Radian Group Inc. is planning to restructure its services business following a $130.9 million after-tax, noncash impairment charge, CEO Richard Thornberry said during the company's second-quarter earnings call.
Part of the restructuring, Thornberry said, would be discontinuing certain business initiatives and focusing on its core products and services within the company's services segment. Charges related to the restructuring should not exceed $25 million pretax and "could be materially less," he said.
The company decided to book the charges following a review of the business and lower-than-expected performance. The impairment resulted from a decrease in projected future cash flows, based on current market trends and changes to the segment’s business strategy going forward, Thornberry said.
"We believe it is appropriate at this time to take a step back and refocus, so that our services businesses is strategically better-positioned to go forward," he said.
At the same time, the CEO said the company is committed to the business and is not planning to sell it off as it sees "significant opportunity" to leverage its core products and services, but the option to sell is not off the table.
But for now, the company is focusing on its restructuring plan as Thornberry said he believes the segment could become profitable.
"In terms of profitability, going forward, as we go through and complete our restructuring plan, I think [we] will have a better view of that," he said, in response to an analyst's question about selling the business.
The company expects to provide an update to the plan in the third quarter.