Radian(RDN) - 2025 Q3 - Quarterly Results

Financial Performance - Radian reported third quarter net income from continuing operations of $153 million, or $1.11 per diluted share, compared to $167 million, or $1.09 per share in the same quarter last year, reflecting a decrease of 8.4%[1][2] - Total revenues for the third quarter of 2025 were $303 million, a slight decrease from $313 million in the third quarter of 2024[3] - Adjusted diluted net operating income per share for the quarter was $1.15, up from $1.10 in the same quarter last year, indicating a growth of 4.5%[2][3] - Total revenues for Q3 2025 were $303.186 million, an increase from $298.551 million in Q2 2025[24] - Net premiums earned in Q3 2025 were $237.103 million, compared to $233.526 million in Q2 2025, reflecting a growth of 2.3%[24] - Net income from continuing operations for Q3 2025 was $152.802 million, slightly down from $154.485 million in Q2 2025[24] - Diluted net income per share for Q3 2025 was $1.03, an increase from $1.02 in Q2 2025[26] - The average common shares outstanding for Q3 2025 were 137,003, compared to 137,376 in Q2 2025[26] - The company reported net gains on investments of $1.285 million in Q3 2025, down from $1.851 million in Q2 2025[24] - The effective tax rate for Q3 2025 was reflected in the income tax provision of $45.892 million on a pretax income of $198.694 million[24] Insurance Metrics - Primary mortgage insurance in force reached an all-time high of $281 billion, up from $275 billion year-over-year, representing a growth of 2.5%[1][9] - New insurance written (NIW) was $15.5 billion in the third quarter of 2025, compared to $13.5 billion in the same quarter last year, marking a year-over-year increase of 14.8%[9] - The loss ratio for the third quarter of 2025 was 8%, compared to 3% in the same quarter last year, indicating an increase in claims[9] - The loss ratio for Q3 2025 was 7.5%, up from 5.1% in Q2 2025, indicating a deterioration in underwriting performance[48] - The percentage of NIW for purchases in Q3 2025 was 94.8%, compared to 94.6% in Q2 2025 and 95.6% in Q1 2025[60] - Primary Insurance in Force (IIF) as of Q3 2025 was $280,559 million, up from $276,745 million in Q2 2025[61] - Primary Risk in Force (RIF) for Q3 2025 was $74,039 million, an increase from $72,820 million in Q2 2025[61] - The persistency rate for the 12 months ended Q3 2025 was 83.8%, consistent with 83.8% in Q2 2025[61] - The percentage of NIW by FICO score for those with scores >=740 was 63.5% in Q3 2025, down from 68.2% in Q2 2025[60] - Direct monthly and other recurring premiums accounted for 90.7% of Primary RIF in Q3 2025, slightly up from 90.3% in Q2 2025[61] Acquisition and Divestiture - The company announced plans to acquire Inigo, a Lloyd's specialty insurer, for $1.7 billion, which is expected to significantly expand Radian's total addressable market and enhance capital allocation[1][12] - The acquisition of Inigo is expected to deliver mid-teens percentage accretion to earnings per share and approximately 200 basis points accretion to return on equity in the first full year after closing[17] - Radian Group is planning to acquire Inigo Limited, with expectations of enhancing earnings, return on equity, and revenue, pending regulatory approvals[63] - Radian Group's board approved a divestiture plan for its Mortgage Conduit, Title, and Real Estate Services businesses in Q3 2025, impacting future operations[43] - The company is divesting its Mortgage Conduit, Title, and Real Estate Services businesses, which may impact its ability to attract and retain key personnel[64] Financial Position and Liquidity - Radian's available liquidity increased to $995 million as of September 30, 2025, up from $784 million at the end of the previous quarter[13] - Total assets decreased to $8,204,803 thousand as of September 30, 2025, down from $9,603,701 thousand as of June 30, 2025, representing a decline of approximately 14.6%[28] - Cash and cash equivalents decreased to $15,258 thousand as of September 30, 2025, down from $19,013 thousand as of June 30, 2025, a decline of about 19.0%[28] - The book value per share increased to $34.34 as of September 30, 2025, up from $33.18 as of June 30, 2025, representing an increase of approximately 3.5%[28] - The holding company debt-to-capital ratio was 18.7% as of September 30, 2025, a slight decrease from 19.2% as of June 30, 2025[28] Operational Performance - Total expenses for Q3 2025 were $104.492 million, a decrease from $105.765 million in Q2 2025[24] - The provision for losses in Q3 2025 was $17.886 million, up from $11.954 million in Q2 2025, indicating a rise of 49.5%[24] - Other operating expenses totaled $62,256 thousand in Q3 2025, a decrease from $69,178 thousand in Q2 2025, representing a decline of approximately 10.5%[38] - Interest expense for Q3 2025 was $17,184 thousand, slightly down from $17,428 thousand in Q2 2025, showing a decrease of about 1.4%[40] - Interest expense for Q3 2025 was $8,105,000, slightly down from $8,446,000 in Q2 2025[42] - The company reported a net investment income of $10,744,000 in Q3 2025, a decrease from $11,097,000 in Q2 2025[42] Risks and Challenges - Radian Guaranty must maintain eligibility under PMIERs to insure loans purchased by GSEs, which is critical for its operations[64] - The company faces risks from the U.S. housing market's health, including inflation, interest rates, and potential recession impacts[63] - There is uncertainty regarding the completion of the Inigo acquisition, including potential liabilities and the ability to secure necessary cash resources[64] - Radian Group's financial performance may be affected by regulatory changes and the current economic environment, including the government shutdown[64] - The company is exposed to competition from other mortgage insurers and credit enhancement alternatives, which could impact market share[64] - Radian Group's ability to execute its capital plans and maintain liquidity is essential for meeting ongoing financial needs[63] - The effectiveness of the company's information technology systems is critical, with risks related to cybersecurity and operational failures[64] - The company must navigate complex compliance requirements for regulatory approvals related to the Inigo acquisition and other business strategies[64]