RDN, Book Value 25.12/Share....
Radian Reports Second Quarter Financial Results
8:00a ET August 5, 2009 (PR NewsWire)
Radian Group Inc. (NYSE: RDN) today reported net income for the quarter ended June 30, 2009, of $231.9 million, or $2.82 per diluted share. This compares to a net loss of $392.5 million, or $4.91 per diluted share, for the prior-year quarter. Book value per share at June 30, 2009, was $25.12.
"We are pleased that Radian generated net income in the second quarter, despite a difficult environment with rising delinquencies. These earnings were driven primarily by loss management efforts that positively impacted our provision for mortgage insurance losses and by unrealized gains on derivatives," said Chief Executive Officer S. A. Ibrahim. "While there are positive signs in today's economy, we remain aware of the challenges and uncertainties Radian continues to face in the near term, and the condition of the U.S. housing market. Our primary focus is on increasing our capital strength and financial flexibility, continuing to write high-quality new business, and positioning Radian for growth and success when markets recover."
SECOND QUARTER HIGHLIGHTS
-- The mortgage insurance provision for losses of $142.8 million reflects higher delinquency counts, offset significantly by Radian's ongoing loss management efforts. -- Mortgage insurance claims paid of $167.7 million again were lower than the company's forecast and consisted of $149.4 million of first liens and $18.3 million of second liens. In the third quarter, total first- and second-lien claims paid are expected to be approximately $275 million to $300 million. For the full year 2009, Radian has reduced its expectations from $1.2 billion to $1.4 billion, to a current estimate in the $1.1 billion range. -- Radian is encouraged by the many government and private initiatives to help borrowers and has programs in place to provide assistance to lenders and their borrowers who are struggling with mortgage payments. The company is ready to handle the anticipated increase in volume from government-sponsored programs and through other lender-initiated refinance or modification programs. Radian continues to expect an increase in delinquencies throughout the remainder of 2009, which could result in a higher provision and reserve for losses. -- Over the past year, Radian has successfully transformed its mortgage insurance business, producing a 2009 book that consists of loans with excellent risk characteristics. For example, of the total primary new mortgage insurance written in the quarter of $5.5 billion: -- 99.9 percent was prime credit quality; -- 98.4 percent had a FICO score of 680 or greater, with 72.9 percent at 740 or above; -- all had loan-to-value (LTV) ratios of 95 percent or below, and 73 percent had LTV ratios of 90 percent or below; -- 99.5 percent were fixed-rate mortgages; and -- we have observed a significant decrease in early default activity in the 2009 vintage, which is an example of improved underwriting. In addition, Radian's market share has grown steadily in 2009 and represents a significant increase over historical levels. -- Unrealized gains on derivatives were $272.3 million on total pre-tax income of $353.7 million. -- Radian's current cash position is strong, with approximately $480 million immediately available to the parent company after having received a $105 million tax refund in May. -- Radian Asset Assurance Inc. the company's principal financial guaranty subsidiary, continues to serve as an important source of capital support for Radian Guaranty Inc., the company's mortgage insurance subsidiary, and is expected to continue to provide Radian Guaranty with cash infusions over time. -- As of June 30, 2009, Radian Asset had more than $900 million in statutory capital with an additional $1.84 billion in total claims- paying resources. -- At the end of June, Radian Asset paid an ordinary dividend of approximately $100 million to Radian Guaranty.
RECENT EVENTS
-- On July 17, the Company filed a $1 billion securities shelf registration. -- On July 20, Radian Asset entered into a Commutation and Release Agreement, effective as of July 1, 2009, with Ambac Assurance Corporation and Ambac Assurance UK Limited to commute $9.8 billion of Radian Asset's reinsurance portfolio assumed from Ambac, decreasing Radian Asset's total insured portfolio by 10 percent. As a result, the statutory surplus of Radian Asset (and Radian Guaranty) will be positively impacted in the third quarter 2009 by approximately $40 million.
