Radian posts 1st profit in a year, stock jumps
PHILADELPHIA (AP) — Radian Group Inc. turned a profit for the first time in a year in the third quarter as the company sold more mortgage insurance and set aside less money for losses.
Radian on Thursday posted net income of $14.3 million, or 11 cents per share for the July-September period — a steep drop from profit of $183.6 million, or $1.37 per share, in the same quarter last year. But it was the company's first quarterly profit in 2012, and analysts had expected a loss. Revenue fell 49 percent to $260 million, compared with $508 million the year before.
Analysts had estimated that Radian would report a loss of 59 cents per share and lower revenue of $202.4 million, according to the data provider FactSet.
Stock in the Philadelphia-based company jumped 13 percent after the results were released. Radian's shares were up 62 cents to $5.31 in afternoon trading, earlier peaking at $5.47. That's their highest price since May 2011.
The company wrote $10.6 billion in new mortgage insurance during the quarter. That's up from $4.1 billion the year before. It also set aside less money for mortgage insurance losses — $171.8 million versus $276.6 million a year ago — and paid out less money in mortgage insurance claims.
Radian's quarterly results include an $84.7 million gain on investments, up 4 percent from a year ago, and a $41.1 million hit from falling values for derivatives and other financial instruments, compared with a gain of $126 million in last year's quarter. The value of derivatives hinges on an underlying investment or commodity — such as currency rates, mortgages, oil futures or interest rates.