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Credit Trends in Mortgage Insurance Drive Strong Q1 for Radian

money-fivePhiladelphia-based Radian reported $9.4 billion in new mortgage insurance written (NIW) and $172.1 billion in total primary mortgage insurance in force during Q1, according to the company's First Quarter 2015 Financial Results released Thursday. Both figures represented year-over-year increases up from $6.8 billion and $162.4 billion, respectively.

"We delivered strong results for Radian in the first quarter, driven primarily by outstanding credit trends in our mortgage insurance business," Radian CEO S.A. Ibrahim said. "The last 12 months have been a turning point for Radian, as we’ve eliminated a significant portion of our legacy risk and therefore simplified our company with a focus on our core strengths. Today, we are better positioned to drive long-term value, both from our large and growing mortgage insurance portfolio and by broadening our future sources of revenue through our new mortgage and real estate services businesses."

Refinance activity spiked by 15 percentage points year-over-year in Q1, comprising 33 percent of NIW – compared to 18 percent for the same quarter in 2014 and 22 percent in Q4 2014.

Radian took some important steps in growth and diversification strategy in the last year, namely the acquisition in June 2014 of Connecticut-based Clayton Holdings, a leading provider of loan due diligence, surveillance, REO management, and consulting services to the mortgage and real estate industries. Clayton's operations comprise much of Radian's Mortgage and Real Estate Services Segment. Subsequently, in March 2015, Clayton acquired Utah-based real estate brokerage firm Red Bell Real Estate and its sister company, Main Street Valuations, in order to expand its product offerings in the real estate market.

Overall, Radian reported revenues of $290.7 million in Q1, which was a 13 percent increase from the same quarter a year ago ($258.2 million). The company's net income, however, experienced a 37 percent drop year-over-year in Q1 from $146.0 million ($0.68 per diluted share) down to $91.7 million ($0.39 per diluted share). Radian's book value per share jumped by 89 percent from $6.10 in Q1 2014 up to $11.53 in Q1 2015. The company's figures for Q1 last year, which ended March 31, 2014, do not include the company's acquisition of Clayton Holdings, which was finalized in June 2014.

Radian's total number of delinquent mortgage loans in its portfolio by 24 percent year-over-year in Q1 and by 11 percent from the fourth quarter of 2014. The primary mortgage insurance delinquency rate fell by 4.6 percent quarter-over-quarter and by 6.3 percent year-over-year in Q1, according to Radian's announcement.

Click here to see Radian's full Q2 2015 results.

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.

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