Radian's Profitable Fourth Quarter Can't Stem Annual Loss
Mortgage insurer Radian Group had a profitable fourth quarter, but still lost $197 million in 2013.
The company earned $36.4 million in the 4Q13, or 19 cents per share, compared to a net loss of $177.3 million for the same period in 2012. This quarter's results included $30.6 million of combined net gains from the change in fair value of derivatives and other financial instruments and net losses.
New mortgage insurance written was $9.3 billion in the fourth quarter, down 21% from the same period a year ago. Radian said 70% of new insurance was written with monthly premiums, 30% was with upfront, one-time premiums.
Radian's mortgage insurance portfolio showed improved credit quality in the fourth quarter. Its total number of primary delinquent loans declined 35% from the fourth quarter of 2012, to 60,909. Its primary mortgage insurance delinquency rate was 7.3%, down 4.8 percentage points from the same period a year ago. Radian cut its mortgage insurance provision for losses by 53%, to $144.3 million.
Mortgage insurance claims paid totaled $283.4 million, an 8% increase from the same period a year ago. Radian also processed an additional $50 million of claims in accordance with its settlement with Freddie Mac. Radian's other operating expenses increased by 30%, to $72.5 million.
For the full year, Radian's $197 million loss included $186 million of net losses from the change in fair value of derivatives and other financial instruments and a net loss on investments. It lost $451.5 million in 2012. The company's new mortgage insurance written increased by 27%, to $47.3 billion.
"Radian's performance in 2013 reflects the solid progress we have made against our top priorities," chief executive S.A. Ibrahim said in a Wednesday press release. "I am pleased to report that we achieved operating profitability in our mortgage insurance business, and we expect that the size and credit quality of our mortgage insurance portfolio will fuel improved levels of operating profitability this year."