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Radian Group (RDN) Q1 Earnings and Revenues Beat Estimates

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Radian Group Inc.’s (RDN - Free Report) first-quarter 2018 operating income of 59 cents per share beat the Zacks Consensus Estimate by 1.7%. The bottom line also improved 59.5% year over year.

Radian Group Inc. Price, Consensus and EPS Surprise

 

Radian Group Inc. Price, Consensus and EPS Surprise | Radian Group Inc. Quote

 

The company benefited from a solid performance at its Mortgage Insurance segment. It continued to grow its insurance in force portfolio, which forms a major driver of future earnings.

Net income per share of 52 cents surged 52.9% from the year-ago quarter.  

Behind the Headlines

Operating revenues grew 9.4% year over year to $277.3 million, courtesy of higher net premiums and investment income as well as other income. Revenues outpaced the Zacks Consensus Estimate by 0.7%. Total revenues (including services revenues and net loss on investments and other financial instruments) came in at $291.6 million, up nearly 1% year over year.

Total net premiums earned were $242.6 million, up nearly 9.4% year over year.

New mortgage insurance written grew 15.8% year over year to $11.7 billion in the quarter under review. As of Mar 31, 2018, total primary mortgage insurance in force was $204.0 billion, up 10% from $185.9 million as of Mar 31, 2017.

Persistency — percentage of mortgage insurance in force that remains in the company’s books after a 12-month period — was 81.0% as of Mar 31, 2018. The company reported a persistency of 84.4% as of Mar 31, 2017.

Primary delinquent loans were 24,597, down 4.6% year over year in the first quarter.

Total expenses decreased 14.3% year over year to $149.1 million, primarily on lower provision for loss, cost of services, other operating expenses, interest expense and amortization plus impairment of other intangible assets.

Segment Update

Net premiums earned by Mortgage Insurance segment were $242.6 million, up nearly 9.4% year over year. Claims paid were $59.9 million in the quarter under review, down 27% year over year. Loss ratio improved 590 basis points to 15.4%.

The Mortgage and Real Estate Services segment reported 14.8% year-over-year decline in total revenues to $34.2 million. Pre-tax operating loss of $0.4 million was narrower than the year-ago loss of $1.2 million.

Restructuring charge was of $0.5 million in the reported quarter. Additional pre-tax charges of about $0.6 million were incurred with additional charges of about $3.1 million expected to be incurred and acknowledged by Dec 31, 2018.

Financial Update

As of Mar 31, 2018, Radian Group had a solid cash balance of $122.5 million, up 66.2% year over year.

Long-term debt was $1 billion, up nearly 1.9% year over year.

Book value per share, a measure of net worth, grew 4.3% year over year to $14.16 as of Mar 31, 2018.

Share Repurchase Update

In the first quarter of 2018, Radian Group bought back 0.5 million shares worth $10 million.

In April, the company bought back additional 0.9 million shares worth $15 million. Under the current share buyback program, expiring Jul 31, 2018, the company can repurchase shares up to an amount of $25 million.

Zacks Rank

Radian Group carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1Rank (Strong Buy) stocks here.

Performance of Other Insurers

Among other players from the insurance industry having reported first-quarter earnings, the bottom line of The Progressive Corporation (PGR - Free Report) , MGIC Investment Corporation (MTG - Free Report) and Torchmark Corporation beat the respective Zacks Consensus Estimate.

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