Radian Group Inc. Chief Executive Officer S.A. Ibrahim said the mortgage insurer is poised to expand after its first profitable year since 2006.
Radian posted net income of $959.5 million in 2014 after enduring years of losses on guaranties of home loans that were made before the financial crisis. As the company’s stock rebounded, Ibrahim reached a deal last year to acquire mortgage-services provider Clayton Holdings. He also sold a bond guaranty unit for about $800 million.
“The combination of these events marks a turning point,” Ibrahim said in an annual letter to shareholders on the Philadelphia-based insurer’s website Friday. “With the majority of our legacy exposure behind us, we are able to simplify and streamline our company to drive long-term value.”
Radian traded for $17.26 a share at 12:57 p.m. in New York, compared with $2.34 at the end of 2011.
The insurer is now “particularly well positioned to benefit from a potential upturn in the U.S. housing market,” Mark Palmer, an analyst with BTIG, said in a March 9 note. The company “should be able to continue to drive growth through the addition of new customers.”
Mortgage insurers cover losses when homeowners default and foreclosures fail to recoup costs. The policies are typically required when borrowers pay less than 20 percent of the cost of a home up-front. The financial crisis forced almost half of the companies in the industry to exit the business.