It has been about a month since the last earnings report for Radian (
RDN Quick Quote RDN - Free Report) . Shares have lost about 9% 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 drivers.
Radian Group Q3 Earnings & Revenues Miss Estimates Radian Group reported third-quarter 2021 adjusted operating income of 67 cents per share, which missed the Zacks Consensus Estimate by 8.2%. The bottom line increased 13.6% year over year. The company’s results witnessed lower premiums earned, lower net investment income as well as decreased MI new insurance written, offset by lower expenses. Quarter in Details
Operating revenues decreased 11.7% year over year to $286 million due to lower net premiums earned, net investment income and other income. Nonetheless, the results partly benefited from higher services revenues. The top line missed the consensus mark by 13.1%.
Net premiums earned were $249.1 million, which decreased 13% year over year. Net investment income slumped 0.8% year over year to $35.9 million. MI New Insurance Written decreased 20.3% year over year to $26.6 billion. Primary mortgage insurance in force was $241.6 billion as of Sep 30, 2021, down 1.6% year over year. The year-over-year decrease was due to a decline in single premium policy insurance in force. It was partially offset by an increase in monthly 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 60.8% as of Sep 30, 2021, down 480 basis points (bps) year over year. Primary delinquent loans were 33,795 as of Sep 30, 2021, down 46.1% year over year. Total expenses decreased 23.3% year over year to $164.1 million on account of lower provision for losses and policy acquisition costs. Segmental Update
The Mortgage segment reported a year-over-year decrease of 14.2% in total revenues to $274.6 million. Net premiums earned by the segment were $236.9 million, down 16.4% year over year. Claims paid were $10.2 million in the quarter under review, down 5.6% year over year. The loss ratio improved 2390 bps year over year to 7.1%.
The homegenius segment’s revenues of $45.1 million climbed 51.3% year over year. The increase in revenues was primarily driven by increases in net title premiums earned and services revenues, attributable to the title and asset management businesses. Net premiums earned by the segment were $12.2 million, which surged 72.6% year over year. The segment reported adjusted pretax operating loss before allocated corporate operating expenses of $0.6 million, which came in narrower than the prior-year quarter loss of $1.8 million. Financial Update
As of Sep 30, 2021, Radian Group had solid cash balance of $154.7 million, up 75.9% from the 2020-end level. The debt to capital ratio deteriorated 200 bps to 24.9% from the 2020- end level.
Book value per share, a measure of net worth, climbed 9% year over year to $23.48 as of Sep 30, 2021. In the third quarter, adjusted net operating return on equity was 11.8% compared with 11.3% in the year-ago quarter. The risk-to-capital ratio of Radian Guaranty as of third-quarter end was 11.4:1, lower than 12.7:1 from the 2020-end level. Excess available resources to support PMIERs of $1.7 billion were 49% higher than Radian Guaranty's minimum required assets. Share Repurchase and Dividend Update
Radian bought back 7.1 million shares worth $158.3 million in the third quarter. The company had $142 million remaining under its share repurchase authorization as of Sep 30, 2021.
The board of directors declared a quarterly dividend of 14 cents per share. The dividend was paid on Sep 2, 2021. 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.