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Radian Group (RDN) Q2 Earnings Top Estimates, Revenues Rise

Radian Group Inc.’s RDN  second-quarter 2017 operating income of 48 cents per share beat the Zacks Consensus Estimate by 20%. However, the bottom line improved 26.3% year over year. 

 

Radian Group Inc. Price, Consensus and EPS Surprise

Behind the Headlines

Operating revenues grew 3% year over year to $260 million, courtesy of higher net premiums. However, lower investment income and service revenues suffered a decline.

New mortgage insurance written (NIW) grew 11% year over year to $14.3 billion in the quarter. As of Jun 30, 2017, total primary mortgage insurance in force was $191.6 billion, up 8% from $177.7 million as of Jun 30, 2016.

Persistency, which is the percentage of mortgage insurance in force that remains in the company’s books after a 12-month period, was 78.5% as of Jun 30, 2017. The company reported persistency of 79.9% as of Jun 30, 2016.

 Primary delinquent loans decreased 20% year over year in the quarter.

Total expenses surged 92% year over year to $338 million, primarily due to impairment of goodwill and amortization of intangible assets in the quarter.

Segment Update

Net premiums earned by Mortgage Insurance segment were $229 million, up 3% year over year. Claims paid were $91.3 million in the quarter, up 1% year over year. Loss ratio improved 1420 basis points to 7.7%.

The Mortgage and Real Estate Services segment reported 5% year-over-year decline in total revenue to $40 million. Pre-tax operating income of $1.2 million was lower than an operating income of $1.5 million in the year-ago quarter.

Financial Update

Radian Group ended the quarter with a cash balance of $56.9 million, up 3% year over year.

Long-term debt was $989 million, down 23% year over year.

Book value per share, a measure of net worth, grew 3% year over year to $13.54 as of Jun 30, 2017.

Business Update

The company expects to restructure its business. Restructuring charges are likely to be within $25 million on a pre-tax basis.

Zacks Rank

Radian Group currently carries a Zacks Rank #3 (Hold). You can see https://www.zacks.com/stocks/buy-list/?ADID=zp_1link&ICI... _1link">the complete list of today’s Zacks #1 Rank stocks here.

Performance of Other Insurers

Among other players from the insurance industry that have reported their second-quarter earnings so far, the bottom line of Brown & Brown, Inc. BRO and Fidelity National Financial, Inc. FNF have topped their respective Zacks Consensus Estimates, while The Progressive Corporation PGR has missed the same.

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Radian Group Inc. (RDN): Free Stock Analysis Report
 
Brown & Brown, Inc. (BRO): Free Stock Analysis Report
 
Progressive Corporation (The) (PGR): Free Stock Analysis Report
 
Fidelity National Financial, Inc. (FNF): Free Stock Analysis Report
 
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