• Net Income: $148 million for Q4 2024; $604 million for the full year.
• Earnings Per Share (EPS): $0.98 per diluted share for Q4 2024; $3.92 for the full year.
• Adjusted Diluted Net Operating Income Per Share: $1.09 for Q4 2024; $4.11 for the full year.
• Return on Equity (ROE): 13.4% for the full year 2024.
• Book Value Per Share: Increased by 9% year-over-year to $31.33.
• Total Revenues: $316 million for Q4 2024; $1.3 billion for the full year, a 4% increase from 2023.
• Net Premiums Earned: $235 million for Q4 2024; $939 million for the full year, a 3% increase from the prior year.
• Primary Mortgage Insurance In Force: Reached an all-time high of $275 billion, a 2% year-over-year growth.
• New Insurance Written (NIW): $52 billion for 2024; $13.2 billion in Q4 2024, a 24% increase compared to Q4 2023.
• Persistency Rate: 83.6% in Q4 2024.
• Investment Portfolio: $6.5 billion, generating $71 million in net investment income for Q4 2024.
• Operating Expenses: $88 million for Q4 2024; $348 million for the full year, with an 8% reduction year-over-year excluding impairments.
• Capital Returned to Shareholders: $376 million in 2024 through share repurchases and dividends.
• Available Holding Company Liquidity: $885 million at the end of 2024.

• Warning! GuruFocus has detected 4 Warning Sign with RDN.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Radian Group Inc (NYSE:RDN) reported a 9% year-over-year increase in book value per share, generating a net income of $604 million and a return on equity of 13.4%.
• The company's primary mortgage insurance in force reached an all-time high of $275 billion, indicating strong future earnings potential.
• Radian Group Inc (NYSE:RDN) returned $376 million of capital to stockholders through share repurchases and dividends, demonstrating a commitment to shareholder value.
• The company exceeded its initial guidance by paying $675 million in ordinary dividends to Radian Group, showcasing strong financial performance.
• Radian Group Inc (NYSE:RDN) maintained a strong capital and liquidity position with a PMIERs cushion of $2.2 billion and available holding company liquidity of $885 million at the end of 2024.

Negative Points

• The net investment income decreased due to the use of $450 million in cash to redeem senior notes, reducing financial leverage.
• The ending default inventory for 2024 increased to approximately 24,000 loans, resulting in a portfolio default rate of 2.44%, up from 2.20% at year-end 2023.
• Operating expenses included $13 million related to impairments to internal use software and lease-related assets, impacting overall expenses.
• The company's provision for losses and related credit trends showed an increase in new defaults, reflecting normal seasonal trends and the seasoning of the insurance in-force portfolio.
• Radian Group Inc (NYSE:RDN) faced challenges in its Homegenius business, leading to restructuring and impairments, indicating operational difficulties in that segment.

Q & A Highlights

Q: What is Radian Group's outlook for credit and default rates in 2025, considering the recent trends? A: Derek Brummer, President of Mortgage Insurance, mentioned that they expect typical seasonal impacts in Q1 and Q2, with default rates likely remaining below 3% unless there are significant macroeconomic changes. Excluding hurricane-impacted areas, new defaults declined by about 3% quarter-over-quarter.

Q: Can you provide more details on the assumed claim rate and its impact on reserves? A: Sumita Pandit, CFO, explained that a 7.5% roll rate was applied to all new defaults, without separating hurricane-impacted areas, as they did not materially affect reserves. This blended rate will be monitored going forward.

Q: How does Radian Group view its leverage and capital return strategy following recent debt redemption? A: Sumita Pandit stated that the company is comfortable with its current leverage, which naturally decreases over time. They returned $376 million to shareholders in 2024 and will continue to manage capital effectively, without setting a specific target for capital return as a percentage of dividends from Radian Guaranty.

Q: What is Radian Group's perspective on the new administration's stance on the private mortgage insurance industry and GSE reform? A: CEO Richard Thornberry noted that the private MI industry is well-regarded by both political parties for its role in providing affordable housing and protecting taxpayers. While comprehensive GSE reform is unlikely soon, administrative actions may occur, and Radian is well-positioned to continue supporting the housing finance system.

Q: What are the expectations for Radian's Homegenius business and overall expense management in 2025? A: Richard Thornberry indicated that restructuring efforts have positioned Homegenius for improved performance, with expectations for better margins in 2025. Sumita Pandit added that the company has reduced headcount by 30% and is focused on further expense reductions, aiming for an $80 million quarterly operating expense run rate.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.