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Radian Group (RDN) Q1 Earnings Miss, Revenues Increase Y/Y
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Radian Group Inc.’s (RDN - Free Report) first-quarter 2017 operating income of 37 cents per share missed the Zacks Consensus Estimate by 14%. Earnings were flat year over year.
Radian Group continues to benefit from positive credit trends, including decline in the total number of delinquent loans and continued outstanding performance from the newest books of mortgage insurance business.
Behind the Headlines
Operating revenues grew 16% year over year to $254 million on higher net premiums earned, increased investment income and service revenues.
New mortgage insurance written (NIW) surged 25% year over year to $10 billion in the quarter. Notably, the quarter’s NIW consisted of loans with excellent risk-return characteristics. As of Mar 31, 2017, total primary mortgage insurance in force was $185.9 billion, up 6% from $175.4 million as of Mar 31, 2016.
Persistency, which is the percentage of mortgage insurance in force that remains on the company’s books after a 12-month period, was 77.1% as of Mar 31, 2017. The company had reported persistency of 79.4% as of Mar 31, 2016.
Primary delinquent loans decreased 11.4% year over year in the quarter.
Total expenses were down 17% year over year to $174 million, primarily due to increase in provision for losses, policy acquisition costs, direct cost of services, and other operating expenses.
Radian Group Inc. Price, Consensus and EPS Surprise
Net premiums earned by Mortgage Insurance segment was $221.8 million, up 0.4% year over year. Claims paid were $82.1 million in the quarter, up 9% year over year. Loss ratio decreased 210 basis points to 21.3%.
The Mortgage and Real Estate Services segment – formed after the acquisition of Clayton Holdings in Jun 2014 – reported 24% year-over-year decline in total revenue to $40.1 million. Pre-tax operating loss of $1.2 million was narrower than a loss $3.8 million in the year-ago quarter.
Financial Update
Radian Group ended the quarter with a cash balance of $86.3 million, up 15% year over year.
Long-term debt was $1.1 billion, down 8.3% year over year.
Book value per share, a measure of net worth, grew 9% year over year to $13.58 as of Mar 31, 2017.
Among the other players from the insurance industry that have reported their first-quarter earnings so far, Chubb Limited (CB - Free Report) beat the Zacks Consensus Estimate but RLI Corp. (RLI - Free Report) and The Progressive Corporation (PGR - Free Report) missed expectations.
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Radian Group (RDN) Q1 Earnings Miss, Revenues Increase Y/Y
Radian Group Inc.’s (RDN - Free Report) first-quarter 2017 operating income of 37 cents per share missed the Zacks Consensus Estimate by 14%. Earnings were flat year over year.
Radian Group continues to benefit from positive credit trends, including decline in the total number of delinquent loans and continued outstanding performance from the newest books of mortgage insurance business.
Behind the Headlines
Operating revenues grew 16% year over year to $254 million on higher net premiums earned, increased investment income and service revenues.
New mortgage insurance written (NIW) surged 25% year over year to $10 billion in the quarter. Notably, the quarter’s NIW consisted of loans with excellent risk-return characteristics. As of Mar 31, 2017, total primary mortgage insurance in force was $185.9 billion, up 6% from $175.4 million as of Mar 31, 2016.
Persistency, which is the percentage of mortgage insurance in force that remains on the company’s books after a 12-month period, was 77.1% as of Mar 31, 2017. The company had reported persistency of 79.4% as of Mar 31, 2016.
Primary delinquent loans decreased 11.4% year over year in the quarter.
Total expenses were down 17% year over year to $174 million, primarily due to increase in provision for losses, policy acquisition costs, direct cost of services, and other operating expenses.
Radian Group Inc. Price, Consensus and EPS Surprise
Radian Group Inc. Price, Consensus and EPS Surprise | Radian Group Inc. Quote
Segment Update
Net premiums earned by Mortgage Insurance segment was $221.8 million, up 0.4% year over year. Claims paid were $82.1 million in the quarter, up 9% year over year. Loss ratio decreased 210 basis points to 21.3%.
The Mortgage and Real Estate Services segment – formed after the acquisition of Clayton Holdings in Jun 2014 – reported 24% year-over-year decline in total revenue to $40.1 million. Pre-tax operating loss of $1.2 million was narrower than a loss $3.8 million in the year-ago quarter.
Financial Update
Radian Group ended the quarter with a cash balance of $86.3 million, up 15% year over year.
Long-term debt was $1.1 billion, down 8.3% year over year.
Book value per share, a measure of net worth, grew 9% year over year to $13.58 as of Mar 31, 2017.
Zacks Rank and Performance of Other Insurers
Radian Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among the other players from the insurance industry that have reported their first-quarter earnings so far, Chubb Limited (CB - Free Report) beat the Zacks Consensus Estimate but RLI Corp. (RLI - Free Report) and The Progressive Corporation (PGR - Free Report) missed expectations.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trade>>