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Radian Group (RDN) Q3 Earnings Beat Estimates, Premiums Rise

Radian Group Inc.’s RDN third-quarter 2017 operating income of 46 cents per share beat the Zacks Consensus Estimate by 9.5%. The bottom line also improved 12% year over year.

The company benefited from positive trends in the credit environment and a strong demand for the core products in both business segments

Behind the Headlines

Operating revenues grew 3% year over year to $270 million, courtesy higher net premiums. However, lower investment income and service revenues suffered a decline.

New mortgage insurance written (NIW) declined 3% year over year to $15.1 billion in the quarter. As of Sep 30, 2017, total primary mortgage insurance in force was $196.5 billion, up 8% from $181.2 million as of Sep 30, 2016.

Persistency — percentage of mortgage insurance in force that remains in the company’s books after a 12-month period — was 80% as of Sep 30, 2017. The company reported persistency of 74% as of Sep 30, 2016.

 Primary delinquent loans remained flat year over year in the quarter.

Total expenses increased 7.9% year over year to $209.2 million, primarily due to restructuring and exit costs, other operating expenses, loss on induced conversion and debt extinguishment in the quarter.

Segment Update

Net premiums earned by Mortgage Insurance segment were $236.7 million, down 0.6% year over year. Claims paid were $131.5 million in the quarter, up 59% year over year. Loss ratio improved 840 basis points to 15.2%.

The Mortgage and Real Estate Services segment reported 14.4% year-over-year decline in total revenue to $41.1 million. Pre-tax operating loss of $4.7 million compared unfavorably with $4.8 million earned in the year-ago quarter.

Financial Update

Radian Group ended the quarter with a cash balance of $98.8 million, up 75% year over year.

Long-term debt was $1 billion, down 3.8% year over year.

Book value per share, a measure of net worth, grew 3% year over year to $13.88 as of Sep 30, 2017.

Zacks Rank

Radian Group  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 (Strong Buy) stocks here.

Performance of Other Insurers

Among other players from the insurance industry that have reported third-quarter earnings so far, the bottom line at The Progressive Corporation PGR, The Travelers Companies, Inc. TRV and RLI Corp. RLI beat their respective Zacks Consensus Estimate.

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Radian Group Inc. (RDN): Free Stock Analysis Report
 
RLI Corp. (RLI): Free Stock Analysis Report
 
The Travelers Companies, Inc. (TRV): Free Stock Analysis Report
 
Progressive Corporation (The) (PGR): Free Stock Analysis Report
 
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