
Radian Group Inc. Price, Consensus and EPS Surprise
Radian Group Inc. Price, Consensus and EPS Surprise | Radian Group Inc. Quote
2016 Highlights
Operating earnings per share were $1.56 per share, up 11% year over year.
Revenues of $1.2 billion improved 3.4% year over year.
Segment Update
Net premiums earned in the company’s Mortgage Insurance segment was $233.6 million, up 3.2% year over year. Claims paid were $116.5 million in the quarter, down 34% year over year. Loss ratio decreased 170 basis points to 23.4%.
In the Mortgage and Real Estate Services segment – formed after the acquisition of Clayton Holdings in Jun 2014 – total revenue grew 33% year over year to $52.6 million. Pre-tax operating loss of $2.6 million was wider than a loss $1.2 million of incurred in the year-ago quarter.
Financial Update
Radian Group ended the quarter with a cash balance of $62 million, up 3.3% year over year.
Long-term debt was $1.1 billion, down 8.3% year over year.
Book value per share, a measure of net worth, grew 11% year over year to $13.39 as of Dec 31, 2016.
Share Repurchase Update
The company exhausted its $100 million buyback program and approved another $125 million buyback program.
Zacks Rank and Performance of Other Insurers
Radian Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among other players in the insurance industry that have reported their fourth-quarter earnings so far, earnings at Progressive Corp. (PGR - Free Report) , MGIC Investment Corp. (MTG - Free Report) and RLI Corp. (RLI - Free Report) beat their respective Zacks Consensus Estimate,
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>