Key Takeaways NMIH is poised to capitalize on growth in the mortgage insurance sector. A robust reinsurance strategy helps NMIH manage credit volatility and access efficient growth capital. Earnings growth is supported by increased production of both monthly and single premium policies. Shares of NMI Holdings Inc. (NMIH) have gained 15.1% in the past year, outperforming the industry’s growth of 7.8%.NMIH has outperformed its peers, American Financial Group, Inc. (AFG) and Cincinnati Financial Corporation (C ...

Key Takeaways Radian Group plans to buy Inigo for $1.7B to expand into global multi-line specialty insurance. New business, higher persistency and a strong mortgage insurance portfolio support growth. Declining claims and a strengthened capital base back RDN's dividend hikes and buybacks. Shares of Radian Group Inc. (RDN) have gained 13.5% in the past year, outperforming the industry’s growth of 10.3%. RDN has outperformed its peers, CNO Financial Group, Inc. (CNO) , which has gained 13.3% in the past year, ...

Arch Capital Group Ltd. (NASDAQ:ACGL) is one of the most profitable value stocks to invest in right now. On December 2, Roth Capital lowered the firm’s price target on Arch Capital to $110 from $125 with a Buy rating on the shares. The firm noted that the company’s earnings beat was primarily driven by an unusually low level of catastrophe losses within its reinsurance division. However, written premium growth underperformed expectations across both insurance and reinsurance. Roth Capital believes that thi ...

Group 1 - Radian Group Inc.'s subsidiary, Radian Guaranty, has agreed to a $373 million excess of loss reinsurance arrangement with highly rated third-party providers [1][2] - The reinsurance agreement is part of Radian's broader risk distribution strategy to manage capital and mitigate risk, covering policies written from 2016 to 2021 [2] - The agreement is expected to close in December 2025, with an effective date of December 1st, 2025 [2] Group 2 - In September 2025, Radian Group acquired Inigo Limited, a Lloyd's specialty insurer, in a transaction valued at $1.7 billion, primarily in cash [3] - The acquisition was funded using Radian's available liquidity and capital from its subsidiaries, leading to a 'BBB-' rating on Radian and an 'A-' rating on Radian Guaranty being placed on CreditWatch with a developing outlook by S&P Global Ratings [3] - The rationale behind the acquisition was to enhance business diversification and create growth opportunities beyond its US mortgage insurance operations [4]

Core Insights - NMI Holdings Inc. (NMIH) shares closed at $37.58, close to its 52-week high of $43.20, indicating strong investor confidence and potential for further price appreciation [1] - The stock is trading above its 50-day and 200-day simple moving averages, suggesting solid upward momentum [1] Financial Performance - NMI Holdings' earnings have grown by 15.7% over the last five years, with a solid surprise history of beating earnings estimates in two of the last four quarters [2] - The company’s shares have gained 2.2% in the past year, underperforming the industry growth of 11% [3] Valuation Metrics - NMI Holdings' shares are trading at a forward price-to-book value of 1.15X, lower than the industry average of 1.46X and the Finance sector's 4.25X [4][8] - The Zacks average price target for NMIH is $43.00 per share, suggesting a potential upside of 15.5% from the last closing price [10] Growth Projections - The Zacks Consensus Estimate for NMI Holdings' 2025 earnings per share indicates a year-over-year increase of 8.89%, with revenues projected at $702.40 million, reflecting a 7.9% improvement [9] - The company is expected to benefit from new business opportunities in the growing mortgage insurance market, with increased production of monthly and single premium policies [7][13] Return on Capital - NMI Holdings has a return on equity (ROE) of 16.08%, significantly higher than the industry average of 8%, indicating efficient use of shareholders' funds [12] - The company has a comprehensive reinsurance program to manage credit volatility and enhance its return profile [15] Strategic Initiatives - NMIH is focused on efficiency and expense management to drive margin expansion, with a new $250 million share repurchase program authorized through December 31, 2027 [16] - The insurer is well-positioned for growth with a favorable growth outlook and affordable share prices, supported by a VGM Score of B [18]

Financial Data and Key Metrics Changes - For Q3 2025, the company reported a net income of $164 million, down from $176 million a year ago, while diluted earnings per share increased to $1.67 from $1.65 [4][9] - The year-to-date return on equity was 13% as of September 30, 2025 [4] - Consolidated cash and investments totaled $6.6 billion with an annualized investment yield of 3.9% [6][7] Business Line Data and Key Metrics Changes - The U.S. mortgage insurance in force was $249 billion, a 2% increase year-over-year [5][9] - The mortgage insurance net premium earned for Q3 2025 was $232 million, including $15.9 million from Essent Re [10] - The average base premium rate for the U.S. mortgage insurance portfolio remained at 41 basis points, while the average net premium rate decreased by one basis point to 35 basis points [10] Market Data and Key Metrics Changes - The 12-month persistency rate was 86%, unchanged from the previous quarter [5][9] - The default rate on the U.S. mortgage insurance portfolio increased to 2.29%, up 17 basis points from the previous quarter [10] Company Strategy and Development Direction - The company maintains a conservative capital strategy to navigate market volatility while allowing for strategic growth investments [7][14] - A new $500 million share repurchase authorization was approved, running through year-end 2027, indicating a commitment to returning capital to shareholders [8][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business, benefiting from favorable credit trends and the current interest rate environment [4] - The company anticipates that the current level of mortgage rates will support elevated persistency in the near term [5] - Management highlighted the strong credit quality of the insurance in force, with a weighted average FICO of 746 [5] Other Important Information - The company repurchased nearly 9 million shares for over $500 million year-to-date through October 31, 2025 [8] - The estimated annual effective tax rate was increased from 15.4% to 16.2% due to withholding taxes incurred on a dividend [11] Q&A Session Summary Question: Credit trends and provisions - Management noted that the average loan size has increased, which impacts provisions when larger loans default [16] Question: Claims amount and severity - Management indicated that fluctuations in claims are dependent on document processing and that severity remains below reserves [18] Question: Seeded premiums and reinsurance transactions - Management explained that seeded premiums will vary based on default and provision activity, with seasonal trends expected [22] Question: Tax rate expectations - Management suggested a tax rate of around 16% going forward, influenced by capital distributions to shareholders [24] Question: Severity rates and long-term expectations - Management stated that while severity rates have increased, the overall risk remains low, and they are well-capitalized to handle potential losses [30][34] Question: Underwriting guardrails and credit score changes - Management reassured that current underwriting standards remain stringent and that any changes in credit score requirements by GSEs have not yet been implemented [42][45] Question: Upstreaming capital from MI subsidiary - Management indicated plans for consistent dividends from the MI subsidiary, with potential for a larger dividend in Q4 [48] Question: Diversification and growth avenues - Management discussed the performance of the Title business and indicated that while it is still small, it is being developed as a potential growth area [50]

Financial Data and Key Metrics Changes - For Q3 2025, the company reported a net income of $164 million, down from $176 million a year ago, while diluted earnings per share increased to $1.67 from $1.65 a year ago [4][5] - The year-to-date return on equity was 13% through Q3 2025 [4] - Consolidated cash and investments totaled $6.6 billion with an annualized investment yield of 3.9% [5][6] Business Line Data and Key Metrics Changes - The U.S. mortgage insurance in force was $249 billion, a 2% increase year-over-year [5] - The mortgage insurance net premium earned for Q3 2025 was $232 million, including $15.9 million from third-party business [9] - The average base premium rate for the U.S. mortgage insurance portfolio remained at 41 basis points, while the average net premium rate decreased by one basis point to 35 basis points [9] Market Data and Key Metrics Changes - The portfolio default rate increased to 2.29%, up 17 basis points from the previous quarter [9] - The weighted average FICO score of the insurance in force was 746, with a weighted average original loan-to-value (LTV) of 93% [5] Company Strategy and Development Direction - The company continues to focus on a prudent capital strategy, maintaining a strong balance sheet while returning capital to shareholders [6][12] - A new $500 million share repurchase authorization was approved, running through year-end 2027 [7] - The company is committed to investing in strategic growth while balancing shareholder returns [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business, benefiting from favorable credit trends and the interest rate environment [4] - The company anticipates that current mortgage rates will support elevated persistency in the near term [5] - Management highlighted the strong credit quality of the insurance portfolio and the substantial home equity embedded in the in-force book as mitigating factors for potential claims [5][6] Other Important Information - The company repurchased nearly 9 million shares for over $500 million year-to-date through October 31 [7] - The board approved a common dividend of $0.31 for Q4 2025 [7] - The statutory capital of Essent Guarantee was $3.7 billion, with a risk-to-capital ratio of 8.9 to 1 [11] Q&A Session Summary Question: Credit trends and provisions - Management noted that the average loan size has increased to nearly $300,000, which affects provisions when defaults occur [15] Question: Claims amount and severity - Management indicated that fluctuations in claims are dependent on document processing and adjudication, with severity remaining below reserves [17] Question: Seeded premiums and reinsurance transactions - Management explained that seeded premiums will fluctuate based on default and provision activity, with seasonal trends expected [19][20] Question: Tax rate changes - The increase in the estimated annual effective tax rate was attributed to withholding taxes on dividends, with expectations of a rate around 16% going forward [21][22] Question: Severity rates and long-term expectations - Management stated that while severity rates have increased, the overall risk remains low, and they are conservative in provisioning [26][27] Question: Underwriting guardrails and credit score requirements - Management confirmed that current systems have not changed significantly, and lenders are focused on managing origination costs [39][40] Question: Upstreaming capital from MI subsidiary - Management indicated plans for consistent dividends, potentially larger in Q4, while maintaining a focus on upstreaming cash [42] Question: Title business performance and growth avenues - Management noted that the Title business is still in early stages, with a focus on lender relationships and potential future growth [43][44]

Financial Data and Key Metrics Changes - Radian achieved net income from continuing operations of $153 million, or $1.11 per diluted share, consistent with the previous quarter [13] - Net income including discontinued operations was $141 million in the third quarter [13] - Return on equity (ROE) was 12.4% including discontinued operations, and 13.4% for continuing operations, reflecting a 100 basis points increase [13][14] - Book value per share grew 9% year over year to $34.34 [14] Business Line Data and Key Metrics Changes - Total revenues for the third quarter were $303 million [15] - Net premiums earned reached $237 million, the highest level in over three years [15] - The mortgage insurance in-force portfolio grew to an all-time high of $281 billion, with $15.5 billion of new insurance written, a 15% increase year-over-year [15][16] - Persistency rate remained strong at 84% [15] Market Data and Key Metrics Changes - The investment portfolio totaled $6 billion, generating net investment income of $63 million [17] - The number of new defaults was approximately 13,400, a decline of 2% from the same period last year [17] - Total defaults increased to approximately 24,000 loans, resulting in a portfolio default rate of 2.42% [17] Company Strategy and Development Direction - Radian is transitioning from a leading U.S. mortgage insurer to a global multi-line specialty insurer, with the acquisition of Inigo as a key strategic move [7][10] - The divestiture plan for mortgage conduit, title, and real estate services businesses is underway, with completion expected by the third quarter of next year [6][12] - The acquisition of Inigo is valued at $1.7 billion, funded through available liquidity and excess capital [8][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the mortgage insurance business, citing strong credit characteristics and favorable market conditions [4][18] - The outlook remains positive, with expectations for stable in-force premium yield and continued strong persistency rates [16][18] - Management emphasized the importance of maintaining a disciplined approach to underwriting and capital allocation [9][10] Other Important Information - Radian has returned nearly $3 billion of capital to stockholders through dividends and share repurchases since 2017 [5] - The company expects to maintain strong liquidity, with available holding company liquidity growing to $995 million by quarter-end [21] - The leverage ratio declined to 18.7%, with expectations to remain below 20% by year-end 2026 [22] Q&A Session Summary Question: Should the 200 basis points increase be added to the current run rate ROE? - Management confirmed that a 200 basis points increase on the current operating ROE of 13.9% is reasonable [26][27] Question: What potential capital benefits could arise from using unearned premiums at Radian as capital at Inigo? - Management indicated that future details on potential synergies and reinsurance opportunities will be provided post-acquisition [28][29] Question: How should capital freed up from divesting non-core businesses be viewed? - The carrying value of the three businesses is estimated at $170 million, with no significant gains or losses expected [33][34] Question: What are the key steps to return to the buyback program? - Management outlined that excess liquidity is expected to return within a few quarters post-Inigo acquisition, allowing for a revisit of the share repurchase strategy [36][37] Question: What is the timing of the divestitures? - Management confirmed that the divestiture process is on track to be completed by the third quarter of next year [41][42] Question: What would it take to move the claim rate below 7.5%? - Management stated that the current claim rate is a through-the-cycle assumption, and no changes are expected in the near future [44][46] Question: Has anything changed post-COVID affecting claim rate trends? - Management noted that home equity growth and improved borrower assistance processes have positively influenced cure rates since COVID [47][49]

Financial Data and Key Metrics Changes - Radian reported net income from continuing operations of $153 million, or $1.11 per diluted share, consistent with the previous quarter [12] - The company achieved a return on equity (ROE) of 12.4%, with a higher ROE of 13.4% for continuing operations [12] - Book value per share grew by 9% year over year to $34.34 [12] - Total revenues for the quarter were $303 million, with net premiums earned reaching $237 million, the highest level in over three years [13] Business Line Data and Key Metrics Changes - The mortgage insurance in-force portfolio grew to an all-time high of $281 billion, with new insurance written increasing by 15% year over year to $15.5 billion [13][14] - The persistency rate for the mortgage insurance portfolio remained strong at 84% [13] - The in-force premium yield remained stable at 38 basis points [14] Market Data and Key Metrics Changes - The number of new defaults in the third quarter was approximately 13,400, a decline of 2% from the same period last year [15] - Total defaults increased to approximately 24,000 loans, resulting in a portfolio default rate of 2.42% [15] - The company maintained a default-to-claim rate of 7.5%, resulting in a loss provision of $53 million for new defaults [17] Company Strategy and Development Direction - Radian is transitioning from a leading U.S. mortgage insurer to a global multi-line specialty insurer, with the acquisition of Indigo as a key strategic move [6][9] - The divestiture plan for non-core businesses is underway, with expectations to complete the process by the third quarter of next year [5][11] - The acquisition of Indigo, valued at $1.7 billion, is expected to double earned premiums and expand the total addressable market by 12 times [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the mortgage insurance business, highlighting strong credit performance and the resilience of the portfolio [4][23] - The company anticipates maintaining strong persistency rates due to a significant portion of the insurance portfolio having mortgage rates of 5% or lower [14] - Management remains vigilant regarding credit trends in other asset classes but sees positive performance in the mortgage segment [16] Other Important Information - Radian has returned nearly $3 billion of capital to stockholders through dividends and share repurchases since 2017 [5] - The company expects to maintain strong liquidity, with available holding company liquidity growing to $995 million by quarter-end [19] - The company has revised its expense run rate guidance for continuing operations to approximately $250 million for the full year 2025 [18] Q&A Session Summary Question: Should the 200 basis points increase be added to the current run rate ROE? - Management indicated that a 200 basis points increase on the current operating ROE of 13.9% is reasonable [25][26] Question: What are the potential capital benefits from using unearned premiums at Radian as capital at Indigo? - Management noted that future details on potential synergies and reinsurance opportunities between the MI business and Indigo will be shared post-transaction [27][28] Question: How should capital freed up from divesting non-core businesses be viewed? - Management stated that the carrying value of the three businesses is approximately $170 million, with no significant gains or losses expected [33][34] Question: What are the key steps to return to the buyback program? - Management outlined that excess liquidity is expected within a few quarters post-Indigo acquisition, which will allow for a revisit of the share repurchase strategy [35][38] Question: What is the timing of the divestitures? - Management confirmed that the divestiture process is on track to be completed by the third quarter of next year, with significant interest from potential buyers [42][43] Question: What would it take to move the claim rate below 7.5%? - Management explained that the current claim rate is a through-the-cycle assumption, and they do not expect changes in the near future [45][46] Question: Has anything changed post-COVID affecting cure rates? - Management noted that home equity growth and improved borrower assistance processes have positively influenced cure rates since COVID [49][50]

Financial Performance - Q3 2025 - Net income from continuing operations was $153 million[20] - Diluted net income from continuing operations per share was $1.11[20] - Adjusted diluted net operating income per share was $1.15, compared to $1.11 in Q2 2025 and $1.09 in Q3 2024[20] - Return on equity from continuing operations was 13.4%[21] - Adjusted net operating return on equity was 13.9%, compared to 13.5% in Q2 2025 and 14.7% in Q3 2024[21] - Primary mortgage insurance in force reached $280.6 billion, up from $276.7 billion as of June 30, 2025[26] - Total revenues were $303 million, compared to $299 million in Q2 2025[26] Strategic Initiatives - Radian announced the proposed acquisition of Inigo for $1.7 billion in cash[10] - The acquisition is expected to result in mid-teens GAAP EPS accretion and approximately 200 bps GAAP ROE accretion in FY 2026E[10] - Radian plans to divest its Mortgage Conduit, Title, and Real Estate Services businesses within one year[15] - The divestiture is expected to reduce expenses by 36% and improve Radian's standalone ROE by 120 bps[15]