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Radian Group (RDN) Q3 Earnings Top, Insurance in Force Rises
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Radian Group Inc. (RDN - Free Report) reported third-quarter 2023 adjusted operating income of $1.04 per share, which beat the Zacks Consensus Estimate by 31.6%. However, the bottom line decreased 20.6% year over year.
Operating revenues increased 6.5% year over year to $311 million due to higher net premiums earned and services revenues. The metric beat the Zacks Consensus Estimate by 6.4%.
The results reflect the strength of the business model and the insured portfolio.
Radian Group Inc. Price, Consensus and EPS Surprise
Net premiums earned were $237 million, up 0.9% year over year. Net investment income increased 33.9% year over year to $68.8 million.
MI New Insurance Written decreased 21% year over year to $13.9 billion.
Primary mortgage insurance in force in force increased 4% year over year to $269.5 billion, reflecting a 7% increase in monthly premium policy insurance in force and a 12% 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 84% as of Sep 30, 2023, up 200 basis points (bps) year over year.
Primary delinquent loans were 20,406 as of Jun 30, 2023, down 3.2% year over year.
Total expenses doubled year over year to $112.6 million. The expense ratio was 23.4, down 270 bps from the year-ago quarter.
Segmental Update
The Mortgage segment reported a year-over-year increase of 2.7% in total revenues to $288.6 million. Net premiums earned by the segment were $236.8 million, up 0.7% year over year. Claims paid were $5 million, flat year over year. The loss ratio was negative 3.5 compared with negative 41.5 in the year-ago quarter.
The homegenius segment’s revenues of $15 million decreased 40% year over year. Net premiums earned by the segment were $3.5 million, which decreased 31.1% year over year. Adjusted pre-tax operating loss was $21 million, narrower than the prior-year quarter loss of $26 million.
Financial Update
As of Sep 30, 2023, Radian Group solid cash balance of $55.5 million, reflecting an increase of 0.4% from the 2022 end level. The debt-to-capital ratio improved 110 bps to 25.4 from the 2022-end level. Book value per share, a measure of net worth, climbed 12.1% year over year to $26.69 as of Sep 30, 2023.
In the third quarter, adjusted net operating return on equity was 16%, which deteriorated 650 bps year over year.
As of Sep 30, 2023, Radian Guaranty’s Available Assets under PMIERs totaled approximately $5.8 billion, resulting in PMIERs excess Available Assets of $1.7 billion.
Share Repurchase and Dividend Update
Radian bought back 1.9 million shares worth $50 million, including commissions, in the third quarter. The remaining repurchase capacity was $230 million as of Sep 30, 2023. The board of directors paid a quarterly dividend of 22.5 cents per share.
The Travelers Companies (TRV - Free Report) reported third-quarter 2023 core income of $1.95 per share, which missed the Zacks Consensus Estimate by 33.4%. The bottom line decreased 11.4% year over year, primarily attributable to higher catastrophe losses and net unfavorable prior-year reserve development. Travelers’ total revenues increased 14% from the year-ago quarter to $10.6 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 1.3%.
Net written premiums increased 14% year over year to a record $10.4 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.4 billion. Travelers witnessed an underwriting gain of $868 million, up 43% year over year, driven by record net earned premiums of $9.7 billion and a consolidated underlying combined ratio, which improved 90.6%.
The Progressive Corporation’s (PGR - Free Report) third-quarter 2023 earnings per share of $2.09 beat the Zacks Consensus Estimate of $1.71. The bottom line improved more than fourfold year over year. Net premiums written were $15.6 billion in the quarter, which grew 20% from $13 billion a year ago and beat our estimate of $14.2 billion.
Net premiums earned grew 20% to $14.9 billion, beating our estimate of $13.6 billion and the Zacks Consensus Estimate of $14.8 billion. Net realized losses on securities were $149 million, narrower than a loss of $216.4 million in the year-ago quarter. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 680 bps from the prior-year quarter’s level to 92.4.
RLI Corp. (RLI - Free Report) reported third-quarter 2023 operating earnings of 61 cents per share, beating the Zacks Consensus Estimate by 510%. The bottom line improved 22% from the prior-year quarter. Operating revenues for the reported quarter were $350.4 million, up 12.1% year over year, driven by 9.2% higher net premiums earned and 50.3% higher net investment income. The top line, however, missed the Zacks Consensus Estimate by 7.2%.
Gross premiums written increased 11.3% year over year to $449.3 million. Underwriting income of $4.2 million decreased by 52.3%, primarily due to Hawaiian wildfire losses. The combined ratio deteriorated 170 basis points year over year to 98.7. Our estimate was 90.8.
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Radian Group (RDN) Q3 Earnings Top, Insurance in Force Rises
Radian Group Inc. (RDN - Free Report) reported third-quarter 2023 adjusted operating income of $1.04 per share, which beat the Zacks Consensus Estimate by 31.6%. However, the bottom line decreased 20.6% year over year.
Operating revenues increased 6.5% year over year to $311 million due to higher net premiums earned and services revenues. The metric beat the Zacks Consensus Estimate by 6.4%.
The results reflect the strength of the business model and the insured portfolio.
Radian Group Inc. Price, Consensus and EPS Surprise
Radian Group Inc. price-consensus-eps-surprise-chart | Radian Group Inc. Quote
Quarter in Details
Net premiums earned were $237 million, up 0.9% year over year. Net investment income increased 33.9% year over year to $68.8 million.
MI New Insurance Written decreased 21% year over year to $13.9 billion.
Primary mortgage insurance in force in force increased 4% year over year to $269.5 billion, reflecting a 7% increase in monthly premium policy insurance in force and a 12% 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 84% as of Sep 30, 2023, up 200 basis points (bps) year over year.
Primary delinquent loans were 20,406 as of Jun 30, 2023, down 3.2% year over year.
Total expenses doubled year over year to $112.6 million. The expense ratio was 23.4, down 270 bps from the year-ago quarter.
Segmental Update
The Mortgage segment reported a year-over-year increase of 2.7% in total revenues to $288.6 million. Net premiums earned by the segment were $236.8 million, up 0.7% year over year. Claims paid were $5 million, flat year over year. The loss ratio was negative 3.5 compared with negative 41.5 in the year-ago quarter.
The homegenius segment’s revenues of $15 million decreased 40% year over year. Net premiums earned by the segment were $3.5 million, which decreased 31.1% year over year. Adjusted pre-tax operating loss was $21 million, narrower than the prior-year quarter loss of $26 million.
Financial Update
As of Sep 30, 2023, Radian Group solid cash balance of $55.5 million, reflecting an increase of 0.4% from the 2022 end level. The debt-to-capital ratio improved 110 bps to 25.4 from the 2022-end level. Book value per share, a measure of net worth, climbed 12.1% year over year to $26.69 as of Sep 30, 2023.
In the third quarter, adjusted net operating return on equity was 16%, which deteriorated 650 bps year over year.
As of Sep 30, 2023, Radian Guaranty’s Available Assets under PMIERs totaled approximately $5.8 billion, resulting in PMIERs excess Available Assets of $1.7 billion.
Share Repurchase and Dividend Update
Radian bought back 1.9 million shares worth $50 million, including commissions, in the third quarter. The remaining repurchase capacity was $230 million as of Sep 30, 2023. The board of directors paid a quarterly dividend of 22.5 cents per share.
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 Other Insurers
The Travelers Companies (TRV - Free Report) reported third-quarter 2023 core income of $1.95 per share, which missed the Zacks Consensus Estimate by 33.4%. The bottom line decreased 11.4% year over year, primarily attributable to higher catastrophe losses and net unfavorable prior-year reserve development. Travelers’ total revenues increased 14% from the year-ago quarter to $10.6 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 1.3%.
Net written premiums increased 14% year over year to a record $10.4 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.4 billion. Travelers witnessed an underwriting gain of $868 million, up 43% year over year, driven by record net earned premiums of $9.7 billion and a consolidated underlying combined ratio, which improved 90.6%.
The Progressive Corporation’s (PGR - Free Report) third-quarter 2023 earnings per share of $2.09 beat the Zacks Consensus Estimate of $1.71. The bottom line improved more than fourfold year over year. Net premiums written were $15.6 billion in the quarter, which grew 20% from $13 billion a year ago and beat our estimate of $14.2 billion.
Net premiums earned grew 20% to $14.9 billion, beating our estimate of $13.6 billion and the Zacks Consensus Estimate of $14.8 billion. Net realized losses on securities were $149 million, narrower than a loss of $216.4 million in the year-ago quarter. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 680 bps from the prior-year quarter’s level to 92.4.
RLI Corp. (RLI - Free Report) reported third-quarter 2023 operating earnings of 61 cents per share, beating the Zacks Consensus Estimate by 510%. The bottom line improved 22% from the prior-year quarter. Operating revenues for the reported quarter were $350.4 million, up 12.1% year over year, driven by 9.2% higher net premiums earned and 50.3% higher net investment income. The top line, however, missed the Zacks Consensus Estimate by 7.2%.
Gross premiums written increased 11.3% year over year to $449.3 million. Underwriting income of $4.2 million decreased by 52.3%, primarily due to Hawaiian wildfire losses. The combined ratio deteriorated 170 basis points year over year to 98.7. Our estimate was 90.8.