• Revenue: $334 million for the third quarter.
• Net Income: $152 million for the third quarter.
• Adjusted Diluted Net Operating Income per Share: $1.90 for the third quarter.
• Annualized Return on Equity: 13.2% for the third quarter.
• Adjusted Net Operating Return on Equity: 13.7% for the third quarter.
• Book Value per Share: $31.37, an 18% increase year-over-year.
• Primary Mortgage Insurance in Force: $275 billion at the end of the third quarter.
• New Insurance Written: $13.5 billion in the third quarter.
• Persistency Rate: 84.4% in the third quarter.
• Net Investment Income: $78 million in the third quarter.
• Investment Portfolio Yield: 4.3% in the third quarter.
• Unrealized Net Loss on Investments: $233 million at quarter end.
• Provision for Losses: Net expense of $6 million in the third quarter.
• Other Operating Expenses: $86 million in the third quarter.
• Dividends Paid: $185 million in the third quarter, $485 million year-to-date.
• Debt Reduction: Paid off $450 million of senior debt, reducing leverage ratio to 18.5%.
• Holding Company Liquidity: $844 million at the end of the third quarter.
• Share Repurchases: $49 million in the third quarter.

• Warning! GuruFocus has detected 8 Warning Signs with NFG.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Radian Group Inc (NYSE:RDN) reported a strong financial performance with a net income of $152 million and an annualized return on equity of 13.2% for the third quarter.
• The company increased its book value per share by 18% year-over-year to $31.37.
• Radian Group Inc (NYSE:RDN) successfully reduced its leverage ratio to 18.5% by paying off $450 million of senior debt.
• The company maintained a strong capital and liquidity position with a PMIERs cushion of $2.1 billion and holding company liquidity of $844 million.
• Radian Group Inc (NYSE:RDN) returned $86 million to shareholders in the third quarter through share repurchases and dividends, demonstrating a commitment to returning capital to shareholders.

Negative Points

• The company experienced an increase in total defaults to approximately 22,000 loans, resulting in a portfolio default rate of 2.25%.
• Radian Group Inc (NYSE:RDN) reported a $10 million non-operating impairment on internal use software during the quarter.
• The persistency rate of existing insurance in force remained high, which could limit new business opportunities.
• The company anticipates potential impacts from natural disasters, such as hurricanes, which could increase the number of new defaults reported.
• Radian Group Inc (NYSE:RDN) faces a competitive pricing environment in the mortgage insurance market, which could impact future profitability.

Q & A Highlights

Q: Can you provide more details on Radian Mortgage Capital's future issuance plans? A: Rick Thornberry, CEO, stated that while they haven't provided specific forward guidance, Radian Mortgage Capital completed its first deal in the third quarter and a second in the fourth quarter. They expect to be a regular issuer in the market as the business scales, with continued issuance anticipated next year.

Q: What was the reason behind the $10 million software impairment in the quarter? A: Sumita Pandit, CFO, explained that the impairment was related to software in the "All Other" category, deemed necessary due to its current use. This is considered a one-time item. The "All Other" category includes various business segments, and they expect revenues to slightly decrease due to debt repayment.

Q: How is the current pricing environment for mortgage insurance, and what are the competitive dynamics? A: Derek Brummer, President of Mortgage Insurance, noted that the pricing environment has been stable and rational for the past 18-24 months. While there are minor variations, the environment allows Radian to leverage analytics to find value across the risk spectrum.

Q: With favorable cure rates, why hasn't Radian adjusted its default-to-claim rate assumptions? A: Sumita Pandit, CFO, emphasized the importance of maintaining prudent, through-the-cycle assumptions. Despite low current claim rates, Radian prefers to remain conservative, keeping the default-to-claim rate at 8% to account for potential future changes.

Q: What are the expectations for the private mortgage insurance market growth in 2025, and how will Radian participate? A: Rick Thornberry, CEO, expects the market to grow by 10% in 2025, driven by an expanding purchase market. Radian plans to leverage its data analytics and proprietary tools to target economic value and participate in this growth, focusing on risk selection rather than market share.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.