Radian's Inigo Deal Doubles Revenue, Squeezes Profit and Capital
Radian Group's revenue nearly doubled to $575 million as its Inigo Specialty acquisition bulked up the top line, but net income fell to $118 million and the mortgage insurer's capital cushion kept shrinking.
Radian Group (RDN) reported second-quarter revenue of $575 million, up 93% from $299 million a year earlier, as the first full quarter of contribution from its Inigo Specialty segment reshaped the mortgage insurer's business mix. Net premiums earned climbed 116% to $504 million, with Specialty now accounting for 53% of the total, a segment that did not exist in the company's reporting a year ago.
The growth came with a cost. Net income from continuing operations fell to $118 million, or $0.87 a diluted share, from $154 million, or $1.11 a share, in the prior-year quarter, and dropped from $129 million in the first quarter of 2026. Adjusted operating income per share, which strips out acquisition-related costs, held closer to flat at $1.14 versus $1.11 a year earlier but slid from $1.27 in the first quarter. Return on equity from continuing operations fell to 9.8% from 13.6% a year ago and 10.8% last quarter, extending a three-quarter decline in profitability even as revenue expanded.
The Specialty segment's combined ratio deteriorated to 97.7% from 85.3% in the first quarter, driven by a $169 million loss provision that included reserves tied to the Middle East conflict, partly offset by $24 million of favorable prior-year reserve development. The core Mortgage segment held up better, with its combined ratio rising to a still-favorable 35.8% from 30.2%, cushioned by $20 million of favorable reserve development. Primary mortgage insurance in force reached a record $284 billion, up 3% from a year earlier, while new insurance written rose 14% to $16.3 billion. The share of primary loans in default fell to 2.47% from 2.51%, the third straight quarterly improvement.
Book value per share rose 8.5% year over year to $36.00, but that growth rate has decelerated for two consecutive quarters, down from 10% in the first quarter and 13% in the fourth quarter of 2025. PMIERs excess available assets, a key measure of the mortgage insurer's regulatory capital cushion, declined to $1.45 billion from $1.6 billion last quarter and $2.0 billion a year ago. Holding-company available liquidity fell to $412 million from $1.83 billion at the end of 2025, a drawdown the company has partly funded through dividends from its Radian Guaranty subsidiary, which paid $200 million to the holding company in the quarter, up from $140 million in the first quarter, as part of an expected $650 million in total 2026 dividends.
Radian is also leaning on reinsurance to manage capital. The company signed two Specialty quota-share arrangements in June, ceding 15% of new insurance written from July 2027 through June 2028 and 20% from July 2028 through June 2029, bringing total ceded coverage to 30%.
On the divestiture front, Radian's wind-down of its Mortgage Conduit business was substantially complete by the end of the quarter, the sale of its Real Estate Services unit closed, and it signed an agreement in August to sell its Title business. Assets and liabilities held for sale shrank to $64 million and $30 million, respectively, from $2.27 billion and $2.07 billion a year earlier, reflecting that progress.
Radian increased share repurchases to $76 million in the quarter, buying back 2.2 million shares, and added another $50 million in July. The company exhausted its prior $900 million buyback authorization and is now drawing on a new $750 million authorization, with $686 million remaining. A CEO transition occurred, described as supporting strategic continuity, a topic absent from the company's first-quarter and year-end 2025 releases.