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Radian Group Inc. Message Board

  • tommiegun53 tommiegun53 Dec 8, 2012 1:22 AM Flag

    Radian passes 2008 $32.5 billion NIW with $33.4 billion NIW YTD as of November

    Radian is having its best year in new insurance written since 2007. Based on risk in force, once net premium earned reaches a full reflection of new insurance written, we could obtain $250 million a quarter or $1 billion a year.

    In addition, at the current rate Radian will write $11.77 billion in Q4, that will surpass $10.65 billion written in Q3 2012.

    Sentiment: Strong Buy

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    • How do you get to $250 mil per quarter if RDN profit is $7.5 mil per $1 bil of NIW?

      • 1 Reply to jbpape
      • Sir jbpape, you are confusing net premium earned with net profit. Net premiums earned is a derivative of net premiums written, its just net revenue term used by insurance companies.

        Look at the Radian SEC 10-Q dated Sept 30, 2012, page 8 for a review of Radians "condensed consolidated statements of operations for Q3 2012 for a complete breakdown of the profit and loss for nine months ended September 30, 2012. It will help you.

        Sentiment: Strong Buy

    • tommie, can you elaborate on "Based on risk in force, once net premium earned reaches a full reflection of new insurance written, we could obtain $250 million a quarter or $1 billion a year." ??

      • 3 Replies to calcsmart
      • Calcsmart, you raise a very good point and, and my answer before does not do it justice.

        So, each quarter insurance companies loses insurance through payoffs by refinance or otherwise and, only retains about 82.7% is retained on the books, that is called Persistency rate. I have figured out Radian has to increase insurance by $7 billion a quarter to keep the risk in force from falling.

        Last year Radian only wrote $15.5 billion and risk in force fell. As a matter of fact, it wasn't until the first quarter of Q1 2012 that was able to write enough insurance to increase It's"risk in force"and increase its net premiums earned".

        It took me quite awhile realize how insurance companies actually increase revenues because, writing a higher level of insurance might not increase revenues, if the runoff is greater than the new business.

        Radian now has two things working in its favor:
        1. provisions for loan losses are falling.
        2. net premiums earned are rising now for the last 3 quarters and Q4 too.

        Sentiment: Strong Buy

      • Risk in force is A reflection of all insurance outstanding. When Radian reports earnings they use the risk in force at that point in time so, quarterly earnings reports are a historical document.

        When Radian reports Q4 2012 they will use risk in force as of December 31, 2012. The risk in force at that time will show all of the insurance written during Q4. If Radian writes more insurance in Q4, risk in force will rise in Q4.

        Sentiment: Strong Buy

      • Tommie doesn't elaborate on anything, he posts useless garbage. He has absolutely zero insight. He probably doesn't even realize most of what they are putting on the books is reinsured to the max, so most of the premium is going to a reinsurer. Radian is left with crumbs, they don't have the capital to keep most of it in house.

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