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05/03/2023

Radian Announces First Quarter 2023 Financial Results

— Primary mortgage insurance in force increases 5% year-over-year to $261.5 billion

— Total revenues increase 6% year-over-year to $311 million

— Total holding company liquidity grows to $1.2 billion, including benefit from $100 million ordinary dividend paid by Radian Guaranty —

— PMIERs excess Available Assets of $1.7 billion (or 44% over the Minimum Required Assets) —

— GAAP net income of $158 million, or $0.98 per diluted share —

— Adjusted diluted net operating income of $0.98 per share —

— Return on equity of 15.7% —

WAYNE, Pa.--(BUSINESS WIRE)--May 3, 2023-- Radian Group Inc. (NYSE: RDN) today reported net income for the quarter ended March 31, 2023, of $158 million, or $0.98 per diluted share. This compares with net income for the quarter ended March 31, 2022, of $181 million, or $1.01 per diluted share.

Key Financial Highlights

 

Quarter ended

($ in millions, except per-share amounts)

 

March 31, 2023

 

December 31, 2022

 

March 31, 2022

Total revenues (1)

 

$311

 

$315

 

$293

Net income (1)

 

$158

 

$162

 

$181

Diluted net income per share

 

$0.98

 

$1.01

 

$1.01

Consolidated pretax income

 

$204

 

$203

 

$234

Adjusted pretax operating income (2)

 

$200

 

$213

 

$265

Adjusted diluted net operating income per share (2) (3)

 

$0.98

 

$1.05

 

$1.17

Return on equity (1) (4)

 

15.7%

 

17.0%

 

17.2%

Adjusted net operating return on equity (2) (3)

 

15.7%

 

17.6%

 

19.9%

New Insurance Written (NIW) - mortgage insurance

 

$11,261

 

$12,859

 

$18,655

Net premiums earned - mortgage insurance

 

$231

 

$230

 

$245

New defaults

 

10,624

 

10,735

 

9,393

Provision for losses - mortgage insurance

 

($17)

 

($44)

 

($84)

homegenius revenues

 

$13

 

$19

 

$34

Book value per share

 

$26.23

 

$24.95

 

$23.75

Accumulated other comprehensive income (loss) value per share (5)

 

($2.47)

 

($2.91)

 

($0.74)

PMIERs Available Assets (6)

 

$5,651

 

$5,553

 

$5,102

PMIERs excess Available Assets (7)

 

$1,740

 

$1,727

 

$1,560

Total Holding Company Liquidity (8)

 

$1,231

 

$1,178

 

$1,282

Total investments

 

$5,838

 

$5,693

 

$6,335

Primary mortgage insurance in force

 

$261,450

 

$260,994

 

$248,951

Percentage of primary loans in default (9)

 

2.1%

 

2.2%

 

2.6%

Mortgage insurance loss reserves

 

$400

 

$421

 

$722

(1)

Total revenues and net income for the first quarter of 2023 includes a pretax net gain of $6 million on investments and other financial instruments compared with a pretax net gain on investments and other financial instruments of $7 million in the fourth quarter of 2022 and a pretax net loss on investments and other financial instruments of $29 million for the first quarter of 2022.

(2)

Adjusted results, including adjusted pretax operating income, adjusted diluted net operating income per share and adjusted net operating return on equity, are non-GAAP financial measures. For definitions and reconciliations of these measures to the comparable GAAP measures, see Exhibits F and G.

(3)

Calculated using the company’s statutory tax rate of 21%.

(4)

Calculated by dividing annualized net income by average stockholders' equity, based on the average of the beginning and ending balances for each period presented.

(5)

Included in book value per share for each period presented.

(6)

Represents Radian Guaranty’s Available Assets, calculated in accordance with the Private Mortgage Insurer Eligibility Requirements (PMIERs) financial requirements in effect for each date shown.

(7)

Represents Radian Guaranty’s excess or “cushion” of Available Assets over its Minimum Required Assets, calculated in accordance with the PMIERs financial requirements in effect for each date shown.

(8)

Represents Radian Group's total liquidity, including available capacity under its $275 million unsecured revolving credit facility.

(9)

Represents the number of primary loans in default as a percentage of the total number of insured primary loans.

Net income for the quarter ended March 31, 2023, was $158 million, or $0.98 per diluted share. This compares with net income for the quarter ended March 31, 2022, of $181 million, or $1.01 per diluted share.

Adjusted pretax operating income for the quarter ended March 31, 2023, was $200 million, or $0.98 per diluted share. This compares with adjusted pretax operating income for the quarter ended March 31, 2022, of $265 million, or $1.17 per diluted share.

Book value per share at March 31, 2023, was $26.23, compared to $24.95 at December 31, 2022, and $23.75 at March 31, 2022. This represents a 10% growth in book value per share at March 31, 2023, as compared to March 31, 2022, and includes accumulated other comprehensive income (loss) of $(2.47) per share as of March 31, 2023, and $(0.74) per share as of March 31, 2022, which, if excluded as of both dates, would represent 17% growth for the period. The change in accumulated other comprehensive income (loss) since March 31, 2022, is primarily from net unrealized losses on investments as a result of an increase in market interest rates.

“We kicked off the year with another solid quarter for Radian, increasing book value per share by 10% year-over-year to $26.23, generating net income of $158 million and delivering return on equity of 15.7%. Our primary mortgage insurance in force, which is the main driver of future earnings for our company, grew 5% year-over-year and our cure rate on defaulted loans reached the second highest level in 15 years during the first quarter of 2023,” said Radian’s Chief Executive Officer Rick Thornberry. “We continue to strategically manage capital by maintaining strong holding company liquidity and PMIERs cushion, repurchasing shares opportunistically and paying the highest yielding dividend in the industry.”

FIRST QUARTER HIGHLIGHTS

  • NIW was $11.3 billion in the first quarter of 2023, compared to $12.9 billion in the fourth quarter of 2022, and $18.7 billion in the first quarter of 2022.
    • Purchase NIW decreased 13% in the first quarter of 2023 compared to the fourth quarter of 2022 and decreased 36% compared to the first quarter of 2022.
    • Refinances accounted for 2% of total NIW in the first quarter of 2023, compared to 2% in the fourth quarter of 2022, and 9% in the first quarter of 2022.
    • Of the $11.3 billion in NIW in the first quarter of 2023, 95% was written with monthly and other recurring premiums, which was the same percentage as in the fourth quarter of 2022 and the first quarter of 2022.
  • Total primary mortgage insurance in force as of March 31, 2023, increased to $261.5 billion, relatively flat as compared to $261.0 billion as of December 31, 2022, and an increase of 5% compared to $249.0 billion as of March 31, 2022. The year-over-year change reflects an 8% increase in monthly premium policy insurance in force and a 12% decline in single premium policy insurance in force.
    • Persistency, which is the percentage of mortgage insurance that remains in force after a twelve-month period, was 82% for the twelve months ended March 31, 2023, compared to 80% for the twelve months ended December 31, 2022, and 68% for the twelve months ended March 31, 2022.
    • Annualized persistency for the three months ended March 31, 2023, was 84%, compared to 84% for the three months ended December 31, 2022, and 77% for the three months ended March 31, 2022.
  • Net mortgage insurance premiums earned were $231 million for the first quarter of 2023, compared to $230 million for the fourth quarter of 2022, and $245 million for the first quarter of 2022.
    • Mortgage insurance in force portfolio premium yield was 38.5 basis points in the first quarter of 2023. This compares to 38.1 basis points in the fourth quarter of 2022, and 39.6 basis points in the first quarter of 2022.
    • The impact of single premium policy cancellations before consideration of reinsurance represented 0.8 basis points of direct premium yield in the first quarter of 2023, 0.9 basis points in the fourth quarter of 2022, and 2.4 basis points in the first quarter of 2022.
    • Total net mortgage insurance premium yield, which includes the impact of ceded premiums and accrued profit commission, was 35.4 basis points in the first quarter of 2023. This compares to 35.4 basis points in the fourth quarter of 2022, and 39.6 basis points in the first quarter of 2022.
    • Details regarding premiums earned may be found in Exhibit D.
  • The mortgage insurance provision for losses was a benefit of $17 million in the first quarter of 2023, compared to benefits of $44 million and $84 million in the fourth quarter of 2022 and first quarter of 2022, respectively.
    • All periods benefited from significant favorable reserve development on prior period defaults, particularly in 2022, due to more favorable trends in cures than originally estimated. The decreased benefit in the first quarter of 2023 compared to the fourth quarter of 2022 and the first quarter of 2022 was primarily related to less favorable development on prior period reserves, as the remaining number of defaults and loss reserve balance continues to decline.
    • The number of primary delinquent loans was 20,748 as of March 31, 2023, compared to 21,913 as of December 31, 2022, and 25,510 as of March 31, 2022.
    • The loss ratio in the first quarter of 2023 was (7.3)% compared to (18.9)% in the fourth quarter of 2022, and (34.3)% in the first quarter of 2022.
    • Total mortgage insurance claims paid were $3 million in the first quarter of 2023, compared to $8 million in the fourth quarter of 2022, and $5 million in the first quarter of 2022.
  • Radian's homegenius segment offers an array of title, real estate and technology products and services to consumers, mortgage lenders, mortgage and real estate investors, GSEs, real estate brokers and agents.
    • Total homegenius segment revenues for the first quarter of 2023 were $13 million, compared to $19 million for the fourth quarter of 2022, and $34 million for the first quarter of 2022.
    • Adjusted pretax operating loss, our primary segment measure of profitability for the homegenius segment, was $23 million for the first quarter of 2023, compared to $31 million for the fourth quarter of 2022, and $14 million for the first quarter of 2022.
  • Other operating expenses were $83 million in the first quarter of 2023, compared to $110 million in the fourth quarter of 2022, and $90 million in the first quarter of 2022.
    • Other operating expenses decreased in the first quarter of 2023 as compared to expenses in the fourth quarter of 2022, which were elevated primarily due to impairments to our lease-related assets and severance and related expenses previously reported and recognized in that quarter. Our expense reduction actions taken during 2022 helped to lower the level of our expenses in the first quarter of 2023. Additional details regarding other operating expenses by segment may be found in Exhibit E.

CAPITAL AND LIQUIDITY UPDATE

Radian Group

  • As of March 31, 2023, Radian Group maintained $956 million of available liquidity. Total holding company liquidity, which includes the company’s $275 million unsecured revolving credit facility, was $1.2 billion as of March 31, 2023.
  • During the first quarter of 2023, the company repurchased 716 thousand shares of Radian Group common stock at a total cost of $15 million, including commissions.
  • In addition, in April 2023 the company purchased an additional 229 thousand shares of Radian Group common stock at a total cost of $5 million, including commissions. After the repurchases in April, purchase authority of up to $280 million remained available under this program.
  • As previously announced, on February 15, 2023, Radian Group’s board of directors authorized a regular quarterly dividend on its common stock in the amount of $0.225 per share, an increase of 12.5% from the previous quarterly dividend. The dividend was paid on March 15, 2023.

Radian Guaranty

  • In March 2023, Radian Guaranty paid an ordinary dividend to Radian Group of $100 million. Radian Guaranty expects to pay between $200 million to $300 million of additional ordinary dividends to Radian Group during the remainder of 2023, based on current performance expectations.
  • At March 31, 2023, Radian Guaranty’s Available Assets under PMIERs totaled approximately $5.7 billion, resulting in excess available resources or a “cushion” of $1.7 billion, or 44%, over its Minimum Required Assets under PMIERs.

CONFERENCE CALL

Radian will discuss first quarter 2023 financial results in a conference call tomorrow, Thursday, May 4, 2023, at 12:00 p.m. Eastern time. The conference call will be webcast live on the company’s website at https://radian.com/who-we-are/for-investors/webcasts or at www.radian.com. The webcast is listen-only. Those interested in participating in the question-and-answer session should follow the conference call dial-in instructions below.

The call may be accessed via telephone by registering for the call here to receive the dial-in numbers and unique PIN. It is recommended that you join 10 minutes prior to the event start (although you may register and dial in at any time during the call).

A digital replay of the webcast will be available on Radian’s website approximately two hours after the live broadcast ends for a period of one year at https://radian.com/who-we-are/for-investors/webcasts.

In addition to the information provided in the company's earnings news release, other statistical and financial information, which is expected to be referred to during the conference call, will be available on Radian's website at www.radian.com, under Investors.

NON-GAAP FINANCIAL MEASURES

Radian believes that adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share and adjusted net operating return on equity (non-GAAP measures) facilitate evaluation of the company’s fundamental financial performance and provide relevant and meaningful information to investors about the ongoing operating results of the company. On a consolidated basis, these measures are not recognized in accordance with accounting principles generally accepted in the United States of America (GAAP) and should not be considered in isolation or viewed as substitutes for GAAP measures of performance. The measures described below have been established in order to increase transparency for the purpose of evaluating the company’s operating trends and enabling more meaningful comparisons with Radian’s competitors.

Adjusted pretax operating income (loss) is defined as GAAP consolidated pretax income (loss) excluding the effects of: (i) net gains (losses) on investments and other financial instruments, except for certain investments and other financial instruments attributable to our reportable segments and All Other activities; (ii) gains (losses) on extinguishment of debt; (iii) amortization and impairment of goodwill and other acquired intangible assets; and (iv) impairment of other long-lived assets and other non-operating items, such as impairment of internal-use software, gains (losses) from the sale of lines of business and acquisition-related income and expenses. Adjusted diluted net operating income (loss) per share is calculated by dividing (i) adjusted pretax operating income (loss) attributable to common stockholders, net of taxes computed using the company’s statutory tax rate, by (ii) the sum of the weighted average number of common shares outstanding and all dilutive potential common shares outstanding. Adjusted net operating return on equity is calculated by dividing annualized adjusted pretax operating income (loss), net of taxes computed using the company’s statutory tax rate, by average stockholders’ equity, based on the average of the beginning and ending balances for each period presented.

In addition to the above non-GAAP measures for the consolidated company, we also have presented as supplemental information non-GAAP measures for our homegenius segment of adjusted pretax operating income (loss) before allocated corporate operating expenses and adjusted gross profit. Adjusted pretax operating income (loss) before allocated corporate operating expenses is calculated as adjusted pretax operating income (loss) as described above (which is the segment's ASC 280 GAAP measure of operating performance), adjusted to remove the impact of corporate allocations of other operating expenses for the homegenius segment. Adjusted gross profit is further adjusted to remove other operating expenses. For the homegenius segment, adjusted pretax operating income (loss) before allocated corporate operating expenses and adjusted gross profit are used to facilitate comparisons with other services companies, since they are widely accepted measures of performance in the services industry and are used internally as supplemental measures to evaluate the performance of our homegenius segment.

See Exhibit F or Radian’s website for a description of these items, as well as Exhibit G for reconciliations to the most comparable consolidated GAAP measures.

ABOUT RADIAN

Radian Group Inc. (NYSE: RDN) is ensuring the American dream of homeownership responsibly and sustainably through products and services that include industry-leading mortgage insurance and a comprehensive suite of mortgage, risk, title, valuation, asset management and other real estate services. We are powered by technology, informed by data and driven to deliver new and better ways to transact and manage risk. Visit www.radian.com and homegenius.com to learn more about how Radian and its pioneering homegenius platform are building a smarter future for mortgage and real estate services.

FINANCIAL RESULTS AND SUPPLEMENTAL INFORMATION CONTENTS (Unaudited)

Exhibit A:

Condensed Consolidated Statements of Operations Trend Schedule

Exhibit B:

Net Income Per Share Trend Schedule

Exhibit C:

Condensed Consolidated Balance Sheets

Exhibit D:

Net Premiums Earned

Exhibit E:

Segment Information

Exhibit F:

Definition of Consolidated Non-GAAP Financial Measures

Exhibit G:

Consolidated Non-GAAP Financial Measure Reconciliations

Exhibit H:

Mortgage Supplemental Information - New Insurance Written

Exhibit I:

Mortgage Supplemental Information - Primary Insurance in Force and Risk in Force

Exhibit J:

Mortgage Supplemental Information - Default, Reserves and Claim Statistics

Exhibit K:

Mortgage Supplemental Information - Reinsurance Programs

Radian Group Inc. and Subsidiaries

Condensed Consolidated Statements of Operations Trend Schedule

Exhibit A

 

 

 

2023

 

2022

(In thousands, except per-share amounts)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Revenues

 

 

 

 

 

 

 

 

 

 

Net premiums earned

 

$

233,238

 

 

$

232,827

 

 

$

240,222

 

 

$

253,892

 

 

$

254,190

 

Services revenue

 

 

10,984

 

 

 

15,441

 

 

 

20,146

 

 

 

27,281

 

 

 

29,348

 

Net investment income

 

 

59,221

 

 

 

59,091

 

 

 

51,414

 

 

 

46,957

 

 

 

38,196

 

Net gains (losses) on investments and other financial instruments

 

 

5,585

 

 

 

6,845

 

 

 

(16,252

)

 

 

(41,869

)

 

 

(29,457

)

Other income

 

 

1,592

 

 

 

520

 

 

 

659

 

 

 

572

 

 

 

703

 

Total revenues

 

 

310,620

 

 

 

314,724

 

 

 

296,189

 

 

 

286,833

 

 

 

292,980

 

Expenses

 

 

 

 

 

 

 

 

 

 

Provision for losses

 

 

(16,929

)

 

 

(43,599

)

 

 

(96,964

)

 

 

(113,922

)

 

 

(83,754

)

Policy acquisition costs

 

 

6,293

 

 

 

5,931

 

 

 

5,442

 

 

 

5,940

 

 

 

6,605

 

Cost of services

 

 

10,398

 

 

 

16,128

 

 

 

18,717

 

 

 

22,760

 

 

 

24,753

 

Other operating expenses

 

 

83,269

 

 

 

109,785

 

 

 

91,327

 

 

 

90,495

 

 

 

89,541

 

Interest expense

 

 

22,207

 

 

 

21,594

 

 

 

21,183

 

 

 

20,831

 

 

 

20,846

 

Amortization of other acquired intangible assets

 

 

1,371

 

 

 

1,587

 

 

 

1,023

 

 

 

849

 

 

 

849

 

Total expenses

 

 

106,609

 

 

 

111,426

 

 

 

40,728

 

 

 

26,953

 

 

 

58,840

 

Pretax income

 

 

204,011

 

 

 

203,298

 

 

 

255,461

 

 

 

259,880

 

 

 

234,140

 

Income tax provision

 

 

46,254

 

 

 

40,968

 

 

 

57,181

 

 

 

58,687

 

 

 

53,009

 

Net income

 

$

157,757

 

 

$

162,330

 

 

$

198,280

 

 

$

201,193

 

 

$

181,131

 

Diluted net income per share

 

$

0.98

 

 

$

1.01

 

 

$

1.20

 

 

$

1.15

 

 

$

1.01

 

Selected Mortgage Key Ratios

 

 

2023

 

2022

 

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Loss ratio (1)

 

(7.3

)%

 

(18.9

)%

 

(41.5

)%

 

(46.2

)%

 

(34.3

)%

Expense ratio (2)

 

25.9

%

 

27.3

%

 

26.1

%

 

26.2

%

 

27.2

%

(1)

 

For our Mortgage segment, calculated as provision for losses expressed as a percentage of net premiums earned. See Exhibit E for additional information.

(2)

 

For our Mortgage segment, calculated as operating expenses, (which consist of policy acquisition costs and other operating expenses, as well as allocated corporate operating expenses), expressed as a percentage of net premiums earned. See Exhibit E for additional information.

Radian Group Inc. and Subsidiaries

Net Income Per Share Trend Schedule

Exhibit B

The calculation of basic and diluted net income per share is as follows.

 

 

 

2023

 

2022

(In thousands, except per-share amounts)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Net income—basic and diluted

 

$

157,757

 

$

162,330

 

$

198,280

 

$

201,193

 

$

181,131

Average common shares outstanding—basic

 

 

158,304

 

 

158,357

 

 

162,506

 

 

173,705

 

 

176,816

Dilutive effect of stock-based compensation arrangements (1)

 

 

3,045

 

 

2,450

 

 

2,232

 

 

1,714

 

 

2,263

Adjusted average common shares outstanding—diluted

 

 

161,349

 

 

160,807

 

 

164,738

 

 

175,419

 

 

179,079

Basic net income per share

 

$

1.00

 

$

1.03

 

$

1.22

 

$

1.16

 

$

1.02

Diluted net income per share

 

$

0.98

 

$

1.01

 

$

1.20

 

$

1.15

 

$

1.01

(1)

 

The following number of shares of our common stock equivalents issued under our share-based compensation arrangements were not included in the calculation of diluted net income per share because they would be anti-dilutive.

 

 

2023

 

2022

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Shares of common stock equivalents

 

25

 

 

 

189

 

Radian Group Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

Exhibit C

 

 

 

March 31,

 

December 31,

 

September 30,

 

June 30

 

March 31,

(In thousands, except per-share amounts)

 

2023

 

2022

 

2022

 

2022

 

2022

Assets

 

 

 

 

 

 

 

 

 

 

Investments

 

$

5,837,892

 

 

$

5,693,491

 

 

$

5,591,881

 

 

$

5,906,147

 

 

$

6,334,950

 

Cash

 

 

50,167

 

 

 

56,183

 

 

 

54,701

 

 

 

135,262

 

 

 

131,853

 

Restricted cash

 

 

577

 

 

 

377

 

 

 

1,107

 

 

 

561

 

 

 

1,651

 

Accrued investment income

 

 

42,567

 

 

 

40,093

 

 

 

38,596

 

 

 

35,774

 

 

 

35,531

 

Accounts and notes receivable

 

 

129,565

 

 

 

119,834

 

 

 

174,041

 

 

 

166,380

 

 

 

142,579

 

Reinsurance recoverable

 

 

24,396

 

 

 

25,633

 

 

 

30,569

 

 

 

39,876

 

 

 

55,015

 

Deferred policy acquisition costs

 

 

18,236

 

 

 

18,460

 

 

 

17,920

 

 

 

16,983

 

 

 

16,383

 

Property and equipment, net

 

 

72,111

 

 

 

70,981

 

 

 

75,740

 

 

 

74,874

 

 

 

75,275

 

Goodwill and other acquired intangible assets, net

 

 

13,914

 

 

 

15,285

 

 

 

16,873

 

 

 

17,895

 

 

 

18,744

 

Prepaid federal income taxes

 

 

596,368

 

 

 

596,368

 

 

 

526,123

 

 

 

466,123

 

 

 

354,123

 

Other assets

 

 

418,609

 

 

 

427,024

 

 

 

458,292

 

 

 

414,412

 

 

 

449,642

 

Total assets

 

$

7,204,402

 

 

$

7,063,729

 

 

$

6,985,843

 

 

$

7,274,287

 

 

$

7,615,746

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

 

 

Unearned premiums

 

$

257,735

 

 

$

271,479

 

 

$

285,290

 

 

$

298,991

 

 

$

312,013

 

Reserve for losses and loss adjustment expense

 

 

405,651

 

 

 

426,843

 

 

 

483,664

 

 

 

594,808

 

 

 

727,247

 

Senior notes

 

 

1,414,549

 

 

 

1,413,504

 

 

 

1,412,473

 

 

 

1,411,458

 

 

 

1,410,458

 

Other borrowings

 

 

121,642

 

 

 

155,822

 

 

 

153,550

 

 

 

184,284

 

 

 

148,983

 

Reinsurance funds withheld

 

 

153,099

 

 

 

152,067

 

 

 

218,777

 

 

 

223,649

 

 

 

225,363

 

Net deferred tax liability

 

 

455,517

 

 

 

391,083

 

 

 

335,374

 

 

 

324,866

 

 

 

324,004

 

Other liabilities

 

 

289,731

 

 

 

333,604

 

 

 

358,665

 

 

 

305,269

 

 

 

320,114

 

Total liabilities

 

 

3,097,924

 

 

 

3,144,402

 

 

 

3,247,793

 

 

 

3,343,325

 

 

 

3,468,182

 

Common stock

 

 

176

 

 

 

176

 

 

 

176

 

 

 

186

 

 

 

193

 

Treasury stock

 

 

(931,313

)

 

 

(930,643

)

 

 

(930,396

)

 

 

(930,284

)

 

 

(920,958

)

Additional paid-in capital

 

 

1,515,852

 

 

 

1,519,641

 

 

 

1,513,615

 

 

 

1,698,490

 

 

 

1,871,763

 

Retained earnings

 

 

3,908,396

 

 

 

3,786,952

 

 

 

3,656,870

 

 

 

3,491,675

 

 

 

3,326,119

 

Accumulated other comprehensive income (loss)

 

 

(386,633

)

 

 

(456,799

)

 

 

(502,215

)

 

 

(329,105

)

 

 

(129,553

)

Total stockholders’ equity

 

 

4,106,478

 

 

 

3,919,327

 

 

 

3,738,050

 

 

 

3,930,962

 

 

 

4,147,564

 

Total liabilities and stockholders’ equity

 

$

7,204,402

 

 

$

7,063,729

 

 

$

6,985,843

 

 

$

7,274,287

 

 

$

7,615,746

 

Shares outstanding

 

 

156,547

 

 

 

157,056

 

 

 

157,058

 

 

 

166,388

 

 

 

174,648

 

Book value per share

 

$

26.23

 

 

$

24.95

 

 

$

23.80

 

 

$

23.63

 

 

$

23.75

 

Debt to capital ratio (1)

 

25.6 %

 

26.5 %

 

27.4 %

 

26.4 %

 

25.4 %

Risk to capital ratio-Radian Guaranty only

 

10.6:1

 

10.7:1

 

11.1:1

 

11.9:1

 

12.1:1

(1)

 

Calculated as senior notes divided by senior notes and stockholders' equity.

Radian Group Inc. and Subsidiaries

Net Premiums Earned

Exhibit D

 

 

 

2023

 

2022

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Premiums earned

 

 

 

 

 

 

 

 

 

 

Direct - Mortgage

 

 

 

 

 

 

 

 

 

 

Premiums earned, excluding revenue from cancellations

 

$

251,166

 

 

$

247,880

 

 

$

250,140

 

 

$

249,936

 

 

$

243,600

 

Single Premium Policy cancellations

 

 

5,361

 

 

 

5,756

 

 

 

6,705

 

 

 

6,894

 

 

 

14,696

 

Total direct - Mortgage

 

 

256,527

 

 

 

253,636

 

 

 

256,845

 

 

 

256,830

 

 

 

258,296

 

Assumed - Mortgage (1)

 

 

 

 

 

(56

)

 

 

1,211

 

 

 

1,539

 

 

 

1,331

 

Ceded - Mortgage

 

 

 

 

 

 

 

 

 

 

Premiums earned, excluding revenue from cancellations

 

 

(35,526

)

 

 

(35,773

)

 

 

(38,879

)

 

 

(28,565

)

 

 

(27,339

)

Single Premium Policy cancellations (2)

 

 

(1,472

)

 

 

(1,676

)

 

 

(1,844

)

 

 

(1,965

)

 

 

(4,192

)

Profit commission - other (3)

 

 

11,921

 

 

 

13,802

 

 

 

17,864

 

 

 

19,070

 

 

 

17,078

 

Total ceded premiums - Mortgage (4)

 

 

(25,077

)

 

 

(23,647

)

 

 

(22,859

)

 

 

(11,460

)

 

 

(14,453

)

Net premiums earned - Mortgage

 

 

231,450

 

 

 

229,933

 

 

 

235,197

 

 

 

246,909

 

 

 

245,174

 

Net premiums earned - homegenius

 

 

1,788

 

 

 

2,894

 

 

 

5,025

 

 

 

6,983

 

 

 

9,016

 

Net premiums earned

 

$

233,238

 

 

$

232,827

 

 

$

240,222

 

 

$

253,892

 

 

$

254,190

 

(1)

 

Represents premiums from our participation in certain credit risk transfer programs. We discontinued our participation in these programs in December 2022 by novating these insurance policies to an unrelated third-party reinsurer.

(2)

 

Includes the impact of related profit commissions.

(3)

The amounts represent the profit commission on the Single Premium QSR Program and 2022 QSR Agreement, excluding the impact of Single Premium Policy cancellations.

(4)

See Exhibit K for additional information on ceded premiums for our various reinsurance programs.

Radian Group Inc. and Subsidiaries

Segment Information

Exhibit E (page 1 of 6)

Summarized financial information concerning our operating segments as of and for the periods indicated is as follows. For a definition of adjusted pretax operating income (loss), homegenius adjusted pretax operating income (loss) before allocated corporate operating expenses and homegenius adjusted gross profit, along with reconciliations to consolidated GAAP measures, see Exhibits F and G.

 

 

 

Three Months Ended March 31, 2023

(In thousands)

 

Mortgage

 

homegenius

 

All Other (1)

 

Inter-segment (2)

 

Total

Net premiums written (3)

 

$

229,419

 

 

$

1,788

 

 

$

 

$

 

 

$

231,207

 

(Increase) decrease in unearned premiums

 

 

2,031

 

 

 

 

 

 

 

 

 

 

 

2,031

 

Net premiums earned

 

 

231,450

 

 

 

1,788

 

 

 

 

 

 

 

 

233,238

 

Services revenue

 

 

336

 

 

 

10,743

 

 

 

 

 

(95

)

 

 

10,984

 

Net investment income

 

 

46,497

 

 

 

430

 

 

 

12,294

 

 

 

 

 

59,221

 

Net gains (losses) on investments and other financial instruments

 

 

 

 

 

 

 

 

80

 

 

 

 

 

80

 

Other income

 

 

1,587

 

 

 

 

 

 

5

 

 

 

 

 

1,592

 

Total

 

 

279,870

 

 

 

12,961

 

 

 

12,379

 

 

(95

)

 

 

305,115

 

Provision for losses

 

 

(16,864

)

 

 

(65

)

 

 

 

 

 

 

 

(16,929

)

Policy acquisition costs

 

 

6,293

 

 

 

 

 

 

 

 

 

 

 

6,293

 

Cost of services

 

 

241

 

 

 

10,157

 

 

 

 

 

 

 

 

10,398

 

Other operating expenses before allocated corporate operating expenses (4)

 

 

18,806

 

 

 

21,252

 

 

 

518

(5)

 

(95

)

 

 

40,481

 

Interest expense

 

 

22,130

 

 

 

 

 

 

77

 

 

 

 

 

22,207

 

Total

 

 

30,606

 

 

 

31,344

 

 

 

595

 

 

(95

)

 

 

62,450

 

Adjusted pretax operating income (loss) before allocated corporate operating expenses

 

 

249,264

 

 

 

(18,383

)

 

 

11,784

 

 

 

 

 

242,665

 

Allocation of corporate operating expenses

 

 

34,829

 

 

 

4,658

 

 

 

3,315

(5)

 

 

 

 

42,802

 

Adjusted pretax operating income (loss)

 

$

214,435

 

 

$

(23,041

)

 

$

8,469

 

$

 

 

$

199,863

 

Radian Group Inc. and Subsidiaries

Segment Information

Exhibit E (page 2 of 6)

 

 

 

Three Months Ended March 31, 2022

(In thousands)

 

Mortgage

 

homegenius

 

All Other (1)

 

Inter-segment (2)

 

Total

Net premiums written (3)

 

$

248,360

 

 

$

9,016

 

 

$

 

$

 

 

$

257,376

 

(Increase) decrease in unearned premiums

 

 

(3,186

)

 

 

 

 

 

 

 

 

 

 

(3,186

)

Net premiums earned

 

 

245,174

 

 

 

9,016

 

 

 

 

 

 

 

 

254,190

 

Services revenue

 

 

4,552

 

 

 

24,878

 

 

 

 

 

(82

)

 

 

29,348

 

Net investment income

 

 

34,017

 

 

 

18

 

 

 

4,161

 

 

 

 

 

38,196

 

Other income

 

 

703

 

 

 

 

 

 

 

 

 

 

 

703

 

Total

 

 

284,446

 

 

 

33,912

 

 

 

4,161

 

 

(82

)

 

 

322,437

 

Provision for losses

 

 

(84,193

)

 

 

481

 

 

 

 

 

(42

)

 

 

(83,754

)

Policy acquisition costs

 

 

6,605

 

 

 

 

 

 

 

 

 

 

 

6,605

 

Cost of services

 

 

3,383

 

 

 

21,370

 

 

 

 

 

 

 

 

24,753

 

Other operating expenses before allocated corporate operating expenses (4)

 

 

23,755

 

 

 

20,287

 

 

 

3,142

 

 

(40

)

 

 

47,144

 

Interest expense

 

 

20,846

 

 

 

 

 

 

 

 

 

 

 

20,846

 

Total

 

 

(29,604

)

 

 

42,138

 

 

 

3,142

 

 

(82

)

 

 

15,594

 

Adjusted pretax operating income (loss) before allocated corporate operating expenses

 

 

314,050

 

 

 

(8,226

)

 

 

1,019

 

 

 

 

 

306,843

 

Allocation of corporate operating expenses

 

 

36,209

 

 

 

5,280

 

 

 

406

 

 

 

 

 

41,895

 

Adjusted pretax operating income (loss)

 

$

277,841

 

 

$

(13,506

)

 

$

613

 

$

 

 

$

264,948

 

(1)

All Other activities include: (i) income (losses) from assets held by our holding company; (ii) related general corporate operating expenses not attributable or allocated to our reportable segments; and (iii) certain investments in new business opportunities, including activities and investments associated with Radian Mortgage Capital, and other immaterial activities.

(2)

Includes immaterial inter-segment revenue for our homegenius segment and immaterial inter-segment expenses for our Mortgage segment and All Other activities.

(3)

Net of ceded premiums written under our quota share and excess-of-loss reinsurance agreements. See Exhibit K for additional information.

(4)

Does not include impairment of long-lived assets and other non-operating items, which are not considered components of adjusted pretax operating income (loss).

(5)

In the first quarter of 2023, as a one-time adjustment, we reclassified $2.9 million in cumulative expenses previously reflected in the All Other results as direct other operating expenses to allocated corporate operating expenses.

Radian Group Inc. and Subsidiaries

Segment Information

Exhibit E (page 3 of 6)

 

 

 

Mortgage

 

 

 

2023

 

 

2022

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Net premiums written (1)

 

$

229,419

 

 

$

227,791

 

 

$

235,076

 

 

$

248,645

 

 

$

248,360

 

(Increase) decrease in unearned premiums

 

 

2,031

 

 

 

2,142

 

 

 

121

 

 

 

(1,736

)

 

 

(3,186

)

Net premiums earned

 

 

231,450

 

 

 

229,933

 

 

 

235,197

 

 

 

246,909

 

 

 

245,174

 

Services revenue

 

 

336

 

 

 

328

 

 

 

405

 

 

 

2,105

 

 

 

4,552

 

Net investment income

 

 

46,497

 

 

 

52,165

 

 

 

44,842

 

 

 

40,197

 

 

 

34,017

 

Other income

 

 

1,587

 

 

 

512

 

 

 

589

 

 

 

572

 

 

 

703

 

Total

 

 

279,870

 

 

 

282,938

 

 

 

281,033

 

 

 

289,783

 

 

 

284,446

 

Provision for losses (2)

 

 

(16,864

)

 

 

(43,509

)

 

 

(97,493

)

 

 

(114,179

)

 

 

(84,193

)

Policy acquisition costs

 

 

6,293

 

 

 

5,931

 

 

 

5,442

 

 

 

5,940

 

 

 

6,605

 

Cost of services

 

 

241

 

 

 

235

 

 

 

373

 

 

 

1,960

 

 

 

3,383

 

Other operating expenses before allocated corporate operating expenses (2) (3)

 

 

18,806

 

 

 

20,131

 

 

 

23,396

 

 

 

25,474

 

 

 

23,755

 

Interest expense

 

 

22,130

 

 

 

21,580

 

 

 

21,183

 

 

 

20,831

 

 

 

20,846

 

Total (2)

 

 

30,606

 

 

 

4,368

 

 

 

(47,099

)

 

 

(59,974

)

 

 

(29,604

)

Adjusted pretax operating income before allocated corporate operating expenses

 

 

249,264

 

 

 

278,570

 

 

 

328,132

 

 

 

349,757

 

 

 

314,050

 

Allocation of corporate operating expenses

 

 

34,829

 

 

 

36,663

 

 

 

32,457

 

 

 

33,237

 

 

 

36,209

 

Adjusted pretax operating income

 

$

214,435

 

 

$

241,907

 

 

$

295,675

 

 

$

316,520

 

 

$

277,841

 

 

 

homegenius

 

 

 

2023

 

 

2022

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Net premiums earned

 

$

1,788

 

 

$

2,894

 

 

$

5,025

 

 

$

6,983

 

 

$

9,016

 

Services revenue (2)

 

 

10,743

 

 

 

15,207

 

 

 

19,812

 

 

 

25,261

 

 

 

24,878

 

Net investment income

 

 

430

 

 

 

366

 

 

 

246

 

 

 

99

 

 

 

18

 

Other income (2)

 

 

 

 

 

170

 

 

 

 

 

 

 

 

 

 

Total (2)

 

 

12,961

 

 

 

18,637

 

 

 

25,083

 

 

 

32,343

 

 

 

33,912

 

Provision for losses

 

 

(65

)

 

 

(90

)

 

 

435

 

 

 

309

 

 

 

481

 

Cost of services

 

 

10,157

 

 

 

15,893

 

 

 

18,344

 

 

 

20,800

 

 

 

21,370

 

Other operating expenses before allocated corporate operating expenses (3)

 

 

21,252

 

 

 

27,998

 

 

 

26,285

 

 

 

23,205

 

 

 

20,287

 

Total

 

 

31,344

 

 

 

43,801

 

 

 

45,064

 

 

 

44,314

 

 

 

42,138

 

Adjusted pretax operating income (loss) before allocated corporate operating expenses

 

 

(18,383

)

 

 

(25,164

)

 

 

(19,981

)

 

 

(11,971

)

 

 

(8,226

)

Allocation of corporate operating expenses

 

 

4,658

 

 

 

6,302

 

 

 

5,555

 

 

 

5,719

 

 

 

5,280

 

Adjusted pretax operating income (loss)

 

$

(23,041

)

 

$

(31,466

)

 

$

(25,536

)

 

$

(17,690

)

 

$

(13,506

)

Radian Group Inc. and Subsidiaries

Segment Information

Exhibit E (page 4 of 6)

 

 

 

All Other (4)

 

 

2023

 

2022

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Net investment income

 

$

12,294

 

$

6,560

 

$

6,326

 

$

6,661

 

$

4,161

Net gains (losses) on investments and other financial instruments

 

 

80

 

 

47

 

 

 

 

 

 

Other income

 

 

5

 

 

8

 

 

70

 

 

 

 

Total

 

 

12,379

 

 

6,615

 

 

6,396

 

 

6,661

 

 

4,161

Other operating expenses before allocated corporate operating expenses (2) (3)

 

 

518

(5)

 

3,606

 

 

3,444

 

 

3,077

 

 

3,142

Interest expense

 

 

77

 

 

14

 

 

 

 

 

 

Total (2)

 

 

595

 

 

3,620

 

 

3,444

 

 

3,077

 

 

3,142

Adjusted pretax operating income before allocated corporate operating expenses

 

 

11,784

 

 

2,995

 

 

2,952

 

 

3,584

 

 

1,019

Allocation of corporate operating expenses

 

 

3,315

(5)

 

420

 

 

371

 

 

381

 

 

406

Adjusted pretax operating income (loss)

 

$

8,469

 

$

2,575

 

$

2,581

 

$

3,203

 

$

613

(1)

Net of ceded premiums written under our quota share and excess-of-loss reinsurance agreements. See Exhibit K for additional information.

(2)

Includes immaterial inter-segment revenue for our homegenius segment and immaterial inter-segment expenses for our Mortgage segment and All Other activities.

(3)

Does not include impairment of long-lived assets and other non-operating items, which are not considered components of adjusted pretax operating income (loss).

(4)

All Other activities include: (i) income (losses) from assets held by our holding company; (ii) related general corporate operating expenses not attributable or allocated to our reportable segments; and (iii) certain investments in new business opportunities, including activities and investments associated with Radian Mortgage Capital, and other immaterial activities.

(5)

In the first quarter of 2023, as a one-time adjustment, we reclassified $2.9 million in cumulative expenses previously reflected in the All Other results as direct other operating expenses to allocated corporate operating expenses.

Radian Group Inc. and Subsidiaries

Segment Information

Exhibit E (page 5 of 6)

Supplemental Other Operating Expense Information by Segment

 

 

 

Mortgage

 

 

 

2023

 

 

2022

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Other operating expenses by type

 

 

 

 

 

 

 

 

 

 

Salaries and other base employee expenses

 

$

22,377

 

 

$

28,059

 

 

$

23,824

 

 

$

24,420

 

 

$

22,189

 

Variable and share-based incentive compensation

 

 

13,306

 

 

 

10,419

 

 

 

10,186

 

 

 

11,524

 

 

 

16,697

 

Other general operating expenses

 

 

22,580

 

 

 

23,414

 

 

 

26,116

 

 

 

25,611

 

 

 

25,027

 

Ceding commissions

 

 

(4,628

)

 

 

(5,098

)

 

 

(4,273

)

 

 

(2,844

)

 

 

(3,949

)

Total

 

$

53,635

 

 

$

56,794

 

 

$

55,853

 

 

$

58,711

 

 

$

59,964

 

 

 

homegenius

 

 

2023

 

2022

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Other operating expenses by type

 

 

 

 

 

 

 

 

 

 

Salaries and other base employee expenses

 

$

10,494

 

$

17,403

 

$

13,403

 

$

12,187

 

$

10,375

Variable and share-based incentive compensation

 

 

4,700

 

 

4,148

 

 

4,429

 

 

4,776

 

 

5,522

Other general operating expenses

 

 

10,019

 

 

11,670

 

 

12,158

 

 

10,162

 

 

8,571

Title agent commissions

 

 

697

 

 

1,079

 

 

1,850

 

 

1,799

 

 

1,099

Total

 

$

25,910

 

$

34,300

 

$

31,840

 

$

28,924

 

$

25,567

 

 

All Other

 

 

2023

 

2022

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Other operating expenses by type

 

 

 

 

 

 

 

 

 

 

Salaries and other base employee expenses

 

$

2,193

 

$

1,529

 

$

1,429

 

$

1,726

 

$

1,613

Variable and share-based incentive compensation

 

 

267

 

 

755

 

 

751

 

 

709

 

 

953

Other general operating expenses

 

 

1,373

 

 

1,742

 

 

1,635

 

 

1,023

 

 

982

Total

 

$

3,833

 

$

4,026

 

$

3,815

 

$

3,458

 

$

3,548

Radian Group Inc. and Subsidiaries

Segment Information

Exhibit E (page 6 of 6)

 

 

 

Inter-segment

 

 

 

2023

 

 

2022

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Other operating expenses by type

 

 

 

 

 

 

 

 

 

 

Other general operating expenses

 

$

(95

)

 

$

(264

)

 

$

(165

)

 

$

(33

)

 

$

(40

)

Total

 

$

(95

)

 

$

(264

)

 

$

(165

)

 

$

(33

)

 

$

(40

)

 

 

Total

 

 

 

2023

 

 

2022

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Other operating expenses by type

 

 

 

 

 

 

 

 

 

 

Salaries and other base employee expenses

 

$

35,064

 

 

$

46,991

 

 

$

38,656

 

 

$

38,333

 

 

$

34,177

 

Variable and share-based incentive compensation

 

 

18,273

 

 

 

15,322

 

 

 

15,366

 

 

 

17,009

 

 

 

23,172

 

Other general operating expenses

 

 

33,877

 

 

 

36,562

 

 

 

39,744

 

 

 

36,763

 

 

 

34,540

 

Ceding commissions

 

 

(4,628

)

 

 

(5,098

)

 

 

(4,273

)

 

 

(2,844

)

 

 

(3,949

)

Title agent commissions

 

 

697

 

 

 

1,079

 

 

 

1,850

 

 

 

1,799

 

 

 

1,099

 

Total

 

$

83,283

 

 

$

94,856

 

(1)

$

91,343

 

 

$

91,060

 

 

$

89,039

 

(1)

Includes $11.7 million of severance and related expenses, including $10.4 million of severance expense in salaries and other base employee expenses, $0.6 million of related share-based compensation in variable and share-based incentive compensation, and $0.7 million of outplacement costs in other general operating expenses.

Radian Group Inc. and Subsidiaries

Definition of Consolidated Non-GAAP Financial Measures

Exhibit F (page 1 of 2)

Use of Non-GAAP Financial Measures

In addition to the traditional GAAP financial measures, we have presented “adjusted pretax operating income (loss),” “adjusted diluted net operating income (loss) per share” and “adjusted net operating return on equity,” which are non-GAAP financial measures for the consolidated company, among our key performance indicators to evaluate our fundamental financial performance. These non-GAAP financial measures align with the way our business performance is evaluated by both management and by our board of directors. These measures have been established in order to increase transparency for the purposes of evaluating our operating trends and enabling more meaningful comparisons with our peers. Although on a consolidated basis adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share and adjusted net operating return on equity are non-GAAP financial measures, we believe these measures aid in understanding the underlying performance of our operations. Our senior management, including our Chief Executive Officer (Radian’s chief operating decision maker), uses adjusted pretax operating income (loss) as our primary measure to evaluate the fundamental financial performance of our business segments and to allocate resources to the segments.

Adjusted pretax operating income (loss) is defined as GAAP consolidated pretax income (loss) excluding the effects of: (i) net gains (losses) on investments and other financial instruments, except for certain investments and other financial instruments attributable to our reportable segments and All Other activities; (ii) gains (losses) on extinguishment of debt; (iii) amortization and impairment of goodwill and other acquired intangible assets; and (iv) impairment of other long-lived assets and other non-operating items, such as impairment of internal-use software, gains (losses) from the sale of lines of business and acquisition-related income and expenses. Adjusted diluted net operating income (loss) per share is calculated by dividing (i) adjusted pretax operating income (loss) attributable to common stockholders, net of taxes computed using the company’s statutory tax rate, by (ii) the sum of the weighted average number of common shares outstanding and all dilutive potential common shares outstanding. Adjusted net operating return on equity is calculated by dividing annualized adjusted pretax operating income (loss), net of taxes computed using the company’s statutory tax rate, by average stockholders’ equity, based on the average of the beginning and ending balances for each period presented.

Although adjusted pretax operating income (loss) excludes certain items that have occurred in the past and are expected to occur in the future, the excluded items represent those that are: (i) not viewed as part of the operating performance of our primary activities or (ii) not expected to result in an economic impact equal to the amount reflected in pretax income (loss). These adjustments, along with the reasons for their treatment, are described below.

(1) Net gains (losses) on investments and other financial instruments. The recognition of realized investment gains or losses can vary significantly across periods as the activity is highly discretionary based on the timing of individual securities sales due to such factors as market opportunities, our tax and capital profile and overall market cycles. Unrealized gains and losses arise primarily from changes in the market value of our investments that are classified as trading or equity securities. These valuation adjustments may not necessarily result in realized economic gains or losses.

Trends in the profitability of our fundamental operating activities can be more clearly identified without the fluctuations of these realized and unrealized gains or losses and changes in fair value of other financial instruments. Except for certain investments and other financial instruments attributable to our reportable segments and All Other activities, we do not view them to be indicative of our fundamental operating activities.

(2) Gains (losses) on extinguishment of debt. Gains or losses on early extinguishment of debt and losses incurred to purchase our debt prior to maturity are discretionary activities that are undertaken in order to take advantage of market opportunities to strengthen our financial and capital positions; therefore, we do not view these activities as part of our operating performance. Such transactions do not reflect expected future operations and do not provide meaningful insight regarding our current or past operating trends.

(3) Amortization and impairment of goodwill and other acquired intangible assets. Amortization of acquired intangible assets represents the periodic expense required to amortize the cost of acquired intangible assets over their estimated useful lives. Acquired intangible assets are also periodically reviewed for potential impairment, and impairment adjustments are made whenever appropriate. We do not view these charges as part of the operating performance of our primary activities.

(4) Impairment of other long-lived assets and other non-operating items. Includes activities that we do not view to be indicative of our fundamental operating activities, such as: (i) impairment of internal-use software and other long-lived assets; (ii) gains (losses) from the sale of lines of business; and (iii) acquisition-related income and expenses.

Radian Group Inc. and Subsidiaries

Definition of Consolidated Non-GAAP Financial Measures

Exhibit F (page 2 of 2)

In addition to the above non-GAAP measures for the consolidated company, we also have presented as supplemental information non-GAAP measures for our homegenius segment of adjusted pretax operating income (loss) before allocated corporate operating expenses and adjusted gross profit. Adjusted pretax operating income (loss) before allocated corporate operating expenses is calculated as adjusted pretax operating income (loss) as described above (which is the segment's ASC 280 GAAP measure of operating performance), adjusted to remove the impact of corporate allocations of other operating expenses for the homegenius segment. Adjusted gross profit is further adjusted to remove other operating expenses. For the homegenius segment, adjusted pretax operating income (loss) before allocated corporate operating expenses and adjusted gross profit are used to facilitate comparisons with other services companies, since they are widely accepted measures of performance in the services industry and are used internally as supplemental measures to evaluate the performance of our homegenius segment.

See Exhibit G for the reconciliation of the most comparable GAAP measures, consolidated pretax income (loss), diluted net income (loss) per share and return on equity to our non-GAAP financial measures for the consolidated company, adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share and adjusted net operating return on equity, respectively. Exhibit G also contains the reconciliation of adjusted pretax operating income (loss) to adjusted pretax operating income (loss) before allocated corporate operating expenses and adjusted gross profit for the homegenius segment.

Total adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share, adjusted net operating return on equity, homegenius adjusted pretax operating income (loss) before allocated corporate operating expenses and homegenius adjusted gross profit should not be considered in isolation or viewed as substitutes for GAAP pretax income (loss), diluted net income (loss) per share, return on equity or net income (loss), or in the case of the homegenius non-GAAP measures, for homegenius adjusted pretax operating income (loss). Our definitions of adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share, adjusted net operating return on equity, homegenius adjusted pretax operating income (loss) before allocated corporate operating expenses and homegenius adjusted gross profit may not be comparable to similarly-named measures reported by other companies.

Radian Group Inc. and Subsidiaries

Consolidated Non-GAAP Financial Measure Reconciliations

Exhibit G (page 1 of 3)

 

Reconciliation of Consolidated Pretax Income to Adjusted Pretax Operating Income

 

 

 

 

2023

 

 

2022

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Consolidated pretax income

 

$

204,011

 

 

$

203,298

 

 

$

255,461

 

 

$

259,880

 

 

$

234,140

 

Less reconciling income (expense) items

 

 

 

 

 

 

 

 

 

 

Net gains (losses) on investments and other financial instruments (1)

 

 

5,505

 

 

 

6,798

 

 

 

(16,252

)

 

 

(41,869

)

 

 

(29,457

)

Amortization of other acquired intangible assets

 

 

(1,371

)

 

 

(1,587

)

 

 

(1,023

)

 

 

(849

)

 

 

(849

)

Impairment of other long-lived assets and other non-operating items (2)

 

 

14

 

 

 

(14,929

)

 

 

16

 

 

 

565

 

 

 

(502

)

Total adjusted pretax operating income (3)

 

$

199,863

 

 

$

213,016

 

 

$

272,720

 

 

$

302,033

 

 

$

264,948

 

(1)

Excludes certain net gains (losses), if any, on investments and other financial instruments that are attributable to specific operating segments and therefore included in adjusted pretax operating income (loss).

(2)

The amounts for all the periods presented are included in other operating expenses on the Condensed Consolidated Statement of Operations in Exhibit A and primarily relate to impairments of other long-lived assets.

(3)

Total adjusted pretax operating income consists of adjusted pretax operating income (loss) for each reportable segment and All Other activities as follows.

 

 

 

2023

 

 

2022

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Adjusted pretax operating income (loss)

 

 

 

 

 

 

 

 

 

 

Mortgage segment

 

$

214,435

 

 

$

241,907

 

 

$

295,675

 

 

$

316,520

 

 

$

277,841

 

homegenius segment

 

 

(23,041

)

 

 

(31,466

)

 

 

(25,536

)

 

 

(17,690

)

 

 

(13,506

)

All Other activities

 

 

8,469

 

 

 

2,575

 

 

 

2,581

 

 

 

3,203

 

 

 

613

 

Total adjusted pretax operating income

 

$

199,863

 

 

$

213,016

 

 

$

272,720

 

 

$

302,033

 

 

$

264,948

 

Radian Group Inc. and Subsidiaries

Consolidated Non-GAAP Financial Measure Reconciliations

Exhibit G (page 2 of 3)

Reconciliation of Diluted Net Income Per Share to Adjusted Diluted Net Operating Income Per Share

 

 

 

 

2023

 

 

2022

 

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Diluted net income per share

 

$

0.98

 

 

$

1.01

 

 

$

1.20

 

 

$

1.15

 

 

$

1.01

 

Less per-share impact of reconciling income (expense) items

 

 

 

 

 

 

 

 

 

 

Net gains (losses) on investments and other financial instruments

 

 

0.03

 

 

 

0.04

 

 

 

(0.10

)

 

 

(0.24

)

 

 

(0.16

)

Amortization of other acquired intangible assets

 

 

(0.01

)

 

 

(0.01

)

 

 

(0.01

)

 

 

 

 

 

(0.01

)

Impairment of other long-lived assets and other non-operating items

 

 

 

 

 

(0.09

)

 

 

 

 

 

 

 

 

 

Income tax (provision) benefit on reconciling income (expense) items (1)

 

 

(0.01

)

 

 

0.01

 

 

 

0.02

 

 

 

0.05

 

 

 

0.03

 

Difference between statutory and effective tax rates

 

 

(0.01

)

 

 

0.01

 

 

 

(0.02

)

 

 

(0.02

)

 

 

(0.02

)

Per-share impact of reconciling income (expense) items

 

 

 

 

 

(0.04

)

 

 

(0.11

)

 

 

(0.21

)

 

 

(0.16

)

Adjusted diluted net operating income per share (1)

 

$

0.98

 

 

$

1.05

 

 

$

1.31

 

 

$

1.36

 

 

$

1.17

 

(1)

Calculated using the company’s federal statutory tax rate of 21%. Any permanent tax adjustments and state income taxes on these items have been deemed immaterial and are not included.

Reconciliation of Return on Equity to Adjusted Net Operating Return on Equity (1)

 

 

 

2023

 

2022

 

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Return on equity (1)

 

15.7

%

 

17.0

%

 

20.7

%

 

19.9

%

 

17.2

%

Less impact of reconciling income (expense) items (2)

 

 

 

 

 

 

 

 

 

 

Net gains (losses) on investments and other financial instruments

 

0.5

 

 

0.7

 

 

(1.7

)

 

(4.1

)

 

(2.8

)

Amortization of other acquired intangible assets

 

(0.1

)

 

(0.2

)

 

(0.1

)

 

(0.1

)

 

(0.1

)

Impairment of other long-lived assets and other non-operating items

 

 

 

(1.6

)

 

 

 

0.1

 

 

 

Income tax (provision) benefit on reconciling income (expense) items (3)

 

(0.1

)

 

0.2

 

 

0.4

 

 

0.9

 

 

0.6

 

Difference between statutory and effective tax rates

 

(0.3

)

 

0.3

 

 

(0.4

)

 

(0.5

)

 

(0.4

)

Impact of reconciling income (expense) items

 

 

 

(0.6

)

 

(1.8

)

 

(3.7

)

 

(2.7

)

Adjusted net operating return on equity (3)

 

15.7

%

 

17.6

%

 

22.5

%

 

23.6

%

 

19.9

%

(1)

Calculated by dividing annualized net income by average stockholders’ equity, based on the average of the beginning and ending balances for each period presented.

(2)

Annualized, as a percentage of average stockholders’ equity.

(3)

Calculated using the company’s federal statutory tax rate of 21%. Any permanent tax adjustments and state income taxes on these items have been deemed immaterial and are not included.

Radian Group Inc. and Subsidiaries

Consolidated Non-GAAP Financial Measure Reconciliations

Exhibit G (page 3 of 3)

 

Reconciliation of homegenius Adjusted Pretax Operating Income (Loss) to homegenius Adjusted Gross Profit

 

 

 

 

2023

 

 

2022

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

homegenius adjusted pretax operating income (loss)

 

$

(23,041

)

 

$

(31,466

)

 

$

(25,536

)

 

$

(17,690

)

 

$

(13,506

)

Less reconciling income (expense) items

 

 

 

 

 

 

 

 

 

 

Allocation of corporate operating expenses

 

 

(4,658

)

 

 

(6,302

)

 

 

(5,555

)

 

 

(5,719

)

 

 

(5,280

)

Adjusted pretax operating income (loss) before allocated corporate operating expenses

 

 

(18,383

)

 

 

(25,164

)

 

 

(19,981

)

 

 

(11,971

)

 

 

(8,226

)

Less reconciling income (expense) items

 

 

 

 

 

 

 

 

 

 

Other operating expenses before allocated corporate operating expenses

 

 

(21,252

)

 

 

(27,998

)

 

 

(26,285

)

 

 

(23,205

)

 

 

(20,287

)

homegenius adjusted gross profit

 

$

2,869

 

 

$

2,834

 

 

$

6,304

 

 

$

11,234

 

 

$

12,061

 

On a consolidated basis, “adjusted pretax operating income (loss),” “adjusted diluted net operating income (loss) per share” and “adjusted net operating return on equity” are measures not determined in accordance with GAAP. In addition, “homegenius adjusted pretax operating income (loss) before allocated corporate operating expenses" and "homegenius adjusted gross profit" are also non-GAAP measures. These measures should not be considered in isolation or viewed as substitutes for GAAP pretax income (loss), diluted net income (loss) per share, return on equity or net income (loss), or in the case of the homegenius non-GAAP measures, for homegenius adjusted pretax operating income (loss).

Our definitions of adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share, adjusted net operating return on equity, homegenius adjusted pretax operating income (loss) before allocated corporate operating expenses and homegenius adjusted gross profit may not be comparable to similarly-named measures reported by other companies. See Exhibit F for additional information on our consolidated non-GAAP financial measures.

Radian Group Inc. and Subsidiaries

Mortgage Supplemental Information - New Insurance Written

Exhibit H

 

 

 

 

2023

 

 

2022

($ in millions)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

New insurance written (“NIW”)

 

$

11,261

 

 

$

12,859

 

 

$

17,616

 

 

$

18,935

 

 

$

18,655

 

Total borrower-paid NIW

 

 

99.4

%

 

 

99.3

%

 

 

99.1

%

 

 

99.2

%

 

 

99.2

%

NIW by premium type

 

 

 

 

 

 

 

 

 

 

Direct monthly and other recurring premiums

 

 

94.9

%

 

 

94.8

%

 

 

95.5

%

 

 

95.4

%

 

 

94.5

%

Direct single premiums (1)

 

 

5.1

%

 

 

5.2

%

 

 

4.5

%

 

 

4.6

%

 

 

5.5

%

 

 

 

 

 

 

 

 

 

 

 

NIW for purchases

 

 

97.6

%

 

 

98.3

%

 

 

98.4

%

 

 

97.1

%

 

 

91.4

%

NIW for refinances

 

 

2.4

%

 

 

1.7

%

 

 

1.6

%

 

 

2.9

%

 

 

8.6

%

NIW by FICO score (2)

 

 

 

 

 

 

 

 

 

 

>=740

 

 

60.7

%

 

 

59.4

%

 

 

63.3

%

 

 

59.6

%

 

 

57.1

%

680-739

 

 

32.8

 

 

 

33.1

 

 

 

28.5

 

 

 

32.3

 

 

 

35.7

 

620-679

 

 

6.5

 

 

 

7.5

 

 

 

8.2

 

 

 

8.1

 

 

 

7.2

 

Total NIW

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

NIW by LTV

 

 

 

 

 

 

 

 

 

 

95.01% and above

 

 

17.7

%

 

 

15.5

%

 

 

18.3

%

 

 

17.7

%

 

 

14.6

%

90.01% to 95.00%

 

 

40.2

 

 

 

40.8

 

 

 

37.1

 

 

 

39.9

 

 

 

42.0

 

85.01% to 90.00%

 

 

28.7

 

 

 

29.7

 

 

 

28.0

 

 

 

26.7

 

 

 

29.4

 

85.00% and below

 

 

13.4

 

 

 

14.0

 

 

 

16.6

 

 

 

15.7

 

 

 

14.0

 

Total NIW

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

(1)

Borrower-paid Single Premium Policies were 4.9%, 4.9%, 4.3%, 4.4% and 5.3% NIW for the periods indicated, respectively.

(2)

For loans with multiple borrowers, the percentage of NIW by FICO score represents the lowest of the borrowers’ FICO scores.

Radian Group Inc. and Subsidiaries

Mortgage Supplemental Information - Primary Insurance in Force and Risk in Force

Exhibit I

 

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

($ in millions)

 

 

2023

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Primary insurance in force

 

$

261,450

 

 

$

260,994

 

 

$

259,121

 

 

$

254,226

 

 

$

248,951

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Primary risk in force (“RIF”)

 

$

66,580

 

 

$

66,094

 

 

$

65,288

 

 

$

63,770

 

 

$

62,036

 

 

Primary RIF by premium type

 

 

 

 

 

 

 

 

 

 

 

Direct monthly and other recurring premiums

 

 

87.6

%

 

 

87.1

%

 

 

86.4

%

 

 

85.6

%

 

 

84.9

%

 

Direct single premiums (1)

 

 

12.4

%

 

 

12.9

%

 

 

13.6

%

 

 

14.4

%

 

 

15.1

%

 

Primary RIF by FICO score (2)

 

 

 

 

 

 

 

 

 

 

 

>=740

 

 

57.4

%

 

 

57.4

%

 

 

57.5

%

 

 

57.2

%

 

 

56.9

%

 

680-739

 

 

34.6

 

 

 

34.6

 

 

 

34.5

 

 

 

34.9

 

 

 

35.1

 

 

620-679

 

 

7.6

 

 

 

7.6

 

 

 

7.6

 

 

 

7.5

 

 

 

7.5

 

 

<=619

 

 

0.4

 

 

 

0.4

 

 

 

0.4

 

 

 

0.4

 

 

 

0.5

 

 

Total Primary

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

Primary RIF by LTV

 

 

 

 

 

 

 

 

 

 

 

95.01% and above

 

 

17.5

%

 

 

17.1

%

 

 

16.8

%

 

 

16.1

%

 

 

15.5

%

 

90.01% to 95.00%

 

 

48.5

 

 

 

48.4

 

 

 

48.4

 

 

 

48.7

 

 

 

48.9

 

 

85.01% to 90.00%

 

 

27.0

 

 

 

27.2

 

 

 

27.2

 

 

 

27.4

 

 

 

27.6

 

 

85.00% and below

 

 

7.0

 

 

 

7.3

 

 

 

7.6

 

 

 

7.8

 

 

 

8.0

 

 

Total

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

Primary RIF by policy year

 

 

 

 

 

 

 

 

 

 

 

2008 and prior

 

 

3.3

%

 

 

3.5

%

 

 

3.7

%

 

 

4.0

%

 

 

4.3

%

 

2009 - 2017

 

 

9.1

 

 

 

10.0

 

 

 

10.9

 

 

 

12.2

 

 

 

13.6

 

 

2018

 

 

3.3

 

 

 

3.5

 

 

 

3.7

 

 

 

4.1

 

 

 

4.6

 

 

2019

 

 

6.4

 

 

 

6.7

 

 

 

7.1

 

 

 

7.7

 

 

 

8.6

 

 

2020

 

 

20.3

 

 

 

21.6

 

 

 

23.0

 

 

 

25.0

 

 

 

27.2

 

 

2021

 

 

28.6

 

 

 

29.5

 

 

 

30.6

 

 

 

32.1

 

 

 

34.0

 

 

2022

 

 

24.7

 

 

 

25.2

 

 

 

21.0

 

 

 

14.9

 

 

 

7.7

 

 

2023

 

 

4.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Persistency Rate (12 months ended)

 

 

81.6

%

 

 

79.6

%

 

 

75.9

%

 

 

71.7

%

 

 

68.0

%

 

Persistency Rate (quarterly, annualized) (3)

 

 

84.4

%

(4)

 

84.1

%

(4)

 

81.6

%

(4)

 

79.8

%

 

 

76.9

%

(4)

(1)

Borrower-paid Single Premium Policies were 7.5%, 7.7%, 7.9%, 8.1% and 8.4% of primary RIF for the periods indicated, respectively.

(2)

For loans with multiple borrowers, the percentage of primary RIF by FICO score represents the lowest of the borrowers’ FICO scores.

(3)

The Persistency Rate on a quarterly, annualized basis is calculated based on loan-level detail for the quarter ending as of the date shown. It may be impacted by seasonality or other factors, including the level of refinance activity during the applicable periods and may not be indicative of full-year trends.

(4)

The Persistency Rate was reduced by an increase in cancellations of Single Premium Policies due to increased cancellations identified by our ongoing servicer monitoring process for Single Premium Policies.

Radian Group Inc. and Subsidiaries

Mortgage Supplemental Information - Default, Reserves and Claim Statistics

Exhibit J

 

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

 

2023

 

2022

 

2022

 

2022

 

2022

Default Statistics

 

 

 

 

 

 

 

 

 

 

Primary Insurance

 

 

 

 

 

 

 

 

 

 

Number of insured loans

 

997,443

 

 

1,003,183

 

 

1,004,305

 

 

998,520

 

 

994,721

 

Number of loans in default

 

20,748

 

 

21,913

 

 

21,077

 

 

21,861

 

 

25,510

 

Percentage of loans in default

 

2.1

%

 

2.2

%

 

2.1

%

 

2.2

%

 

2.6

%

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

($ in thousands, except per default amounts)

 

2023

 

2022

 

2022

 

2022

 

2022

Reserve for losses by category (1)

 

 

 

 

 

 

 

 

 

 

Mortgage reserves

 

 

 

 

 

 

 

 

 

 

Primary case reserves

 

$

378,992

 

$

398,874

 

$

454,726

 

$

562,436

 

$

691,090

LAE

 

 

9,535

 

 

10,041

 

 

11,443

 

 

14,147

 

 

17,367

IBNR

 

 

1,772

 

 

2,128

 

 

2,229

 

 

2,424

 

 

2,539

Total primary reserves

 

 

390,299

 

 

411,043

 

 

468,398

 

 

579,007

 

 

710,996

Total pool reserves

 

 

9,379

 

 

9,740

 

 

9,175

 

 

9,756

 

 

10,330

Total 1st lien reserves

 

 

399,678

 

 

420,783

 

 

477,573

 

 

588,763

 

 

721,326

Other

 

 

172

 

 

172

 

 

174

 

 

184

 

 

184

Total Mortgage reserves

 

 

399,850

 

 

420,955

 

 

477,747

 

 

588,947

 

 

721,510

homegenius reserves

 

 

5,801

 

 

5,888

 

 

5,917

 

 

5,861

 

 

5,737

Total reserves

 

$

405,651

 

$

426,843

 

$

483,664

 

$

594,808

 

$

727,247

Primary reserve per primary default excluding IBNR and other

 

$

18,726

 

$

18,661

 

$

22,122

 

$

26,380

 

$

27,776

(1)

Includes ceded losses on reinsurance transactions, which are expected to be recovered and are included in the reinsurance recoverables reported in our condensed consolidated balance sheets.

 

 

 

2023

 

 

2022

($ in thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Net claims paid (1)

 

 

 

 

 

 

 

 

 

 

Primary claims paid

 

$

3,019

 

 

$

3,821

 

 

$

3,606

 

 

$

3,659

 

 

$

5,153

 

Pool and other

 

 

(3

)

 

 

(49

)

 

 

(420

)

 

 

(396

)

 

 

(415

)

Subtotal

 

 

3,016

 

 

 

3,772

 

 

 

3,186

 

 

 

3,263

 

 

 

4,738

 

Impact of commutations and settlements (2)

 

 

 

 

 

4,582

 

 

 

1,317

 

 

 

 

 

 

 

Total net claims paid

 

$

3,016

 

 

$

8,354

 

 

$

4,503

 

 

$

3,263

 

 

$

4,738

 

Total average net primary claims paid (1) (3)

 

$

35.5

 

 

$

51.6

 

 

$

45.1

 

 

$

41.6

 

 

$

41.6

 

Average direct primary claims paid (3) (4)

 

$

36.1

 

 

$

52.7

 

 

$

45.2

 

 

$

41.9

 

 

$

42.1

 

(1)

Includes the impact of reinsurance recoveries and LAE.

(2)

Includes payments to commute mortgage insurance coverage on certain performing and non-performing loans.

(3)

Calculated without giving effect to the impact of commutations and settlements.

(4)

Before reinsurance recoveries.

Radian Group Inc. and Subsidiaries

Mortgage Supplemental Information - Reinsurance Programs

Exhibit K

 

 

 

 

2023

 

 

2022

($ in thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

2022 and 2012 QSR Agreements (1)

 

 

 

 

 

 

 

 

 

 

Ceded premiums written (2)

 

$

7,834

 

 

$

6,770

 

 

$

10,363

 

 

$

253

 

 

$

306

 

% of premiums written

 

 

3.2

%

 

 

2.8

%

 

 

4.2

%

 

 

0.1

%

 

 

0.1

%

Ceded premiums earned

 

$

6,745

 

 

$

5,570

 

 

$

4,036

 

 

$

360

 

 

$

491

 

% of premiums earned

 

 

2.6

%

 

 

2.2

%

 

 

1.5

%

 

 

0.1

%

 

 

0.2

%

Ceding commissions earned (3)

 

$

2,529

 

 

$

2,128

 

 

$

1,609

 

 

$

127

 

 

$

537

 

Profit commission

 

$

4,925

 

 

$

4,433

 

 

$

4,008

 

 

$

 

 

$

 

Ceded losses

 

$

1,553

 

 

$

736

 

 

$

(235

)

 

$

(917

)

 

$

(720

)

Single Premium QSR Program

 

 

 

 

 

 

 

 

 

 

Ceded premiums written (2)

 

$

(9,202

)

 

$

(11,523

)

 

$

(19,303

)

 

$

(21,806

)

 

$

(22,386

)

% of premiums written

 

 

(3.8

)%

 

 

(4.8

)%

 

 

(7.7

)%

 

 

(8.6

)%

 

 

(8.9

)%

Ceded premiums earned

 

$

2,070

 

 

$

114

 

 

$

(3,465

)

 

$

(8,297

)

 

$

(3,731

)

% of premiums earned

 

 

0.8

%

 

 

%

 

 

(1.3

)%

 

 

(3.1

)%

 

 

(1.4

)%

Ceding commissions earned (3)

 

$

2,712

 

 

$

3,530

 

 

$

3,153

 

 

$

3,287

 

 

$

4,586

 

Profit commission

 

$

8,778

 

 

$

11,159

 

 

$

16,074

 

 

$

21,447

 

 

$

22,075

 

Ceded losses

 

$

(2,725

)

 

$

(5,587

)

 

$

(9,049

)

 

$

(14,120

)

 

$

(11,868

)

Excess-of-Loss Program

 

 

 

 

 

 

 

 

 

 

Ceded premiums written

 

$

14,629

 

 

$

16,691

 

 

$

18,114

 

 

$

18,151

 

 

$

16,164

 

% of premiums written

 

 

6.0

%

 

 

6.9

%

 

 

7.3

%

 

 

7.2

%

 

 

6.4

%

Ceded premiums earned

 

$

16,159

 

 

$

17,924

 

 

$

22,184

 

 

$

19,292

 

 

$

17,588

 

% of premiums earned

 

 

6.3

%

 

 

7.0

%

 

 

8.4

%

 

 

7.3

%

 

 

6.5

%

Ceded RIF (4)

 

 

 

 

 

 

 

 

 

 

Single Premium QSR Program

 

$

3,885,689

 

 

$

4,076,690

 

 

$

4,273,500

 

 

$

4,665,020

 

 

$

4,855,228

 

Excess-of-Loss Program

 

 

1,789,145

 

 

 

1,866,808

 

 

 

1,940,126

 

 

 

2,076,121

 

 

 

2,199,919

 

2022 QSR Agreement

 

 

3,830,179

 

 

 

3,307,429

 

 

 

2,710,247

 

 

 

 

 

 

 

2012 QSR Agreements

 

 

125,718

 

 

 

142,364

 

 

 

160,106

 

 

 

175,046

 

 

 

186,930

 

Total Ceded RIF

 

$

9,630,731

 

 

$

9,393,291

 

 

$

9,083,979

 

 

$

6,916,187

 

 

$

7,242,077

 

PMIERs impact - reduction in Minimum Required Assets

 

 

 

 

 

 

 

 

 

 

Excess-of-Loss Program

 

$

610,567

 

 

$

665,617

 

 

$

732,895

 

 

$

785,705

 

 

$

881,917

 

Single Premium QSR Program

 

 

218,931

 

 

 

231,339

 

 

 

243,911

 

 

 

268,847

 

 

 

286,706

 

2022 QSR Agreement

 

 

272,489

 

 

 

233,532

 

 

 

189,408

 

 

 

 

 

 

 

2012 QSR Agreements

 

 

7,395

 

 

 

8,357

 

 

 

9,310

 

 

 

10,226

 

 

 

11,214

 

Total PMIERs impact

 

$

1,109,382

 

 

$

1,138,845

 

 

$

1,175,524

 

 

$

1,064,778

 

 

$

1,179,837

 

(1)

Beginning with the third quarter of 2022, includes the impact of the 2022 QSR Agreement.

(2)

Net of profit commission.

(3)

Includes amounts reported in policy acquisition costs and other operating expenses. See Exhibit E for details.

(4)

Included in primary RIF.

FORWARD-LOOKING STATEMENTS

All statements in this press release that address events, developments or results that we expect or anticipate may occur in the future are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the U.S. Private Securities Litigation Reform Act of 1995. In most cases, forward-looking statements may be identified by words such as “anticipate,” “may,” “will,” “could,” “should,” “would,” “expect,” “intend,” “plan,” “goal,” “contemplate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “seek,” “strategy,” “future,” “likely” or the negative or other variations on these words and other similar expressions. These statements, which may include, without limitation, projections regarding our future performance and financial condition, are made on the basis of management’s current views and assumptions with respect to future events. These statements speak only as of the date they were made, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We operate in a changing environment where new risks emerge from time to time and it is not possible for us to predict all risks that may affect us. The forward-looking statements are not guarantees of future performance, and the forward-looking statements, as well as our prospects as a whole, are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements. These risks and uncertainties include, without limitation:

  • the health of the U.S. housing market generally and changes in economic conditions that impact the size of the insurable mortgage market, the credit performance of our insured mortgage portfolio and our business prospects, including more recently, changes resulting from inflationary pressures, the higher interest rate environment and the risks of a recession and of higher unemployment rates, as well as other macroeconomic stresses such as those that may arise from the need to raise the U.S. debt limit in the near-term, including a failure to raise the limit or uncertainty as to whether it will be raised and the Russia-Ukraine conflict or other geopolitical events;
  • changes in the way customers, investors, ratings agencies, regulators or legislators perceive our performance, financial strength and future prospects;
  • Radian Guaranty Inc.’s (“Radian Guaranty”) ability to remain eligible under the Private Mortgage Insurer Eligibility Requirements (the “PMIERs”) to insure loans purchased by Fannie Mae and Freddie Mac (collectively, the “GSEs”);
  • our ability to maintain an adequate level of capital in our insurance subsidiaries to satisfy current and future regulatory requirements;
  • changes in the charters or business practices of, or rules or regulations imposed by or applicable to, the GSEs or loans purchased by the GSEs, which may include changes in furtherance of housing policy objectives such as the accessibility and affordability of homeownership for low-and moderate-income borrowers and underrepresented communities, or changes in the requirements for Radian Guaranty to remain an approved insurer to the GSEs, such as changes in the PMIERs or the GSEs’ interpretation and application of the PMIERs or other applicable requirements;
  • the effects of the Enterprise Regulatory Capital Framework, which establishes a new regulatory capital framework for the GSEs, and which, as finalized, increases the capital requirements for the GSEs, and among other things, could impact the GSEs' operations and pricing as well as the size of the insurable mortgage market, and which may form the basis for future changes to the PMIERs to better align with the Enterprise Regulatory Capital Framework;
  • changes in the current housing finance system in the United States, including the roles of the Federal Housing Administration (the “FHA”), the GSEs and private mortgage insurers in this system;
  • our ability to successfully execute and implement our capital plans, including our risk distribution strategy through the capital markets and traditional reinsurance markets, and to maintain sufficient holding company liquidity to meet our liquidity needs;
  • our ability to successfully execute and implement our business plans and strategies, including plans and strategies that may require GSE and/or regulatory approvals and licenses, that are subject to complex compliance requirements that we may be unable to satisfy, or that may expose us to new risks, including those that could impact our capital and liquidity positions;
  • risks associated with the discontinuance of LIBOR and transition to one or more alternative benchmarks that could cause interest rate volatility and, among other things, impact our investment portfolio, cost of debt and cost of reinsurance through mortgage insurance-linked notes transactions;
  • risks related to the quality of third-party mortgage underwriting and mortgage servicing;
  • a decrease in the “Persistency Rates” (the percentage of insurance in force that remains in force over a period of time) of our mortgage insurance on monthly premium products;
  • competition in the private mortgage insurance industry generally, and more specifically: price competition in our mortgage insurance business, including the prevalence of formulaic, granular risk-based pricing methodologies that are less transparent than historical rate-card-based pricing practices; and competition from the FHA and the U.S. Department of Veterans Affairs as well as from other forms of credit enhancement, such as any potential GSE-sponsored alternatives to traditional mortgage insurance;
  • U.S. political conditions and legislative and regulatory activity (or inactivity), including any failure to take action to increase the U.S.’s debt limit, adoption of (or failure to adopt) new laws and regulations, or changes in existing laws and regulations, or the way they are interpreted or applied;
  • legal and regulatory claims, assertions, actions, reviews, audits, inquiries and investigations that could result in adverse judgments, settlements, fines, injunctions, restitutions or other relief that could require significant expenditures, new or increased reserves or have other effects on our business;
  • the amount and timing of potential payments or adjustments associated with federal or other tax examinations;
  • the possibility that we may fail to estimate accurately, especially in the event of an extended economic downturn or a period of extreme market volatility and economic uncertainty, the likelihood, magnitude and timing of losses in establishing loss reserves for our mortgage insurance business or to accurately calculate and/or project our Available Assets and Minimum Required Assets under the PMIERs, which will be impacted by, among other things, the size and mix of our insurance in force, the level of defaults in our portfolio, the reported status of defaults in our portfolio, (including whether they are subject to mortgage forbearance, a repayment plan or a loan modification trial period), the level of cash flow generated by our insurance operations and our risk distribution strategies;
  • volatility in our financial results caused by changes in the fair value of our assets and liabilities, including with respect to our use of derivatives and within our investment portfolio;
  • changes in “GAAP” (accounting principles generally accepted in the U.S.) or “SAPP” (statutory accounting principles and practices including those required or permitted, if applicable, by the insurance departments of the respective states of domicile of our insurance subsidiaries) rules and guidance, or their interpretation;
  • risks associated with investments to grow our existing businesses, or to pursue new lines of business or new products and services, including our ability and related costs to develop, launch and implement new and innovative technologies and digital products and services, whether these products and services receive broad customer acceptance or disrupt existing customer relationships, and additional financial risks related to these investments, including required changes in our investment, financing and hedging strategies, risks associated with our increased use of financial leverage, which could expose us to liquidity risks resulting from changes in the fair values of assets, and the risk that we may fail to achieve forecasted results which could result in lower or negative earnings contribution and/or impairment charges associated with intangible assets;
  • the effectiveness and security of our information technology systems and digital products and services, including the risk that these systems, products or services fail to operate as expected or planned or expose us to cybersecurity or third-party risks, including due to malware, unauthorized access, cyberattack, ransomware or other similar events;
  • our ability to attract and retain key employees;
  • the amount of dividends, if any, that our insurance subsidiaries may distribute to us, which under applicable regulatory requirements is based primarily on the financial performance of our insurance subsidiaries, and therefore, may be impacted by general economic, competitive and other factors, many of which are beyond our control; and
  • the ability of our operating subsidiaries to distribute amounts to us under our internal tax- and expense-sharing arrangements, which for our insurance subsidiaries are subject to regulatory review and could be terminated at the discretion of such regulators.

For more information regarding these risks and uncertainties as well as certain additional risks that we face, you should refer to “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, and to subsequent reports and registration statements filed from time to time with the U.S. Securities and Exchange Commission. We caution you not to place undue reliance on these forward-looking statements, which are current only as of the date on which we issued this press release. We do not intend to, and we disclaim any duty or obligation to, update or revise any forward-looking statements to reflect new information or future events or for any other reason.

For Investors
John Damian - Phone: 215.231.1383
email: john.damian@radian.com

For Media
Rashi Iyer - Phone: 215.231.1167
email: rashi.iyer@radian.com

Source: Radian Group Inc.