Radian 4Q Net Income Down 18% on Investment Losses


Radian Group Inc. reported fourth-quarter net income of $61.1 million, down 18% from $74.5 million for the same period in 2015. A net loss of $38.8 million on investments and other financial instruments during the quarter was responsible for the difference.

Otherwise, the Philadelphia-based company ended the year strong, with its mortgage insurance subsidiary Radian Guaranty seeing a 53% year-over-year increase in new insurance written to $13.9 billion, compared with $9 billion for the fourth quarter of 2015. Just over one-quarter of the fourth-quarter book of business was in single-premium product, while refinancings made up 27% of NIW, up from 17% one year prior.

Radian has $183.5 billion of insurance-in-force as of the end of 2016, of which 88% was written after 2008.

Net premiums earned were $233.6 million, compared with $226.4 million for the fourth quarter of 2015.

“While premium growth was good at 3.2%, it was below our 5.5% expectation, and loss margins were marginally narrower than we forecasted. There was some reallocation of certain revenues and expense to the services segment in the quarter, which could impact reported versus forecasted results,” said Randy Binner, an analyst with FRB Group, in a report. Radian’s NIW exceeded his projection of $11.8 billion, a 30% year-over-year improvement.

Its services segment, which includes Clayton Holdings, had a 33% year-over-over increase in revenue to $52.6 million. But it had an adjusted pretax operating loss of $2.6 million, compared with a loss of $1.2 million in the fourth quarter of 2015.

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