RDN Radian Group Inc

— First quarter net income of $152 million, or $0.98 per diluted share —

— Return on equity of 13.8% and adjusted net operating return on equity of 14.5% —

— Default rate declines to 2.1% with highest quarterly cure rate in more than 20 years —

— Primary mortgage insurance in force growth of 4% year-over-year to an all-time high of $271 billion —

— Total revenue growth of 3% year-over-year to $319 million —

— Book value per share growth of 12% year-over-year to $29.30 —

— Completed $625 million senior notes offering and redemption of $525 million senior notes in the quarter —

Radian Group Inc. (NYSE: RDN) today reported net income for the quarter ended March 31, 2024, of $152 million, or $0.98 per diluted share. This compares with net income for the quarter ended March 31, 2023, of $158 million, or $0.98 per diluted share.

Adjusted pretax operating income for the quarter ended March 31, 2024, was $203 million, or $1.03 per diluted share. This compares with adjusted pretax operating income for the quarter ended March 31, 2023, of $200 million, or $0.98 per diluted share.

Key Financial Highlights

 

Quarter ended

($ in millions, except per-share amounts)

 

March 31,

2024

 

December 31,

2023

 

March 31,

2023

Total revenues

 

$319

 

$329

 

$310

Net income

 

$152

 

$143

 

$158

Diluted net income per share

 

$0.98

 

$0.91

 

$0.98

Consolidated pretax income

 

$199

 

$180

 

$204

Adjusted pretax operating income (1)

 

$203

 

$192

 

$200

Adjusted diluted net operating income per share (1) (2)

 

$1.03

 

$0.96

 

$0.98

Return on equity (3)

 

13.8%

 

13.4%

 

15.7%

Adjusted net operating return on equity (1) (2)

 

14.5%

 

14.2%

 

15.7%

New Insurance Written (NIW) - mortgage insurance

 

$11,534

 

$10,629

 

$11,261

Net premiums earned - mortgage insurance

 

$234

 

$230

 

$231

New defaults

 

11,756

 

12,452

 

10,624

Provision for losses - mortgage insurance

 

($7)

 

$5

 

($17)

 

 

 

 

As of

($ in millions, except per-share amounts)

 

March 31,

2024

 

December 31,

2023

 

March 31,

2023

Book value per share

 

$29.30

 

$28.71

 

$26.23

Accumulated other comprehensive income (loss) value per share (4)

 

($2.39)

 

($2.16)

 

($2.47)

PMIERs Available Assets (5)

 

$5,989

 

$5,890

 

$5,651

PMIERs excess Available Assets (6)

 

$2,282

 

$2,260

 

$1,740

Total Holding Company Liquidity (7)

 

$1,369

 

$1,267

 

$1,231

Total investments

 

$6,327

 

$6,086

 

$5,838

Primary mortgage insurance in force

 

$270,986

 

$269,979

 

$261,450

Percentage of primary loans in default (8)

 

2.1%

 

2.2%

 

2.1%

Mortgage insurance loss reserves

 

$357

 

$365

 

$400

(1)

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.

(2)

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

(3)

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

(4)

Included in book value per share for each period presented.

(5)

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.

(6)

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.

(7)

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

(8)

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

Book value per share at March 31, 2024, was $29.30, compared to $28.71 at December 31, 2023, and $26.23 at March 31, 2023. This represents a 12% growth in book value per share at March 31, 2024, as compared to March 31, 2023, and includes accumulated other comprehensive income (loss) of $(2.39) per share as of March 31, 2024, and $(2.47) per share as of March 31, 2023. Changes in accumulated other comprehensive income (loss) are primarily from net unrealized gains or losses on investments as a result of decreases or increases, respectively, in market interest rates.

“We had a strong start to the year with excellent first quarter operating results for Radian. We increased book value per share by 12% year-over-year and delivered return on equity of approximately 14%. These results demonstrate the embedded economic value of our high-quality mortgage insurance portfolio, which is the main driver of future earnings for our company and reached an all-time high of $271 billion during the quarter,” said Radian’s Chief Executive Officer Rick Thornberry. “We continue to strategically manage capital, paying our fifth consecutive quarterly dividend of $100 million from Radian Guaranty to Radian Group and returning capital to stockholders through dividends and share repurchases.”

FIRST QUARTER HIGHLIGHTS

• NIW was $11.5 billion in the first quarter of 2024, compared to $10.6 billion in the fourth quarter of 2023, and $11.3 billion in the first quarter of 2023.
  • Purchase NIW increased 6% in the first quarter of 2024 compared to the fourth quarter of 2023 and increased 2% compared to the first quarter of 2023.
  • Refinances accounted for 3% of total NIW in the first quarter of 2024, compared to 1% in the fourth quarter of 2023, and 2% in the first quarter of 2023.
• Total primary mortgage insurance in force of $271.0 billion as of March 31, 2024, increased as compared to $270.0 billion as of December 31, 2023, and increased 4% compared to $261.5 billion as of March 31, 2023.
  • Persistency, which is the percentage of mortgage insurance that remains in force after a twelve-month period, was 84% for the twelve months ended March 31, 2024, compared to 84% for the twelve months ended December 31, 2023, and 82% for the twelve months ended March 31, 2023.
  • Annualized persistency for the three months ended March 31, 2024, was 85%, compared to 86% for the three months ended December 31, 2023, and 84% for the three months ended March 31, 2023.
• Net mortgage insurance premiums earned were $234 million for the first quarter of 2024, an increase compared to $230 million for the fourth quarter of 2023, and $231 million for the first quarter of 2023.
  • Mortgage insurance in force portfolio premium yield was 38.2 basis points in the first quarter of 2024. This compares to 38.1 basis points in the fourth quarter of 2023, and 38.5 basis points in the first quarter of 2023.
  • The impact of single premium policy cancellations before consideration of reinsurance represented 0.3 basis points of direct premium yield in the first quarter of 2024, 0.3 basis points in the fourth quarter of 2023, and 0.8 basis points in the first quarter of 2023.
  • Total net mortgage insurance premium yield, which includes the impact of ceded premiums earned and accrued profit commission, was 34.6 basis points in the first quarter of 2024. This compares to 34.2 basis points in the fourth quarter of 2023, and 35.4 basis points in the first quarter of 2023.
  • Details regarding premiums earned may be found in Exhibit D.
• The mortgage insurance provision for losses was a benefit of $7 million in the first quarter of 2024, compared to a loss of $5 million in the fourth quarter of 2023 and a benefit of $17 million in the first quarter of 2023.
  • Favorable reserve development on prior period defaults was $61 million in the first quarter of 2024, compared to $49 million in the fourth quarter of 2023 and $67 million in the first quarter of 2023.
  • The number of primary delinquent loans was 20,850 as of March 31, 2024, compared to 22,021 as of December 31, 2023, and 20,748 as of March 31, 2023.
  • The loss ratio in the first quarter of 2024 was (2.9)%, compared to 2.0% in the fourth quarter of 2023, and (7.3)% in the first quarter of 2023.
  • Total mortgage insurance claims paid were $3 million in the first quarter of 2024, compared to $3 million in the fourth quarter of 2023, and $3 million in the first quarter of 2023.
  • Additional details regarding mortgage insurance provision for losses may be found in Exhibit D.
• Other operating expenses were $83 million in the first quarter of 2024, compared to $95 million in the fourth quarter of 2023, and $83 million in the first quarter of 2023.
  • Other operating expenses decreased in the first quarter of 2024 as compared to the fourth quarter of 2023, primarily due to $14 million of impairments of long-lived assets and other non-operating items recognized in the fourth quarter of 2023, related to lease-related assets and internal-use software.
  • Additional details regarding other operating expenses may be found in Exhibit D.

CAPITAL AND LIQUIDITY UPDATE

Radian Group

• As of March 31, 2024, Radian Group maintained $1.1 billion of available liquidity. Total holding company liquidity, including the company’s $275 million unsecured revolving credit facility, was $1.4 billion as of March 31, 2024.
• During the first quarter of 2024, the company repurchased 1.8 million shares of Radian Group common stock at a total cost of $50 million, including commissions. As of March 31, 2024, purchase authority of up to $117 million remained available under the existing program.
• As previously announced, on February 14, 2024, Radian Group’s board of directors authorized a regular quarterly dividend on its common stock in the amount of $0.245 per share, an increase of 9% from the previous quarterly dividend. The dividend totaling $37 million was paid to stockholders on March 12, 2024.
• During the first quarter of 2024, the Company initiated a series of transactions to increase its financial strength and reduce holding company leverage by year-end 2024:
  • Issued $625 million aggregate principal amount of 6.200% senior unsecured notes due May 2029.
  • Utilized a portion of the proceeds from the new debt issuance mentioned above to redeem all of its $525 million aggregate principal amount of 6.625% senior unsecured notes due March 2025.
  • In addition, the Company intends to retire its $450 million aggregate principal amount of 4.500% senior unsecured notes due October 2024 at or prior to maturity without incurring any additional indebtedness, which is expected to reduce the holding company debt to capital ratio to below 20% by year-end 2024.

Radian Guaranty

• In the first quarter of 2024, Radian Guaranty paid an ordinary dividend to Radian Group of $100 million.
• At March 31, 2024, Radian Guaranty’s Available Assets under PMIERs totaled approximately $6.0 billion, resulting in PMIERs excess Available Assets of $2.3 billion.

RECENT EVENTS AND OTHER MATTERS

• As previously disclosed, on January 8, 2024, S&P Global Ratings (“S&P”) upgraded the insurance financial strength (IFS) rating of Radian Guaranty to A- from BBB+. In the same rating action, S&P also upgraded the senior unsecured debt rating of Radian Group Inc. to BBB- from BB+. The outlook for the ratings is stable.
• In the first quarter of 2024, the Company made a change to the way that it aggregates and reports its segment results. Whereas previously Radian had aggregated the results of its title, real estate services and real estate technology operating segments and reflected them as a separate reportable segment named homegenius, the results of these immaterial operating segments and the company’s mortgage conduit business (the other operating segment that does not meet the reportable segment materiality thresholds) are now reported in the All Other category, along with certain corporate and other activities. This change is reflected in the segment operating results for all periods presented.

CONFERENCE CALL

Radian will discuss first quarter 2024 financial results in a conference call tomorrow, Thursday, May 2, 2024, 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 segment or All Other activities; (ii) amortization and impairment of goodwill and other acquired intangible assets; and (iii) impairment of other long-lived assets and other non-operating items, if any, such as gains (losses) from the sale of lines of business, acquisition-related income (expenses) and gains (losses) on extinguishment of debt. Adjusted diluted net operating income (loss) per share is calculated by dividing adjusted pretax operating income (loss) attributable to common stockholders, net of taxes computed using the company’s statutory tax rate, by 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.

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

Exhibit B:

Net Income Per Share

Exhibit C:

Condensed Consolidated Balance Sheets

Exhibit D:

Condensed Consolidated Statements of Operations Detail

Exhibit E:

Segment Information

Exhibit F:

Definition of Consolidated Non-GAAP Financial Measures

Exhibit G:

Consolidated Non-GAAP Financial Measure Reconciliations

Exhibit H:

Mortgage Insurance Supplemental Information - New Insurance Written

Exhibit I:

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

Radian Group Inc. and Subsidiaries Condensed Consolidated Statements of Operations(1) Exhibit A

 

 

2024

 

2023

 

(In thousands, except per-share amounts)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Revenues

 

 

 

 

 

 

 

 

 

 

Net premiums earned

 

$

235,857

 

 

$

232,649

 

$

240,262

 

 

$

213,429

 

 

$

233,238

 

Services revenue

 

 

12,588

 

 

 

12,419

 

 

10,892

 

 

 

11,797

 

 

 

10,984

 

Net investment income

 

 

69,221

 

 

 

68,824

 

 

67,805

 

 

 

63,348

 

 

 

58,453

 

Net gains (losses) on investments and other financial instruments

 

 

490

 

 

 

13,447

 

 

(8,555

)

 

 

(236

)

 

 

5,585

 

Other income

 

 

1,262

 

 

 

1,305

 

 

2,109

 

 

 

1,241

 

 

 

1,592

 

Total revenues

 

 

319,418

 

 

 

328,644

 

 

312,513

 

 

 

289,579

 

 

 

309,852

 

Expenses

 

 

 

 

 

 

 

 

 

 

Provision for losses

 

 

(7,034

)

 

 

4,170

 

 

(8,135

)

 

 

(21,632

)

 

 

(16,929

)

Policy acquisition costs

 

 

6,794

 

 

 

6,147

 

 

6,920

 

 

 

5,218

 

 

 

6,293

 

Cost of services

 

 

9,327

 

 

 

8,950

 

 

8,886

 

 

 

10,257

 

 

 

10,398

 

Other operating expenses

 

 

82,636

 

 

 

95,218

 

 

79,206

 

 

 

89,885

 

 

 

83,269

 

Interest expense

 

 

29,046

 

 

 

23,169

 

 

23,282

 

 

 

21,805

 

 

 

21,439

 

Impairment of goodwill

 

 

—

 

 

 

9,802

 

 

—

 

 

 

—

 

 

 

—

 

Amortization of other acquired intangible assets

 

 

—

 

 

 

1,371

 

 

1,371

 

 

 

1,370

 

 

 

1,371

 

Total expenses

 

 

120,769

 

 

 

148,827

 

 

111,530

 

 

 

106,903

 

 

 

105,841

 

Pretax income

 

 

198,649

 

 

 

179,817

 

 

200,983

 

 

 

182,676

 

 

 

204,011

 

Income tax provision

 

 

46,295

 

 

 

37,124

 

 

44,401

 

 

 

36,589

 

 

 

46,254

 

Net income

 

$

152,354

 

 

$

142,693

 

$

156,582

 

 

$

146,087

 

 

$

157,757

 

Diluted net income per share

 

$

0.98

 

 

$

0.91

 

$

0.98

 

 

$

0.91

 

 

$

0.98

 

  (1) See Exhibit D for additional details.

Radian Group Inc. and Subsidiaries Net Income Per Share Exhibit B

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

 

 

2024

 

2023

(In thousands, except per-share amounts)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Net income—basic and diluted

 

$

152,354

 

$

142,693

 

$

156,582

 

$

146,087

 

$

157,757

Average common shares outstanding—basic

 

 

153,817

 

 

155,318

 

 

158,461

 

 

159,010

 

 

158,304

Dilutive effect of share-based compensation arrangements (1)

 

 

2,154

 

 

1,909

 

 

1,686

 

 

1,734

 

 

3,045

Adjusted average common shares outstanding—diluted

 

 

155,971

 

 

157,227

 

 

160,147

 

 

160,744

 

 

161,349

Basic net income per share

 

$

0.99

 

$

0.92

 

$

0.99

 

$

0.92

 

$

1.00

Diluted net income per share

 

$

0.98

 

$

0.91

 

$

0.98

 

$

0.91

 

$

0.98

(1)

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

 

 

2024

 

2023

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Shares of common stock equivalents

 

—

 

—

 

—

 

112

 

25

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)

 

2024

 

2023

 

2023

 

2023

 

2023

Assets

 

 

 

 

 

 

 

 

 

 

Investments

 

$

6,327,114

 

 

$

6,085,654

 

 

$

5,885,652

 

 

$

5,895,871

 

 

$

5,837,892

 

Cash

 

 

26,993

 

 

 

18,999

 

 

 

55,489

 

 

 

61,142

 

 

 

50,167

 

Restricted cash

 

 

1,832

 

 

 

1,066

 

 

 

1,305

 

 

 

1,317

 

 

 

577

 

Accrued investment income

 

 

46,334

 

 

 

45,783

 

 

 

45,623

 

 

 

42,650

 

 

 

42,567

 

Accounts and notes receivable

 

 

130,095

 

 

 

123,857

 

 

 

144,614

 

 

 

138,432

 

 

 

129,565

 

Reinsurance recoverable

 

 

28,151

 

 

 

25,909

 

 

 

24,148

 

 

 

22,979

 

 

 

24,396

 

Deferred policy acquisition costs

 

 

18,561

 

 

 

18,718

 

 

 

18,817

 

 

 

19,272

 

 

 

18,236

 

Property and equipment, net

 

 

60,521

 

 

 

63,822

 

 

 

74,558

 

 

 

73,885

 

 

 

72,111

 

Goodwill and other acquired intangible assets, net

 

 

—

 

 

 

—

 

 

 

11,173

 

 

 

12,543

 

 

 

13,914

 

Prepaid federal income taxes

 

 

750,320

 

 

 

750,320

 

 

 

696,820

 

 

 

663,320

 

 

 

596,368

 

Other assets

 

 

369,944

 

 

 

459,805

 

 

 

420,483

 

 

 

375,132

 

 

 

418,609

 

Total assets

 

$

7,759,865

 

 

$

7,593,933

 

 

$

7,378,682

 

 

$

7,306,543

 

 

$

7,204,402

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

 

 

Unearned premiums

 

$

215,124

 

 

$

225,396

 

 

$

236,400

 

 

$

246,666

 

 

$

257,735

 

Reserve for losses and loss adjustment expense

 

 

361,833

 

 

 

370,148

 

 

 

367,568

 

 

 

379,434

 

 

 

405,651

 

Senior notes

 

 

1,512,860

 

 

 

1,417,781

 

 

 

1,416,687

 

 

 

1,415,610

 

 

 

1,414,549

 

Secured borrowings

 

 

207,601

 

 

 

119,476

 

 

 

241,753

 

 

 

178,762

 

 

 

121,642

 

Reinsurance funds withheld

 

 

133,460

 

 

 

130,564

 

 

 

156,114

 

 

 

154,354

 

 

 

153,099

 

Net deferred tax liability

 

 

626,353

 

 

 

589,564

 

 

 

497,560

 

 

 

479,754

 

 

 

455,517

 

Other liabilities

 

 

262,902

 

 

 

343,199

 

 

 

309,701

 

 

 

281,127

 

 

 

289,731

 

Total liabilities

 

 

3,320,133

 

 

 

3,196,128

 

 

 

3,225,783

 

 

 

3,135,707

 

 

 

3,097,924

 

Common stock

 

 

171

 

 

 

173

 

 

 

175

 

 

 

177

 

 

 

176

 

Treasury stock

 

 

(946,202

)

 

 

(945,870

)

 

 

(945,504

)

 

 

(945,032

)

 

 

(931,313

)

Additional paid-in capital

 

 

1,390,436

 

 

 

1,430,594

 

 

 

1,482,712

 

 

 

1,522,895

 

 

 

1,515,852

 

Retained earnings

 

 

4,357,823

 

 

 

4,243,759

 

 

 

4,136,598

 

 

 

4,016,482

 

 

 

3,908,396

 

Accumulated other comprehensive income (loss)

 

 

(362,496

)

 

 

(330,851

)

 

 

(521,082

)

 

 

(423,686

)

 

 

(386,633

)

Total stockholders’ equity

 

 

4,439,732

 

 

 

4,397,805

 

 

 

4,152,899

 

 

 

4,170,836

 

 

 

4,106,478

 

Total liabilities and stockholders’ equity

 

$

7,759,865

 

 

$

7,593,933

 

 

$

7,378,682

 

 

$

7,306,543

 

 

$

7,204,402

 

Shares outstanding

 

 

151,509

 

 

 

153,179

 

 

 

155,582

 

 

 

157,350

 

 

 

156,547

 

Book value per share

 

$

29.30

 

 

$

28.71

 

 

$

26.69

 

 

$

26.51

 

 

$

26.23

 

 

Holding company debt-to-capital ratio (1)

 

 

25.4

%

 

 

24.4

%

 

 

25.4

%

 

 

25.3

%

 

 

25.6

%

(1)

Calculated as carrying value of senior notes, which were issued and are owed by our holding company, divided by carrying value of senior notes and stockholders’ equity. This holding company ratio does not include the effects of amounts owed by our subsidiaries related to secured borrowings.

Radian Group Inc. and Subsidiaries Condensed Consolidated Statements of Operations Detail Exhibit D (page 1 of 3)

Net Premiums Earned

 

 

2024

 

2023

 

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Premiums earned

 

 

 

 

 

 

 

 

 

 

Direct - Mortgage insurance

 

 

 

 

 

 

 

 

 

 

Premiums earned, excluding revenue from cancellations

 

$

258,593

 

 

$

256,632

 

 

$

254,903

 

 

$

252,537

 

 

$

251,166

 

Single Premium Policy cancellations

 

 

2,114

 

 

 

2,058

 

 

 

3,304

 

 

 

3,980

 

 

 

5,361

 

Total direct - Mortgage insurance

 

 

260,707

 

 

 

258,690

 

 

 

258,207

 

 

 

256,517

 

 

 

256,527

 

Ceded - Mortgage insurance

 

 

 

 

 

 

 

 

 

 

Premiums earned, excluding revenue from cancellations

 

 

(38,997

)

 

 

(40,065

)

 

 

(32,363

)

 

 

(57,916

)

(1)

 

(35,526

)

Single Premium Policy cancellations (2)

 

 

(112

)

 

 

(444

)

 

 

(873

)

 

 

(1,114

)

 

 

(1,472

)

Profit commission - other (3)

 

 

12,401

 

 

 

12,199

 

 

 

11,830

 

 

 

13,245

 

 

 

11,921

 

Total ceded premiums - Mortgage insurance

 

 

(26,708

)

 

 

(28,310

)

 

 

(21,406

)

 

 

(45,785

)

 

 

(25,077

)

Net premiums earned - Mortgage insurance

 

 

233,999

 

 

 

230,380

 

 

 

236,801

 

 

 

210,732

 

 

 

231,450

 

Net premiums earned - Title insurance

 

 

1,858

 

 

 

2,269

 

 

 

3,461

 

 

 

2,697

 

 

 

1,788

 

Net premiums earned

 

$

235,857

 

 

$

232,649

 

 

$

240,262

 

 

$

213,429

 

 

$

233,238

 

(1)

Includes the result of the tender offers by Eagle Re 2019-1 Ltd. and Eagle Re 2020-1 Ltd. to purchase the mortgage insurance-linked notes that supported their reinsurance agreements with Radian Guaranty. As a result, Radian Guaranty incurred additional ceded premiums earned during the second quarter of 2023 of $21 million.

(2)

Includes the impact of related profit commissions.

(3)

The amounts represent the profit commission under our QSR Program, excluding the impact of Single Premium Policy cancellations.

Services Revenue

 

 

2024

 

2023

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Mortgage Insurance

 

 

 

 

 

 

 

 

 

 

Contract underwriting services

 

$

210

 

$

202

 

$

266

 

$

284

 

$

336

All Other

 

 

 

 

 

 

 

 

 

 

Real estate services

 

9,193

 

8,888

 

7,046

 

7,598

 

7,395

Title

 

 

2,573

 

 

2,713

 

 

2,964

 

 

3,233

 

 

2,554

Real estate technology

 

 

612

 

 

616

 

 

616

 

 

682

 

 

699

Total services revenue

 

$

12,588

 

$

12,419

 

$

10,892

 

$

11,797

 

$

10,984

Radian Group Inc. and Subsidiaries Condensed Consolidated Statements of Operations Detail Exhibit D (page 2 of 3)

Net Investment Income

 

 

2024

 

2023

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Fixed-maturities

 

$

57,259

 

 

$

58,669

 

 

$

59,599

 

 

$

56,439

 

 

$

52,948

 

Equity securities

 

 

2,539

 

 

 

3,753

 

 

 

3,222

 

 

 

3,512

 

 

 

2,932

 

Mortgage loans held for sale

 

 

1,793

 

 

 

1,725

 

 

 

1,719

 

 

 

574

 

 

 

194

 

Short-term investments

 

 

8,958

 

 

 

5,871

 

 

 

5,405

 

 

 

3,976

 

 

 

3,588

 

Other (1)

 

 

(1,328

)

 

 

(1,194

)

 

 

(1,140

)

 

 

(1,153

)

 

 

(1,209

)

Net investment income

 

$

69,221

 

 

$

68,824

 

 

$

67,805

 

 

$

63,348

 

 

$

58,453

 

(1)

Includes investment management expenses, as well as the net impact from our securities lending activities.

Provision for Losses

 

 

2024

 

2023

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Mortgage insurance

 

 

 

 

 

 

 

 

 

 

Current period defaults (1)

 

$

53,688

 

 

$

53,981

 

 

$

46,630

 

 

$

41,223

 

 

$

50,578

 

Prior period defaults (2)

 

 

(60,574

)

 

 

(49,373

)

 

 

(54,887

)

 

 

(62,846

)

 

 

(67,442

)

Total Mortgage insurance

 

 

(6,886

)

 

 

4,608

 

 

 

(8,257

)

 

 

(21,623

)

 

 

(16,864

)

Title insurance

 

 

(148

)

 

 

(438

)

 

 

122

 

 

 

(9

)

 

 

(65

)

Total provision for losses

 

$

(7,034

)

 

$

4,170

 

 

$

(8,135

)

 

$

(21,632

)

 

$

(16,929

)

(1)

Related to defaulted loans with the most recent default notice dated in the period indicated. For example, if a loan had defaulted in a prior period, but then subsequently cured and later re-defaulted in the current period, the default would be considered a current period default.

(2)

Related to defaulted loans with a default notice dated in a period earlier than the period indicated, which have been continuously in default since that time.

Other Operating Expenses

 

 

 

2024

 

2023

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Other operating expenses by type

 

 

 

 

 

 

 

 

 

 

Salaries and other base employee expenses

 

$

39,723

 

 

$

34,182

 

 

$

33,272

 

 

$

39,032

 

 

$

35,064

 

Variable and share-based incentive compensation

 

 

17,515

 

 

 

20,262

 

 

 

19,546

 

 

 

18,908

 

 

 

18,273

 

Other general operating expenses

 

 

30,262

 

 

 

45,186

 

(1)

 

29,812

 

 

 

35,655

 

 

 

33,863

 

Ceding commissions

 

 

(5,644

)

 

 

(5,327

)

 

 

(5,153

)

 

 

(4,824

)

 

 

(4,628

)

Title agent commissions

 

 

780

 

 

 

915

 

 

 

1,729

 

 

 

1,114

 

 

 

697

 

Total

 

$

82,636

 

 

$

95,218

 

 

$

79,206

 

 

$

89,885

 

 

$

83,269

 

(1)

Includes $14 million of impairment of long-lived assets, primarily from impairments to our lease-related assets and internal-use software.

Radian Group Inc. and Subsidiaries Condensed Consolidated Statements of Operations Detail Exhibit D (page 3 of 3)

Interest Expense

 

 

2024

 

2023

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Senior notes

 

$

22,128

 

$

20,335

 

$

20,320

 

$

20,303

 

$

20,288

Loss on extinguishment of debt(1)

 

 

4,275

 

 

—

 

 

—

 

 

—

 

 

—

Mortgage loan financing facilities

 

 

1,438

 

 

1,421

 

 

1,609

 

 

400

 

 

77

FHLB advances

 

 

945

 

 

1,059

 

 

1,039

 

 

611

 

 

745

Revolving credit facility

 

 

260

 

 

354

 

 

310

 

 

399

 

 

311

Other

 

 

—

 

 

—

 

 

4

 

 

92

 

 

18

Total interest expense

 

$

29,046

 

$

23,169

 

$

23,282

 

$

21,805

 

$

21,439

(1)

Primarily comprised of the acceleration of remaining unamortized issuance costs related to the March 2024 redemption of our Senior Notes due 2025.

Radian Group Inc. and Subsidiaries Segment Information Exhibit E (page 1 of 4)

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), along with a reconciliation to its consolidated GAAP measure, see Exhibits F and G.

 

 

Three Months Ended March 31, 2024

(In thousands)

 

Mortgage Insurance

 

All Other (1)

 

Inter- segment

 

Total

Net premiums written

 

$

231,877

 

 

$

1,858

 

 

$

—

 

 

$

233,735

 

(Increase) decrease in unearned premiums

 

 

2,122

 

 

 

—

 

 

 

—

 

 

 

2,122

 

Net premiums earned

 

 

233,999

 

 

 

1,858

 

 

 

—

 

 

 

235,857

 

Services revenue

 

 

210

 

 

 

12,493

 

 

 

(115

)

 

 

12,588

 

Net investment income

 

 

49,574

 

 

 

19,647

 

 

 

—

 

 

 

69,221

 

Net gains (losses) on investments and other financial instruments

 

 

—

 

 

 

383

 

 

 

—

 

 

 

383

 

Other income

 

 

1,240

 

 

 

25

 

 

 

(3

)

 

 

1,262

 

Total

 

 

285,023

 

 

 

34,406

 

 

 

(118

)

 

 

319,311

 

Provision for losses

 

 

(6,886

)

 

 

(148

)

 

 

—

 

 

 

(7,034

)

Policy acquisition costs

 

 

6,794

 

 

 

—

 

 

 

—

 

 

 

6,794

 

Cost of services

 

 

153

 

 

 

9,174

 

 

 

—

 

 

 

9,327

 

Other operating expenses before allocated corporate operating expenses

 

 

17,270

 

 

 

27,264

 

 

 

(118

)

 

 

44,416

 

Interest expense

 

 

23,333

 

 

 

1,438

 

 

 

—

 

 

 

24,771

 

Total

 

 

40,664

 

 

 

37,728

 

 

 

(118

)

 

 

78,274

 

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

 

 

244,359

 

 

 

(3,322

)

 

 

—

 

 

 

241,037

 

Allocation of corporate operating expenses

 

 

34,509

 

 

 

3,711

 

 

 

—

 

 

 

38,220

 

Adjusted pretax operating income (loss) (2)

 

$

209,850

 

 

$

(7,033

)

 

$

—

 

 

$

202,817

 

Radian Group Inc. and Subsidiaries Segment Information Exhibit E (page 2 of 4)

 

 

Three Months Ended March 31, 2023

(In thousands)

 

Mortgage Insurance

 

All Other (1)

 

Inter- segment

 

Total

Net premiums written

 

$

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

 

 

45,993

 

 

 

12,460

 

 

 

—

 

 

 

58,453

 

Net gains (losses) on investments and other financial instruments

 

 

—

 

 

 

80

 

 

 

—

 

 

 

80

 

Other income

 

 

1,587

 

 

 

5

 

 

 

—

 

 

 

1,592

 

Total

 

 

279,366

 

 

 

25,076

 

 

 

(95

)

 

 

304,347

 

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

 

 

18,806

 

 

 

21,770

 

 

 

(95

)

 

 

40,481

 

Interest expense

 

 

21,362

 

 

 

77

 

 

 

—

 

 

 

21,439

 

Total

 

 

29,838

 

 

 

31,939

 

 

 

(95

)

 

 

61,682

 

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

 

 

249,528

 

 

 

(6,863

)

 

 

—

 

 

 

242,665

 

Allocation of corporate operating expenses

 

 

34,829

 

 

 

7,973

 

 

 

—

 

 

 

42,802

 

Adjusted pretax operating income (loss) (2)

 

$

214,699

 

 

$

(14,836

)

 

$

—

 

 

$

199,863

 

(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) the operating results from certain other immaterial activities and operating segments, including our mortgage conduit, title, real estate services and real estate technology businesses.

(2)

See Exhibits F and G for additional information on the use and definition of this term and a reconciliation to consolidated net income.

Radian Group Inc. and Subsidiaries Segment Information Exhibit E (page 3 of 4)

 

 

Mortgage Insurance

 

 

2024

 

2023

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Net premiums written

 

$

231,877

 

 

$

225,112

 

$

235,169

 

 

$

214,540

 

 

$

229,419

 

(Increase) decrease in unearned premiums

 

 

2,122

 

 

 

5,268

 

 

1,632

 

 

 

(3,808

)

 

 

2,031

 

Net premiums earned

 

 

233,999

 

 

 

230,380

 

 

236,801

 

 

 

210,732

 

 

 

231,450

 

Services revenue

 

 

210

 

 

 

202

 

 

266

 

 

 

284

 

 

 

336

 

Net investment income

 

 

49,574

 

 

 

51,061

 

 

49,953

 

 

 

48,070

 

 

 

45,993

 

Other income

 

 

1,240

 

 

 

1,302

 

 

1,237

 

 

 

1,246

 

 

 

1,587

 

Total

 

 

285,023

 

 

 

282,945

 

 

288,257

 

 

 

260,332

 

 

 

279,366

 

Provision for losses

 

 

(6,886

)

 

 

4,608

 

 

(8,257

)

 

 

(21,623

)

 

 

(16,864

)

Policy acquisition costs

 

 

6,794

 

 

 

6,147

 

 

6,920

 

 

 

5,218

 

 

 

6,293

 

Cost of services

 

 

153

 

 

 

157

 

 

172

 

 

 

143

 

 

 

241

 

Other operating expenses before allocated corporate operating expenses

 

 

17,270

 

 

 

15,559

 

 

16,776

 

 

 

20,009

 

 

 

18,806

 

Interest expense

 

 

23,333

 

 

 

21,748

 

 

21,673

 

 

 

21,405

 

 

 

21,362

 

Total

 

 

40,664

 

 

 

48,219

 

 

37,284

 

 

 

25,152

 

 

 

29,838

 

Adjusted pretax operating income before allocated corporate operating expenses

 

 

244,359

 

 

 

234,726

 

 

250,973

 

 

 

235,180

 

 

 

249,528

 

Allocation of corporate operating expenses

 

 

34,509

 

 

 

36,929

 

 

31,744

 

 

 

37,081

 

 

 

34,829

 

Adjusted pretax operating income (1)

 

$

209,850

 

 

$

197,797

 

$

219,229

 

 

$

198,099

 

 

$

214,699

 

Radian Group Inc. and Subsidiaries Segment Information Exhibit E (page 4 of 4)

 

 

All Other (2)

 

 

2024

 

2023

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Net premiums earned

 

$

1,858

 

 

$

2,269

 

 

$

3,461

 

 

$

2,697

 

 

$

1,788

 

Services revenue

 

 

12,493

 

 

 

12,311

 

 

 

10,723

 

 

 

11,617

 

 

 

10,743

 

Net investment income

 

 

19,647

 

 

 

17,763

 

 

 

17,852

 

 

 

15,278

 

 

 

12,460

 

Net gains (losses) on investments and other financial instruments

 

 

383

 

 

 

356

 

 

 

283

 

 

 

95

 

 

 

80

 

Other income

 

 

25

 

 

 

14

 

 

 

9

 

 

 

(1

)

 

 

5

 

Total (3)

 

 

34,406

 

 

 

32,713

 

 

 

32,328

 

 

 

29,686

 

 

 

25,076

 

Provision for losses

 

 

(148

)

 

 

(438

)

 

 

122

 

 

 

(9

)

 

 

(65

)

Cost of services

 

 

9,174

 

 

 

8,793

 

 

 

8,714

 

 

 

10,114

 

 

 

10,157

 

Other operating expenses before allocated corporate operating expenses

 

 

27,264

 

 

 

23,660

 

 

 

26,062

 

 

 

27,538

 

 

 

21,770

 

Interest expense

 

 

1,438

 

 

 

1,421

 

 

 

1,609

 

 

 

400

 

 

 

77

 

Total

 

 

37,728

 

 

 

33,436

 

 

 

36,507

 

 

 

38,043

 

 

 

31,939

 

Adjusted pretax operating income before allocated corporate operating expenses

 

 

(3,322

)

 

 

(723

)

 

 

(4,179

)

 

 

(8,357

)

 

 

(6,863

)

Allocation of corporate operating expenses

 

 

3,711

 

 

 

5,340

 

 

 

4,595

 

 

 

5,367

 

 

 

7,973

 

Adjusted pretax operating income (loss) (1)

 

$

(7,033

)

 

$

(6,063

)

 

$

(8,774

)

 

$

(13,724

)

 

$

(14,836

)

(1)

See Exhibits F and G for additional information on the use and definition of this term and a reconciliation to consolidated net income.

(2)

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) the operating results from certain other immaterial activities and operating segments, including our mortgage conduit, title, real estate services and real estate technology businesses.

(3)

Details of All Other revenue are as follows.

 

 

2024

 

2023

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Holding company (a)

 

$

16,536

 

$

15,374

 

$

15,601

 

$

14,202

 

$

11,840

Real estate services

 

 

9,517

 

 

9,014

 

 

7,126

 

 

7,676

 

 

7,484

Title

 

 

4,997

 

 

5,516

 

 

6,948

 

 

6,422

 

 

4,776

Mortgage conduit

 

 

2,690

 

 

2,171

 

 

2,020

 

 

678

 

 

275

Real estate technology

 

 

666

 

 

638

 

 

633

 

 

708

 

 

701

Total

 

$

34,406

 

$

32,713

 

$

32,328

 

$

29,686

 

$

25,076

(a)

Consists of net investment income earned from assets held by Radian Group, our holding company, that are not attributable or allocated to our underlying businesses.

Selected Mortgage Insurance Key Ratios

 

 

2024

 

2023

 

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Loss ratio (1)

 

(2.9

)%

 

2.0

%

 

(3.5

)%

 

(10.3

)%

 

(7.3

)%

Expense ratio (2)

 

25.0

%

 

25.5

%

 

23.4

%

 

29.6

%

 

25.9

%

(1)

For our Mortgage Insurance segment, calculated as provision for losses expressed as a percentage of net premiums earned.

(2)

For our Mortgage Insurance 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.

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 businesses and to allocate resources to them.

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 segment or All Other activities; (ii) amortization and impairment of goodwill and other acquired intangible assets; and (iii) impairment of other long-lived assets and other non-operating items, if any, such as gains (losses) from the sale of lines of business, acquisition-related income (expenses) and gains (losses) on extinguishment of debt. Adjusted diluted net operating income (loss) per share is calculated by dividing adjusted pretax operating income (loss) attributable to common stockholders, net of taxes computed using the company’s statutory tax rate, by 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 specific operating segments, we do not view them to be indicative of our fundamental operating activities.

 

(2)

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.

 

(3)

Impairment of other long-lived assets and other non-operating items, if any. 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; (iii) acquisition-related income and expenses; and (iv) gains (losses) on extinguishment of debt.

Radian Group Inc. and Subsidiaries Definition of Consolidated Non-GAAP Financial Measures Exhibit F (page 2 of 2)

See Exhibit G for the reconciliations 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.

Total adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share and adjusted net operating return on equity 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). Our definitions of adjusted pretax operating income (loss) and adjusted diluted net operating income (loss) per share 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 2)

Reconciliation of Consolidated Pretax Income to Adjusted Pretax Operating Income

 

 

 

2024

 

2023

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Consolidated pretax income

 

$

198,649

 

 

$

179,817

 

 

$

200,983

 

 

$

182,676

 

 

$

204,011

 

Less reconciling income (expense) items

 

 

 

 

 

 

 

 

 

 

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

 

 

107

 

 

 

13,091

 

 

 

(8,838

)

 

 

(331

)

 

 

5,505

 

Amortization and impairment of goodwill and other acquired intangible assets

 

 

—

 

 

 

(11,173

)

 

 

(1,371

)

 

 

(1,370

)

 

 

(1,371

)

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

 

 

(4,275

)

(2)

 

(13,835

)

(3)

 

737

 

 

 

2

 

 

 

14

 

Total adjusted pretax operating income (4)

 

$

202,817

 

 

$

191,734

 

 

$

210,455

 

 

$

184,375

 

 

$

199,863

 

(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)

This amount is included in interest expense on the Condensed Consolidated Statement of Operations in Exhibit A and relates to the loss on extinguishment of debt.

(3)

This amount is included in other operating expenses on the Condensed Consolidated Statement of Operations in Exhibit A and primarily relates to impairment of other long-lived assets.

(4)

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

 

 

2024

 

2023

(In thousands)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Adjusted pretax operating income (loss)

 

 

 

 

 

 

 

 

 

 

Mortgage Insurance segment

 

$

209,850

 

 

$

197,797

 

 

$

219,229

 

 

$

198,099

 

 

$

214,699

 

All Other activities

 

 

(7,033

)

 

 

(6,063

)

 

 

(8,774

)

 

 

(13,724

)

 

 

(14,836

)

Total adjusted pretax operating income

 

$

202,817

 

 

$

191,734

 

 

$

210,455

 

 

$

184,375

 

 

$

199,863

 

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

 

 

2024

 

2023

 

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Diluted net income per share

 

$

0.98

 

 

$

0.91

 

 

$

0.98

 

 

$

0.91

 

 

$

0.98

 

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

 

 

 

 

 

 

 

 

 

 

Net gains (losses) on investments and other financial instruments

 

 

—

 

 

 

0.08

 

 

 

(0.06

)

 

 

—

 

 

 

0.03

 

Amortization and impairment of goodwill and other acquired intangible assets

 

 

—

 

 

 

(0.07

)

 

 

(0.01

)

 

 

(0.01

)

 

 

(0.01

)

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

 

 

(0.03

)

 

 

(0.09

)

 

 

0.01

 

 

 

—

 

 

 

—

 

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

 

 

0.01

 

 

 

0.02

 

 

 

0.01

 

 

 

—

 

 

 

(0.01

)

Difference between statutory and effective tax rates

 

 

(0.03

)

 

 

0.01

 

 

 

(0.01

)

 

 

0.01

 

 

 

(0.01

)

Per-share impact of reconciling income (expense) items

 

 

(0.05

)

 

 

(0.05

)

 

 

(0.06

)

 

 

—

 

 

 

—

 

Adjusted diluted net operating income per share (1)

 

$

1.03

 

 

$

0.96

 

 

$

1.04

 

 

$

0.91

 

 

$

0.98

 

(1)

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

Radian Group Inc. and Subsidiaries Consolidated Non-GAAP Financial Measure Reconciliations Exhibit G (page 2 of 2)

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

 

 

2024

 

2023

 

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

Return on equity (1)

 

13.8

%

 

13.4

%

 

15.0

%

 

14.1

%

 

15.7

%

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

 

 

 

 

 

 

 

 

 

 

Net gains (losses) on investments and other financial instruments

 

—

 

 

1.2

 

 

(0.9

)

 

—

 

 

0.5

 

Amortization and impairment of goodwill and other acquired intangible assets

 

—

 

 

(1.0

)

 

(0.2

)

 

(0.1

)

 

(0.1

)

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

 

(0.4

)

 

(1.3

)

 

0.1

 

 

—

 

 

—

 

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

 

0.1

 

 

0.2

 

 

0.2

 

 

(0.1

)

 

(0.1

)

Difference between statutory and effective tax rates

 

(0.4

)

 

0.1

 

 

(0.2

)

 

0.2

 

 

(0.3

)

Impact of reconciling income (expense) items

 

(0.7

)

 

(0.8

)

 

(1.0

)

 

—

 

 

—

 

Adjusted net operating return on equity (3)

 

14.5

%

 

14.2

%

 

16.0

%

 

14.1

%

 

15.7

%

(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%.

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. 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).

Our definitions of adjusted pretax operating income (loss), adjusted diluted net operating income (loss) per share and adjusted net operating return on equity 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 Insurance Supplemental Information - New Insurance Written Exhibit H

 

 

2024

 

2023

($ in millions)

 

Qtr 1

 

Qtr 4

 

Qtr 3

 

Qtr 2

 

Qtr 1

NIW

 

$

11,534

 

 

$

10,629

 

 

$

13,922

 

 

$

16,946

 

 

$

11,261

 

NIW by premium type

 

 

 

 

 

 

 

 

 

 

Direct monthly and other recurring premiums

 

 

96.7

%

 

 

96.4

%

 

 

96.0

%

 

 

96.5

%

 

 

94.9

%

Direct single premiums

 

 

3.3

%

 

 

3.6

%

 

 

4.0

%

 

 

3.5

%

 

 

5.1

%

 

 

 

 

 

 

 

 

 

 

 

NIW for purchases

 

 

96.9

%

 

 

98.8

%

 

 

98.7

%

 

 

98.6

%

 

 

97.6

%

NIW for refinances

 

 

3.1

%

 

 

1.2

%

 

 

1.3

%

 

 

1.4

%

 

 

2.4

%

NIW by FICO score (1)

 

 

 

 

 

 

 

 

 

 

>=740

 

 

67.3

%

 

 

66.5

%

 

 

67.3

%

 

 

66.1

%

 

 

60.7

%

680-739

 

 

27.1

 

 

 

27.9

 

 

 

27.4

 

 

 

28.4

 

 

 

32.8

 

620-679

 

 

5.6

 

 

 

5.6

 

 

 

5.3

 

 

 

5.5

 

 

 

6.5

 

<=619

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

Total NIW

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

NIW by LTV (2)

 

 

 

 

 

 

 

 

 

 

95.01% and above

 

 

15.4

%

 

 

15.4

%

 

 

16.5

%

 

 

17.9

%

 

 

17.7

%

90.01% to 95.00%

 

 

40.8

 

 

 

40.0

 

 

 

38.6

 

 

 

39.1

 

 

 

40.2

 

85.01% to 90.00%

 

 

31.3

 

 

 

31.3

 

 

 

30.2

 

 

 

29.5

 

 

 

28.7

 

85.00% and below

 

 

12.5

 

 

 

13.3

 

 

 

14.7

 

 

 

13.5

 

 

 

13.4

 

Total NIW

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

(1)

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

(2)

At origination.

Radian Group Inc. and Subsidiaries Mortgage Insurance Supplemental Information - Primary Insurance in Force and Risk in Force Exhibit I

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

($ in millions)

 

2024

 

2023

 

2023

 

2023

 

2023

 

 

 

 

 

 

 

 

 

 

 

Primary insurance in force

 

$

270,986

 

 

$

269,979

 

 

$

269,511

 

 

$

266,859

 

 

$

261,450

 

 

 

 

 

 

 

 

 

 

 

 

Primary risk in force (“RIF”)

 

$

70,299

 

 

$

69,710

 

 

$

69,298

 

 

$

68,323

 

 

$

66,580

 

Primary RIF by premium type

 

 

 

 

 

 

 

 

 

 

Direct monthly and other recurring premiums

 

 

89.2

%

 

 

88.9

%

 

 

88.6

%

 

 

88.2

%

 

 

87.6

%

Direct single premiums

 

 

10.8

%

 

 

11.1

%

 

 

11.4

%

 

 

11.8

%

 

 

12.4

%

Primary RIF by FICO score (1)

 

 

 

 

 

 

 

 

 

 

>=740

 

 

58.8

%

 

 

58.5

%

 

 

58.2

%

 

 

57.8

%

 

 

57.4

%

680-739

 

 

33.6

 

 

 

33.9

 

 

 

34.0

 

 

 

34.3

 

 

 

34.6

 

620-679

 

 

7.3

 

 

 

7.3

 

 

 

7.4

 

 

 

7.5

 

 

 

7.6

 

<=619

 

 

0.3

 

 

 

0.3

 

 

 

0.4

 

 

 

0.4

 

 

 

0.4

 

Total

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

Primary RIF by LTV (2)

 

 

 

 

 

 

 

 

 

 

95.01% and above

 

 

18.9

%

 

 

18.6

%

 

 

18.4

%

 

 

18.0

%

 

 

17.5

%

90.01% to 95.00%

 

 

48.2

 

 

 

48.2

 

 

 

48.2

 

 

 

48.4

 

 

 

48.5

 

85.01% to 90.00%

 

 

27.1

 

 

 

27.1

 

 

 

27.0

 

 

 

26.9

 

 

 

27.0

 

85.00% and below

 

 

5.8

 

 

 

6.1

 

 

 

6.4

 

 

 

6.7

 

 

 

7.0

 

Total

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

Primary RIF by policy year

 

 

 

 

 

 

 

 

 

 

2008 and prior

 

 

2.7

%

 

 

2.8

%

 

 

2.9

%

 

 

3.1

%

 

 

3.3

%

2009 - 2018

 

 

9.1

 

 

 

9.7

 

 

 

10.4

 

 

 

11.3

 

 

 

12.4

 

2019

 

 

5.1

 

 

 

5.4

 

 

 

5.6

 

 

 

5.9

 

 

 

6.4

 

2020

 

 

15.7

 

 

 

16.6

 

 

 

17.5

 

 

 

18.7

 

 

 

20.3

 

2021

 

 

23.3

 

 

 

24.5

 

 

 

25.6

 

 

 

26.9

 

 

 

28.6

 

2022

 

 

21.8

 

 

 

22.4

 

 

 

22.8

 

 

 

23.6

 

 

 

24.7

 

2023

 

 

18.1

 

 

 

18.6

 

 

 

15.2

 

 

 

10.5

 

 

 

4.3

 

2024

 

 

4.2

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

Persistency Rate (12 months ended)

 

 

84.3

%

 

 

84.0

%

 

 

83.6

%

 

 

82.8

%

 

 

81.6

%

Persistency Rate (quarterly, annualized) (3)

 

 

85.3

%

 

 

85.8

%

 

 

84.2

%

 

 

83.5

%

 

 

84.4

%

(1)

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

(2)

At origination.

(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.

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 changes resulting from inflationary pressures, the higher interest rate environment and the risk of higher unemployment rates, as well as other macroeconomic stresses and uncertainties, including potential impacts resulting from political and geopolitical events;
• changes in the way customers, investors, ratings agencies, regulators or legislators perceive our performance, financial strength and future prospects;
• Radian Guaranty’s ability to remain eligible under the PMIERs to insure loans purchased by 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, 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 ERCF, 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;
• changes in the current housing finance system in the United States, including the roles of the FHA, the VA, 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 related to the quality of third-party mortgage underwriting and mortgage loan servicing;
• a decrease in the Persistency Rates of our mortgage insurance on Monthly Premium Policies;
• competition in the private mortgage insurance industry generally, and more specifically: price competition in our mortgage insurance business and competition from the FHA and the VA as well as from other forms of credit enhancement, such as any potential GSE-sponsored alternatives to traditional mortgage insurance;
• U.S. political conditions, which may be more volatile and present a heightened risk in Presidential election years, and legislative and regulatory activity (or inactivity), including 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 could be impacted by, among other things, the size and mix of our IIF, future changes to the PMIERs, 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 or SAP 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;
• 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, 2023, 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240426300947/en/

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