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.
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.
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.
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.
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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