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Radian Group (RDN) Q4 Earnings Top Estimates, Decrease Y/Y
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Radian Group Inc. (RDN - Free Report) reported fourth-quarter 2022 adjusted operating income of $1.05 per share, which beat the Zacks Consensus Estimate by 20.6%. The bottom line decreased 1.8% year over year.
The results reflected higher monthly premium policy insurance in force, decline in single premium policy insurance in force, offset by higher expenses.
Radian Group Inc. Price, Consensus and EPS Surprise
Operating revenues decreased 8.2% year over year to $307.9 million due to lower net premiums earned, services revenues and other income.
Net premiums earned were $232.8 million, down 10.9% year over year. Net investment income increased 58% year over year to $59 million.
MI New Insurance Written decreased 45.8% year over year to $12.8 billion. Primary mortgage insurance in force was $261 billion as of Dec 31, 2022, up 6.1% year over year. The year-over-year change reflects a 10.0% increase in monthly premium policy insurance in force and a 12.6% 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 79.6% as of Dec 31, 2022, up 1530 basis points (bps) year over year.
Primary delinquent loans were 21,913 as of Dec 31, 2022, down 24.6% year over year.
Total expenses increased 21.3% year over year to $111.4 million on account of higher other operating expenses, interest expense and amortization of other acquired intangible assets.
The expense ratio was 27.3, a deterioration of 170 bps from the year-ago quarter.
Segmental Update
The Mortgage segment reported a year-over-year decrease of 2% in total revenues to $282.9 million. Net premiums earned by the segment were $229.9 million, down 7.9% year over year. Claims paid were $8.4 million, decreased 19.2% year over year. The loss ratio was (18.9) compared with (18.6) in the year-ago quarter.
The homegenius segment’s revenues of $18.6 million decreased 58.4% year over year. Net premiums earned by the segment were $2.9 million, which decreased 75.4% year over year. Adjusted pre-tax operating loss was $31.5 million, wider than the prior-year quarter loss of $2.1 million.
Full-Year Highlights
Adjusted operating income of $4.87 per share beat the Zacks Consensus Estimate of $4.71. The bottom line increased 54.6% year over year.
Total revenues came in at $1.3 billion, down 3.3% year over year.
New insurance written of $67.9 billion decreased 26% from 2021. The loss ratio was negative 35.5 against 1.9 in 2021 while the expense ratio was 26.7, a deterioration from 140 bps in 2021.
Financial Update
As of Dec 31, 2022, Radian Group had a solid cash balance of $56.2 million, down 62.8% from the 2021-end level. The debt-to-capital ratio deteriorated 160 bps to 26.5 from the 2021-end level.
Book value per share, a measure of net worth, climbed 2.7% year over year to $24.95 as of Dec 31, 2022.
In 2022, the adjusted net operating return on equity was 20.3%, expanded 630 basis points year over year.
The risk-to-capital ratio of Radian Guaranty as of fourth-quarter end was 10.7:1, lower than 11.1:1 from the 2021-end level.
Excess available resources to support PMIERs of $5.6 billion were 45% higher than Radian Guaranty's minimum required assets.
Share Repurchase and Dividend Update
Radian bought back 19.5 million shares worth $400.2 million, including commissions in 2022. The board of directors paid a quarterly dividend of 20 cents per share.
In January 2023, the board of directors approved a new share repurchase program that enables the company to repurchase its shares. The new authorization provides Radian Group the flexibility to repurchase shares opportunistically and spend up to $300 million, based on market and business conditions, stock price and other factors.
MGIC Investment Corporation (MTG - Free Report) reported fourth-quarter 2022 operating net income per share of 64 cents, which beat the Zacks Consensus Estimate by 8.5% and our estimate of 59 cents. The reported figure increased 4.9% year over year. Insurance in force increased 7.6% from the prior-year quarter to $295.3 billion. The figure was higher than our estimate of $294.9 billion. The insurer witnessed a 20.7% decrease in primary delinquency to 26,387 loans.
MGIC Investment recorded total operating revenues of $291 million, which decreased 0.6% year over year on lower premiums earned. The top line missed the consensus mark by 12.9% and our estimate of $334.1 million. Net premiums written decreased 2.8% year over year to $231.4 million. The figure was lower than our estimate of $260.1 million. Net investment income increased 18.5% year over year to $46.4 million. The figure was higher than our estimate of $44.3 million. Persistency — the percentage of insurance remaining in force from one year prior — was 79.8% as of Dec 31, 2022, up from 62.6% in the year-ago quarter. It compares favorably with our estimate of 66.3%.
Cigna Corporation (CI - Free Report) reported fourth-quarter 2022 adjusted earnings of $4.96 per share, which outpaced the Zacks Consensus Estimate by 2.5% and our estimate of $4.84 per share. The bottom line advanced 4% year over year. Adjusted revenues inched up 0.1% year over year to $45,743 million, owing to better pharmacy revenues coupled with higher fees and other revenues. The top line beat the consensus mark by a whisker and exceeded our estimate of $44,354.2 million.
Cigna’s medical customer base came in at 18 million, which grew 5.4% year over year as of Dec 31, 2022. The growth came on the back of a well-performing U.S. Commercial business. The reported figure matched both the consensus mark and our estimate. Total benefits and expenses declined 0.3% year over year to $44,026 million in the quarter under review. The adjusted selling, general and administrative expense ratio of 7.6% deteriorated 20 bps year over year.
MetLife, Inc. (MET - Free Report) reported fourth-quarter 2022 adjusted operating earnings of $1.55 per share, which missed the Zacks Consensus Estimate of $1.74 and our estimate of $1.77. The bottom line declined 29% year over year. Adjusted operating revenues of MetLife amounted to $15,836 million, which decreased 21.6% year over year. The top line missed the consensus mark of $16,996 million and our estimate of $16,303.1 million. Adjusted premiums, fees and other revenues, excluding pension risk transfer (PRT), were $11,375 million, down 1% year over year.
Total expenses of $14,589 million decreased from $18,783 million a year ago due to lower policyholder benefits and claims. The adjusted expense ratio, excluding total notable items related to adjusted other expenses and PRT, increased 30 bps year over year to 20.7%. Net income increased 12% year over year to $1,314 million driven by net derivative and investment gains. Adjusted return on equity, excluding AOCI other than FCTA, deteriorated 400 bps year over year to 11.3%.
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Radian Group (RDN) Q4 Earnings Top Estimates, Decrease Y/Y
Radian Group Inc. (RDN - Free Report) reported fourth-quarter 2022 adjusted operating income of $1.05 per share, which beat the Zacks Consensus Estimate by 20.6%. The bottom line decreased 1.8% year over year.
The results reflected higher monthly premium policy insurance in force, decline in single premium policy insurance in force, offset by higher expenses.
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 decreased 8.2% year over year to $307.9 million due to lower net premiums earned, services revenues and other income.
Net premiums earned were $232.8 million, down 10.9% year over year. Net investment income increased 58% year over year to $59 million.
MI New Insurance Written decreased 45.8% year over year to $12.8 billion.
Primary mortgage insurance in force was $261 billion as of Dec 31, 2022, up 6.1% year over year. The year-over-year change reflects a 10.0% increase in monthly premium policy insurance in force and a 12.6% 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 79.6% as of Dec 31, 2022, up 1530 basis points (bps) year over year.
Primary delinquent loans were 21,913 as of Dec 31, 2022, down 24.6% year over year.
Total expenses increased 21.3% year over year to $111.4 million on account of higher other operating expenses, interest expense and amortization of other acquired intangible assets.
The expense ratio was 27.3, a deterioration of 170 bps from the year-ago quarter.
Segmental Update
The Mortgage segment reported a year-over-year decrease of 2% in total revenues to $282.9 million. Net premiums earned by the segment were $229.9 million, down 7.9% year over year. Claims paid were $8.4 million, decreased 19.2% year over year. The loss ratio was (18.9) compared with (18.6) in the year-ago quarter.
The homegenius segment’s revenues of $18.6 million decreased 58.4% year over year. Net premiums earned by the segment were $2.9 million, which decreased 75.4% year over year. Adjusted pre-tax operating loss was $31.5 million, wider than the prior-year quarter loss of $2.1 million.
Full-Year Highlights
Adjusted operating income of $4.87 per share beat the Zacks Consensus Estimate of $4.71. The bottom line increased 54.6% year over year.
Total revenues came in at $1.3 billion, down 3.3% year over year.
New insurance written of $67.9 billion decreased 26% from 2021. The loss ratio was negative 35.5 against 1.9 in 2021 while the expense ratio was 26.7, a deterioration from 140 bps in 2021.
Financial Update
As of Dec 31, 2022, Radian Group had a solid cash balance of $56.2 million, down 62.8% from the 2021-end level. The debt-to-capital ratio deteriorated 160 bps to 26.5 from the 2021-end level.
Book value per share, a measure of net worth, climbed 2.7% year over year to $24.95 as of Dec 31, 2022.
In 2022, the adjusted net operating return on equity was 20.3%, expanded 630 basis points year over year.
The risk-to-capital ratio of Radian Guaranty as of fourth-quarter end was 10.7:1, lower than 11.1:1 from the 2021-end level.
Excess available resources to support PMIERs of $5.6 billion were 45% higher than Radian Guaranty's minimum required assets.
Share Repurchase and Dividend Update
Radian bought back 19.5 million shares worth $400.2 million, including commissions in 2022. The board of directors paid a quarterly dividend of 20 cents per share.
In January 2023, the board of directors approved a new share repurchase program that enables the company to repurchase its shares. The new authorization provides Radian Group the flexibility to repurchase shares opportunistically and spend up to $300 million, based on market and business conditions, stock price and other factors.
Zacks Rank
Radian Group 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 Multi-Line Insurers
MGIC Investment Corporation (MTG - Free Report) reported fourth-quarter 2022 operating net income per share of 64 cents, which beat the Zacks Consensus Estimate by 8.5% and our estimate of 59 cents. The reported figure increased 4.9% year over year. Insurance in force increased 7.6% from the prior-year quarter to $295.3 billion. The figure was higher than our estimate of $294.9 billion. The insurer witnessed a 20.7% decrease in primary delinquency to 26,387 loans.
MGIC Investment recorded total operating revenues of $291 million, which decreased 0.6% year over year on lower premiums earned. The top line missed the consensus mark by 12.9% and our estimate of $334.1 million. Net premiums written decreased 2.8% year over year to $231.4 million. The figure was lower than our estimate of $260.1 million. Net investment income increased 18.5% year over year to $46.4 million. The figure was higher than our estimate of $44.3 million. Persistency — the percentage of insurance remaining in force from one year prior — was 79.8% as of Dec 31, 2022, up from 62.6% in the year-ago quarter. It compares favorably with our estimate of 66.3%.
Cigna Corporation (CI - Free Report) reported fourth-quarter 2022 adjusted earnings of $4.96 per share, which outpaced the Zacks Consensus Estimate by 2.5% and our estimate of $4.84 per share. The bottom line advanced 4% year over year. Adjusted revenues inched up 0.1% year over year to $45,743 million, owing to better pharmacy revenues coupled with higher fees and other revenues. The top line beat the consensus mark by a whisker and exceeded our estimate of $44,354.2 million.
Cigna’s medical customer base came in at 18 million, which grew 5.4% year over year as of Dec 31, 2022. The growth came on the back of a well-performing U.S. Commercial business. The reported figure matched both the consensus mark and our estimate. Total benefits and expenses declined 0.3% year over year to $44,026 million in the quarter under review. The adjusted selling, general and administrative expense ratio of 7.6% deteriorated 20 bps year over year.
MetLife, Inc. (MET - Free Report) reported fourth-quarter 2022 adjusted operating earnings of $1.55 per share, which missed the Zacks Consensus Estimate of $1.74 and our estimate of $1.77. The bottom line declined 29% year over year. Adjusted operating revenues of MetLife amounted to $15,836 million, which decreased 21.6% year over year. The top line missed the consensus mark of $16,996 million and our estimate of $16,303.1 million. Adjusted premiums, fees and other revenues, excluding pension risk transfer (PRT), were $11,375 million, down 1% year over year.
Total expenses of $14,589 million decreased from $18,783 million a year ago due to lower policyholder benefits and claims. The adjusted expense ratio, excluding total notable items related to adjusted other expenses and PRT, increased 30 bps year over year to 20.7%. Net income increased 12% year over year to $1,314 million driven by net derivative and investment gains. Adjusted return on equity, excluding AOCI other than FCTA, deteriorated 400 bps year over year to 11.3%.