Radian Group Q2 Earnings Call Highlights

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Radian Group (NYSE:RDN) reported second-quarter results that reflected its first full quarter including specialty insurer Inigo, while executives emphasized continued strength in mortgage insurance, progress on divestitures and disciplined capital deployment amid a softer specialty insurance market.

Total revenue rose 93% year over year to $575 million, while net earned premiums increased 116% to $504 million. The company reported GAAP net income from continuing operations of $0.87 per share and a 10% return on equity. Adjusted net operating earnings were $1.14 per share, with an adjusted net operating return on equity of 13%.

Senior Executive Vice President and Interim Chief Financial Officer Dan Kobell said results included one-time costs associated with the Inigo transaction, non-cash amortization and purchase-accounting adjustments. They also reflected seasonal share-based compensation expenses and reserves established in the specialty business related to developments in the Middle East.

Transformation Strategy and Inigo Contribution

Chief Executive Officer Rick Thornberry said Radian has advanced the strategic plan announced alongside its agreement to acquire Inigo, which was intended to transform the company from a primarily U.S. mortgage insurer into a global multiline specialty insurer.

The company has completed the Inigo acquisition, exited its mortgage conduit business, completed the sale of its real estate services business and entered an agreement to sell its title business. Radian said the actions have narrowed its focus to insurance, expanded its products and reduced organizational complexity.

Inigo represented approximately 50% of consolidated revenue and 53% of total net premiums earned during the quarter, according to Thornberry. Specialty segment net premiums earned totaled $267 million, up 9% year over year.

Management said specialty market conditions have become more competitive, particularly in property insurance and reinsurance, with rates continuing to soften. Thornberry said the company would prioritize profitability, rate adequacy and returns over premium volume.

“We won't sacrifice pricing or terms or expected returns to maintain premium volume,” Thornberry said during the call.

Kobell said Radian expects specialty earned premiums in the second half of 2026 to be about 20% higher than in the first half because of the business’s typical revenue seasonality. He said the guidance includes Inigo’s January results, which were not part of Radian’s consolidated reporting following the acquisition timing.

Specialty Reserves and Margin Outlook

The specialty segment reported a 98% net combined ratio in the second quarter. Total loss provision was $169 million, including $24 million of favorable development from prior-period reserves, primarily in property lines.

However, Radian also established approximately $30 million of reserves related to Middle East developments. Kobell said the figure included expected and potential conflict-related claims as well as updated inflation assumptions across the insured portfolio due to possible macroeconomic and inflation pressures tied to the conflict.

Excluding that reserving, the second-quarter specialty combined ratio would have been in the mid-to-high 80% range, Kobell said. For the first half, the specialty combined ratio was 93%; absent the Middle East-related item, it would have been in the high 80s.

Looking ahead, management said a combined ratio in the low 90% range is more representative of current specialty underwriting conditions as lower margins from softening prices gradually earn through results. Kobell added that quarterly combined ratios could be volatile because of market events.

Radian said it believes it is well reserved based on information available at the end of the quarter, while continuing to monitor the Middle East situation.

Mortgage Insurance Remains a Key Earnings Driver

Radian’s mortgage insurance segment wrote $16.3 billion of new insurance during the quarter, an increase of 14% from a year earlier. Primary insurance in force rose 3% year over year to a record $284 billion, while persistency increased to 82%.

Approximately half of the insurance-in-force portfolio carried mortgage rates of 5.5% or lower at quarter-end, which management said makes those policies less likely to cancel through refinancing under current interest-rate conditions.

Credit trends remained favorable. New defaults declined 9% sequentially to about 12,400, while cures exceeded new defaults, reducing the portfolio default rate to 2.47%. Favorable cure trends resulted in $20 million of favorable development from prior-period defaults.

Kobell said the company was effectively reserving to a 92.5% cure rate and has consistently achieved that level or better across default cohorts. He said management did not see areas of concern by credit metric, geography or vintage.

Mortgage segment operating expenses declined 7% year over year, and the segment expense ratio improved to 23% from 25% a year earlier.

Capital Returns, Liquidity and Leadership Transition

Radian Guaranty paid a $200 million dividend to the parent company during the quarter, and Radian increased its 2026 expectation for dividends from Radian Guaranty to at least $650 million, including $340 million already paid in the first half.

The company’s PMIERs cushion stood at $1.5 billion above required capital levels. Holding-company liquidity increased to $412 million at quarter-end after Radian repurchased $76 million of stock, paid $37 million in quarterly dividends and repaid $75 million of borrowings under its revolving credit facility.

Radian repurchased another $50 million of shares early in the third quarter, bringing year-to-date repurchases to $176 million, or 5 million shares. Kobell said the company now expects to finish 2026 nearer the upper end of its prior $200 million to $250 million repurchase range, subject to market conditions.

Radian had $75 million remaining on its revolving credit facility at quarter-end and expects to repay that balance during 2026. The company said it expects to evaluate refinancing debt maturing in the first quarter of 2027, with its current expectation being a refinancing at a similar size.

CEO-Elect Mike Weinbach, who joined Radian on June 1, said the company’s two core insurance businesses are uncorrelated and share a focus on using data, analytics and risk management to outperform. He said Radian sees opportunities to improve efficiency, use emerging artificial intelligence technologies and selectively grow in specialty lines where pricing and underwriting conditions remain attractive.

Thornberry, whose tenure as CEO is ending, said he will continue as a strategic adviser to Weinbach and the board.

About Radian Group (NYSE:RDN)

Radian Group Inc (NYSE:RDN) is a leading provider of private mortgage insurance and related risk management solutions in the United States. Through its primary subsidiary, Radian Guaranty Inc, the company underwrites borrower-paid and lender-paid mortgage insurance that protects lenders and investors from potential losses arising from borrower defaults. Radian's core business focuses on supporting residential mortgage originations and servicing by offering capital-efficient credit protection and credit risk transfer strategies.

Beyond mortgage insurance, Radian offers an array of real estate transaction services under its Radian Title division.

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