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Radian Group Inc. (RDN - Free Report) reported first-quarter 2022 adjusted operating income of $1.17 per share, which beat the Zacks Consensus Estimate by 28.6%. The bottom line increased 72.1% year over year.
The results reflected strong growth in the housing and real estate markets along with sustained demand for products and services.
Radian Group Inc. Price, Consensus and EPS Surprise
Operating revenues increased 3.5% year over year to $322 million on higher service revenues.
Net premiums earned were $254.2 million, down 6.5% year over year. Net investment income fell 0.1% year over year to $37.4 million. MI New Insurance Written decreased 7.4% year over year to $18.7 billion.
Primary mortgage insurance in force was $249 billion as of Mar 31, 2022, up 4.2% year over year. The year-over-year increase reflects a 10.3% increase in monthly premium policy insurance in force and a 19.1% 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 68% as of Mar 31, 2022, up 1080 basis points (bps) year over year.
Primary delinquent loans were 25,510 as of Dec 31, 2021, down 49% year over year.
Total expenses decreased 64.7% year over year to $58.8 million on account of lower policy acquisition costs, interest expense and amortization of other acquired intangible assets. The expense ratio was 27.2, a deterioration from 21.9 in the year-ago quarter.
Segmental Update
The Mortgage segment reported a year-over-year decrease of 6.4% in total revenues to $284.4 million. Net premiums earned by the segment were $245.2 million, down 7.4% year over year. Claims paid were $4.7 million, down 55.2% year over year. The loss ratio was (34.3) against 17.3 in the year-ago quarter.
The homegenius segment’s revenues of $33.9 million climbed 31.4% year over year, driven by solid real estate services businesses. Adjusted pre-tax operating loss was $13.5 million, wider than the prior-year quarter’s loss of $10.5 million.
Financial Update
As of Mar 31, 2022, Radian Group had a solid cash balance of $131.9 million, down from $151.1 million at 2021-end level. The debt-to-capital ratio deteriorated 50 bps to 25.4 from the 2021-end level.
Book value per share, a measure of net worth, climbed 7.3% year over year to $23.75 as of Mar 31, 2022. Adjusted net operating return on equity was 19.9% compared with 12.4% in the year-ago quarter.
The risk-to-capital ratio of Radian Guaranty as of first-quarter end was 12.1:1, higher than 11.1:1 from the 2021-end level. Excess available resources to support PMIERs of $1.6 billion were 44% higher than Radian Guaranty's minimum required assets.
Share Repurchase and Dividend Update
Radian bought back 0.9 million shares worth $21.3 million in the first quarter of 2022. In April 2022, Radian purchased an additional 1.8 million shares for $39.3 million and is left with $339.4 million available under the existing program.
On Feb 9, 2022, Radian Group’s board of directors authorized a regular quarterly dividend of 20 cents per share and the dividend was paid on Mar 3, 2022.
Of the insurance industry players that have reported first-quarter results so far, The Travelers Companies (TRV - Free Report) and RLI Corporation (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings, while The Progressive Corporation (PGR - Free Report) missed the mark.
Travelers reported first-quarter 2022 core income of $4.22 per share, which beat the Zacks Consensus Estimate by 14% and increased 54.6% year over year. Total revenues increased 6.8% from the year-ago quarter to $8.8 billion, primarily due to higher premiums and fee income but missed the consensus estimate. Travelers’ combined ratio deteriorated 530 bps year over year to 91.3.
RLI’s first-quarter 2022 operating earnings of $1.43 per share beat the Zacks Consensus Estimate by 40.2% and improved 64.4% from the prior-year quarter. Operating revenues were $287 million, up 17.1% year over year and beat the Zacks Consensus Estimate by 0.8%. RLI’s gross premiums written increased 22% year over year to $359.2 million. The combined ratio improved 900 bps year over year to 77.9.
Progressive’s first-quarter 2022 earnings per share of $1.12 missed the Zacks Consensus Estimate of $1.24 and declined 34.9% from the year-ago quarter. Net premiums written were $13.2 billion in the quarter, up 12% from $11.7 billion a year ago. Progressive’s combined ratio deteriorated 520 bps from the prior-year quarter to 94.7.
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Radian Group's (RDN) Q1 Earnings Top, Revenues Rise Y/Y
Radian Group Inc. (RDN - Free Report) reported first-quarter 2022 adjusted operating income of $1.17 per share, which beat the Zacks Consensus Estimate by 28.6%. The bottom line increased 72.1% year over year.
The results reflected strong growth in the housing and real estate markets along with sustained demand for products and services.
Radian Group Inc. Price, Consensus and EPS Surprise
Radian Group Inc. price-consensus-eps-surprise-chart | Radian Group Inc. Quote
Quarter in Details
Operating revenues increased 3.5% year over year to $322 million on higher service revenues.
Net premiums earned were $254.2 million, down 6.5% year over year. Net investment income fell 0.1% year over year to $37.4 million. MI New Insurance Written decreased 7.4% year over year to $18.7 billion.
Primary mortgage insurance in force was $249 billion as of Mar 31, 2022, up 4.2% year over year. The year-over-year increase reflects a 10.3% increase in monthly premium policy insurance in force and a 19.1% 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 68% as of Mar 31, 2022, up 1080 basis points (bps) year over year.
Primary delinquent loans were 25,510 as of Dec 31, 2021, down 49% year over year.
Total expenses decreased 64.7% year over year to $58.8 million on account of lower policy acquisition costs, interest expense and amortization of other acquired intangible assets. The expense ratio was 27.2, a deterioration from 21.9 in the year-ago quarter.
Segmental Update
The Mortgage segment reported a year-over-year decrease of 6.4% in total revenues to $284.4 million. Net premiums earned by the segment were $245.2 million, down 7.4% year over year. Claims paid were $4.7 million, down 55.2% year over year. The loss ratio was (34.3) against 17.3 in the year-ago quarter.
The homegenius segment’s revenues of $33.9 million climbed 31.4% year over year, driven by solid real estate services businesses. Adjusted pre-tax operating loss was $13.5 million, wider than the prior-year quarter’s loss of $10.5 million.
Financial Update
As of Mar 31, 2022, Radian Group had a solid cash balance of $131.9 million, down from $151.1 million at 2021-end level. The debt-to-capital ratio deteriorated 50 bps to 25.4 from the 2021-end level.
Book value per share, a measure of net worth, climbed 7.3% year over year to $23.75 as of Mar 31, 2022. Adjusted net operating return on equity was 19.9% compared with 12.4% in the year-ago quarter.
The risk-to-capital ratio of Radian Guaranty as of first-quarter end was 12.1:1, higher than 11.1:1 from the 2021-end level. Excess available resources to support PMIERs of $1.6 billion were 44% higher than Radian Guaranty's minimum required assets.
Share Repurchase and Dividend Update
Radian bought back 0.9 million shares worth $21.3 million in the first quarter of 2022. In April 2022, Radian purchased an additional 1.8 million shares for $39.3 million and is left with $339.4 million available under the existing program.
On Feb 9, 2022, Radian Group’s board of directors authorized a regular quarterly dividend of 20 cents per share and the dividend was paid on Mar 3, 2022.
Zacks Rank
Radian currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Some Other Insurers
Of the insurance industry players that have reported first-quarter results so far, The Travelers Companies (TRV - Free Report) and RLI Corporation (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings, while The Progressive Corporation (PGR - Free Report) missed the mark.
Travelers reported first-quarter 2022 core income of $4.22 per share, which beat the Zacks Consensus Estimate by 14% and increased 54.6% year over year. Total revenues increased 6.8% from the year-ago quarter to $8.8 billion, primarily due to higher premiums and fee income but missed the consensus estimate. Travelers’ combined ratio deteriorated 530 bps year over year to 91.3.
RLI’s first-quarter 2022 operating earnings of $1.43 per share beat the Zacks Consensus Estimate by 40.2% and improved 64.4% from the prior-year quarter. Operating revenues were $287 million, up 17.1% year over year and beat the Zacks Consensus Estimate by 0.8%. RLI’s gross premiums written increased 22% year over year to $359.2 million. The combined ratio improved 900 bps year over year to 77.9.
Progressive’s first-quarter 2022 earnings per share of $1.12 missed the Zacks Consensus Estimate of $1.24 and declined 34.9% from the year-ago quarter. Net premiums written were $13.2 billion in the quarter, up 12% from $11.7 billion a year ago. Progressive’s combined ratio deteriorated 520 bps from the prior-year quarter to 94.7.