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Radian Group Banks on Solid Premiums, Cost Concerns Linger
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Radian Group (RDN - Free Report) is well-poised for growth, driven by higher insurance in force, increased monthly premium policies, higher average investment balances and prudent capital deployment.
The company continues to benefit from strong mortgage origination market including higher refinance activity, aided by a historically low interest rate environment and increased private mortgage insurance penetration rates, which have been aiding new mortgage insurance written (NIW) to increase. Despite the risks and uncertainties due to the COVID-19 pandemic, it continues to expect NIW to be more than $75 billion in 2020.
Recent trends of lower persistency and higher levels of new insurance written have contributed to a faster rate of change in the yield of mortgage insurance portfolio.
Its premium should benefit from increase in insurance in force IIF (primary driver of future premiums), higher monthly premium policies, and increase in single premium policy cancellations due to an increase in refinance activity. Given higher investment yields, higher average investment balances owing to investing positive cash flow from operations, investment income is expected to improve despite the current low interest rate environment.
Additionally, this mortgages insurer improved its capital and liquidity positions through the extension of the maturity of unsecured revolving credit facility of $267.5 million and the issuance of $525 million aggregate principal amount of Senior Notes due 2025. Also, total debt to total capital of 28.4% compares favorably with the industry average of 30.8%.
The company increased its dividend at a six-year (2014-2020) CAGR of 99.2% and currently yields 3.4% compared with the industry average of 3%. These make the stock appealing to yield-seeking investors.
Radian’s return on equity was 11% in the trailing 12-month period, higher than the industry average of 7.5%. Return on equity is a profitability measure that identifies a company’s efficiency in utilizing its shareholders’ funds.
However, we remain concerned about the company’s high expenses, which have been putting pressure on margins.
Other Players
Other key players in the multi-line insurance industry include James River Group Holdings Ltd. (JRVR - Free Report) , Assurant Inc. (AIZ - Free Report) , Horace Mann Educators Corporation (HMN - Free Report) .
James River Group surpassed estimates in three of the last four quarters, with the average being 14.86%.
Assurant surpassed estimates in three of the last four quarters, with the average being 6%.
Horace Mann Educators surpassed estimates in three of the last four quarters, with the average being 24.77%.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Radian Group Banks on Solid Premiums, Cost Concerns Linger
Radian Group (RDN - Free Report) is well-poised for growth, driven by higher insurance in force, increased monthly premium policies, higher average investment balances and prudent capital deployment.
The company continues to benefit from strong mortgage origination market including higher refinance activity, aided by a historically low interest rate environment and increased private mortgage insurance penetration rates, which have been aiding new mortgage insurance written (NIW) to increase. Despite the risks and uncertainties due to the COVID-19 pandemic, it continues to expect NIW to be more than $75 billion in 2020.
Recent trends of lower persistency and higher levels of new insurance written have contributed to a faster rate of change in the yield of mortgage insurance portfolio.
Its premium should benefit from increase in insurance in force IIF (primary driver of future premiums), higher monthly premium policies, and increase in single premium policy cancellations due to an increase in refinance activity.
Given higher investment yields, higher average investment balances owing to investing positive cash flow from operations, investment income is expected to improve despite the current low interest rate environment.
Additionally, this mortgages insurer improved its capital and liquidity positions through the extension of the maturity of unsecured revolving credit facility of $267.5 million and the issuance of $525 million aggregate principal amount of Senior Notes due 2025. Also, total debt to total capital of 28.4% compares favorably with the industry average of 30.8%.
The company increased its dividend at a six-year (2014-2020) CAGR of 99.2% and currently yields 3.4% compared with the industry average of 3%. These make the stock appealing to yield-seeking investors.
Radian’s return on equity was 11% in the trailing 12-month period, higher than the industry average of 7.5%. Return on equity is a profitability measure that identifies a company’s efficiency in utilizing its shareholders’ funds.
However, we remain concerned about the company’s high expenses, which have been putting pressure on margins.
Other Players
Other key players in the multi-line insurance industry include James River Group Holdings Ltd. (JRVR - Free Report) , Assurant Inc. (AIZ - Free Report) , Horace Mann Educators Corporation (HMN - Free Report) .
James River Group surpassed estimates in three of the last four quarters, with the average being 14.86%.
Assurant surpassed estimates in three of the last four quarters, with the average being 6%.
Horace Mann Educators surpassed estimates in three of the last four quarters, with the average being 24.77%.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>