Radian(US:RDN)2021-08-04 19:29Financial Data and Key Metrics Changes - The company reported net income of $155 million or $0.80 per share for Q2 2021, with adjusted diluted net operating income per share at $0.75, compared to $0.68 in Q1 2021 and a loss of $0.36 in Q2 2020 [11][34] - Book value per share increased by 11% year-over-year [11][70] - The company returned $100 million in dividends to stockholders over the past year [11] Business Line Data and Key Metrics Changes - The mortgage segment wrote $21.7 billion of new mortgage insurance business in Q2 2021, with primary insurance in force at $237.3 billion [12][37] - Monthly premium insurance in force grew by 8% year-over-year, despite a modest decline in the total mortgage insurance portfolio [13][38] - Homegenius segment revenues reached $33.5 million, a 30% increase from Q1 2021 and a 48% increase year-over-year, driven by a 74% increase in title revenue [25][46] Market Data and Key Metrics Changes - The home purchase market remains strong, with 77% of new mortgage insurance business representing purchase volume in Q2 2021, up from 56% a year ago [19][36] - The Radian home price index indicated a 12% annualized increase in home prices due to strong demand and limited supply [20] - Total mortgage originations for 2021 are projected to be approximately $3.9 trillion, with the private mortgage insurance market expected to be around $550 billion to $600 billion [21][23] Company Strategy and Development Direction - The company aims to maximize economic value and future earnings from its mortgage insurance portfolio while navigating a competitive pricing environment [16][17] - The Homegenius segment is seen as a natural extension of the core mortgage insurance business, with significant potential for value creation [26] - The company is focused on disciplined growth, emphasizing high-quality new business and maintaining a strong capital position [70] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the improving credit performance of the portfolio and the overall economy [10][70] - The company noted a 42% year-over-year decline in defaulted loans, with strong cure activity outpacing new defaults [14][15] - Management expects continued growth in the purchase market and a gradual return to normality in the regulatory environment [31][126] Other Important Information - The company maintained a strong capital position with $1.2 billion in total holding company liquidity and $1.9 billion in PMIERs excess available assets [27][61] - The company repurchased 3.9 million shares for $90 million in Q2 2021 and an additional 2.8 million shares for $61.4 million in July [27][66] - The effective tax rate for Q2 2021 was 20.6%, consistent with the statutory rate [60] Q&A Session Summary Question: Insights on sizing the buyback - Management indicated a prudent approach to capital management and returning capital to shareholders, with $39 million remaining in the current repurchase authorization [75][76] Question: Defaulted loans and forbearance - Management acknowledged that while aging defaulted loans may carry higher reserve assumptions, there is potential for higher cure likelihood as borrowers have more time to catch up on payments [81] Question: Homegenius segment growth - The growth in the Homegenius segment was attributed to adding new clients and deepening relationships with existing clients, leading to increased share of business [88] Question: Insurance in force and market share - Management noted a decline in insurance in force but highlighted growth in the monthly book of business, which is expected to drive future earnings [95][96] Question: Operating expenses expectations - Management provided guidance for normalized operating expenses to be around $70 million to $72 million per quarter [109] Question: Impact of eviction moratorium - Management indicated that the eviction moratorium would have minimal impact, with forbearance being the more significant factor [116]