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Radian Group Inc. Message Board

  • tommiegun53 tommiegun53 Jan 12, 2013 5:51 PM Flag

    Radian Q4 2012 Income Statement So Far

    "12/31/12 Radian income statement forecast"
    (In millions)

    $196.7 Net Premiums Earned
    30.4 Net investment income
    59.5 Net gain on investment
    -49 Change in fair value of derivatives
    $237.6 Total revenues

    $174.8 Provision for losses
    17.23 Policy acquisition cost
    27.4 Other operating expenses
    12.5 Interest expenses
    $231.93 Total expenses

    $5.7 Pretax income

    I estimated the investment income and net gain by using the nine month total and dividing by three.
    I estimated derivatives by using nine month average which happened to be higher than the September quarter number.
    The net Premium was based on the risk in force, which I estimated increased in excess of $1 billion. New Insurance was $11.7 billion versus $10.65 billion in Q3.
    Other operating expenses $27.4, which is the Q3 number minus the Greece debt of $23.5 million that was paid in full in Q3.

    A refined forecast will come later as a better review is achieved through more information or, as a better understanding is made. I believe that Radian management might release reserves to profit but, we won't know until the actual Q4 Financial Results is released by Radian.

    I am not sure about the Radian Asset Assurance impact to the results yet.

    This is only for amusement.

    Sentiment: Strong Buy

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    • Sleestack,
      I respect your investing skills and opinions and, macro-economic observations.

      From a critical microeconomic perspective, what areas need to be changed here?

      Sentiment: Strong Buy

    • Radian has two positive benefits that unfortunately none of the other mortgage insurers have going for them.
      1. Claims cost are really declining.
      2. They wrote so much new insurance, in 2012, that revenues(net premiums earned) are rising.

      Net premiums earned is a function of "risk in force". RIF has increased for Radian year over year by approximately $2.92 billion as of December 31, 2012.

      Sentiment: Strong Buy

    • Q4 2012 and Q3 2012 sequential comparison

      Period. Q4 2012 . Q3 2012 . .
      N.Defaults . 18,204 . .18,709 .
      Cures . . . .. . .14,530 . .14,503
      Den./Rec.. . . .. .355 . . . 2,342
      Paid loans.. . .4,981.. .4,940

      Difference for Q4 is 1662 loans removed from default inventory.

      During the Q3 Earnings Conference, Radian management stated they expected to actually increase the default inventory as more denials were paid and, that did happen to some degree as denials and rescissions were down compared to Q3 in Q4 but, cures were up larger than expected. In addition, new defaults were lower offsetting reduced denials and, rescissions.

      So, overall the loan loss provision is lower as reinstated loans were down. You will see that reflected forecast above.

      Sentiment: Strong Buy

    • The average analyst estimates for Thompson Reuters Estimates and Factset for Q4 2012 is for Radian to lose 58 cents.

      Radian has an extra reserve for reinstated denials and rescissions in future losses on them for $239 million as of September 30, 2012 per SEC 10-Q, page 46. Previously, I estimated an over reserve of $216 million as of September 2012.

      The professional analysts don't provide a detail forecast and, I am unable to reconcile the differences.

      Sentiment: Strong Buy

    • Claims Paid
      (In millions)

      $1026 ... 2012
      $1470 . .2011
      $1468. ..2010

      All data from SEC 10-Ks for 2011, 2010. 2012 is SEC -Q dated Sept 2012, and monthly data reports "paid loans" totals.

      In 2011 Radian estimated claims would be $1.3 billion for 2012. After Q1 Financial results they revised their estimate to $1.1 billion, so $1.026 billion is below targeted results.

      Sentiment: Strong Buy

    • With all due respect to your projections Tommie, I have different numbers:
      For 4th Quarter revenues I show $245 million, Expenses $310 million with a $5 million tax benefit bringing after tax net down to -$60 million. However, what is ignored is the restoration of capitalizing back deferred tax assets. Last year, their outside accountants, discouraged with the losses, made them remove $400 million of deferred tax assets. I think they have a very strong case to have them restored. If so, and not counting losses this year, if they get back $400 million they make $340 million which translates to $2.57 a share.

      Sentiment: Strong Buy

    • Radian longterm debt

      (In millions)
      Period . . . . . . . . . . Balance
      Sept 30, 2011. . . .. . . $818.6
      Sept 30, 2012.. . . . . . $659.2
      Difference. . . . . . . . $159.4

      Interest expense declined from $47.2 million to $39.2 million.

      Sentiment: Strong Buy

    • Just my 2 cents --- my 2012 acts & 2013 planning

      In 2012, I Longed RDN 110%, Short Tech ETF 20% (closed 11/2012)
      (many years ago, I was a VC too.)

      In 2013, I plan to Long RDN 130 - 140%, Short - 0 %

      action plan: add additional 10% in Jan pull back if any.
      if no routine 3-4 weeks before Earning release pull back / manipulation,
      then add 1st 10% shares after the earning release - Profit taking.

      My 2nd and 3rd 10% addition will probably wait till weekly chart correction completed (from June till July? Based on RDN's one year Seasonal cycle.)

      The final 10% addition probably at Oct-Nov.

      h92 thinks RDN may reach $20 in one year, but I am very confident RDN will reach same goal within 4 years and very likely much shorter. The details in every QT tracing the minute change, will still depend on you.

      I never see such a blessing case like RDN in my 30 years of stock observation.
      A re-set to near 10-15% of value, yet all the infrastructure, business base few loss.
      Suddenly all the extremely negative factors turn into positive Earning factors with the aid of Fed's another 4 years support!

      This RDN should not be just in my Roth IRA, but also my kids'.

      Sentiment: Strong Buy

    • Thanks Oldman.

      In relation to the Financial Guaranty Unit, what I mean is, It's results are included in the forecast. I just don't know of any significant events that effect its results different than Q3.

      1 Add $2.2 million additional net premiums earned.
      2 Add other income from contract underwriting $1 million.

      $8.1 Pretax income adjusted

      Sentiment: Strong Buy

    • Bravo! Our great Analyst, Smart Tomi ! ( We are really lucky to be in your side.)

      Assume Radian Asset Assurance just earned total net income 1¢ only, instead of $M.
      We already know RDN earned 4.3¢ at least in Q4, another Upside surprise against all of those big players Analysts' gloomy, downward Earning modified all the past 3 Mo !

      To my previous experience as a Senior Management member in a Silicon Valley Hi Tech Co. ,
      many brokerage house's young Analyst may not as experienced as our Fellow Tomi.
      Especially involved in very complicated MI activities like CDS, and many others.

      Truly appreciate that we have a great fellow like Tomi with Real Estate Analyst background and willing to spend hours and hours research and study effort to share honestly with all of us
      that our whole group may benefit the REAL early information and advantage, not those junk marketings from those big players. ( I feel bad for many new comers that always lose money on those intentionally misleading marketings or short term market price manipulation. Many of their game rules are never announced. Many new comers and constant day traders like 5 min. extreme traders are often the victim. Even in the gold mine like this RDN case. )

      If anyone with CPA or Analyst speciality, please share with us about the Radian Asset Assurance side result.

      No matter what the final real earning outcome is, the Street's gloomy, downward accelerating revised earning mood will provide us a great chance to big profit again when earning is released.

      Just be careful to hold your shares. (usually 3 - 4 weeks before earning release some big players will sense or get get early information that short term market price manipulation will happen, and some guys will lose their shares, only to see it shoot higher again.)

      To Tomi with Thanks & Respect !
      (I owe U a coffee when meet U someday.
      So that U can work harder again. :-)

      Sentiment: Strong Buy

13.55+0.02(+0.15%)Sep 30 4:03 PMEDT