Radian takes $131M charge ahead of Clayton Holdings restructuring
Radian Group posted a net loss of $27.3 million in the second quarter on charges associated with the planned restructuring of its underperforming mortgage and real estate services unit.
Radian took $130.9 million in after-tax, noncash charges related to impairment of goodwill and other intangible assets as it anticipates a restructuring and a reduction in future cash flows from services provided by the company's Clayton due diligence unit and its subsidiaries.
"We've decided to discontinue certain business initiatives and focus on our core products and services within our services segment, which we believe have higher growth potential," said CEO Rick Thornberry in the company's earnings call.
The second-quarter loss comes despite gains in its mortgage insurance business and contrasts a profitable first quarter, in which Radian earned $76.5 million due to growth in new insurance written. Radian generated $98.1 million in net income during the second quarter of last year.
"As a result of these changes and in light of recent financial performance below our expectations, we determined that an impairment of goodwill and other intangible assets related to the services segment was necessary," Thornberry said.
Results from Radian's core mortgage insurance business were more favorable. The bulk of Radian's revenue in the second quarter came from mortgage insurance, and only 15% came from fee-based services, according to the group's earnings presentation.
New insurance written was up 11% from last year's second quarter at $14.3 billion and in June the company set a new record for monthly flow volume in this area.