Last month, private mortgage insurer Radian Group reported net income for the quarter ended Dec. 31, 2016 of $61.1 million, down from $74.5 million for the quarter ended Dec. 31, 2015.

Radian’s CEO S.A. Ibrahim remained positive on the company’s results: “In 2016, we successfully grew book value by 11%, improved our capital structure and achieved our targeted expense goals, while setting new records for writing our highest volume of high-quality and profitable flow MI business in Radian’s history.”

Indeed, Radian’s new mortgage insurance written grew to $50.5 billion for the full year 2016, compared to $41.4 billion for the prior year. Broken up, new mortgage insurance written hit $13.9 billion for the quarter, $15.7 billion in the third quarter of 2016 and $9.1 billion in the prior year quarter.

Additionally in a 10-K filing with the Securities and Exchange Commission yesterday, Radian reports that its federal mortgage insurance competition is growing

"We have faced increasing competition from the VA. Based on publicly available information, the VA accounted for 28% of the insurable mortgage market in 2016,” the filing states.

“We believe that the VA’s market share has generally been increasing because the VA offers 100% LTV loans and charges a one-time funding fee that can be included in the loan amount with no additional monthly expense, and because of an increase in the number of borrowers that are eligible for the VA’s program."

Radian also listed five risk factors that could further reduce the demand for private mortgage insurance:

1. Lenders and other investors holding mortgages in their portfolio and self-insuring.

2.  Lenders using pass-through vehicles that take on the risk of loss for loans ultimately sold to the GSEs.

3. Engaging in credit-linked note transactions or other structured risk transfer transactions in the capital markets.

4. Risk sharing, risk transfer or using other risk mitigation techniques in conjunction with reduced levels of private mortgage insurance coverage.

5. Lenders originating mortgages using “piggyback” structures to avoid private mortgage insurance, such as a first-lien mortgage with an 80% LTV and a second mortgage with a 10%, 15% or 20% LTV, which could become more attractive because the tax deduction for mortgage insurance premiums has not been renewed beyond the 2016 tax year.

“If we do not appropriately manage the strategic decisions required in this environment, our franchise value, business prospects, results of operations and financial condition could be negatively impacted,” the company stated.