A month has gone by since the last earnings report for Radian (RDN Quick QuoteRDN - Free Report) . Shares have lost about 4.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Radian due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Radian Group's Q2 Earnings Beat Estimates, Increase Y/Y

Radian Group Inc.  reported second-quarter 2022 adjusted operating income of $1.36 per share, which beat the Zacks Consensus Estimate by 51.1%. The bottom line increased 81.3% year over year. The results reflected higher monthly premium policy insurance in force, a decline in single premium policy insurance in force and higher investment income.

Quarter in Details   

Operating revenues increased 2.3% year over year to $328.7 million on higher net investment income. Net premiums earned were $253.9 million, down 0.3% year over year. Net investment income increased 29.4% year over year to $46.9 million. MI New Insurance Written decreased 12.6% year over year to $18.9 billion.

Primary mortgage insurance in force was $254.2 billion as of Jun 30, 2022, up 7.1% year over year. The year-over-year change reflects a 12.6% increase in monthly premium policy insurance in force and a 15.1% 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 71.7 % as of Jun 30, 2022, up 1400 basis points (bps) year over year. Primary delinquent loans were 21,861 as of Jun 30, 2022, compared with 40,464 in the year-ago quarter.

Total expenses decreased 80.9% year over year to $26.9 million on account of lower provision for losses, cost of services, interest expense and amortization of other acquired intangible assets. The expense ratio was 26.2, down 80 bps from the year-ago quarter.

Segmental Update

The Mortgage segment reported a year-over-year increase of 1.9% in total revenues to $289.8 million. Net premiums earned by the segment were $246.9 million, down 0.07% year over year. Claims paid were $3.3 million, down 22.7% year over year. The loss ratio was (46.2) against 1.3 in the year-ago quarter.

The homegenius segment’s revenues of $32.3 million decreased 3.6% year over year. Adjusted pre-tax operating loss was $17.7 million, wider than the prior-year quarter’s loss of $9.2 million.

Financial Update

As of Jun 30, 2022, Radian Group had a solid cash balance of $135.3 million, down 10.5% from the 2021-end level. The debt-to-capital ratio deteriorated 190 bps to 26.4 from the 2021-end level.

Book value per share, a measure of net worth, climbed 2.6% year over year to $23.63 as of Jun 30, 2022. Adjusted net operating return on equity was 23.6%, compared with 13.6% in the year-ago quarter.

The risk-to-capital ratio of Radian Guaranty as of second-quarter end was 11.9:1, higher than 11.1:1 from the 2021-end level. Excess available resources to support PMIERs of $1.4 billion were 38% higher than Radian Guaranty's minimum required assets.

Share Repurchase and Dividend Update

Radian bought back 9.1 million shares worth $183.8 million in the second quarter of 2022. In July 2022, Radian purchased an additional 4.8 million shares for $97.5 million and is left with $97.6 million available under the existing program.

On May 11, 2022, Radian Group’s board of directors authorized a regular quarterly dividend of 20 cents per share and the dividend was paid on Jun 3, 2022.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.