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Radian Group (RDN) Q2 Earnings Surpass Estimates, Surge Y/Y

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Radian Group Inc.’s (RDN - Free Report) second-quarter 2018 operating income of 59 cents per share beat the Zacks Consensus Estimate by 15%. The bottom line also improved 43.8% 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 plus Mortgage and Real Estate Services segments. It continued to grow its insurance in force portfolio, a major catalyst for future earnings.

Net income per share came in at 96 cents against net loss of 13 cents from the year-ago quarter.

Behind the Headlines

Operating revenues grew 11.6% year over year to $289.8 million, courtesy of higher net premiums, investment income as well as other income. Total revenues (including services revenues and net loss on investments and other financial instruments) totaled $319.3 million, up nearly 5.4% year over year.

Total net premiums earned were $251.3 million, up nearly 9.7% year over year.

New mortgage insurance written grew 15.8% year over year to a record $16.4 billion (on a flow basis) in the quarter under review. As of Jun 30, 2018, total primary mortgage insurance in force was $210.7 billion, up 10% from $191.6 billion as of Jun 30, 2017.

Persistency — percentage of mortgage insurance in force that remains in the company’s books after a 12-month period — was 80.9% as of Jun 30, 2018. The company reported a persistency of 78.5% as of Jun 30, 2017.

Primary delinquent loans were 22,088 in the second quarter, down 7% year over year.

Total expenses increased 59% year over year to $138.7 million, primarily on the back of lower policy acquisition costs, cost of services, interest expense as well as amortization and impairment of other intangible assets.

Segment Update

Net premiums earned by Mortgage Insurance segment were $249 million, up nearly 8.7% year over year. Claims paid were $56.5 million in the quarter under review, down 38.1% year over year. Loss ratio deteriorated 10 basis points to 7.8%.

The Mortgage and Real Estate Services segment reported a 1.3% year-over-year increase in total revenues to $40.5 million. Pretax operating income of $1 million was down 16.7% from the year-ago quarter’s figure.

Restructuring charge was $1.1 million in the reported quarter.

Financial Update

As of Jun 30, 2018, Radian Group had a solid cash balance of $95.6 million, up 67.9% year over year.

Long-term debt was $1 billion, up 4% year over year.

Book value per share, a measure of net worth, grew 10.9% year over year to $15.01 as of Jun 30, 2018.

Share Repurchase Update

In the second quarter of 2018, Radian Group bought back 2.5 million shares worth $40 million.

Zacks Rank

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

Performance of Other Insurers

Among other players from the insurance industry having reported second-quarter earnings so far, the bottom line of The Progressive Corporation (PGR - Free Report) , MGIC Investment Corporation (MTG - Free Report) and RLI Corp. (RLI - Free Report) outpace the respective Zacks Consensus Estimate.

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