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Radian (RDN) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Financials· Aug 6, 2026

Source: earnings call transcript

Executive summary

Radian Q2 FY26 — Strategic Transformation and Diversified Growth

Radian Group completed its strategic transformation in Q2 FY26, integrating Inigo and divesting non-core assets to become a focused multiline specialty insurer. The quarter saw significant revenue and premium growth driven by the new Specialty segment, which now contributes substantially to the company's diversified earnings profile. While the Specialty market faces softening rates, management emphasizes underwriting discipline and capital allocation to profitable opportunities, alongside continued strong performance from the Mortgage Insurance business and robust capital returns.

Highlights

6

  • Total revenues increased 93% year-over-year to $575 million, driven by the Specialty segment.

  • Net earned premiums increased 116% year-over-year to $504 million, with Specialty accounting for 53%.

  • Primary insurance in force reached a record $284 billion, up 3% year-over-year.

  • Adjusted net operating earnings per share grew year-over-year to $1.14.

  • Book value per share grew 8.5% year-over-year to $36.

  • Increased expected dividends from Radian Guaranty to Radian Group to at least $650 million for 2026.

Concerns

3

  • Specialty Insurance market conditions have become more competitive, with rates continuing to soften.

  • Specialty segment combined ratio was 98% for Q2, elevated due to $30 million in reserves for Middle East developments and updated inflation assumptions.

  • Expected lower underwriting margins in the Specialty business, with a combined ratio in the low 90s being more reflective of the current operating environment.

Guidance & targets

CategoryTargetConfidence
Specialty segment net premiums earned
Approximately 20% higher than in the first half of the year
medium materiality
High
Specialty segment net combined ratio
Low 90s
high materiality
High
Total dividends from Radian Guaranty to Radian Group
At least $650 million
high materiality
High
Total share repurchases
More towards the upper end of $200 million to $250 million
high materiality
High
Revolving credit facility draw repayment
Repay $75 million outstanding
medium materiality
High
Debt maturity refinancing
Refinance at a similar size to what exists today
medium materiality
Medium

Segment performance

SegmentRevenueYoYQoQMargin
Mortgage Insurance
The business continues to produce strong underlying performance, generating earnings and capital. Approximately half of the in-force portfolio has a mortgage rate of 5.5% or lower, making it less likely to cancel due to refinancing. Cure activity continues to exceed new defaults, driving favorable development.
New insurance written: $16.3 billionNew insurance written growth YoY: 14%Persistency: 82%Primary insurance in force: $284 billionPrimary insurance in force growth YoY: 3%In-force premium yield: StableNew defaults: 12,400New defaults decline QoQ: 9%Portfolio default rate: 2.47%Favorable development from prior period defaults: $20 millionOperating expenses decline YoY: 7%Expense ratio: 23%Expense ratio prior year: 25%
————
Specialty Insurance
This is the first full reporting period reflecting Inigo's contribution, significantly diversifying revenue and earnings. The market is becoming more competitive with softening rates, particularly in property insurance and reinsurance. The combined ratio was elevated in Q2 due to $30 million in reserves for Middle East developments and updated inflation assumptions. Earned premiums are expected to be seasonally higher in the second half of the year.
Net premiums earned: $267 millionNet premiums earned growth YoY: 9%Share of total revenues: ~50%Share of total net premiums earned: 53%Operating expenses: $39 millionTotal loss provision: $169 millionFavorable net development for prior period reserves: $24 millionNet combined ratio: 98%Net combined ratio (H1 FY26): 93%Net combined ratio (H1 FY26 ex-Middle East reserving): High 80s
————

Deals & partnerships

Intego Acquisition of a global multiline specialty insurer.

Announced in September last year, successfully closed and integrated.

null Sale of real estate services business.

Completed this week (Q3 FY26).

null Agreement to sell title business.

Definitive agreement entered into.

null Exiting the mortgage conduit business.

Exited earlier this year.

Risks & headwinds

Softening market conditions and increased competition in Specialty Insurance Ongoing

Rates continue to soften; expected lower underwriting margins; combined ratio in the low 90s is more reflective of current environment compared to prior high 80s.

Mitigation:Underwriting discipline, focus on rate adequacy, selective capital allocation to most attractive opportunities, prioritizing profitability over revenue growth.

Geopolitical conflict and related inflation Q2 FY26 impact, ongoing monitoring

$30 million in reserves established in Q2 FY26 for Middle East developments, including expected/potential claims and updated inflation assumptions.

Mitigation:Proactive reserving, active monitoring of the situation, maintaining strong capital position.

What to watch in Q3 FY26

Specialty segment earned premiums

H2 FY26
Current First half 2026 earned premiums
Target Approximately 20% higher than H1 FY26

Why it matters

This will indicate the seasonal uplift and growth trajectory of the newly integrated Specialty segment amidst softening market conditions.

As a result, we anticipate second half earned premiums in 2026 to be approximately 20% higher than in the first half of the year.

Find out whether RDN delivers this. Inve re-checks your case every morning.

Q&A highlights

Clarification on the $20 million Middle East loss, whether it's from large claims or many small ones, and if ongoing pressures are expected.

The total reserving for the Middle East, including expected/potential claims and updated inflation estimates, was around $30 million in Q2. This is a fully loaded number, and management feels well-reserved, actively monitoring the situation.

“So I'd say the total of all those items in the second quarter was around $30 million, a bit higher than the number you provided. And again, that's inclusive of all of that for the Middle East. Excluding that, the combined ratio would have been generally in the mid- to high 80s.”

asked by Rowland Mayor · answered by Unknown Executive

2 min read 5 chapters

Detailed narrative

Strategic Transformation and Diversification

Radian has completed a significant strategic transformation, evolving from a leading U.S. mortgage insurer into a global multiline specialty insurer. This involved the acquisition of Inigo, which closed in Q4 FY25, and the divestiture of non-core businesses, including the sale of its real estate services business and an agreement to sell its title business, alongside exiting the mortgage conduit business earlier in the year. These actions have sharpened the company's focus on insurance, expanded its product set, and simplified its portfolio.

Mortgage Insurance Business Performance

The foundational Mortgage Insurance business continues to be a strong source of earnings and capital. New insurance written increased year-over-year, driven by strong purchase activity and proprietary data analytics. The primary insurance in force reached a record $284 billion, with persistency remaining strong at 82%. Credit performance is positive, with new defaults declining 9% from the prior quarter and cures exceeding new defaults, reducing the portfolio default rate to 2.47%.

Specialty Insurance Integration and Contribution

Q2 FY26 marks the first full quarter with Inigo's contribution, with the Specialty segment representing approximately 50% of total revenues and 53% of total net premiums earned. This significantly diversifies Radian's revenue and earnings profile. While the underlying portfolio performs well, the market has become more competitive with softening rates, which was anticipated during the acquisition underwriting. The Inigo team maintains underwriting discipline, prioritizing profitability over revenue growth.

Capital Management and Shareholder Returns

Radian maintains a strong capital position, with its earnings power providing significant financial flexibility. The company continued to return capital to stockholders through dividends and share repurchases. Radian Guaranty's PMIERs cushion stands at $1.5 billion above the required level. The holding company repaid $75 million of its revolving credit facility, reducing its leverage ratio to 19%, and increased its liquidity to $412 million.

CEO Transition

Rick Thornberry is transitioning leadership to Mike Weinbach, who joined as CEO-elect on June 1. Mike brings significant industry experience and a strong leadership track record. The transition is described as seamless, with Mike expressing confidence in Radian's people, culture, and platforms, particularly the data and analytics capabilities across both the Mortgage and Specialty segments.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.