Mortgage insurances companies earned significantly less profit in their third-quarter earnings report as net incomes plummeted from last year.
Private mortgage insurer Radian Group posted 21% less profit to its net income from $82.8 million in the third quarter of 2016 to $65.1 million in the third quarter this year.
However, the company pointed out that these results include $45.8 million of pretax loss on induced conversion and debt extinguishment as well as $12 million of pretax restructuring and other exit costs related to the mortgage and real estate services segment.
When Radian announced its second-quarter earnings, the company said that it planned to restructure its services business, which is conducted through its principal subsidiary Clayton, and Clayton’s subsidiaries: Green River Capital, Red Bell Real Estate and ValuAmerica.
Earlier this month, the company revealed just how significant those structural changes are going to be, including the elimination of the position of president of its services business – meaning that Jeff Tennyson is out as president of Clayton.
The company reported adjusted diluted net operating income per share came in at $0.46 per share, an increase of 12% from $0.41 per share last year.
“We reported another quarter of excellent operating results for Radian and took several actions that strengthened our financial position and improved our capital structure,” Radian CEO Rick Thornberry said.
“We also completed a strategic review of our Services business and finalized our restructuring plan, which is focused on re-positioning the segment for sustained profitability,” Thornberry said. “We believe the changes we have made across our Services business will drive future growth and profitability for Radian, and deliver even greater value to our customers and stockholders.”
However, the company also showed a drop of 3% in new insurance written from $15.7 billion last year to $15.1 billion in the third quarter this year.
Old Republic International Corp. also reported its earnings Thursday, showing its net income plummeted during the third quarter this year.
The company reported it earned 58.4% less in net income from $110.9 million in the third quarter 2016 to $46.1 million in the third quarter this year. This represents 56.4% in net income per diluted common share, which fell from $0.39 last year to $0.17 per share in the third quarter this year.
The company explained part of this loss can be attributed to insurance claim provisions of $20 million associated with the current evaluation of exposures from hurricanes Harvey and Irma.
Old Republic posted an increase of 4.6% in its insurance revenue. Operational revenues increased from $1.49 billion in the third quarter of 2016 to $1.56 billion in the third quarter this year.