Magazine article American Banker

Mortgage Insurers Hot; Radian Profits Surge 40%

Magazine article American Banker

Mortgage Insurers Hot; Radian Profits Surge 40%

Article excerpt

Fueled by a strong housing market and scorching economy, Radian Group Inc. posted big numbers in its third quarter, reflecting the strength of the mortgage insurance business.

The Philadelphia-based Radian, formed in June of last year when Amerin Guaranty and Commonwealth Mortgage Insurance merged, boosted net income a whopping 40% in the third quarter, to $64.1 million, or $1.66 a share, beating analysts' consensus by 5 cents. For the first nine months, net income jumped almost 46%, to $184.5 million.

Frank P. Filipps, chairman and chief executive officer, credited high credit quality in the business and fundamental economic conditions in the housing market for Radian's performance.

"We've been able to drive operational expense savings from the synergies that we derived from putting the two companies into one," he said. "It's all really come together for us."

And Radian is not alone in its double-digit growth; the current housing market has been kind to most players in the mortgage insurance business. PMI Group of San Francisco reported earnings rose 27% in the third quarter, to $69.3 million, and MGIC Investment Corp. of Milwaukee, the largest mortgage insurer, said its earnings jumped 19%, to $146.4 million.

"Radian is enjoying a superb environment, as are most companies that insure credit risk," said Jonathan E. Gray, an analyst at Sanford C. Bernstein & Co. "It's Nirvana."

Mr. Gray said several factors have contributed to the tremendous housing and mortgage insurance market, including rising premium yields and investment income, declining claims, and improving credit quality. …

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