Radian Q1 Earnings Beat on Higher Revenues, Lower Claims - Analyst Blog

Radian Group Inc.RDN reported first-quarter operating income of 35 cents per share, beating the Zacks Consensus Estimate by 12.9%. Better-than-expected earnings were driven by higher revenues and a decline in claims paid.

Radian Group Inc. - Earnings Surprise | FindTheCompany

Behind the Headlines

Total revenue of Radian came in at $290.7 million, up 12.6% year over year on higher premium earned and service revenues. Revenues outperformed the Zacks Consensus Estimate by 4.6%.

New mortgage insurance written (NIW) was $9.4 billion, up 38.2% year over year. The quarter's NIW consisted of loans with excellent risk characteristics.

Total primary mortgage insurance in force was $172.1 billion as of Mar 31, 2015, up 6% year over year.

Persistency, which is the percentage of mortgage insurance in force that remains on the company's books after a 12-month period, was 82.6% as of Mar 31, 2015 compared with 83.3% as of Mar 31, 2014.

Primary delinquent loans decreased 24% year over year.

Total expenses increased 16.9% year over year to $153.2 million in the reported quarter, primarily due to direct cost of services, absent last year.

Segment Update

Net premium written in the company's Mortgage Insurance segment was $241.9 million, up 13.6% year over year. Claims paid were $207.1 million, down 32.5% year over year. The company expects about $250 million claims to be paid in the first half of 2015 and about $600-$700 million in 2015 relating to the Sep 2014 BofA Settlement Agreement.

In the Mortgage and Real Estate Services segment - formed after the acquisition of Clayton Holdings in Jun 2014 - total service revenues were $30.7 million, down 11% year over year and gross profit on services was $12.3 million, down 16.9% year over year. During the reported quarter, the segment acquired Red Bell Real Estate, LLC and its affiliate Main Street Valuations, LLC, to broaden its product offerings within the real estate market.

Financial Update

As of Mar 31, 2015, Radian Guaranty's risk-to-capital ratio was 17.1:1 and statutory capital was $1.8 billion

Radian Group ended the first quarter with a cash balance of $57.2 million, up 87.8% from Dec 31, 2014.

Book value per share, a measure of net worth, was $11.53 as of Mar 31, 2015, up from $10.98 as of Dec 31, 2014.

Portfolio Update

On Apr 1, 2015, Radian Guaranty completed the sale of Radian Asset to Assured Guaranty Corp., a subsidiary of Assured Guaranty Ltd. (AGO) for a consideration of $789 million.

Radian carries a Zacks Rank #2 (Buy).

Other players in the same industry which posted strong earnings were MGIC Investment Corp. MTG , Genworth Financial, Inc. GNW , and Arch Capital Group Ltd. ACGL . All these players outperformed their respective Zacks Rank Estimate.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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