Breaking Down Radian Group Inc. (RDN) Financial Health: Key Insights for Investors

You're looking at Radian Group Inc. (RDN) and seeing a company in the middle of a major pivot, so the financial story is defintely more complex than a simple earnings beat. The direct takeaway is this: RDN is successfully executing a strategic transformation into a global multi-line specialty insurer, but you need to watch the short-term credit risk in their core mortgage business. They reported diluted net income from continuing operations of $1.11 per share for Q3 2025, which is solid, plus their book value per share grew 9% year-over-year to a strong $34.34 as of September 30, 2025. But here's the quick math on the risk: the loss ratio for their mortgage insurance segment jumped to 8% in Q3 2025, up from 3% in Q3 2024, which signals rising claims as credit conditions normalize. This is all happening while they preserve capital to fund the massive $1.7 billion acquisition of Inigo, meaning the share repurchase program is currently paused. The core business is stable at $281 billion in primary insurance in force, but the future is about integrating new specialty risk.

Revenue Analysis

You're looking for a clear picture of Radian Group Inc. (RDN)'s top line, and the data from the 2025 fiscal year tells a story of a business in transition. The core takeaway is that while the trailing twelve-month (TTM) revenue remains substantial, the recent quarterly figures show a revenue contraction, which is a key near-term risk. Still, the company is making a bold strategic move to diversify its revenue base.

For the twelve months ending September 30, 2025, Radian Group Inc. reported TTM revenue of approximately $1.28 Billion. However, the third quarter of 2025 (Q3 2025) revenue came in at $303.2 million, which was a significant 9.2% year-over-year decline. This is defintely a number to watch, as it suggests a softening in demand or a shift in the underlying market dynamics for their traditional products.

Primary Revenue Streams and Segment Contribution

Radian Group Inc.'s revenue is historically anchored in its Mortgage Insurance (MI) business. For an insurer, the primary revenue source is net premiums earned, which is the cornerstone of its operations. Over the last five years, net premiums earned have consistently represented about 77% of the company's total revenue. The remaining portion comes from investment income and fees from its other businesses, like real estate services. Mortgage insurance is the main driver.

Here's the quick math on the core segment for the most recent quarter:

• Q3 2025 Total Revenue: $303.2 million
• Q3 2025 Net Premiums Earned: $237.1 million
• Contribution: Net Premiums Earned made up roughly 78.2% of Q3 2025 revenue. (Here's the quick math: $237.1M / $303.2M ≈ 0.782)

While the total revenue was down year-over-year in Q3 2025, the Net Premiums Earned remained flat at $237.1 million compared to the same quarter last year. This stability in the core underwriting business is a positive sign, but it means the decline is coming from the non-MI segments or investment income, which is less predictable.

The Strategic Revenue Shift: Opportunities and Risks

The most significant change in Radian Group Inc.'s revenue profile is not a historical trend but a forward-looking strategic transformation. The company is actively moving to become a 'global, multi-line specialty insurer.' This involves two major, clear actions:

1. Acquisition: The planned acquisition of Inigo, a highly profitable Lloyd's specialty insurer, for $1.7 billion. This move immediately diversifies their revenue away from the US mortgage market and into global specialty lines like marine, energy, and professional indemnity.
2. Divestiture: The announced plan to divest, or sell off, its non-core businesses, specifically its Mortgage Conduit, Title, and Real Estate Services segments.

What this estimate hides is the short-term disruption. The divestiture will temporarily reduce the top-line revenue-the part that comes from the real estate services-but should improve the overall quality and predictability of earnings by focusing on higher-margin insurance operations. This shift is expected to close in the first quarter of 2026. For a deeper dive into the market's reaction to this strategy, you should check out Exploring Radian Group Inc. (RDN) Investor Profile: Who's Buying and Why?

The table below summarizes the key revenue components and their latest performance, providing a clear benchmark for your analysis:

The risk here is execution-integrating Inigo while simultaneously selling off other units is a complex management task. Still, the intent is clear: to trade a high concentration in US mortgage insurance for a more diversified, global specialty insurance footprint.

Profitability Metrics

You want to know if Radian Group Inc. (RDN) is turning premiums into profit efficiently, and the short answer for 2025 is a resounding yes, especially when compared to the broader financial services sector. The company's Trailing Twelve Months (TTM) net profit margin ending Q3 2025 stood at an impressive 45.25%, significantly outpacing the industry average of 12.2%.

Gross and Operating Profit Margins: Core Efficiency

In the insurance world, we don't look at 'Gross Profit' in the traditional sense, but rather at the underwriting profit, which is best measured by the Combined Ratio (Loss Ratio plus Expense Ratio). This shows you how much of every premium dollar is left over before factoring in investment income and taxes. Radian's performance here is defintely a core strength.

For the trailing twelve months leading up to Q3 2025, Radian Group Inc.'s core profitability ratios were exceptionally strong, demonstrating superior cost management and low claims (loss ratio) compared to the industry average.

• Gross Margin (TTM): 91.26%, compared to the industry TTM average of 33.21%.
• Operating Margin (TTM): 66%, vastly exceeding the industry TTM average of 20.08%.
• Net Profit Margin (TTM): 45.25%, compared to the industry TTM average of 12.2%.

Here's the quick math on core underwriting efficiency (Combined Ratio) for the mortgage insurance segment, which is where the real operational story lives:

A lower Combined Ratio is better. Radian's ratios of 37.7% and 33.6% in Q2 and Q3 2025, respectively, show that for every dollar of premium earned, only about 34 to 38 cents went toward losses and operating expenses. This is a fantastic operational position, though the slight increase in the Loss Ratio from 5% in Q2 to 8% in Q3 is a trend to watch, as it suggests a modest rise in claims or loss provisions.

Near-Term Profitability Trends and Operational Efficiency

Looking at the quarterly data in 2025, the trend shows a deliberate shift in expense management and a slight volatility in claims, but overall, profitability remains rock-solid. The company's strategic initiatives, including plans to divest non-core businesses and acquire a specialty insurer, signal a focus on maximizing returns from the most profitable lines. [cite: 7 in step 1]

The Net Income figures for the first three quarters of 2025 were stable: $145 million in Q1, $142 million in Q2, and $141 million in Q3. [cite: 1 in step 1, 2 in step 1, 7 in step 1] This stability is key. The Operating Margin saw a notable jump in Q3 2025 to 68.0% (calculated from $206 million Adjusted Pretax Operating Income on $303 million in revenue), up from 57.9% in Q2 (calculated from $173 million on $299 million in revenue). [cite: 2 in step 1, 7 in step 1] This huge swing is largely due to a sharp drop in the Expense Ratio from 32.7% in Q2 to 25.6% in Q3 2025, a clear sign of successful cost management after Q2 expenses were temporarily elevated by the timing of annual share-based incentive grants. [cite: 1, 3 in step 2]

The takeaway is simple: Radian Group Inc. is a high-margin business, and management is actively squeezing more efficiency out of its operations. For more on the drivers behind these numbers, you should check out Exploring Radian Group Inc. (RDN) Investor Profile: Who's Buying and Why?

Debt vs. Equity Structure

You're looking at Radian Group Inc. (RDN) and want to know how much risk they are taking on to finance their growth. The short answer is: their balance sheet is conservative, leaning heavily on equity, which is a sign of financial strength in the insurance world. This means the company is not over-leveraged, giving it a solid cushion against market volatility.

As of the third quarter of 2025, Radian Group Inc.'s total debt stood at approximately $1.27 billion. For an insurance holding company, it is crucial to look at the holding company debt-to-capital ratio, which was a low 18.7% at the end of Q3 2025. This ratio is well below the 20% threshold that rating agencies often flag as a point of increased scrutiny.

Here's the quick math on their financing mix:

• Total Debt (MRQ): $1.27 billion
• Book Value Per Share (Q3 2025): $34.34
• Debt-to-Equity Ratio: Approximately 0.27 (or 27.35%)

A Debt-to-Equity (D/E) ratio of 0.27 is defintely on the low side when you compare it to the broader financial services industry, where benchmarks for Capital Markets hover around 0.53. A lower ratio means the company is funding its assets mostly with shareholder equity rather than borrowed money. That's a good sign for investors concerned about fixed obligations.

The company has been active with its debt management, focusing on long-term stability. Their primary debt is in the form of senior unsecured notes, with a significant move in the past year to refinance. They issued $625 million in 6.200% senior unsecured notes due May 2029, and used proceeds to redeem $525 million of notes that were due in March 2025. This proactive management reduces near-term refinancing risk.

Also, in November 2025, Radian Group Inc. secured a new $500 million unsecured revolving credit facility, which replaces a prior facility and matures in 2030. This facility is essentially a low-cost, long-term line of credit for general corporate purposes and working capital needs. It's a liquidity backstop, not a current debt burden.

The credit rating agencies have taken notice of this strong capital position. Radian Group Inc.'s senior unsecured debt is rated investment grade, including an affirmation of 'BBB' by Fitch Ratings in September 2025. This investment-grade rating across all three major agencies signals a lower risk of default, which translates to lower borrowing costs for the company. They are balancing debt financing with equity funding by using debt for long-term, strategic capital needs while consistently returning capital to shareholders through dividends and share repurchases, which you can read more about in their Mission Statement, Vision, & Core Values of Radian Group Inc. (RDN).

The bottom line is that Radian Group Inc. is not chasing growth with excessive borrowing. Their capital structure is built for resilience, prioritizing equity and maintaining a low leverage profile, which is exactly what you want to see in a financial guarantor.

Liquidity and Solvency

You need to know if Radian Group Inc. (RDN) has enough short-term cash to cover its obligations, and the answer is yes, but the figures need context. For an insurance holding company, the standard current ratio is less critical than the available liquidity at the holding company level, which is very strong. Radian's liquidity position is defintely a strength going into 2026.

As of September 30, 2025, the company's available holding company liquidity increased significantly to $995 million, up from $784 million at the end of the second quarter. This is the cash buffer the parent company uses for dividends, share repurchases, and strategic moves like the planned acquisition of Inigo. Total holding company liquidity, including the $275 million undrawn unsecured revolving credit facility, was a robust $1.3 billion.

Current and Quick Ratios: A Closer Look

The traditional liquidity ratios for Radian Group Inc. (RDN) look healthy, though they require an insurance-specific interpretation. These ratios measure the ability to pay short-term debts with short-term assets (current assets). Here's the quick math:

• The Most Recent Quarter (MRQ) Current Ratio is approximately 2.52. This means Radian has about $2.52 in current assets for every $1.00 in current liabilities.
• The Quick Ratio (or acid-test ratio), which excludes inventory and other less liquid assets, is around 0.67.

For a non-financial company, a quick ratio below 1.0 might raise a red flag. But for a mortgage insurer, a large portion of their current assets are highly liquid, high-quality investment securities, and their current liabilities are often non-cash items like unearned premium reserves. The current ratio of 2.52 is a strong indicator of short-term financial flexibility.

Working Capital and Cash Flow Trends

Working capital (current assets minus current liabilities) trends are less about day-to-day operations and more about capital deployment for Radian Group Inc. (RDN). The positive current ratio implies a healthy working capital position, but the cash flow statement tells the real story of capital movement.

The Trailing Twelve Months (TTM) cash flow data as of the most recent quarter shows a significant cash outflow from operations, which is common for a company actively managing its capital and risk profile. This is where the strategic actions show up:

The financing cash flow trend for 2025 is dominated by capital return. In the first half of 2025 alone, Radian Group Inc. (RDN) repurchased approximately 13.5 million shares for a total return of capital to stockholders exceeding $500 million. Plus, the company paid a regular quarterly dividend of $0.255 per share in the third quarter, totaling $35 million. This aggressive share repurchase activity is a clear use of cash, but it signals management's confidence in the long-term cash generation and capital strength of the core mortgage insurance business. If you want to dive deeper into who is buying and why, you should be Exploring Radian Group Inc. (RDN) Investor Profile: Who's Buying and Why?

Valuation Analysis

You want to know if Radian Group Inc. (RDN) is a good value right now, and the numbers suggest it's trading at a discount to its peers, but with a 'Hold' consensus from analysts. This is a classic insurance-sector puzzle: low multiples signal value, but the market is still hesitant, likely due to future reserve release normalization.

When we look at the core valuation metrics, Radian Group Inc. (RDN) looks defintely cheap compared to the broader market and even its industry. The trailing twelve-month (TTM) Price-to-Earnings (P/E) ratio sits at about 8.77 as of November 2025, which is significantly lower than the Insurance industry median of 12.42. This suggests that for every dollar of earnings, you are paying less than the average company in the sector. Here's the quick math on the key multiples:

• P/E Ratio (TTM): 8.77
• Price-to-Book (P/B) Ratio: 1.03
• Enterprise Value-to-EBITDA (EV/EBITDA): 6.70

The Price-to-Book (P/B) ratio of 1.03 is particularly compelling for a financial company, meaning the stock is trading barely above its book value, or net asset value, which is a strong indicator of potential undervaluation. However, the Enterprise Value-to-EBITDA (EV/EBITDA) at 6.70, while still reasonable, is higher than some of its direct mortgage insurance peers, which suggests a slightly more nuanced picture of its total enterprise value relative to operating cash flow.

Looking at the stock price trend over the last year, Radian Group Inc. (RDN) has shown resilience but also volatility. The stock price, which closed around $34.48 in mid-November 2025, has climbed 2.05% over the last 12 months. The 52-week trading range shows a low of $29.32 in May 2025 and a high of $38.84 in September 2025. That September high shows you the upside potential when market sentiment is strong, but the overall modest 12-month gain indicates the stock is still consolidating. You should also check out the full context of this analysis, including strategic frameworks, in our detailed post: Breaking Down Radian Group Inc. (RDN) Financial Health: Key Insights for Investors.

For income-focused investors, Radian Group Inc. (RDN) offers a solid dividend. The annual dividend is $1.02 per share, translating to a dividend yield of approximately 2.97%. The payout ratio is very sustainable at about 25.53% of earnings, which gives the company plenty of room to both reinvest in the business and potentially increase the dividend in the future.

The analyst community is cautious, which explains the low valuation multiples. The consensus rating from a pool of analysts is a 'Hold' or 'Moderate Buy,' with an average 1-year price target of $38.00. This target suggests an upside of over 10% from the current price, but the 'Hold' rating signals that analysts are waiting for clearer signals on the housing market and the future of mortgage credit risk before upgrading their outlook. What this estimate hides is the potential impact of declining mortgage origination volumes and the normalization of reserve releases, which could pressure future earnings.

Risk Factors

You're looking at Radian Group Inc. (RDN) and seeing strong capital metrics, but we need to talk about the real-world risks that could slow down that momentum. The biggest near-term challenges aren't just market-wide-they are specific to the mortgage insurance (MI) business and RDN's own strategic pivot.

Honestly, the primary external risk is the housing market itself. While the company's portfolio is performing well-the default rate was a manageable 2.27% in Q2 2025-management repeatedly cites housing supply constraints and elevated home prices as ongoing market challenges. Plus, the credit picture is showing some early cracks: the loss ratio jumped to 8% in Q3 2025, a noticeable increase from 5% in Q2 2025, and the number of primary delinquent loans rose to 23,819 as of September 30, 2025. That's a defintely a trend to monitor.

Here's a quick breakdown of the key risks and opportunities:

• Housing Market Sensitivity: Higher interest rates and home prices squeeze first-time homebuyers, which directly impacts New Insurance Written (NIW) volume, even though RDN wrote $15.5 billion in NIW in Q3 2025.
• Competitive Pressure: The MI sector is tight, and RDN missed Q3 2025 revenue expectations, reporting $303 million against a forecast of $307.67 million. This suggests a struggle to grow the top line against rivals.
• Strategic Execution Risk: The company is undergoing a major transformation, planning to divest its non-core businesses (like Mortgage Conduit and Real Estate Services) while simultaneously acquiring the specialty insurer Inigo for $1.7 billion. Integrating a large, new global business while exiting others introduces significant operational and financial complexity.

Operational and Financial Headwinds

Beyond the market, RDN faces internal financial headwinds. The company's net investment income, which is a key component of an insurer's revenue, declined from $69.3 million in Q3 2024 to $63.4 million in Q3 2025. Also, the non-core Mortgage Conduit business showed volatility, causing a $9 million mark-to-market impact in Q2 2025, which is why they are wisely exiting that space. Operational cost pressures are also a concern, with other operating expenses hitting $62.3 million for Q3 2025.

To be fair, RDN is not sitting still. They have clear mitigation strategies in place. They use strategic quota share reinsurance agreements, like the 2025 QSR Agreement, to offload a portion of their mortgage credit risk and protect their capital base. This is a smart way to balance risk exposure. Plus, their capital cushion is substantial, with PMIERs (Private Mortgage Insurer Eligibility Requirements) excess available assets standing at a robust $1.9 billion as of Q3 2025.

The strategic shift to focus exclusively on their core Mortgage Insurance business, plus the diversification provided by the Inigo acquisition, is designed to deliver a mid-to-high teens Return on Equity (ROE). But still, the success of this plan hinges on a clean, efficient divestiture of non-core assets and a smooth integration of Inigo. That's the main execution risk for the next year.

For a deeper dive into the company's valuation, you should check out our full report: Breaking Down Radian Group Inc. (RDN) Financial Health: Key Insights for Investors.

Next step: Financial team should model the impact of a 20% increase in the Q3 2025 delinquent loan count (currently 23,819) on the provision for losses by end of next week.

Growth Opportunities

You're looking for where Radian Group Inc. (RDN) goes next, and the answer is clear: a strategic pivot is underway, moving the company from a leading U.S. mortgage insurer to a global, multi-line specialty insurer. The biggest driver for future growth is the transformative $1.7 billion acquisition of Inigo, a highly profitable Lloyd's specialty insurer, announced in Q3 2025.

This deal is expected to close in Q1 2026, but the financial impact is already shaping the outlook. Here's the quick math: the acquisition is projected to double Radian's total annual revenue and deliver a mid-teen percentage accretion to earnings per share (EPS) in the first full year after closing. That's a serious shift in scale and risk profile.

Future Revenue and Earnings Estimates

Near-term, the core mortgage insurance business remains the engine, but the new specialty insurance segment will quickly become a major contributor. For the full fiscal year 2025, the consensus EPS estimate is approximately $3.92 on revenues of about $1.25 billion. Looking at the immediate horizon, the company's Q4 2025 guidance forecasts an EPS of $1.05 and revenue of $310.36 million. Honestly, the mortgage business is resilient, but the real upside is in the diversification.

The strength of the existing portfolio provides a solid base for this expansion. In Q3 2025, Radian's net income from continuing operations was $153 million, and its book value per share grew to $34.34. This capital strength is what funded the Inigo acquisition, which is expected to add roughly 200 basis points to the company's Return on Equity (ROE) in its first year.

Strategic Initiatives and Competitive Edge

The strategic transformation is two-fold: a major acquisition and a focused divestiture. Radian Group Inc. is selling its non-core Mortgage Conduit, Title, and Real Estate Services businesses, which simplifies the structure and allows management to focus on the higher-growth, higher-return specialty insurance market. This is a smart move to streamline operations.

In the core mortgage insurance segment, the competitive advantage lies in the size and quality of its in-force portfolio (IIF). This portfolio reached an all-time high of $281 billion in Q3 2025. A high persistency rate (the percentage of insurance policies remaining in force) of around 84% also means a stable, long-term revenue stream, which is crucial for a mortgage insurer.

Product innovation, like the launch of the Radar Rates Platform, also helps it compete by offering a more streamlined experience for lenders. But the main competitive advantage going forward is the new, diversified structure, which offers flexibility to deploy capital across multiple insurance lines through various business cycles. You can learn more about the firm's overarching goals here: Mission Statement, Vision, & Core Values of Radian Group Inc. (RDN).

• Grow the primary mortgage insurance in-force portfolio to maintain a reliable premium base.
• Integrate Inigo to realize mid-teen EPS accretion and diversify revenue streams.
• Complete the divestiture of non-core businesses to simplify the operating model.

The company is defintely poised for a new phase of growth, moving beyond the cyclical nature of the U.S. housing market.