Radian Announces Updated Pricing for MI Business
07 Mai 2018 - 10:15PM
Business Wire
-- Pricing provides increased risk-based
granularity –
Radian Group Inc. announced today that its principal mortgage
insurance (MI) subsidiary, Radian Guaranty Inc., will be updating
its MI premium rates. The updated rates will provide increased
risk-based granularity to the company’s pricing across most
products and better align with industry trends. The pricing updates
will be effective for all MI applications received on, or after,
Monday, June 4, 2018.
“We are well positioned to compete for the MI business that
meets our portfolio management targets and expect to generate
strong through-the-cycle economic value and returns for our
stockholders,” said Chief Executive Officer Rick Thornberry. “At
Radian, our financial flexibility, capital strength, high-quality
insured portfolio and diversified set of products provide us with a
strong foundation to grow revenue, serve our customers, and support
affordable, sustainable homeownership for many years to come.”
OVERVIEW OF PRICING ACTIONS
Consistent with the company’s strategy to optimize the
risk-adjusted returns of its MI portfolio and compete for the
high-quality MI business being originated today, Radian has
decreased its monthly premium rates and increased its single
premium rates for mortgage insurance. This includes the
introduction of rate adjustors related to multi-borrower loans and
loans with a debt-to-income (DTI) ratio greater than 45 percent,
which provides increased risk-based granularity across most
products.
For Radian’s most recent new business production, applying these
combined actions would result in an overall premium rate decrease
of approximately 6 percent, which includes the impact of the new
rate adjustors on approximately 50 percent of new business. Radian
expects this new pricing to generate a highly attractive, blended
return on required capital in the mid-teens. This projected return
incorporates the company’s understanding of the proposed changes to
the Private Mortgage Insurer Eligibility Requirements (PMIERs),
which are expected to be effective no earlier than the end of this
year.
Thornberry added, “We believe these pricing changes, which are
more risk-based in nature and better align with industry trends,
will offer transparency and consistency for our customers and help
them to provide affordable options for their borrowers. For Radian,
we will continue to compete where we stand out most – our
exceptional service, strong customer relationships and broad set of
products and services across the mortgage spectrum.”
ABOUT RADIAN
Radian Group Inc. (NYSE: RDN), headquartered in Philadelphia,
provides private mortgage insurance, risk management products and
real estate services to financial institutions. Radian offers
products and services through two business segments:
- Mortgage Insurance, through its
principal mortgage insurance subsidiary Radian Guaranty Inc. This
private mortgage insurance helps protect lenders from
default-related losses, facilitates the sale of low-downpayment
mortgages in the secondary market and enables homebuyers to
purchase homes more quickly with downpayments less than 20%.
- Mortgage and Real Estate
Services, through its principal services subsidiary Clayton, as
well as Entitle Direct, Green River Capital, Red Bell Real Estate
and ValuAmerica. These solutions include information and services
that financial institutions, investors and government entities use
to evaluate, acquire, securitize, service and monitor loans and
asset-backed securities.
Additional information may be found at www.radian.biz.
FORWARD-LOOKING STATEMENTS
All statements in this press release that address events,
developments or results that we expect or anticipate may occur in
the future are “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, Section 21E of the
Exchange Act and the U.S. Private Securities Litigation Reform Act
of 1995. In most cases, forward-looking statements may be
identified by words such as “anticipate,” “may,” “will,” “could,”
“should,” “would,” “expect,” “intend,” “plan,” “goal,”
“contemplate,” “believe,” “estimate,” “predict,” “project,”
“potential,” “continue,” “seek,” “strategy,” “future,” “likely” or
the negative or other variations on these words and other similar
expressions. These statements, which may include, without
limitation, projections regarding our future performance and
financial condition, are made on the basis of management’s current
views and assumptions with respect to future events. Any
forward-looking statement is not a guarantee of future performance
and actual results could differ materially from those contained in
the forward-looking statement. These statements speak only as of
the date they were made, and we undertake no obligation to update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise. We operate in a
changing environment where new risks emerge from time to time and
it is not possible for us to predict all risks that may affect us.
The forward-looking statements, as well as our prospects as a
whole, are subject to risks and uncertainties that could cause
actual results to differ materially from those set forth in the
forward-looking statements. These risks and uncertainties include,
without limitation:
- changes in economic and political
conditions that impact the size of the insurable market, the credit
performance of our insured portfolio, and our business
prospects;
- our ability to successfully execute and
implement our business plans and strategies, including plans and
strategies to reposition our Services segment as well as plans and
strategies that require GSE and/or regulatory approvals and
licenses;
- changes in the charters or business
practices of, or rules or regulations imposed by or applicable to,
the GSEs, including: changes imposed by the FHFA that impact the
GSEs’ business prospects; the GSEs’ interpretation and application
of the PMIERs and the proposed changes to the PMIERs; and the GSEs’
use of alternative forms of credit enhancement;
- changes in the current housing finance
system in the U.S., including the role of the FHA, the GSEs and
private mortgage insurers in this system;
- a significant decrease in the
persistency rates of our mortgage insurance on monthly premium
products;
- competition in our mortgage insurance
business, including price competition, competition from the FHA and
VA, as well as competition from alternative forms of credit
enhancement; and
- the possibility that we may fail to
estimate accurately the likelihood, magnitude and timing of losses
in establishing loss reserves for our mortgage insurance business
or to accurately assess our ability to comply with the proposed
PMIERs when implemented.
For more information regarding these risks and uncertainties as
well as certain additional risks that we face, you should refer to
the Risk Factors detailed in Item 1A of our Annual Report on Form
10-K for the year ended December 31, 2017, and subsequent reports
filed from time to time with the U.S. Securities and Exchange
Commission. We caution you not to place undue reliance on these
forward-looking statements, which are current only as of the date
on which we issued this press release. We do not intend to, and we
disclaim any duty or obligation to, update or revise any
forward-looking statements to reflect new information or future
events or for any other reason.
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version on businesswire.com: https://www.businesswire.com/news/home/20180507006034/en/
Radian Group Inc.Emily Riley, 215-231-1035emily.riley@radian.biz
Radian (NYSE:RDN)
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