Radian Group's (RDN) Mortgage Insurance Subsidiary to Update Premium Rates

Radian Group Inc. (NYSE: RDN) announced that its principal mortgage insurance subsidiary, Radian Guaranty Inc., will be updating its premium rates for its mortgage insurance business. The updated rates will provide increased risk-based granularity to the company’s pricing and better align its pricing with the capital requirements under the GSE Private Mortgage Insurer Eligibility Requirements and with industry trends.

Radian’s new borrower-paid monthly rate card, which is available on the company’s website and will become effective in April, subject to regulatory approval, has the following characteristics:

• Refined credit tiers with the expansion of FICO buckets from four to eight
• Generally lower rates for the following:

- 740+ FICOs for loan terms greater than 20 years

- 680+ FICOs for loan terms of 20 years and fewer

• Generally higher rates for loans with FICOs below 740 for loan terms greater than 20 years
• Eliminated adjustments for loan amounts greater than $417,000 and adjustments for rate/term refinances

“Our top priority at Radian is to write as much new, high-quality mortgage insurance business as possible at an attractive return, and in a manner that is consistent with regulatory requirements,” said Radian Guaranty President Teresa Bryce Bazemore. “We believe that these pricing changes will help us to support our customers and answer the market’s demand for our products, while also positioning us to write even more business.”

OVERVIEW OF RECENT PRICING ACTIONS

As part of its strategy to compete for the high-quality business being originated today, capture a larger share of borrower-paid monthly business and generate a blended return on equity in the mid-teens, Radian has:

• increased its filed rates for lender-paid mortgage insurance, which will become effective on March 28, 2016, subject to regulatory approval;
• continued to provide customized rates for lender-paid singles on a selective and negotiated basis, while declining to participate in the significantly discounted aggregated singles business; and
• as discussed above, updated its borrower-paid monthly rates in order to remain competitive and capture more high-quality borrower-paid monthly business. These rates will become effective on April 7, 2016, subject to regulatory approval.

Applying these combined actions to Radian’s new business production in 2015 would have resulted in a modest increase in its average premium rate.

SHARE REPURCHASE PROGRAM

As of December 31, 2015, Radian Group had approximately $340 million of currently available liquidity. In February, Radian fully completed its previously announced $100 million share repurchase program, purchasing approximately 9.4 million shares of Radian common stock at an average price of $10.62 per share, including commissions. This represents approximately 3.8 percent of the company’s diluted shares outstanding as of December 31, 2015.

“We are pleased that Radian’s improved financial position has positioned us to return value more quickly to stockholders,” stated Radian Chief Executive Office S.A. Ibrahim. “The successful completion of our share repurchase program demonstrates our confidence in the strength of our businesses and our commitment to optimizing stockholder returns.”

You May Also Be Interested In

• MGIC Investment (MTG) Announces $750M Share Buyback, Declares $0.115 Dividend
• IBM tumbles on soft Q1 revenue; announces HashiCorp $6.4bn acquisition
• T-Mobile (TMUS) and EQT Announce JV to Acquire Lumos