— Primary mortgage insurance in force increases
4% year-over-year to $269.5 billion —
— Net income of $157 million, or $0.98 per
diluted share —
— Return on equity of 15.0% —
— Book value per share grew 12% year-over-year
to $26.69 —
— Company purchased 1.9 million shares or $50
million of Radian Group common stock during the three months ended
September 30th —
— In October 2023, Radian Guaranty improved its
capital position and enhanced its risk distribution program with
the closing of the $353 million ILN and the $246 million
excess-of-loss reinsurance agreements —
Radian Group Inc. (NYSE: RDN) today reported net income for the
quarter ended September 30, 2023, of $157 million, or $0.98 per
diluted share. This compares with net income for the quarter ended
September 30, 2022, of $198 million, or $1.20 per diluted
share.
Key Financial Highlights
Quarter ended
($ in millions, except per-share
amounts)
September 30, 2023
June 30, 2023
September 30, 2022
Total revenues (1)
$314
$290
$296
Net income
$157
$146
$198
Diluted net income per share
$0.98
$0.91
$1.20
Consolidated pretax income
$201
$183
$255
Adjusted pretax operating income
(2)
$210
$184
$273
Adjusted diluted net operating
income per share (2) (3)
$1.04
$0.91
$1.31
Return on equity (4)
15.0%
14.1%
20.7%
Adjusted net operating return on
equity (2) (3)
16.0%
14.1%
22.5%
Primary mortgage insurance in
force
$269,511
$266,859
$259,121
New Insurance Written (NIW) -
mortgage insurance
$13,922
$16,946
$17,616
Net premiums earned - mortgage
insurance (1)
$237
$211
$235
New defaults
11,156
9,775
9,601
Provision for losses - mortgage
insurance
($8)
($22)
($97)
Book value per share
$26.69
$26.51
$23.80
Accumulated other comprehensive
income (loss) value per share (5)
($3.35)
($2.69)
($3.20)
PMIERs Available Assets (6)
$5,758
$5,689
$5,358
PMIERs excess Available Assets
(7)
$1,670
$1,662
$1,628
Total Holding Company Liquidity
(8)
$1,279
$1,285
$848
Total investments
$5,886
$5,896
$5,592
Percentage of primary loans in
default (9)
2.0%
2.0%
2.1%
Mortgage insurance loss
reserves
$362
$374
$478
(1)
Total revenue and net premiums
earned during the second quarter of 2023 reflect an increase in
ceded premiums incurred, primarily due to costs associated with the
successful completion of tender offers by Eagle Re 2019-1 Ltd. and
Eagle Re 2020-1 Ltd. for the mortgage insurance-linked notes that
supported their reinsurance agreement with Radian Guaranty.
(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 September 30, 2023, was $157
million, or $0.98 per diluted share. This compares with net income
for the quarter ended September 30, 2022, of $198 million, or $1.20
per diluted share.
Adjusted pretax operating income for the quarter ended September
30, 2023, was $210 million, or $1.04 per diluted share. This
compares with adjusted pretax operating income for the quarter
ended September 30, 2022, of $273 million, or $1.31 per diluted
share.
Book value per share at September 30, 2023, was $26.69, compared
to $26.51 at June 30, 2023, and $23.80 at September 30, 2022. This
represents a 12% growth in book value per share at September 30,
2023, as compared to September 30, 2022, and includes accumulated
other comprehensive income (loss) of $(3.35) per share as of
September 30, 2023, and $(3.20) per share as of September 30, 2022.
Beginning in the first quarter of 2022, the change in accumulated
other comprehensive income (loss) is primarily from net unrealized
losses on investments as a result of an increase in market interest
rates.
“We reported another quarter of excellent financial results for
Radian, increasing book value per share by 12% year-over-year,
generating net income of $157 million, and delivering return on
equity of 15%. Our primary mortgage insurance in force, which is
the main driver of future earnings for our company, grew 4%
year-over-year to $270 billion, and, in October, we improved our
capital position as well as enhanced our risk distribution program
with the closing of two new reinsurance agreements,” said Radian’s
Chief Executive Officer Rick Thornberry. “We continue to
strategically manage capital and opportunistically repurchase
shares, including $50 million of common stock purchased in the
quarter. Our overall performance reflects the strength of our
business model and our growing insured portfolio, as well as the
depth of our customer relationships and dedication of our
team.”
THIRD QUARTER HIGHLIGHTS
- NIW was $13.9 billion in the third quarter of 2023, compared to
$16.9 billion in the second quarter of 2023, and $17.6 billion in
the third quarter of 2022.
- Purchase NIW decreased 18% in the third quarter of 2023
compared to the second quarter of 2023 and decreased 21% compared
to the third quarter of 2022.
- Refinances accounted for 1% of total NIW in the third quarter
of 2023, compared to 1% in the second quarter of 2023, and 2% in
the third quarter of 2022.
- Total primary mortgage insurance in force as of September 30,
2023, increased to $269.5 billion, an increase of 1% as compared to
$266.9 billion as of June 30, 2023, and an increase of 4% compared
to $259.1 billion as of September 30, 2022.
- The year-over-year change reflects a 7% 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 84% for the
twelve months ended September 30, 2023, compared to 83% for the
twelve months ended June 30, 2023, and 76% for the twelve months
ended September 30, 2022.
- Annualized persistency for the three months ended September 30,
2023, was 84%, compared to 84% for the three months ended June 30,
2023, and 82% for the three months ended September 30, 2022.
- Net mortgage insurance premiums earned were $237 million for
the third quarter of 2023, compared to $211 million for the second
quarter of 2023, and $235 million for the third quarter of 2022.
- The second quarter of 2023 reflected an increase in ceded
premiums earned, primarily as a result of the successful completion
of tender offers by Eagle Re 2019-1 Ltd. and Eagle Re 2020-1 Ltd.
during the second quarter of 2023 to purchase the mortgage
insurance-linked notes that supported their reinsurance agreements
with Radian Guaranty.
- Mortgage insurance in force portfolio premium yield was 38.0
basis points in the third quarter of 2023. This compares to 38.2
basis points in the second quarter of 2023, and 39.2 basis points
in the third quarter of 2022.
- The impact of single premium policy cancellations before
consideration of reinsurance represented 0.5 basis points of direct
premium yield in the third quarter of 2023, 0.6 basis points in the
second quarter of 2023, and 1.0 basis points in the third quarter
of 2022.
- Total net mortgage insurance premium yield, which includes the
impact of ceded premiums earned and accrued profit commission, was
35.3 basis points in the third quarter of 2023. This compares to
31.9 basis points in the second quarter of 2023, and 36.7 basis
points in the third quarter of 2022. The second quarter of 2023
reflected an increase of 3.2 basis points in ceded premiums earned,
as a result of the tender offers by Eagle Re 2019-1 Ltd. and Eagle
Re 2020-1 Ltd.
- Details regarding premiums earned may be found in Exhibit
D.
- The mortgage insurance provision for losses was a benefit of $8
million in the third quarter of 2023, compared to benefits of $22
million and $97 million in the second quarter of 2023 and third
quarter of 2022, respectively.
- Favorable reserve development on prior period defaults was $55
million in the third quarter of 2023, compared to $63 million in
the second quarter of 2023 and $136 million in the third quarter of
2022.
- The number of primary delinquent loans was 20,406 as of
September 30, 2023, compared to 19,880 as of June 30, 2023, and
21,077 as of September 30, 2022.
- The loss ratio in the third quarter of 2023 was (3.5)%,
compared to (10.3)% in the second quarter of 2023, and (41.5)% in
the third quarter of 2022.
- Total mortgage insurance claims paid were $5 million in the
third quarter of 2023, compared to $3 million in the second quarter
of 2023, and $5 million in the third quarter of 2022.
- Radian’s homegenius segment offers an array of title, real
estate and real estate 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 third quarter of 2023
were $15 million, compared to $15 million for the second quarter of
2023, and $25 million for the third quarter of 2022.
- Adjusted pretax operating loss, our primary segment measure of
profitability for the homegenius segment, was $21 million for the
third quarter of 2023, compared to $24 million for the second
quarter of 2023, and $26 million for the third quarter of
2022.
- Other operating expenses were $79 million in the third quarter
of 2023, compared to $90 million in the second quarter of 2023, and
$91 million in the third quarter of 2022.
- Other operating expenses decreased in the third quarter of 2023
as compared to expenses in the second quarter of 2023, primarily
due to the timing of our annual share-based incentive grants and
severance and related expenses recognized in the second quarter of
2023, as well as a decrease in other general operating expenses in
the third quarter of 2023.
- Additional details regarding other operating expenses may be
found in Exhibit D.
CAPITAL AND LIQUIDITY UPDATE
Radian Group
- As of September 30, 2023, Radian Group maintained $1.0 billion
of available liquidity. Total holding company liquidity, including
the company’s $275 million unsecured revolving credit facility, was
$1.3 billion as of September 30, 2023.
- Radian Group paid a dividend on its common stock in the amount
of $0.225 per share, totaling $35 million on September 6,
2023.
- During the third quarter of 2023, the company repurchased 1.9
million shares of Radian Group common stock at a total cost of $50
million, including commissions. As of September 30, 2023, purchase
authority of up to $230 million remained available under the
existing program.
Radian Guaranty
- In the third quarter of 2023, Radian Guaranty paid an ordinary
dividend to Radian Group of $100 million, bringing the total
ordinary dividends paid from Radian Guaranty to Radian Group during
the year to $300 million. Based on current performance
expectations, Radian Guaranty expects to pay another dividend of
between $50 million to $100 million in the fourth quarter, bringing
the expected full year 2023 total of ordinary dividends paid from
Radian Guaranty to Radian Group to between $350 million to $400
million.
- At September 30, 2023, Radian Guaranty’s Available Assets under
PMIERs totaled approximately $5.8 billion, resulting in PMIERs
excess Available Assets of $1.7 billion.
RECENT EVENTS
- As previously announced, in October 2023, Radian Guaranty
entered into a new fully collateralized mortgage
insurance-linked-note (ILN) reinsurance transaction, in which the
company obtained $353 million of credit-risk protection from Eagle
Re 2023-1 Ltd. (Eagle Re) on $8.8 billion of eligible policies that
were issued between April 1, 2022, and December 31, 2022, through
the issuance by Eagle Re of $353 million of ILNs to capital markets
investors in an unregistered private offering. Eagle Re is a
special purpose insurer domiciled in Bermuda and is not a
subsidiary or affiliate of Radian Guaranty.
- Also in October 2023, Radian Guaranty entered into an
excess-of-loss reinsurance agreement with a panel of third-party
reinsurance providers. This reinsurance agreement provides for up
to $246 million of aggregate excess-of-loss reinsurance coverage
for the mortgage insurance losses on new defaults on an existing
portfolio of eligible policies with RIF of $8.0 billion that were
issued between October 1, 2021, and March 31, 2022. Radian Guaranty
retains a portion of the aggregate losses up to a specified amount,
as well as any losses in excess of the reinsurance coverage
amount.
- Assuming these reinsurance arrangements were in place as of
September 30, 2023, Radian Guaranty’s PMIERs excess Available
Assets would have increased to approximately $2.2 billion.
CONFERENCE CALL
Radian will discuss third quarter 2023 financial results in a
conference call tomorrow, Thursday, November 2, 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) 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 and
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:
Net Premiums Earned and Other Operating
Expenses
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
Radian Group Inc. and Subsidiaries
Condensed Consolidated Statements of Operations Exhibit
A
2023
2022
(In thousands, except per-share
amounts)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Revenues
Net premiums earned
$
240,262
$
213,429
$
233,238
$
232,827
$
240,222
Services revenue
10,892
11,797
10,984
15,441
20,146
Net investment income
68,825
64,182
59,221
59,091
51,414
Net gains (losses) on investments and
other financial instruments
(8,555
)
(236
)
5,585
6,845
(16,252
)
Other income
2,109
1,241
1,592
520
659
Total revenues
313,533
290,413
310,620
314,724
296,189
Expenses
Provision for losses
(8,135
)
(21,632
)
(16,929
)
(43,599
)
(96,964
)
Policy acquisition costs
6,920
5,218
6,293
5,931
5,442
Cost of services
8,886
10,257
10,398
16,128
18,717
Other operating expenses
79,206
89,885
83,269
109,785
91,327
Interest expense
24,302
22,639
22,207
21,594
21,183
Amortization of other acquired intangible
assets
1,371
1,370
1,371
1,587
1,023
Total expenses
112,550
107,737
106,609
111,426
40,728
Pretax income
200,983
182,676
204,011
203,298
255,461
Income tax provision
44,401
36,589
46,254
40,968
57,181
Net income
$
156,582
$
146,087
$
157,757
$
162,330
$
198,280
Diluted net income per share
$
0.98
$
0.91
$
0.98
$
1.01
$
1.20
Radian Group Inc. and Subsidiaries
Net Income Per Share Exhibit B
The calculation of basic and diluted net
income per share is as follows.
2023
2022
(In thousands, except per-share
amounts)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Net income—basic and diluted
$
156,582
$
146,087
$
157,757
$
162,330
$
198,280
Average common shares
outstanding—basic
158,461
159,010
158,304
158,357
162,506
Dilutive effect of share-based
compensation arrangements (1)
1,686
1,734
3,045
2,450
2,232
Adjusted average common shares
outstanding—diluted
160,147
160,744
161,349
160,807
164,738
Basic net income per share
$
0.99
$
0.92
$
1.00
$
1.03
$
1.22
Diluted net income per share
$
0.98
$
0.91
$
0.98
$
1.01
$
1.20
(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.
2023
2022
(In thousands)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Shares of common stock equivalents
—
112
25
—
—
Radian Group Inc. and Subsidiaries
Condensed Consolidated Balance Sheets Exhibit C
September 30,
June 30,
March 31,
December 31,
September 30,
(In thousands, except per-share
amounts)
2023
2023
2023
2022
2022
Assets
Investments
$
5,885,652
$
5,895,871
$
5,837,892
$
5,693,491
$
5,591,881
Cash
55,489
61,142
50,167
56,183
54,701
Restricted cash
1,305
1,317
577
377
1,107
Accrued investment income
45,623
42,650
42,567
40,093
38,596
Accounts and notes receivable
144,614
138,432
129,565
119,834
174,041
Reinsurance recoverable
24,148
22,979
24,396
25,633
30,569
Deferred policy acquisition costs
18,817
19,272
18,236
18,460
17,920
Property and equipment, net
74,558
73,885
72,111
70,981
75,740
Goodwill and other acquired intangible
assets, net
11,173
12,543
13,914
15,285
16,873
Prepaid federal income taxes
696,820
663,320
596,368
596,368
526,123
Other assets
420,483
375,132
418,609
427,024
458,292
Total assets
$
7,378,682
$
7,306,543
$
7,204,402
$
7,063,729
$
6,985,843
Liabilities and stockholders’ equity
Unearned premiums
$
236,400
$
246,666
$
257,735
$
271,479
$
285,290
Reserve for losses and loss adjustment
expense
367,568
379,434
405,651
426,843
483,664
Senior notes
1,416,687
1,415,610
1,414,549
1,413,504
1,412,473
Secured borrowings
241,753
178,762
121,642
155,822
153,550
Reinsurance funds withheld
156,114
154,354
153,099
152,067
218,777
Net deferred tax liability
497,560
479,754
455,517
391,083
335,374
Other liabilities
309,701
281,127
289,731
333,604
358,665
Total liabilities
3,225,783
3,135,707
3,097,924
3,144,402
3,247,793
Common stock
175
177
176
176
176
Treasury stock
(945,504
)
(945,032
)
(931,313
)
(930,643
)
(930,396
)
Additional paid-in capital
1,482,712
1,522,895
1,515,852
1,519,641
1,513,615
Retained earnings
4,136,598
4,016,482
3,908,396
3,786,952
3,656,870
Accumulated other comprehensive income
(loss)
(521,082
)
(423,686
)
(386,633
)
(456,799
)
(502,215
)
Total stockholders’ equity
4,152,899
4,170,836
4,106,478
3,919,327
3,738,050
Total liabilities and stockholders’
equity
$
7,378,682
$
7,306,543
$
7,204,402
$
7,063,729
$
6,985,843
Shares outstanding
155,582
157,350
156,547
157,056
157,058
Book value per share
$
26.69
$
26.51
$
26.23
$
24.95
$
23.80
Holding company debt-to-capital ratio
(1)
25.4
%
25.3
%
25.6
%
26.5
%
27.4
%
(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
Net Premiums Earned and Other Operating Expenses Exhibit
D
Net Premiums Earned
2023
2022
(In thousands)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Premiums earned
Direct - Mortgage
Premiums earned, excluding revenue from
cancellations
$
254,903
$
252,537
$
251,166
$
247,880
$
250,140
Single Premium Policy cancellations
3,304
3,980
5,361
5,756
6,705
Total direct - Mortgage
258,207
256,517
256,527
253,636
256,845
Assumed - Mortgage (1)
—
—
—
(56
)
1,211
Ceded - Mortgage
Premiums earned, excluding revenue from
cancellations (2)
(32,363
)
(57,916
)
(35,526
)
(35,773
)
(38,879
)
Single Premium Policy cancellations
(3)
(873
)
(1,114
)
(1,472
)
(1,676
)
(1,844
)
Profit commission - other (4)
11,830
13,245
11,921
13,802
17,864
Total ceded premiums - Mortgage
(21,406
)
(45,785
)
(25,077
)
(23,647
)
(22,859
)
Net premiums earned - Mortgage
236,801
210,732
231,450
229,933
235,197
Net premiums earned - homegenius
3,461
2,697
1,788
2,894
5,025
Net premiums earned
$
240,262
$
213,429
$
233,238
$
232,827
$
240,222
(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)
The second quarter of 2023 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, consisting of $16
million related to the cost of tender premiums and associated
expenses and $5 million related to the acceleration of deferred
costs from the original executions of these transactions.
(3)
Includes the impact of related profit
commissions.
(4)
The amounts represent the profit
commission under our QSR Program, excluding the impact of Single
Premium Policy cancellations.
Other Operating
Expenses
Total
2023
2022
(In thousands)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Other operating expenses by type
Salaries and other base employee
expenses
$
33,272
$
39,032
$
35,064
$
47,995
$
38,656
Variable and share-based incentive
compensation
19,546
18,908
18,273
15,321
15,366
Other general operating expenses
29,812
35,655
33,863
50,488
39,728
Ceding commissions
(5,153
)
(4,824
)
(4,628
)
(5,098
)
(4,273
)
Title agent commissions
1,729
1,114
697
1,079
1,850
Total
$
79,206
$
89,885
$
83,269
$
109,785
(1)
$
91,327
(1)
Includes $12 million of severance and
related expenses, primarily in salaries and other base employee
expenses and $15 million of impairment of long-lived assets,
primarily in other general operating expenses.
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 September
30, 2023
(In thousands)
Mortgage
homegenius
All Other (1)
Inter segment (2)
Total
Net premiums written (3)
$
235,169
$
3,461
$
—
$
—
$
238,630
(Increase) decrease in unearned
premiums
1,632
—
—
—
1,632
Net premiums earned
236,801
3,461
—
—
240,262
Services revenue
266
10,723
—
(97
)
10,892
Net investment income
50,345
523
17,957
—
68,825
Net gains (losses) on investments and
other financial instruments
—
—
283
—
283
Other income
1,237
—
9
(5
)
1,241
Total
288,649
14,707
18,249
(102
)
321,503
Provision for losses
(8,257
)
122
—
—
(8,135
)
Policy acquisition costs
6,920
—
—
—
6,920
Cost of services
172
8,714
—
—
8,886
Other operating expenses before allocated
corporate operating expenses (4)
16,776
22,562
3,500
(102
)
42,736
Interest expense
22,693
—
1,609
—
24,302
Total
38,304
31,398
5,109
(102
)
74,709
Adjusted pretax operating income (loss)
before allocated corporate operating expenses
250,345
(16,691
)
13,140
—
246,794
Allocation of corporate operating
expenses
31,744
4,241
354
—
36,339
Adjusted pretax operating income
(loss)
$
218,601
$
(20,932
)
$
12,786
$
—
$
210,455
Radian Group Inc. and Subsidiaries
Segment Information Exhibit E (page 2 of 4)
Three Months Ended September
30, 2022
(In thousands)
Mortgage
homegenius
All Other (1)
Inter- segment (2)
Total
Net premiums written (3)
$
235,076
$
5,025
$
—
$
—
$
240,101
(Increase) decrease in unearned
premiums
121
—
—
—
121
Net premiums earned
235,197
5,025
—
—
240,222
Services revenue
405
19,812
—
(71
)
20,146
Net investment income
44,842
246
6,326
—
51,414
Other income
589
—
70
—
659
Total
281,033
25,083
6,396
(71
)
312,441
Provision for losses
(97,493
)
435
—
94
(96,964
)
Policy acquisition costs
5,442
—
—
—
5,442
Cost of services
373
18,344
—
—
18,717
Other operating expenses before allocated
corporate operating expenses (4)
23,396
26,285
3,444
(165
)
52,960
Interest expense
21,183
—
—
—
21,183
Total
(47,099
)
45,064
3,444
(71
)
1,338
Adjusted pretax operating income (loss)
before allocated corporate operating expenses
328,132
(19,981
)
2,952
—
311,103
Allocation of corporate operating
expenses
32,457
5,555
371
—
38,383
Adjusted pretax operating income
(loss)
$
295,675
$
(25,536
)
$
2,581
$
—
$
272,720
(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.
(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).
Radian Group Inc. and Subsidiaries
Segment Information Exhibit E (page 3 of 4)
Mortgage
2023
2022
(In thousands)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Net premiums written (1)
$
235,169
$
214,540
$
229,419
$
227,791
$
235,076
(Increase) decrease in unearned
premiums
1,632
(3,808
)
2,031
2,142
121
Net premiums earned
236,801
210,732
231,450
229,933
235,197
Services revenue
266
284
336
328
405
Net investment income
50,345
48,555
46,497
52,165
44,842
Other income
1,237
1,246
1,587
512
589
Total
288,649
260,817
279,870
282,938
281,033
Provision for losses (2)
(8,257
)
(21,623
)
(16,864
)
(43,509
)
(97,493
)
Policy acquisition costs
6,920
5,218
6,293
5,931
5,442
Cost of services
172
143
241
235
373
Other operating expenses before allocated
corporate operating expenses (2) (3)
16,776
20,009
18,806
20,131
23,396
Interest expense
22,693
22,239
22,130
21,580
21,183
Total (2)
38,304
25,986
30,606
4,368
(47,099
)
Adjusted pretax operating income before
allocated corporate operating expenses
250,345
234,831
249,264
278,570
328,132
Allocation of corporate operating
expenses
31,744
37,081
34,829
36,663
32,457
Adjusted pretax operating income
$
218,601
$
197,750
$
214,435
$
241,907
$
295,675
homegenius
2023
2022
(In thousands)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Net premiums earned
$
3,461
$
2,697
$
1,788
$
2,894
$
5,025
Services revenue (2)
10,723
11,617
10,743
15,207
19,812
Net investment income
523
492
430
366
246
Other income (2)
—
—
—
170
—
Total (2)
14,707
14,806
12,961
18,637
25,083
Provision for losses
122
(9
)
(65
)
(90
)
435
Cost of services
8,714
10,114
10,157
15,893
18,344
Other operating expenses before allocated
corporate operating expenses (3)
22,562
24,168
21,252
27,998
26,285
Total
31,398
34,273
31,344
43,801
45,064
Adjusted pretax operating income (loss)
before allocated corporate operating expenses
(16,691
)
(19,467
)
(18,383
)
(25,164
)
(19,981
)
Allocation of corporate operating
expenses
4,241
4,954
4,658
6,302
5,555
Adjusted pretax operating income
(loss)
$
(20,932
)
$
(24,421
)
$
(23,041
)
$
(31,466
)
$
(25,536
)
Radian Group Inc. and Subsidiaries
Segment Information Exhibit E (page 4 of 4)
All Other (4)
2023
2022
(In thousands)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Net investment income
$
17,957
$
15,135
$
12,294
$
6,560
$
6,326
Net gains (losses) on investments and
other financial instruments
283
95
80
47
—
Other income
9
(1
)
5
8
70
Total
18,249
15,229
12,379
6,615
6,396
Other operating expenses before allocated
corporate operating expenses (2) (3)
3,500
3,370
518
(5)
3,606
3,444
Interest expense
1,609
400
77
14
—
Total (2)
5,109
3,770
595
3,620
3,444
Adjusted pretax operating income before
allocated corporate operating expenses
13,140
11,459
11,784
2,995
2,952
Allocation of corporate operating
expenses
354
413
3,315
(5)
420
371
Adjusted pretax operating income
(loss)
$
12,786
$
11,046
$
8,469
$
2,575
$
2,581
(1)
Net of ceded premiums written under our
quota share and excess-of-loss reinsurance agreements.
(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.
Selected Mortgage Key
Ratios
2023
2022
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Loss ratio (1)
(3.5
)%
(10.3
)%
(7.3
)%
(18.9
)%
(41.5
)%
Expense ratio (2)
23.4
%
29.6
%
25.9
%
27.3
%
26.1
%
(1)
For our Mortgage segment, calculated as
provision for losses expressed as a percentage of net premiums
earned.
(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.
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) 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 and
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 our reportable segments and All Other activities,
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
2023
2022
(In thousands)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Consolidated pretax income
$
200,983
$
182,676
$
204,011
$
203,298
$
255,461
Less reconciling income (expense)
items
Net gains (losses) on investments and
other financial instruments (1)
(8,838
)
(331
)
5,505
6,798
(16,252
)
Amortization of other acquired intangible
assets
(1,371
)
(1,370
)
(1,371
)
(1,587
)
(1,023
)
Impairment of other long-lived assets and
other non-operating items
737
2
14
(14,929
) (2)
16
Total adjusted pretax operating income
(3)
$
210,455
$
184,375
$
199,863
$
213,016
$
272,720
(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 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.
(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 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Adjusted pretax operating income
(loss)
Mortgage segment
$
218,601
$
197,750
$
214,435
$
241,907
$
295,675
homegenius segment
(20,932
)
(24,421
)
(23,041
)
(31,466
)
(25,536
)
All Other activities
12,786
11,046
8,469
2,575
2,581
Total adjusted pretax operating income
$
210,455
$
184,375
$
199,863
$
213,016
$
272,720
Radian Group Inc. and Subsidiaries
Consolidated Non-GAAP Financial Measure Reconciliations
Exhibit G (page 2 of 2)
Reconciliation of Diluted Net
Income Per Share to Adjusted Diluted Net Operating Income Per
Share
2023
2022
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Diluted net income per share
$
0.98
$
0.91
$
0.98
$
1.01
$
1.20
Less per-share impact of reconciling
income (expense) items
Net gains (losses) on investments and
other financial instruments
(0.06
)
—
0.03
0.04
(0.10
)
Amortization of other acquired intangible
assets
(0.01
)
(0.01
)
(0.01
)
(0.01
)
(0.01
)
Impairment of other long-lived assets and
other non-operating items
0.01
—
—
(0.09
)
—
Income tax (provision) benefit on
reconciling income (expense) items (1)
0.01
—
(0.01
)
0.01
0.02
Difference between statutory and effective
tax rates
(0.01
)
0.01
(0.01
)
0.01
(0.02
)
Per-share impact of reconciling income
(expense) items
(0.06
)
—
—
(0.04
)
(0.11
)
Adjusted diluted net operating income per
share (1)
$
1.04
$
0.91
$
0.98
$
1.05
$
1.31
(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 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
Return on equity (1)
15.0
%
14.1
%
15.7
%
17.0
%
20.7
%
Less impact of reconciling income
(expense) items (2)
Net gains (losses) on investments and
other financial instruments
(0.9
)
—
0.5
0.7
(1.7
)
Amortization of other acquired intangible
assets
(0.2
)
(0.1
)
(0.1
)
(0.2
)
(0.1
)
Impairment of other long-lived assets and
other non-operating items
0.1
—
—
(1.6
)
—
Income tax (provision) benefit on
reconciling income (expense) items (3)
0.2
(0.1
)
(0.1
)
0.2
0.4
Difference between statutory and effective
tax rates
(0.2
)
0.2
(0.3
)
0.3
(0.4
)
Impact of reconciling income (expense)
items
(1.0
)
—
—
(0.6
)
(1.8
)
Adjusted net operating return on equity
(3)
16.0
%
14.1
%
15.7
%
17.6
%
22.5
%
(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.
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 Supplemental Information - New Insurance Written
Exhibit H
2023
2022
($ in millions)
Qtr 3
Qtr 2
Qtr 1
Qtr 4
Qtr 3
NIW
$
13,922
$
16,946
$
11,261
$
12,859
$
17,616
NIW by premium type
Direct monthly and other recurring
premiums
96.0
%
96.5
%
94.9
%
94.8
%
95.5
%
Direct single premiums
4.0
%
3.5
%
5.1
%
5.2
%
4.5
%
NIW for purchases
98.7
%
98.6
%
97.6
%
98.3
%
98.4
%
NIW for refinances
1.3
%
1.4
%
2.4
%
1.7
%
1.6
%
NIW by FICO score (1)
>=740
67.3
%
66.1
%
60.7
%
59.4
%
63.3
%
680-739
27.4
28.4
32.8
33.1
28.5
620-679
5.3
5.5
6.5
7.5
8.2
<=619
—
—
—
—
—
Total NIW
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
NIW by LTV
95.01% and above
16.5
%
17.9
%
17.7
%
15.5
%
18.3
%
90.01% to 95.00%
38.6
39.1
40.2
40.8
37.1
85.01% to 90.00%
30.2
29.5
28.7
29.7
28.0
85.00% and below
14.7
13.5
13.4
14.0
16.6
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.
Radian Group Inc. and Subsidiaries
Mortgage Supplemental Information - Primary Insurance in Force
and Risk in Force Exhibit I
September 30,
June 30,
March 31,
December 31,
September 30,
($ in millions)
2023
2023
2023
2022
2022
Primary insurance in force
$
269,511
$
266,859
$
261,450
$
260,994
$
259,121
Primary risk in force (“RIF”)
$
69,298
$
68,323
$
66,580
$
66,094
$
65,288
Primary RIF by premium type
Direct monthly and other recurring
premiums
88.6
%
88.2
%
87.6
%
87.1
%
86.4
%
Direct single premiums
11.4
%
11.8
%
12.4
%
12.9
%
13.6
%
Primary RIF by FICO score (1)
>=740
58.2
%
57.8
%
57.4
%
57.4
%
57.5
%
680-739
34.0
34.3
34.6
34.6
34.5
620-679
7.4
7.5
7.6
7.6
7.6
<=619
0.4
0.4
0.4
0.4
0.4
Total
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Primary RIF by LTV
95.01% and above
18.4
%
18.0
%
17.5
%
17.1
%
16.8
%
90.01% to 95.00%
48.2
48.4
48.5
48.4
48.4
85.01% to 90.00%
27.0
26.9
27.0
27.2
27.2
85.00% and below
6.4
6.7
7.0
7.3
7.6
Total
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Primary RIF by policy year
2008 and prior
2.9
%
3.1
%
3.3
%
3.5
%
3.7
%
2009 - 2017
7.5
8.2
9.1
10.0
10.9
2018
2.9
3.1
3.3
3.5
3.7
2019
5.6
5.9
6.4
6.7
7.1
2020
17.5
18.7
20.3
21.6
23.0
2021
25.6
26.9
28.6
29.5
30.6
2022
22.8
23.6
24.7
25.2
21.0
2023
15.2
10.5
4.3
—
—
Total
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Persistency Rate (12 months ended)
83.6
%
82.8
%
81.6
%
79.6
%
75.9
%
Persistency Rate (quarterly, annualized)
(2)
84.2
%
83.5
%
84.4
%
84.1
%
81.6
%
(1)
For loans with multiple borrowers, the
percentage of primary RIF by FICO score represents the lowest of
the borrowers’ FICO scores.
(2)
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 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 and uncertainties,
including potential impacts resulting from 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, 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 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 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 insurance in force, 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” (accounting principles generally accepted in
the U.S.) or “SAP” (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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231027030896/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
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