Radian Posts 1Q Loss, Genworth’s U.S. Business Profitable

Radian Group posted a net loss for 1Q13 of $188 million, but it added that $173 million of that loss was related to the change in the fair value of derivatives and other financial instruments. This compares with a 1Q12 loss of $169 million, of which $91 million was because of the changes in the fair value of investments.

The risk-to-capital ratio at its Radian Guaranty subsidiary at the end of the quarter was 18.6-to-1, helped by a $115 million cash contribution from the parent company; the money came from Radian Group’s debt and equity offerings. This ratio should remain below 20-to-1 for the foreseeable future.

In the quarter, Radian had new insurance written of $10.9 billion, down from 4Q12’s $11.7 billion but up from $6.9 billion in 1Q12. The company also released its April NIW volume, which was $4.1 billion, which it noted was its strongest month in five years.

The company does not include Home Affordable Refinance Program loans in its NIW (it treats it as a modification of existing coverage). For the quarter it provided insurance on $2.5 billion of HARP loans, down from $2.9 billion in 4Q12 but more than double the $930 million done in 1Q12.

Radian paid $310 million in claims in the period, up from $263 million in 4Q12 and $218 million in 1Q12.

Separately, the U.S. mortgage insurance business of Genworth Financial had net operating income of $21 million, compared with operating losses of $32 million for 4Q12 and $44 million in 1Q12. Results for the quarter include a $4.5 million charge for its settlement with the Consumer Financial Protection Bureau regarding captive reinsurance arrangements.

Flow NIW of $4.7 billion in 1Q12 fell 8% from the linked quarter but increased 57% on a year-over-year basis. In addition, HARP related volume was $2.1 billion (which is not included in the flow NIW total).

Genworth has an estimated 24.2-to-1 risk-to-capital ratio for all of its U.S. subsidiaries, with the risk-to-capital ratio at Genworth Mortgage Insurance Corp. at 26.4-to-1.

Global mortgage insurance (which includes the U.S. unit) had net operating income of $102 million, up from a loss of $37 million one year prior.

Its Canadian unit (which was partially spun-out and publicly traded in that country) had operating earnings of $42 million, up from $37 million in 1Q12. The troubled Australian unit had operating earnings of $46 million, compared with an operating loss of $21 million one year prior.