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RADIAN GROUP INC (RDN)·Q3 2025 Earnings Summary

Executive Summary

  • EPS beat, revenue light: Radian reported diluted EPS from continuing operations of $1.11 vs S&P Global Primary EPS consensus of $1.01; total revenues were $303.2M vs $308.8M consensus. EPS outperformance reflected stable premium yields and lower operating expense ex acquisition-related costs; revenue was modestly below Street despite strong net premiums earned. Bold: EPS beat, Revenue miss *.
  • Operating expense guidance lowered: Management reduced full-year 2025 operating expenses for continuing operations to approximately $250M (from prior ~$320M that included discontinued ops), supporting near-term margin resilience .
  • Strategic transformation intact: The Inigo acquisition (expected close Q1 2026) is anticipated to deliver mid-teens EPS accretion and ~200 bps ROE accretion in the first full year; Radian expects combined annual revenue to double post-close. Bold: EPS accretion and ROE uplift guided .
  • Capital/liquidity strong; buybacks paused near term: Holding company liquidity reached $995M; Radian Guaranty capacity to distribute up to $195M in Q4 and at least $600M in 2026. Management expects to revisit buybacks within a few quarters after closing/funding Inigo as excess capital rebuilds .

What Went Well and What Went Wrong

What Went Well

  • Strong underwriting and portfolio growth: Net premiums earned hit $237M (highest in >3 years), NIW rose to $15.5B, and primary IIF reached an all-time high of $281B, with persistency at 84% and stable in-force premium yield at ~38 bps .
  • Credit performance resilient: Favorable reserve development of $35M offset new-default provisioning; loss ratio 7.5% remained low relative to long-term cycles. Management highlighted embedded borrower equity and sustained cure rates supporting reduced severity and strong cures .
  • Strategic repositioning clarity: CEO emphasized transformation into a global, multi-line specialty insurer and cited attractive Inigo valuation (1.5x projected tangible equity) and expected synergies/capital flexibility post-close. Bold: Transformational acquisition .

What Went Wrong

  • Revenue shortfall vs Street: Total revenues of $303.2M came in below S&P consensus ($308.8M), despite solid net premiums and investment income; Street models for consolidated revenue likely anticipated higher investment/other line contributions. Bold: Revenue miss *.
  • Sequential uptick in delinquencies/defaults: Primary delinquent loans increased to 23,819; new defaults were ~13,378, and loss ratio rose to 7.5% from 5.1% in Q2, reflecting expected seasonality and portfolio seasoning .
  • Non-operating acquisition costs: Other operating expenses included $9M of acquisition-related items; while overall “other operating expenses” declined sequentially, the non-operating costs were a headwind to reported margins in the quarter .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Total Revenues ($USD Millions)$313.4 $318.1 $298.6 $303.2
Diluted EPS – Continuing Ops ($USD)$1.09 $1.03 $1.11 $1.11
Adjusted Diluted Net Operating EPS ($USD)$1.10 $1.04 $1.11 $1.15
Net Premiums Earned ($USD Millions)$235.1 $234.0 $233.5 $237.1
Net Investment Income ($USD Millions)$69.3 $61.0 $61.7 $63.4
Provision for Losses ($USD Millions)$6.3 $15.3 $12.0 $17.9
Loss Ratio (%)2.7% 6.6% 5.1% 7.5%
Expense Ratio (%)26.0% 27.3% 32.7% 25.6%

Segment breakdown (Mortgage Insurance):

MetricQ3 2024Q1 2025Q2 2025Q3 2025
MI Adjusted Pretax Operating Income ($USD Millions)$217.4 $201.1 $190.9 $206.1

KPIs:

KPIQ3 2024Q1 2025Q2 2025Q3 2025
New Insurance Written ($USD Millions)$13,493 $9,489 $14,330 $15,497
Primary Insurance In Force ($USD Millions)$274,721 $274,159 $276,745 $280,559
Persistency (12 months) (%)84.4% 83.7% 83.8% 83.8%
In-force Premium Yield (bps)38.2 38.0 37.8 37.9
Total Net Premium Yield (bps)34.4 34.1 33.9 34.0
Primary Delinquent Loans (count)22,350 22,758 22,258 23,819
Claims Paid ($USD Millions)$3 $4 $7 $10
PMIERs Excess Available Assets ($USD Millions)$2,122 $2,094 $2,035 $1,876

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Operating Expenses (continuing ops)FY 2025~$320M (incl. discontinued ops) ~ $250M (continuing ops) Lowered
In-force Premium YieldRemainder of 2025Not previously quantifiedExpect stable around ~38 bps Maintained stability
Inigo Acquisition CloseQ1 2026Close Q1 2026 Close Q1 2026 Maintained
Post-close AccretionFirst full year post-closeMid-teens EPS; ~200 bps ROE Mid-teens EPS; ~200 bps ROE Reiterated
Holding Co. Leverage RatioYE 2026N/ARemain <20% New
Dividends from Radian GuarantyQ4 2025 / FY 2026Capacity up to $195M in Q4’25 Expect ≥$600M in 2026 Expanded outlook
Share RepurchasesPost-close horizonActive in H1’25 Paused; revisit within few quarters after funding Inigo Paused; conditional resumption

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
Strategic transformation (Inigo; divestitures)Capital returns and reinsurance plans; no M&A disclosed Capital returns; still pre-Inigo announcement Acquisition of Inigo for $1.7B; divestitures of Mortgage Conduit, Title, Real Estate Services; closing Q1’26 Increasing strategic pivot
Capital & liquidityHoldco liquidity $834M; $200M dividend from Guaranty Holdco liquidity $784M; buybacks $223M Holdco liquidity $995M; new $500M revolver; $200M dividend in Q3; ≥$600M dividends in 2026 Strengthening liquidity; leverage stable
Portfolio credit/curesDefault rate declined; favorable reserve development Default inventory down; favorable reserve development Seasonal uptick in defaults; sustained cures; favorable reserve dev $35M Stable favorable cures; seasonal defaults
Pricing/premium yieldIn-force premium yield ~38 bps; stable In-force premium yield 37.8 bps; stable In-force premium yield ~38 bps; expected stable Stable
Reinsurance strategyNew QSR agreements planned (30% cessions) Ongoing capital distribution via risk transfer Potential synergies/reinsurance with Inigo post-close; details at investor day Evolving; likely incremental
Share repurchases$207M repurchased in Q1 $223M repurchased in Q2 Paused ahead of Inigo funding; revisit within few quarters post-close Paused; prospective resumption

Management Commentary

  • CEO: “We delivered excellent financial results during the quarter and announced our plans to strategically transform Radian into a global, multi-line specialty insurer… The acquisition of Inigo… is expected to significantly expand our total addressable market, create meaningful capital synergies… and profitable growth.” .
  • CFO: “We anticipate operating expenses for continuing operations to be approximately $250 million for the full year 2025… We expect our holding company liquidity to be approximately $1.8 billion at the beginning of 2026… deliver mid-teen operating EPS accretion and ~200 bps of ROE accretion starting in year one.” .

Q&A Highlights

  • Accretion math: Management confirmed adding ~200 bps to operating ROE (13.9% in Q3) is a fair framework; buyback pause temporarily inflates capital base, implying future ROE normalization post-Inigo funding .
  • Capital synergies/reinsurance: Post-close, potential reinsurance and capital synergies with Inigo could enhance accretion beyond base-case; more detail planned at investor day .
  • Divestiture process: Three businesses carried at ~$170M held-for-sale; no large gain/loss expected; ~$7M estimated sales costs to date; significant inbound interest; target completion by Q3 2026 .
  • Buyback cadence: With ≥$600M 2026 dividends and rebuilt liquidity, share repurchases likely within a few quarters post-Inigo close, contingent on excess capital at Holdco .
  • Claims/cure assumptions: Default-to-claim rate held at 7.5% through-the-cycle; sustained cures supported by embedded equity and evolved servicer forbearance practices post-COVID; management sees prudence in maintaining assumptions .

Estimates Context

MetricQ3 2024Q1 2025Q2 2025Q3 2025
S&P Primary EPS Consensus Mean ($)0.92*0.97*0.98*1.01*
Actual Primary EPS ($)1.03*0.99*1.01*1.07*
S&P Revenue Consensus Mean ($USD Millions)326.2*321.6*324.9*308.8*
Actual Revenue ($USD Millions)313.4*318.1*298.6*303.2*

Notes: Values retrieved from S&P Global. Company-reported diluted EPS from continuing operations was $1.11 in Q3 2025; S&P “Primary EPS” actual (1.07) reflects different methodology/definition than company diluted EPS *.

Highlights:

  • Q3 2025: EPS beat ($1.07 vs $1.01), Revenue miss ($303.2M vs $308.8M)*.
  • Q2 2025: EPS beat ($1.01 vs $0.98), Revenue miss ($298.6M vs $324.9M)*.
  • Q1 2025: EPS beat ($0.99 vs $0.97), Revenue miss ($318.1M vs $321.6M)*.
  • Q3 2024: EPS beat ($1.03 vs $0.92), Revenue miss ($313.4M vs $326.2M)*.

Key Takeaways for Investors

  • Near-term setup: Outperformance on EPS vs consensus with stable premium yields and adjusted EPS at $1.15 underpin resilient core MI economics; monitor seasonal default dynamics and investment income trajectory .
  • Medium-term thesis: Post-Inigo, Radian targets mid-teens EPS accretion and ~200 bps ROE uplift with doubled annual revenue potential, supported by strong liquidity and disciplined capital deployment .
  • Operating leverage: Lowered OpEx run-rate (~$250M) provides operating leverage tailwind as NIW/in-force grow and expense ratio improved vs Q2 .
  • Capital returns: Buybacks paused to fund Inigo, but ≥$600M dividends expected from Guaranty in 2026 and leverage <20% by YE 2026 suggest capacity to resume repurchases within a few quarters post-close .
  • Credit quality: Embedded borrower equity and robust cure trends continue to limit severity; maintaining 7.5% default-to-claim rate assumption appears prudent through-the-cycle .
  • Liquidity/covenants: Expanded $500M undrawn revolver (accordion to +$250M) enhances flexibility; PMIERs excess remains ample at $1.9B .
  • Watch catalysts: Regulatory approvals and investor day details on reinsurance synergies; divestiture execution/timing; potential buyback resumption guidance could move the stock .
Citations: All company metrics, commentary, and guidance sourced from Radian’s Q3 2025 earnings press release and 8-K furnishing the release **[890926_0001193125-25-265795_rdn-ex99_1.htm:1]** **[890926_0001193125-25-265795_rdn-ex99_1.htm:3]** **[890926_0001193125-25-265795_rdn-ex99_1.htm:6]** **[890926_0001193125-25-265795_rdn-ex99_1.htm:12]** **[890926_c95bce948ac444e2968c06b1ce4f1fa7_2]** **[890926_c95bce948ac444e2968c06b1ce4f1fa7_6]** **[890926_c95bce948ac444e2968c06b1ce4f1fa7_8]**, and Q3 2025 earnings call transcript **[0000890926_2237288_3]** **[0000890926_2237288_4]** **[0000890926_2237288_5]** **[0000890926_2237288_6]** **[0000890926_2237288_7]** **[0000890926_2237288_8]** **[0000890926_2237288_9]**. Prior quarter comparisons sourced from Q1 and Q2 2025 press releases **[890926_ed4e8441657241f7928983359cb7306c_0]** **[890926_99dd476c3f0a4d16a5e491ac692c20ad_0]**. *Estimates and “Primary EPS/Revenue” consensus retrieved from S&P Global via GetEstimates.